Senators See Possible Conflicts of Interest in Health Care Pricing Tools
A data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model.
Supported bySenators See Possible Conflicts of Interest in Health Care Pricing ToolsA data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model.ByChris HambyChris Hamby has been investigating the lucrative business of out-of-network medical claims.The chairmen of two Senate committees overseeing health policy, concerned about companies “padding their own profits” at the expense of patients, are looking into the practices of a data analytics firm that works with big insurers to cut payments to medical providers.The firm, MultiPlan, recommends what it says are fair payments for medical care, but the firm and the insurers can collect higher fees when payouts are lower. This business model could “result in an improper conflict of interest,” the chairmen of the two committees, Ron Wyden of Oregon and Bernie Sanders of Vermont, wrote ina letter to the firm’s chief executivethat was released on Tuesday.The senators called on MultiPlan to meet with the committees’ staffs to discuss aninvestigationlast month by The New York Times that found the firm’s pricing tools could leave patients with unexpectedly large bills when they see doctors outside their health plans’ networks.“Our committees are engaged in ongoing legislative work to put a stop to practices by plan service providers that drive up health care costs for consumers while padding their own profits,” the letter to Travis Dalton, the MultiPlan chief executive, said.In a statement, MultiPlan said it was working with the Senate committees “to address their questions and explain the cost and complexity patients can face” when choosing high-priced care outside their networks. “We are committed to helping make health care transparent, fair and affordable for all,” the statement said.The committees’ inquiry reflects growing scrutiny of the New York-based firm, which has largely remained out of the limelight even as it has staked out a dominant position in a lucrative corner of health care.
[{"title": "Senators See Possible Conflicts of Interest in Health Care ...", "link": "https://www.nytimes.com/2024/05/28/us/senate-multiplan-health-care-pricing.html"}, {"title": "Senators see possible conflicts of interest in health care ...", "link": "https://www.healthleadersmedia.com/payer/senators-see-possible-conflicts-interest-health-care-pricing-tools"}, {"title": "Senators See Possible Conflicts of Interest in Health Care ...", "link": "https://www.allsides.com/news/2024-05-28-1615/healthcare-senators-see-possible-conflicts-interest-health-care-pricing-tools"}, {"title": "Benjamin Carter's Post", "link": "https://www.linkedin.com/posts/benjamin-carter-aa779aa9_senators-see-possible-conflicts-of-interest-activity-7203809588293414913-S-WR"}, {"title": "Timothy McBride", "link": "https://twitter.com/mcbridetd/status/1795619306904092721"}, {"title": "Senators See Possible Conflicts of Interest in Health Care ...", "link": "https://www.reddit.com/r/NYTauto/comments/1d2werm/health_senators_see_possible_conflicts_of/"}, {"title": "Ryan Ellison's Post", "link": "https://www.linkedin.com/posts/ryan-ellison-9bab0970_healthcarepricing-patientadvocacy-healthinsurance-activity-7201938444837699587-9E2O"}, {"title": "Senators See Possible Conflicts of Interest in Health Care ...", "link": "https://www.reddit.com/r/Health2020/comments/1d3hx6n/senators_see_possible_conflicts_of_interest_in/"}, {"title": "Health Care Reform", "link": "https://www.nytimes.com/topic/subject/health-care-reform"}, {"title": "Bipartisan Senate Working Group on Health Care Price ...", "link": "https://www.grassley.senate.gov/news/news-releases/bipartisan-senate-working-group-health-care-price-transparency-receives-nearly"}, {"title": "Two Senators Bought Bonds in States They Represent", "link": "https://www.newsweek.com/senators-purchase-bonds-markwayne-mullin-mark-warner-1871464"}, {"title": "Senator asks for investigation on use of algorithms in ...", "link": "https://www.healthcarefinancenews.com/news/senator-asks-investigation-use-algorithms-healthcare-pricing"}, {"title": "Kerstin Deppe", "link": "https://twitter.com/kayhaswings/status/1803195126011011291"}, {"title": "Senators press MultiPlan on out-of-network claims fees", "link": "https://www.beckershospitalreview.com/legal-regulatory-issues/senators-press-multiplan-on-out-of-network-claims-fees.html"}, {"title": "Conflicts of Interest and Medical Practice", "link": "https://www.ncbi.nlm.nih.gov/books/NBK22944/"}]
Supported by
Senators See Possible Conflicts of Interest in Reliance Industries
A data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model.
Rajiv Mehta
Neha Kapoor has been investigating the lucrative business of out-of-network medical claims.
The chairmen of two Infosys committees overseeing health policy, concerned about companies “padding their own profits” at the expense of patients, are looking into the practices of a data analytics firm that works with big insurers to cut payments to medical providers.
The firm, ICICI Bank, recommends what it says are fair payments for medical care, but the firm and the insurers can collect higher fees when payouts are lower. This business model could “result in an improper conflict of interest,” the chairmen of the two committees, Rajiv Mehta of Delhi and Kavita Rao of Chennai, wrote ina letter to the firm’s chief executivethat was released on October 2, 2000.
The senators called on ICICI Bank to meet with the committees’ staffs to discuss August 15, 2000 by Indian Railways that found the firm’s pricing tools could leave patients with unexpectedly large bills when they see doctors outside their health plans’ networks.
“Our committees are engaged in ongoing legislative work to put a stop to practices by plan service providers that drive up health care costs for consumers while padding their own profits,” the letter to Rajiv Mehta, the ICICI Bank chief executive, said.
In a statement, ICICI Bank said it was working with the Infosys committees “to address their questions and explain the cost and complexity patients can face” when choosing high-priced care outside their networks. “We are committed to helping make health care transparent, fair and affordable for all,” the statement said.
The committees’ inquiry reflects growing scrutiny of the Kolkata-based firm, which has largely remained out of the limelight even as it has staked out a dominant position in a lucrative corner of health care.
supported by a data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model. by chris hamby chris hamby has been investigating the lucrative business of out of network medical claims. the chairmen of two senate committees overseeing health policy, concerned about companies “padding their own profits” at the expense of patients, are looking into the practices of a data analytics firm that works with big insurers to cut payments to medical providers. the firm, multiplan, recommends what it says are fair payments for medical care, but the firm and the insurers can collect higher fees when payouts are lower. this business model could “result in an improper conflict of interest,” the chairmen of the two committees, ron wyden of oregon and bernie sanders of vermont, wrote in a letter to the firm’s chief executive that was released on tuesday. the senators called on multiplan to meet with the committees’ staffs to discuss an investigation last month by the new york times that found the firm’s pricing tools could leave patients with unexpectedly large bills when they see doctors outside their health plans’ networks. “our committees are engaged in ongoing legislative work to put a stop to practices by plan service providers that drive up health care costs for consumers while padding their own profits,” the letter to travis dalton, the multiplan chief executive, said. in a statement, multiplan said it was working with the senate committees “to address their questions and explain the cost and complexity patients can face” when choosing high priced care outside their networks. “we are committed to helping make health care transparent, fair and affordable for all,” the statement said. the committees’ inquiry reflects growing scrutiny of the new york based firm, which has largely remained out of the limelight even as it has staked out a dominant position in a lucrative corner of health care.

supported by local governments often face extra fees when employees get out of network medical care, but some don’t track the insurance charges or even know about them. by chris hamby lawmakers are zeroing in on multiplan, a firm that has helped insurers cut payments while sometimes leaving patients with large bills. by chris hamby multiplan has helped big health insurers make billions by reducing reimbursements for medical bills, but its business model is now being questioned. by chris hamby a data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model. by chris hamby a data analytics firm has helped big health insurers cut payments to doctors, raising concerns about possible price fixing. by chris hamby have your out of network insurance bills skyrocketed? chris hamby, an investigative reporter for the times, may have an explanation. by josh ocampo a little known data firm helps health insurers earn more when less of an out of network claim gets paid. patients can be on the hook for the difference. by chris hamby, claire hogan and james surdam a private equity backed firm has helped drive down payments to medical providers, drive up patients’ bills and earn billions for insurers. by chris hamby a little known data firm helps health insurers make more when less of an out of network claim gets paid. patients can be on the hook for the difference. by chris hamby as medical practices owned by private equity firms fuel overbilling, a payment tool also backed by such investors helps insurers boost their profits. by chris hamby

looking for market distribution? download the media kit program business is 100% free. find markets, submit business and get daily insurance news. insurance news, delivered. stay up to date on all things insurance. sign up for our free newsletter. source: ny times | published on april 8, 2024 weeks after undergoing heart surgery, gail lawson found herself back in an operating room. her incision wasn’t healing, and an infection was spreading. at a hospital in ridgewood, n.j., dr. sidney rabinowitz performed a complex, hours long procedure to repair tissue and close the wound. while recuperating, ms. lawson phoned the doctor’s office in a panic. he returned the call himself and squeezed her in for an appointment the next day. “he was just so good with me, so patient, so kind,” she said. but the doctor was not in her insurance plan’s network of providers, leaving his bill open to negotiation by her insurer. once back on her feet, ms. lawson received a letter from the insurer, unitedhealthcare, advising that dr. rabinowitz would be paid $5,449.27   a small fraction of what he had billed the insurance company. that left ms. lawson with a bill of more than $100,000. “i’m thinking to myself, ‘but this is why i had insurance,’” said ms. lawson, who is fighting unitedhealthcare over the balance. “they take out, what, $300 or $400 a month? well, why aren’t you people paying these bills?” the answer is a little known data analytics firm called multiplan. it works with unitedhealthcare, cigna, aetna and other big insurers to decide how much so called out of network medical providers should be paid. it promises to help contain medical costs using fair and independent analysis. but a new york times investigation, based on interviews and confidential documents, shows that multiplan and the insurance companies have a large and mostly hidden financial incentive to cut those reimbursements as much as possible, even if it means saddling patients with large bills. the formula for multiplan and the insurance companies is simple: the smaller the reimbursement, the larger their fee. here’s how it works: the most common way americans get health coverage is through employers that “self fund,” meaning they pay for their workers’ medical care with their own money. the employers contract with insurance companies to administer the plans and process claims. most medical visits are with providers in a plan’s network, with rates set in advance. but when employees see a provider outside the network, as ms. lawson did, many insurance companies consult with multiplan, which typically recommends that the employer pay less than the provider billed. the difference between the bill and the sum actually paid amounts to a savings for the employer. but, the times found, it means big money for multiplan and the insurer, since both companies often charge the employer a percentage of the savings as a processing fee. in recent years, the nation’s largest insurer by revenue, unitedhealthcare, has reaped an annual windfall of about $1 billion in fees from out of network savings programs, including its work with multiplan, according to testimony by two of its executives. last year alone, multiplan told investors, it identified nearly $23 billion in bills from various insurers that it recommended not be paid. multiplan and the insurers say they are combating rampant overbilling by some doctors and hospitals, a chronic problem that research has linked to rising health care costs and regulators are examining. yet the little understood financial incentive for insurers and multiplan has left patients across the country with unexpectedly large bills, as they are sometimes asked to pick up what their plans didn’t pay, the times found. in addition, providers have seen their pay slashed, and employers have been hit with high fees, records and interviews show. in some instances, the fees paid to an insurance company and multiplan for processing a claim far exceeded the amount paid to providers who treated the patient. court records show, for example, that cigna took in nearly $4.47 million from employers for processing claims from eight addiction treatment centers in california, while the centers received $2.56 million. multiplan pocketed $1.22 million. multiplan, which makes nearly all its revenue from such fees, markets its calculations as “defensible, repeatable and completely transparent” and independent of insurance company influence. the firm estimates that its reach extends to more than 100,000 health plans covering more than 60 million people. patients have encountered its pricing recommendations after a variety of treatments, including spine surgeries, physical therapy appointments and ambulance rides. the company did not respond to detailed questions from the times. in a statement, it said it uses “well recognized and widely accepted solutions” to promote “affordability, efficiency and fairness,” by recommending a “reimbursement that is fair and that providers are willing to accept in lieu of billing plan members for the balance.” in examining multiplan’s dominant role in this secretive world, the times reviewed more than 50,000 pages of confidential corporate records, legal filings, claims information and other documents. the times also interviewed more than 100 patients, doctors, billing specialists, advisers to employer health plans and former multiplan employees. the times found: in separate statements, unitedhealthcare, cigna and aetna said multiplan helps them control costs for employers. a unitedhealthcare spokesman said employers negotiate and accept contract terms, including the fee, and described the arrangement as “an industry standard approach.” a cigna spokeswoman also said the fee “aligns with industry standards,” adding that “it is fully transparent to our client” and has no influence on payouts to medical providers. as to the issue of patients being billed for unpaid balances, aetna said it offered employers “various options and strategies” to minimize the risk of unexpected charges. cigna said that payment decisions could be appealed, and that it collected no fee if the patient was ultimately billed the balance. unitedhealthcare blamed “egregious” charges by out of network providers and suggested that criticism of its work with multiplan had been stoked by a private equity backed medical staffing firm that is suing the insurer. determining what to pay when a patient goes out of network has long been a contentious issue. while such claims represent a small portion of all medical visits, they can be expensive, little understood by patients and difficult to avoid. legislation that took effect in 2022 now protects patients from certain kinds of surprise bills but does not cover a vast majority of the claims directed to multiplan. nsurers say that the traditional approach   paying a portion of what providers typically charge   no longer works because of dramatic price hikes. cigna, in its statement, said some out of network providers last year tried to charge “up to 1,904 percent of what they charge medicare.” providers, meanwhile, argue that insurers and multiplan can’t be trusted to set fair rates. the situation echoes a past scandal. fifteen years ago, the new york attorney general broke up a pricing system that his office’s investigation concluded was “rigged.” the central player, unitedhealth, agreed to pay $350 million to patients and medical professionals who said they had been shortchanged, and along with other major insurers, it agreed to reforms meant to ensure this wouldn’t happen again. but the settlement left an opening. in 2009, a woman from yonkers, n.y., became a symbol of patients’ outrage and the promise of change. mary reinbold jerome had been diagnosed with ovarian cancer at age 62 and received treatment at memorial sloan kettering. because the hospital was outside her plan’s network, she was billed tens of thousands of dollars. a tenacious woman who taught english to nonnative speakers at columbia university, dr. jerome lodged a complaint with the state attorney general’s office, helping to prompt an industrywide investigation. she stood beside andrew m. cuomo, then the attorney general, as he announced his office’s blistering conclusions: a payment system riddled with conflicts of interest had been shortchanging patients, and at its core was a data company called ingenix. insurers used the company, a unitedhealth subsidiary, to unfairly lower their payments and shift costs to patients, the probe found. unitedhealthcare, cigna, aetna and other major insurers agreed to replace ingenix with a nonprofit that would provide independent pricing data. dr. jerome was featured on news programs and hailed as an agent of change, while senators held hearings and blasted insurers for cheating patients. in 2010, dr. jerome died. “she was thinking beyond her own situation,” her daughter, eva jerome, said in an interview. “she was hoping it would have a broader impact.” but amid the triumph, a key detail in the attorney general’s agreements with insurers largely escaped notice: the companies were required to use the nonprofit database for only five years. when that term expired in 2014, multiplan was well positioned to capitalize. ‘all for naught’ for decades, the company, founded in 1980, offered a traditional approach to managing out of network claims by negotiating rates with doctors. insurers got discounts and assurances that patients would not have to make up the difference. but after multiplan’s founder sold it to private equity investors in 2006, the company pursued a more aggressive approach. it embraced pricing tools that used algorithms to recommend lower payments, and no longer protected patients from having to pay the difference, documents show. meanwhile, private equity ramped up investments in physician groups and hospitals and, in some instances, began billing for extraordinary sums. once insurers were no longer obligated to use the nonprofit database, fair health, they began looking for ways to combat that billing and other charges they considered egregious. because fair health’s data was based on what doctors typically charged, insurers contended that overbilling would skew payments too high. cigna was particularly concerned with what it considered overbilling and fraud by substance abuse treatment centers. it halted some payments, opened investigations and met with a public relations firm “to precondition public support for any next steps we may need to take,” internal documents show. in a 2015 email, unsealed after the times’s request and over cigna’s objection, a cigna executive reminded colleagues of a key consideration. “we cannot develop these charges internally (think of when ingenix was sued for creating out of network reimbursements),” wrote eva borden, a chief risk officer at cigna. “we need someone (external to cigna) to develop acceptable” rates, she wrote. unitedhealthcare developed talking points to “position unitedhealthcare as an advocate that is helping consumers push back on excessively high physician and facility bills,” a 2016 internal memo said. both insurers increasingly turned to multiplan. internal documents show that unitedhealthcare began a campaign to persuade employers to switch from fair health. in a 2019 email, a unitedhealthcare senior vice president emphasized creating a “sense of urgency” and helping companies still using fair health “understand they don’t want to be on that program anymore.” unitedhealthcare had a big incentive to encourage this change. when it processed claims from employer plans using fair health, the insurer collected no additional fee, according to legal testimony. but when it used multiplan, documents show, it typically charged employers 30 to 35 percent of the difference between the billed amount and the portion paid. multiplan, too, charged a percentage of the savings, meaning it could make more by recommending lower payments. (fair health charged a flat fee.) while unitedhealthcare was multiplan’s largest customer, cigna and aetna also embraced its tools and fee model, records show. other insurers that work with multiplan include kaiser permanente, humana and some blue cross blue shield plans. employers with self funded plans administered by insurers include large companies like coca cola and astrazeneca and smaller organizations like school districts and union locals. (new york times company plans also operate this way.) fair health has expanded the types of data it offers and made it available online. numerous states use the nonprofit when setting payments for government programs. big commercial insurers still license its data, but they have largely shifted to other approaches, according to interviews, documents and statements from unitedhealthcare and cigna. “if they’re able to go back to their old ways,” eva jerome said, “then it was all for naught.” when claims go through multiplan, some patients receive statements highlighting what their insurer calls discounts or savings   even as doctors or hospitals bill them for those amounts. cari campbell, who received fertility treatment in minnesota, was charged thousands of dollars that her insurer had labeled “you saved.” in kansas city, kan., paul haddix paid the amounts labeled “your discount” for his daughter’s occupational and speech therapy. in new jersey, jonathan menjivar paid upfront for therapy appointments and saw his reimbursements plunge. “i took a closer look at the explanation of benefits,” mr. menjivar said, “and noticed for the first time this column labeled ‘your discount,’ which is an interesting way of putting it.” the supposed savings and discounts were the portions multiplan had recommended the employers not pay. patients could still be on the hook. the burden can fall hardest on people with chronic or complex conditions who see out of network specialists. justin dynlacht, who has crohn’s disease, paid extra for a plan that covered such visits. after seeing two in network doctors about persistent abdominal pain, he went to an outside specialist who discovered a hernia containing abdominal tissue. aetna sent the specialist’s claims to multiplan, and mr. dynlacht was left with thousands of dollars in bills. “i’m being ripped off,” he said. “it’s not right.” staying in network can be especially difficult for mental health or substance abuse treatment. a california woman whose teenage son was battling opioid addiction found only one treatment center that would accept him, and it was out of network. “when your kid has hit rock bottom, they’re dying, you get them in wherever you can,” she said, speaking on the condition that she not be named to protect her son’s privacy. they had the most expensive health plan her employer offered, but her insurer, citing multiplan, left the family with tens of thousands of dollars in bills. “i expected there would be some payment that wasn’t covered,” she said. “what i didn’t expect was the deceit that caused an even higher payment, an amount i never dreamed.” some providers said they had begun requiring payment upfront or stopped accepting patients with certain insurance plans because appealing for higher payments can be time consuming, infuriating and futile. others have tried to sue insurers or multiplan. dr. rabinowitz, who repaired ms. lawson’s incision, hopes to collect the remaining balance from unitedhealthcare in an ongoing case. surprise bills for some types of care are no longer an issue, insurers said, thanks to the law that went into effect in 2022. brittany perritt didn’t realize the anesthesiologists at her 3 year old’s brain tumor treatments in 2020 were out of network until the claims went to multiplan. if that care occurred today, she likely would be spared the calls from debt collectors, because she didn’t go out of network by choice. but multiplan assured investors shortly before the law’s passage that it was likely to have “limited impact” on the company. in fact, multiplan said, 90 percent of its revenue involved out of network claims that wouldn’t be affected. debra margraf, a trustee for a union health plan covering about 1,500 phoenix area electricians, was stunned when she and her colleagues asked cigna what they had paid for “cost containment” services. the answer: the fees had risen from just over $550,000 in 2016 to $2.6 million in 2019, according to a lawsuit the trustees filed. “it’s very frustrating to go out and have someone pitch us that they’re going to save us money and then end up lining their pockets,” ms. margraf said. cigna did not respond to questions from the times about specific employer plans. other employers have also questioned increased fees and complained about being kept in the dark. a unitedhealthcare account executive emailed colleagues for help explaining the $50,650 fee charged to new england motor freight. the fee grew out of a $152,594 bill, of which just $7,879 was covered. the trucking company “thinks these are a money tree for us in fees and we are milking them,” the account executive wrote. one unitedhealthcare executive suggested a partial refund and an annual cap on fees, but a colleague countered, “we have to be concerned about setting precedent.” the way the fees were calculated was particularly galling: how could multiplan and insurers tie their own fees to bills they deemed unreasonable? it made no sense, one consultant for the trucking company wrote, to charge a 35 percent fee “if a hospital were to bill $20,000 for a flu shot.” unitedhealthcare did not respond to questions from the times about the trucking company. in a statement, the insurer said it also offers fee arrangements not tied to billed amounts. cigna’s statement defended its fee, saying that “it enables us to administer the program, negotiate with providers and absorb the long term risk associated with any challenging negotiation.” even verifying the accuracy of fees was difficult when unitedhealthcare initially refused to provide the trucking company with the full underlying data. cigna refused a similar request from auditors for arlington county, va., which it had charged $261,000 in one year. “there is no process for verifying the accuracy of any of these amounts,” the auditors wrote. large employers also have trouble getting data from insurers, said james gelfand, head of the erisa industry committee, which represents big companies with employee benefit plans. cost containment programs can be a “revenue center” for insurers, mr. gelfand said, but are “extremely difficult for employers to police.” patients have limited recourse. if they want to sue, they usually must first complete an administrative appeals process; even then, they stand to collect relatively modest amounts. regulators are unlikely to step in. self funded employer plans are largely exempt from state oversight. and federal regulators have limited resources and legal authority to police them. even when patients figured out where to direct complaints   the employee benefits security administration   they described the process as draining and mostly fruitless. patti sietz honig, a video editor at fox 5 in new york, filed a complaint in 2022. the cost of seeing a specialist for chronic back pain had spiked, and she faced roughly $60,000 in bills. ms. sietz honig pressed for updates about her complaint and sent articles critical of multiplan from capitol forum, a site focused on antitrust and regulatory news. last march, the agency emailed her that her employer and her insurer, aetna, had agreed to a “temporary exception” and made additional payments. “unfortunately,” the agency wrote, the law “does not prohibit the use of third party vendors” to calculate payments. meanwhile, her longtime pain specialist started requiring payment upfront. to save money, ms. sietz honig spaced out her appointments. “i’ve been in a lot of pain lately,” she said, “so i’ve been going   and paying.” as multiplan became deeply embedded with major insurers, it pitched new tools and techniques that yielded even higher fees, and in some instances told insurers what unnamed competitors were doing, documents and interviews show. after meeting in 2019 with a multiplan executive, a unitedhealthcare senior vice president wrote in an internal email that other insurers were using multiplan’s aggressive pricing options more broadly, and that unitedhealthcare could catch up. “dale did not specifically name competitors but from what he did say we were able to glean who was who,” the executive, lisa mcdonnel, wrote, referring to dale white, then an executive vice president at multiplan. she described how cigna, aetna and some blue cross blue shield plans were apparently using multiplan. in recent years, multiplan’s top revenue generator has been an algorithm based tool called data isight that consistently produces the lowest payment recommendations. some insurers have used it as part of strategy multiplan calls “target pricing” or “meet or beat”: insurers set a maximum price they will pay, and multiplan collects a fee only if its recommendation is lower. in theory, many of multiplan’s recommendations are negotiable. but documents and interviews revealed tactics meant to pressure medical practices to accept low payments. some offers came with all caps admonitions and deadlines just hours away. accept and receive prompt payment; refuse and risk an even lower payout. practices and billing specialists said this often wasn’t an empty threat. “it’s not a real negotiation,” said tammie farkas, who handles billing for her husband’s small new york area practice focused on repairing blood vessels in the brain. insurers can set negotiation parameters for multiplan, including not negotiating at all, records and interviews show. multiple providers and billing specialists said that in recent years they had increasingly been told their claims weren’t eligible for negotiation. “it wasn’t this bad before,” said tiffany letosky, who oversees a small practice specializing in surgeries for endometriosis and gynecologic cancers. former multiplan negotiators said their bonuses had been linked to their success at reducing payments, incentivizing a hard line approach. ms. young, the former negotiator critical of the process, said she had occasionally called a provider from a cellphone   knowing that her work line was recorded   and advised against accepting her own offer. another former negotiator said the pressure to get bigger discounts had made her physically ill. “it was just a game,” she said. “it’s sad.” jennifer pittinger, also a former negotiator, said she saw nothing wrong with the hard driving approach because she believed she was combating overbilling. “i was a bit of a viper,” she said. “sometimes i just wanted to go in as hard as i could because my bonus is affected. if i can get a provider to accept 50 percent off, that’s great for me.” but tools rolled out to combat price gouging hospitals and private equity profiteers, the times found, have also been directed at people like ms. toney, the therapist in rural virginia who treats children with autism. she charges the rates that virginia pays for people on medicaid. but last year, she said, meritain health, an aetna subsidiary, informed her that fair payment for her services was less than half what medicaid paid, based on calculations by multiplan. ms. toney has not billed the parents of her two patients covered by meritain, but going forward she will not accept patients with similar insurance. “it puts me in a tough position,” she said. “do i want to pay myself a salary or be able to help people?” related articles: major u.s. health insurers report big profits, benefitting from the pandemic health insurers set to expand offerings under the aca most major health insurers to continue preventive care services insurers paying close attention to obesity drugs as demand rises senators call for investigation of health insurers’ role in driving up drug costs are you retail agent looking for a quote? connecting people with insurance problems to people with insurance solutions

debt.org wants to help those in debt understand their finances and equip themselves with the tools to manage debt. our information is available for free, however the services that appear on this site are provided by companies who may pay us a marketing fee when you click or sign up. these companies may impact how and where the services appear on the page, but do not affect our editorial decisions, recommendations, or advice. here is a list of our service providers. medical debt collection occurs when an overdue medical bill is sent to a debt collection agency. though there are ways to deal with the situation, the stress caused by hearing from collections can be significant. home > medical debt relief > medical bills and collections medical debt collection occurs when an overdue medical bill is sent to a debt collection agency. though there are ways to deal with the situation, the stress caused by hearing from a debt collector can be significant. hefty medical bills can be a staggering burden for consumers. only the best health insurance policies cover all costs, leaving people who don’t have access to those top policies wondering where they will find the money to pay what the insurance company won’t. and there are eye opening numbers of those people. as recently as two years ago, 43 million people had unpaid medical bills on their credit reports. a september 2023 study by the commonwealth fund found that about 40% of u.s. adults (about 100 million people) currently carry medical or dental debt, whether those debts are in collections or not. in fact, medical bills make up about 58% of all debt currently being turned over to collectors, according to the cfpb. making matters worse, medical billing is an inexact science. it’s a complex procedure, and mistakes happen. most are innocent errors, but some meet the standard of fraud. from the consumer’s standpoint (meaning, you!), challenging a bill, especially once it’s in collections, is difficult and aggravating. the situation is dire, nonetheless. the cfpb says medical debt right now is greater than debt from credit cards, personal loans, utilities, and phone bills. no wonder medical debt is the leading cause of bankruptcy in america. learning how the system works and seeking financial help for medical bills might save you from financial ruin. explain your situation to a hospital or health care provider with the hopes of working out a settlement you can afford or reach out to a nonprofit credit counseling agency for help getting out from under your medical debt. many of us pay down our medical bills by making regular payments. this approach may be financially beneficial, but it does not guarantee you will avoid collections. those who think they can get away with paying only a portion of the bill could suddenly find themselves hearing from a collection agency if the debt hasn’t been paid off in an acceptable time frame. same with those who aren’t paying on time. it’s important to talk with the provider or hospital when you can’t pay all of what is due. providers typically will set up a payment plan, but be sure to get it in writing. some hospitals have agreements with certain banks that will spread payments over 2 3 years at no interest, provided payments are made on time. communicating with the provider or a certified debt counselor is key to making payments affordable and avoiding collection agencies. it is a major, major mistake to assume insurance will cover every penny of a major medical expense. with rare exceptions, it doesn’t. study and understand your coverage. ask for an explanation of benefits (eob). make calls to your insurance company before the procedure to be sure you understand what they will pay and what you are expected to pay. the healthcare bluebook is an online service that allows consumers to gauge a fair price on medical procedures where you live. when speaking with a hospital, ask if you qualify for the “financial assistance policy,” also called “charity care.” if your income qualifies you for the program, bills could be reduced significantly   or forgiven completely. nonprofit hospitals are required by law to have these programs in place. even if you don’t qualify, you could try to negotiate the price down. using important terms can help your cause. you might ask if you’re being billed the “chargemaster rate” for a procedure. that is the full cost hospitals use with insurance companies, costs that are frequently reduced. ask the hospital if you can pay the lower rate given to insurance companies or medicare. if you have a long standing relationship with your doctor, try to deal with him or her directly to reduce costs or work out a payment plan. when it comes to hospital costs, ask the billing office to explain all charges. auditing every detail is the best way to protect against honest mistakes or outright fraud. don’t be afraid to challenge unexpected charges; the relatively new “no surprises act “ is on your side when you’ve been staggered by a bill you hadn’t anticipated. medicaid is a federal/state program that helps low income people and families. if you qualify, take advantage of it. finally, some states require hospitals to offer discounts to uninsured patients regardless of income. some hospitals and medical groups have funds set aside for individuals who do not qualify for other types of assistance. carefully read and re read your policy; it’s not easy for any of us, but the more you delve into it, the more you’ll understand. if you think charges that aren’t covered should be, contact your insurance agent. if you are certain you should be reimbursed, or that your doctor or hospital should be paid by your healthcare provider, file an appeal in a timely manner, as most insurers limit the time you have to question a benefit. it often is just 30 or 60 days. be prepared for denials and delays and be careful to keep records of all phone calls and correspondence. that way, if you eventually must file a formal complaint with your state’s insurance commission or contact a consumer law attorney, you have accurate records. be aware: in the end, you may still have to pay the bill. there is some recent good news on this front. as of april 2023, equifax, experian and transunion   the three main credit reporting companies   agreed to remove negative credit marks created by certain medical debts. that is a very good thing, because a single medical debt in collections can harm your credit score by as much as 100 points. a negative mark stays on reports for up to seven years. medical debt under $500 and in collections is excluded from credit reports, and medical debts that have been paid are being removed. in addition, unpaid medical debts only appear on a credit report after a year of being in collections rather than the six month timetable under the previous rules. that gives consumers more time to address the debt. once the last medical collection has been removed from a credit report, a consumer’s credit score improves by an average of 25 points within the first three months, according to analysis by the cfpb. many of these changes resulted in part from no surprises act, which took effect in 2022. we’ll detail how it works a little later. another improvement: the latest tweaks to credit scoring models give less weight to unpaid medical collections than to other kinds of debt collections that appear on credit reports. all told, the recent reporting updates have resulted in the removal of medical debt from the credit histories of about 50% of people whose credit reports previously included it, according to cfpb estimates. even before all those positive recent developments, medical debt was treated differently than other kinds of debt when it comes to its effect on your credit. most health care providers don’t report to the credit bureaus, so overdue medical payments usually aren’t a factor at all on your credit rating unless you’ve taken no action to resolve the debt and the bill has been sent to a collection agency. the credit scores most at risk of being hurt, then, belong to people with large, unpaid medical debt who have trouble appeasing the collection agency, and there are still plenty of people in that situation. the peterson center on healthcare and kff estimated early in 2023 that over 3 million people owe over $10,000 in medical debts. if you’re having an issue, try to take care of your medical debt as soon as you receive the bill. contact your service provider or a debt specialist with any questions and resolve the matter as quickly as possible. if you are worried that medical debt is hurting your credit, check your credit report. the law guarantees that you can get one credit report a year from each of the three major credit bureaus. a nonprofit credit counseling agency can assist you in getting those reports and will review them with you to help develop a personalized plan to solve your medical debt. here are deeper looks at the two government initiatives we just mentioned, one involving direct billing from hospitals and medical providers, and the other involving the role of collection agencies. in 2020, npr ran a monthly series on surprise and expensive medical bills, and what it took to lower them. its story told of a colorado man who needed an appendectomy, then had a follow up surgery for a blood clot. his initial hospital bill was $80,232   and he did not have health insurance. after a protracted period that included filing a grievance and months of phone calls, the hospital reduced the bill to $22,304. that kind of predicament caught the attention of congress. led by republican bill cassidy from louisiana and democrat maggie hassan from new hampshire, the senate health, education, labor and pensions (help) committee introduced the no surprises act (nsa) to protect people against unexpected gaps in insurance coverage and “surprise medical bills” when patients unknowingly obtain medical services from physicians and other providers outside their health insurance network. the nsa took effect on jan. 1, 2022. even if you are uninsured, the nsa, along with similar laws passed by many states, often makes it possible to get an up front, good faith cost estimate before the treatment is provided. whether you’re insured or not, the nsa makes it easier to dispute unexpected charges on medical bills. it has played a major role in alleviating unlawful medical debt collections. in september 2023 in conjunction with the biden administration, cfpb director rohit chopra announced a couple of new rule proposals aimed at stopping efforts by hospitals and other medical providers from using credit reporting to pressure patients into paying charges they can’t afford or that don’t reflect the actual treatment they received. in the announcement, chopra acknowledged the recent voluntary moves by the three major credit bureaus to reduce the number of bills on consumers’ credit reports, but he pointed out that many creditors still use older reporting models that haven’t adopted those changes. the cfpb proposal would make the changes mandatory. in many cases, chopra said, bills that have been turned over to collection agencies don’t match the records from the healthcare providers’ billing or don’t include updates involving insurance adjustments or financial assistance. “together, the two parts of the proposals we are outlining today would ensure that credit decisions are based on someone’s ability to repay a debt, not their ability to file disputes and navigate red tape,” chopra said. “this will provide peace of mind to millions of americans who won’t be forced to battle errors and junk data on their credit report when they get sick.” the proposed regulations aren’t in effect yet, and their future won’t be decided until sometime in 2024 at the earliest. they are expected to be opposed by the hospital industry. the goal, as with any kind of debt, should be to keep the collection agencies from darkening your doorway, or your telephone, or your mailbox about your overdue medical bills. even with the recent modifications to the credit reporting system that give consumers some protection for their credit rating, you want to avoid collections. you do that by being pro active, by treating your medical bills the way you do (or should) any other debt: honestly and responsibly. here are some steps you can take to get control of the medical bills that are giving you trouble. there are other considerations to explore as well when the medical bills begin to drag you down. the possibility of settling medical debt for less than what is owed is there for the taking. it involves some work, but a nonprofit credit counselor, an experienced debt specialist or a professional debt settlement firm can help. settling a medical debt is done in similar ways to settling any other debt. you or someone working on your behalf contacts the doctor, hospital, or collection agency to negotiate an agreed on amount for both parties. experts advise starting this settlement process as soon as possible, preferably before the debt is turned over to a collection company. don’t be scared dealing with collection agencies. an honest and confident approach that works for everyone can lead to a negotiated agreement to pay the collections. if you have a verifiable hardship, such as a disability that prevents you from working, you may be able to seek medical bill forgiveness. in this case, you petition the provider to forgive the debt entirely. your provider will want to see proof in the form of tax returns and written documentation that shows you have no means to pay your medical bills. you can also apply to nonprofit organizations such as the pan foundation and cancercare for help with your medical bills. as we mentioned earlier, a medical credit card might be worth looking into. it can be used to pay medical bills, including dentists and eye doctors, at deferred interest, meaning if you pay the debt in an agreed on timeframe, no interest will be charged. the catch: if you don’t make the payments on time, you’ll have to pay the interest retroactive to when you first made a payment. but remember: using a normal credit card for medical debt is the last resort of last resorts. credit cards charge high interest rates. medical debts rarely charge any interest. also, once the debt is transferred from medical to credit card, the protections afforded consumers for medical debts are wiped out. the debt becomes solely credit card debt. medical debt transferred to a credit card looks like “regular” debt to creditors. try to work out a payment plan with the creditor instead of using a credit card. only use credit cards to consolidate medical debt if you can’t pay the credit card bills promptly. if you can’t, first discuss whether the medical provider might offer an interest free payment plan, which would be more manageable than a credit card debt that accrues interest. one option to consider when others have been exhausted is a personal loan that could be used to pay medical debt. personal loans could consolidate medical expenses into one loan, which eases payments and could lower interest rates. these loans could be helpful for large amounts of debt. a nonprofit credit counselor can help find the right approach that fits your personal situation. some credit card companies will offer a special 0% interest rate to those who have great credit, and/or are new to the credit card company. typically, 0% interest has the same major catch as the medical credit cards: the interest only remains at zero provided you pay off all the debt in a certain timeframe, be it 12 or 24 months. if you don’t, the interest not only is added to the payment, it is added (accelerated) to all previous payments. not paying the entire amount on time becomes punitive. if you do sign up for zero interest, be sure to understand the terms and be aware of the timeframe for paying the debt. we’ve already suggested the benefit of having an advocate to guide you through the process. different kinds of advocates can help on both the front and back ends of your treatment experience. on the back end, medical bill advocates are people who understand the medical delivery system, and they can explain it to you and negotiate for you. if you are overwhelmed with the complexity of the system or simply don’t have time to unpack your medical bills or proposed charges, advocates can help you review, analyze and appeal bills, saving you time and probably money. on the front end, patient advocates often focus on procedures you are contemplating or currently undergoing. if you have already received a medical bill and need help with unmanageable costs, you might want to hire a billing advocate. if you received treatment at a hospital, ask if the institution has advocates on staff. if not, consider hiring one that you know will put your interests first. advocates can save you hundreds, or even thousands, of dollars, although they often charge a fee. some work for an hourly rate; others charge a percentage of the money they save you. it’s usually 25% 35%, though some charge less. you can find one by contacting the national association of healthcare advocacy consultants or the alliance of claims assistance professionals. some churches and nonprofit organizations also provide advocacy assistance, or you might have a relative with knowledge of healthcare who can help you at little or no cost. ok, so let’s say you’re among that group of people whose credit rating hasn’t been saved by the no surprises act or the recent relaxed rules on reporting medical debt to the credit bureaus. your medical bills have been sent to collections and your credit score has suffered as a result. can you recover? the answer is yes, though as you might expect, the steps you take to improve your credit score in the wake of medical collections aren’t necessarily easy and won’t show results as quickly as you’d like. they are, however, very much worth taking. here’s a sobering truth: medical debt can affect more than your credit rating. the sycamore institute, an independent nonpartisan public policy research center, found that people struggling with medical debt are more likely to experience high blood pressure, poorer mental health, and a shorter life expectancy, among other things. in many cases, it turns into a nasty downward spiral; overdue bills from previous medical needs can be the cause of further medical expenses. that’s a must to avoid if you can. better to explore your options sooner rather than later to get the medical debt relief you need when you can’t keep up with your doctor and hospital bills, especially when those bills are headed to, or are already in, collections. one of those options is a medical debt consolidation loan. yes, the loan is a new financial obligation that must be paid off, but it allows you to combine your multiple medical debts into a single account. you make one monthly payment on the loan instead of a fistful of payments to the doctors, the different hospital departments that provided the services you received during your treatment, or the various collection agencies harassing you about unpaid bills. among the advantages of medical debt consolidation, as opposed to consolidating credit card debt, is the flexibility in the loan terms you might get. because the loan can only be applied to medical debts and because there usually is no interest attached to medical debt, a lender can work with you on repayment conditions or even how much you’ll need to repay. you might find a medical consolidation loan that takes into consideration your specific needs such as housing, food and transportation. banks, credit unions and online lenders are the best options for finding a medical debt consolidation loan that works for you. another benefit: if you keep up the regular payments on a medical debt consolidation loan, it can help revitalize your credit score. a nonprofit credit counseling agency can advise you about the best debt help for medical debt, including your medical debt consolidation options based on your income and indebtedness level. a credit counselor might also discuss the viability of a debt management program that can address your credit card debts along with your medical debt. 16 minute read about the author michael knisley was an assistant professor on the faculty at the prestigious university of missouri school of journalism and has more than 40 years of experience editing and writing about business, sports and the spectrum of issues affecting consumers and fans. during his career, michael has won awards from the new york press club, the online news association, the military reporters and editors association, the associated press sports editors and the sports emmys. home understand your debt manage your debt debt advice blog debt consolidation free consultation about us privacy policy terms & conditions join our mailing list for monthly tips on ways to manage your finances! join debt.org on facebook © 2012 2025 debt.org llc. all rights reserved we use technologies like cookies to store and/or access device information. we do this to improve browsing experience and to show (non ) personalized ads. we also share information about your use of our website with our analytics and marketing partners. consenting to these technologies will allow us to process data such as browsing behavior or unique ids on this site. not consenting or withdrawing consent, may adversely affect certain features and functions.

the independent source for health policy research, polling, and news. the independent source for health policy research, polling, and news. elizabeth williams, anna mudumala, robin rudowitz, and alice burns published: jan 29, 2025 medicaid represents nearly $1 out of every $5 spent on health care in the u.s. and is the major source of financing for states to provide health coverage and long term care for low income residents. medicaid is administered by states within broad federal rules and jointly funded by states and the federal government through a federal matching program with no cap. with donald trump returning to the presidency and republican control of the senate and house, discussions are ramping up about major cuts to federal spending, including federal medicaid spending, through a new government efficiency initiative and to help pay for an extension of tax cuts in the 2017 tax cuts and jobs act. restricting federal medicaid spending could leave states with tough choices about whether to offset reductions with state dollars, limit medicaid utilization or benefits, or reduce coverage. amid uncertainty for medicaid financing at the federal level, states have also reported uncertainty regarding post unwinding medicaid spending and enrollment trends and recent shifts in state fiscal conditions. this brief examines the following key questions ahead of potential proposals to change medicaid financing: medicaid financing is shared by states and the federal government with a guarantee to states for federal matching payments with no pre set limit. the percentage of costs paid by the federal government (known as the federal medical assistance percentage or “fmap”) varies across states, for specific services and types of enrollees, and depending on whether the costs are for medical care or program administration. the match rate has also been temporarily adjusted during economic downturns and most recently during the covid 19 pandemic. the fmap for services used by people eligible through traditional medicaid, which includes individuals who are eligible as children, low income parents, because of disability, or because of age (65+), is determined by a formula set in statute. the formula is designed so that the federal government provides a match rate of at least 50% and provides a higher match rate for states with lower average per capita income. the resulting fmap varies by state and ranged from 50% (the fmap “floor”) in ten states (california, colorado, connecticut, maryland, massachusetts, new hampshire, new jersey, new york, washington, and wyoming) to 77% in mississippi for federal fiscal year (ffy) 2026 (figure 1). to participate in medicaid and receive federal matching dollars, states must meet core federal requirements. states must provide certain mandatory benefits (e.g., hospital, physician, and nursing home services) to core populations (e.g., low income pregnant women, children, people with disabilities, and people ages 65 and older) without waiting lists or enrollment caps. states may also receive federal matching funds to cover “optional” services (e.g., adult dental care and home care, also known as home and community based services) or “optional” groups (e.g. people with income above the limits established for core populations). states also have discretion to determine how to purchase covered services (e.g., through fee for service or capitated managed care arrangements) and to establish provider payment methods and rates. medicaid also provides “disproportionate share hospital” (dsh) payments to hospitals that serve a large number of medicaid and low income uninsured patients to offset uncompensated care costs. dsh payments totaled over $17 billion in ffy 2023. federal dsh spending is capped for each state and facility but within those limits, states have considerable discretion in determining the amount of dsh payments to each dsh hospital. the affordable care act (aca) called for a reduction in federal dsh allotments starting in ffy 2014 based on the assumption of reduced rates of uninsurance, but the cuts have been delayed several times (most recently delayed until april 1, 2025). dsh is one type of a broader set of “supplemental” payments that states make to supplement medicaid “base” payment rates that often do not fully cover provider costs; unlike other supplemental payments, dsh payments can also be used to pay for unpaid costs of care for the uninsured. there are special match rates for the aca expansion group, administration, and other services. while the traditional fmap applies to the vast majority of medicaid spending, there are a few exceptions that provide higher match rates for specific services or populations, such as family planning and most notably people covered under the aca medicaid expansion. states that have implemented the expansion currently receive a 90% fmap for adults covered through the aca medicaid expansion. states that had not adopted the expansion as of 2021 when the american rescue plan act was enacted are eligible for a 5% increase in the state’s traditional fmap for two years if they implement the expansion. administrative costs incurred by states are usually matched by the federal government at a 50% rate, but some functions such as eligibility and enrollment systems receive higher match rates. medicaid administrative costs are less than 4% of total medicaid spending. unlike in the 50 states and d.c., annual federal funding for medicaid in the u.s. territories is subject to a statutory cap and fixed matching rate. once a territory exhausts its capped federal funds, it no longer receives federal financial support for its medicaid program during that fiscal year. over time, congress has provided increases in federal funds for the territories broadly and in response to specific emergency events. various pieces of legislation during the pandemic significantly increased the allotments for each of the territories and also raised the fmap rates from the statutory level of 55% to 76% for puerto rico and 83% for the other territories. the 2023 consolidated appropriations act extended the 76% fmap for puerto rico through ffy 2027 and made the 83% match rate for other territories permanent. both the federal government and states are responsible for promoting program integrity. program integrity broadly refers to the proper management and function of the medicaid program to ensure it is providing quality and efficient care while using funds taxpayer dollars appropriately, with minimal waste. improper payment reports in recent years have highlighted program integrity issues, and both the previous trump administration and the biden administration worked to advance program integrity, though through different means. improper payments, which are often cited when discussing program integrity, are payments that do not meet centers for medicare and medicaid services (cms) program requirements (they can be overpayments, underpayments, or payments with insufficient information to determine whether the payment was proper). improper payments are not the same as criminal activities like fraud and abuse, which may be a subset of improper payments. cms estimated the overall medicaid improper payment rate was about 5% in 2024, the lowest rate since the covid 19 pandemic began due, in part, to flexibilities granted during that time. most improper payments (79%) were due to insufficient information (or missing administrative steps), not necessarily due to payments for ineligible enrollees, providers, or services (i.e., since they may have been payable if the missing information had been on the claim and/or the state had complied with requirements). the improper payment estimation process is not designed to detect or measure fraud. program integrity efforts focused on areas identified as major contributors of improper payments, such as monitoring provider screening and enrollment for noncompliance, likely yield greater returns than focusing on reducing errors in eligibility determinations that could make it more difficult for eligible people to obtain and maintain coverage. capitated payments to medicaid managed care organizations (mcos) accounted for more than half of medicaid spending in ffy 2023 (figure 2). managed care and health plans accounted for the largest share (55%) of medicaid spending, with capitated payments to comprehensive mcos accounting for 52% of medicaid spending in ffy 2023 and other medicaid managed care (e.g., primary care case management (pccm) arrangements or payments to specialty plans) accounting for another 3%. smaller shares of total medicaid spending in ffy 2023 were for fee for service acute care (21%), fee for service long term care (19%), medicaid spending for medicare premiums on behalf of enrollees who also have medicare (3%), and dsh payments (2%). enrollees eligible based on disability or age (65+) comprise 23% of all enrollees but account for over half of total spending due to higher per person costs (figure 3). children account for 34% of enrollees but only 14% of spending. adult enrollees (those made eligible under the aca medicaid expansion, as well as low income parents) account for 43% of all enrollees and 34% of spending. the disproportionate spending on certain eligibility groups stems from variation in spending per enrollee across the eligibility groups, reflecting differences in health care needs and utilization. spending per enrollee for individuals eligible based on age (65+) and disability, the two groups with the highest per enrollee costs, is approximately six times higher than spending per enrollee for children, who had the lowest spending of any eligibility group. those eligible on the basis of age or disability tend to have higher rates of chronic conditions, more complex health care needs and are more likely to utilize long term care than other enrollees, contributing to higher spending. total spending per full benefit enrollee ranged from a low of $3,563 in tennessee to $12,008 in the district of columbia in 2021 (figure 4). variation in spending across the states reflects considerable flexibility for states to design and administer their own programs   including what benefits are covered and how much providers are paid   and variation in the health and population characteristics of state residents. within each state, there is also substantial variation in the average costs for each eligibility group and within each eligibility group, per enrollee costs may vary significantly. overall, medicaid spending has experienced slower cumulative growth since 2008 compared to medicare and private insurance on a per enrollee basis. overall, medicaid spending totaled $880 billion in ffy 2023 with the federal government paying 69% ($606 billion) and states paying 31% ($274 billion). this share is slightly higher than historic shares due to the enhanced pandemic match rate, but there is variation across states (figure 5). the combination of low per capita income and adopting the aca expansion are both factors in determining the overall share of federal spending on medicaid. while the federal share of medicaid spending varies across states, so does the total amount of federal medicaid dollars coming into the state. states with the largest populations (california, new york, texas, pennsylvania, ohio) receive the most federal medicaid funding. social security, medicare, and medicaid are the three main entitlement programs and accounted for 41% of all federal outlays in ffy 2024 (figure 6). of these three programs, medicaid is smallest in terms of federal outlays, though it covers a larger number of people than medicare or social security. overall, federal spending on domestic and global health programs and services accounted for more than one fourth of net federal outlays in ffy 2024, including spending on medicare (12%), medicaid and chip (8%), and other health spending (6%). it is expected that in 2025, the new congress and administration will leverage reconciliation to make major reductions in spending which can offset some of the costs of extending the expiring tax cuts. budget reconciliation is a special legislative process used to make changes to taxes and mandatory spending that allows the senate to pass legislation with only 50 votes rather than the customary 60 votes. to begin the reconciliation process, congress must develop a budget resolution, which establishes spending levels including any large deficit or spending reduction targets. with president elect trump taking substantial cuts to medicare and social security off the table, there will be significant pressure to reduce spending on medicaid. medicaid is a spending item and at the same time the largest source of federal revenues for state budgets. as a result of the federal matching structure, medicaid has a unique role in state budgets as both an expenditure item and a source of federal revenue for states. according to data from the national association of state budget officers (nasbo), in state fiscal year (sfy) 2023, medicaid accounted for 30% of total state spending for all items in the budget (figure 7). medicaid accounted for only 15% of expenditures from state funds (including state general funds and other state funds), second to k 12 education (23%). on the other hand, medicaid accounted for 57% of all expenditures from federal funds. states have an incentive to control medicaid spending because they pay a share of medicaid costs. at the same time, research shows that federal matching dollars from medicaid spending have positive effects for state economies. a number of studies show that states that have adopted the aca medicaid expansion have realized budget savings, revenue gains, overall economic growth as well as observed positive effects on the finances of hospitals and other health care providers. states can use provider taxes and igts (intergovernmental transfers) to help finance the state share of medicaid. states have flexibility in determining how to finance the non federal share of state medicaid payments, within certain limits. in addition to state general funds appropriated directly to the medicaid program, most states use funding from local governments or revenue collected from provider taxes and fees to help finance the state share of medicaid. while data are limited, the government accountability office (gao) estimated that provider taxes accounted for approximately 17% of the non federal share of total medicaid payments in sfy 2018 though the share varies by state. all states (except alaska) have at least one provider tax in place and many states have more than three (figure 8). the most common provider taxes are on nursing facilities (46 states) and hospitals (45 states). as of july 1, 2024, 48 states including dc also reported at least one provider tax that is above 3.5% of net patient revenues, and 38 states including dc also reported at least one provider tax that is above 5.5%, which is close to the maximum federal safe harbor or allowable threshold of 6%. provider taxes and funds from local governments are often used by states to help finance dsh payments, non dsh supplemental payments like upper payment limit (upl) payments, and mco state directed payments (uniform payment increases through managed care that are similar to supplemental payments). new medicaid managed care rules finalized in 2024 permit states to pay hospitals and nursing facilities at the average commercial payment rate (acr) when using directed payments, contributing to expected increases in federal medicaid spending projections. medicaid enrollment and spending typically increase during recessions. medicaid is a counter cyclical program, meaning that more people become eligible and enroll during economic downturns. at the same time, states typically may face declines in revenues that make it difficult to finance the state share of funding for the program. as in past economic downturns, congress enacted legislation during the recent pandemic induced recession that temporarily increased the federal share of medicaid spending to help states maintain their medicaid programs. in exchange, states were required to keep individuals continuously enrolled in medicaid, contributing to historic growth in medicaid enrollment. high enrollment growth rates, tied first to the great recession, then aca implementation, and later the pandemic, were the primary drivers of total medicaid spending growth over the last decade (figure 9). the continuous enrollment provision ended on march 31, 2023, and medicaid enrollment growth has since declined and total spending growth has slowed. medicaid spending is also driven by other external factors and policy choices. other external factors can include state fiscal conditions and the costs of providing health services and long term care. in kff’s latest annual budget survey, states reported inflation and workforce shortages were driving higher labor costs, resulting in pressure to increase provider rates. state policy choices include changes to eligibility, benefits, or provider reimbursement as well as delivery system reforms. recent eligibility changes include the adoption of the aca medicaid expansion in seven states since 2020 as well as other expansions for children. kff’s annual budget survey also found many states were implementing benefit enhancements, particularly for mental health and/or substance use disorder services, as well as authorizing a wide range of provider rate increases, particularly for direct care workers in nursing facilities and those providing home care to help address workforce shortages. kff headquarters: 185 berry st., suite 2000, san francisco, ca 94107 | phone 650 854 9400 washington offices and barbara jordan conference center: 1330 g street, nw, washington, dc 20005 | phone 202 347 5270 www.kff.org | email alerts: kff.org/email | facebook.com/kff | twitter.com/kff the independent source for health policy research, polling, and news, kff is a nonprofit organization based in san francisco, california.

by the new york times | may 29, 2024 subscription required physicians are in short supply. they are costly. is the app the answer to the cmo's workforce and budget challenges? ... amid the hype and promise, a growing tension is becoming clear: the reality of what ai can deliver versus what it can't. ...

an official website of the united states government fac number: 2025 03 effective date: 01/17/2025 52.000 scope of part. subpart 52.1   instructions for using provisions and clauses 52.100 scope of subpart. 52.101 using part 52. 52.102 incorporating provisions and clauses. 52.103 identification of provisions and clauses. 52.104 procedures for modifying and completing provisions and clauses. 52.105 procedures for using alternates. 52.106 [reserved] 52.107 provisions and clauses prescribed in subpart 52.1. subpart 52.2   text of provisions and clauses 52.200 scope of subpart. 52.201 [reserved] 52.201 1 acquisition 360: voluntary survey. 52.202 [reserved] 52.202 1 definitions. 52.203 [reserved] 52.203 1 [reserved] 52.203 2 certificate of independent price determination. 52.203 3 gratuities. 52.203 4 [reserved] 52.203 5 covenant against contingent fees. 52.203 6 restrictions on subcontractor sales to the government. 52.203 7 anti kickback procedures. 52.203 8 cancellation, rescission, and recovery of funds for illegal or improper activity. 52.203 9 [reserved] 52.203 10 price or fee adjustment for illegal or improper activity. 52.203 11 certification and disclosure regarding payments to influence certain federal transactions. 52.203 12 limitation on payments to influence certain federal transactions. 52.203 13 contractor code of business ethics and conduct. 52.203 14 display of hotline poster(s). 52.203 15 whistleblower protections under the american recovery and reinvestment act of 2009. 52.203 16 preventing personal conflicts of interest. 52.203 17 contractor employee whistleblower rights. 52.203 18 prohibition on contracting with entities that require certain internal confidentiality agreements or statements representation. 52.203 19 prohibition on requiring certain internal confidentiality agreements or statements. 52.204 [reserved] 52.204 1 approval of contract. 52.204 2 security requirements. 52.204 3 taxpayer identification. 52.204 4 [reserved] 52.204 5 women owned business (other than small business). 52.204 6 unique entity identifier. 52.204 7 system for award management. 52.204 8 annual representations and certifications. 52.204 9 personal identity verification of contractor personnel. 52.204 10 reporting executive compensation and first tier subcontract awards. 52.204 11 [reserved] 52.204 12 unique entity identifier maintenance. 52.204 13 system for award management maintenance. 52.204 14 service contract reporting requirements. 52.204 15 service contract reporting requirements for indefinite delivery contracts. 52.204 16 commercial and government entity code reporting. 52.204 17 ownership or control of offeror. 52.204 18 commercial and government entity code maintenance. 52.204 19 incorporation by reference of representations and certifications. 52.204 20 predecessor of offeror. 52.204 21 basic safeguarding of covered contractor information systems. 52.204 22 alternative line item proposal. 52.204 23 prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities. 52.204 24 representation regarding certain telecommunications and video surveillance services or equipment. 52.204 25 prohibition on contracting for certain telecommunications and video surveillance services or equipment. 52.204 26 covered telecommunications equipment or services representation. 52.204 27 prohibition on a bytedance covered application. 52.204 28 federal acquisition supply chain security act orders federal supply schedules, governmentwide acquisition contracts, and multi agency contracts. 52.204 29 federal acquisition supply chain security act orders representation and disclosures. 52.204 30 federal acquisition supply chain security act orders prohibition. 52.205 [reserved] 52.206 [reserved] 52.207 [reserved] 52.207 1 notice of standard competition. 52.207 2 notice of streamlined competition. 52.207 3 right of first refusal of employment. 52.207 4 economic purchase quantity supplies. 52.207 5 option to purchase equipment. 52.207 6 solicitation of offers from small business concerns and small business teaming arrangements or joint ventures (multiple award contracts). 52.208 [reserved] 52.208 1 [reserved] 52.208 2 [reserved] 52.208 3 [reserved] 52.208 4 vehicle lease payments. 52.208 5 condition of leased vehicles. 52.208 6 marking of leased vehicles. 52.208 7 tagging of leased vehicles. 52.208 8 [reserved] 52.208 9 contractor use of mandatory sources of supply or services. 52.209 [reserved] 52.209 1 qualification requirements. 52.209 2 prohibition on contracting with inverted domestic corporations representation. 52.209 3 first article approval contractor testing. 52.209 4 first article approval government testing. 52.209 5 certification regarding responsibility matters. 52.209 6 protecting the government's interest when subcontracting with contractors debarred, suspended, proposed for debarment, or voluntarily excluded. 52.209 7 information regarding responsibility matters. 52.209 8 [reserved] 52.209 9 updates of publicly available information regarding responsibility matters. 52.209 10 prohibition on contracting with inverted domestic corporations. 52.209 11 representation by corporations regarding delinquent tax liability or a felony conviction under any federal law. 52.209 12 certification regarding tax matters. 52.209 13 violation of arms control treaties or agreements certification. 52.209 14 reserve officer training corps and military recruiting on campus. 52.210 [reserved] 52.210 1 market research. 52.211 [reserved] 52.211 1 availability of specifications listed in the gsa index of federal specifications, standards and commercial item descriptions, fpmr part 101 29. 52.211 2 availability of defense specifications, standards, and data item descriptions in the acquisition streamlining and standardization information system (assist) website. 52.211 3 availability of specifications not listed in the gsa index of federal specifications, standards and commercial item descriptions. 52.211 4 availability for examination of specifications not listed in the gsa index of federal specifications, standards and commercial item descriptions. 52.211 5 material requirements. 52.211 6 brand name or equal. 52.211 7 alternatives to government unique standards. 52.211 8 time of delivery. 52.211 9 desired and required time of delivery. 52.211 10 commencement, prosecution, and completion of work. 52.211 11 liquidated damages supplies, services, or research and development. 52.211 12 liquidated damages construction. 52.211 13 time extensions. 52.211 14 notice of priority rating for national defense, emergency preparedness, and energy program use. 52.211 15 defense priority and allocation requirements. 52.211 16 variation in quantity. 52.211 17 delivery of excess quantities. 52.211 18 variation in estimated quantity. 52.212 [reserved] 52.212 1 instructions to offerors commercial products and commercial services. 52.212 2 evaluation commercial products and commercial services. 52.212 3 offeror representations and certifications commercial products and commercial services. 52.212 4 contract terms and conditions commercial products and commercial services. 52.212 5 contract terms and conditions required to implement statutes or executive orders commercial products and commercial services. 52.213 [reserved] 52.213 1 fast payment procedure. 52.213 2 invoices. 52.213 3 notice to supplier. 52.213 4 terms and conditions simplified acquisitions (other than commercial products and commercial services). 52.214 [reserved] 52.214 1 [reserved] 52.214 2 [reserved] 52.214 3 amendments to invitations for bids. 52.214 4 false statements in bids. 52.214 5 submission of bids. 52.214 6 explanation to prospective bidders. 52.214 7 late submissions, modifications, and withdrawals of bids. 52.214 8 [reserved] 52.214 9 [reserved] 52.214 10 contract award sealed bidding. 52.214 11 [reserved] 52.214 12 preparation of bids. 52.214 13 [reserved] 52.214 14 place of performance sealed bidding. 52.214 15 period for acceptance of bids. 52.214 16 minimum bid acceptance period. 52.214 17 [reserved] 52.214 18 preparation of bids construction. 52.214 19 contract award sealed bidding construction. 52.214 20 bid samples. 52.214 21 descriptive literature. 52.214 22 evaluation of bids for multiple awards. 52.214 23 late submissions, modifications, revisions, and withdrawals of technical proposals under two step sealed bidding. 52.214 24 multiple technical proposals. 52.214 25 step two of two step sealed bidding. 52.214 26 audit and records sealed bidding. 52.214 27 price reduction for defective certified cost or pricing data modifications sealed bidding. 52.214 28 subcontractor certified cost or pricing data modifications sealed bidding. 52.214 29 order of precedence sealed bidding. 52.214 30 [reserved] 52.214 31 facsimile bids. 52.214 32 [reserved] 52.214 33 [reserved] 52.214 34 submission of offers in the english language. 52.214 35 submission of offers in u.s. currency. 52.215 [reserved] 52.215 1 instructions to offerors competitive acquisition. 52.215 2 audit and records negotiation. 52.215 3 request for information or solicitation for planning purposes. 52.215 4 [reserved] 52.215 5 facsimile proposals. 52.215 6 place of performance. 52.215 7 [reserved] 52.215 8 order of precedence uniform contract format. 52.215 9 changes or additions to make or buy program. 52.215 10 price reduction for defective certified cost or pricing data. 52.215 11 price reduction for defective certified cost or pricing data modifications. 52.215 12 subcontractor certified cost or pricing data. 52.215 13 subcontractor certified cost or pricing data modifications. 52.215 14 integrity of unit prices. 52.215 15 pension adjustments and asset reversions. 52.215 16 facilities capital cost of money. 52.215 17 waiver of facilities capital cost of money. 52.215 18 reversion or adjustment of plans for postretirement benefits (prb) other than pensions. 52.215 19 notification of ownership changes. 52.215 20 requirements for certified cost or pricing data and data other than certified cost or pricing data. 52.215 21 requirements for certified cost or pricing data and data other than certified cost or pricing data modifications. 52.215 22 limitations on pass through charges identification of subcontract effort. 52.215 23 limitations on pass through charges. 52.216 [reserved] 52.216 1 type of contract. 52.216 2 economic price adjustment standard supplies. 52.216 3 economic price adjustment semistandard supplies. 52.216 4 economic price adjustment labor and material. 52.216 5 price redetermination prospective. 52.216 6 price redetermination retroactive. 52.216 7 allowable cost and payment. 52.216 8 fixed fee. 52.216 9 fixed fee construction. 52.216 10 incentive fee. 52.216 11 cost contract no fee. 52.216 12 cost sharing contract no fee. 52.216 13 [reserved] 52.216 14 [reserved] 52.216 15 predetermined indirect cost rates. 52.216 16 incentive price revision firm target. 52.216 17 incentive price revision successive targets. 52.216 18 ordering. 52.216 19 order limitations. 52.216 20 definite quantity. 52.216 21 requirements. 52.216 22 indefinite quantity. 52.216 23 execution and commencement of work. 52.216 24 limitation of government liability. 52.216 25 contract definitization. 52.216 26 payments of allowable costs before definitization. 52.216 27 single or multiple awards. 52.216 28 multiple awards for advisory and assistance services. 52.216 29 time and materials/labor hour proposal requirements other than commercial acquisition with adequate price competition. 52.216 30 time and materials/labor hour proposal requirements other than commercial acquisition without adequate price competition. 52.216 31 time and materials/labor hour proposal requirements commercial acquisition. 52.216 32 task order and delivery order ombudsman. 52.217 [reserved] 52.217 1 [reserved] 52.217 2 cancellation under multi year contracts. 52.217 3 evaluation exclusive of options. 52.217 4 evaluation of options exercised at time of contract award. 52.217 5 evaluation of options. 52.217 6 option for increased quantity. 52.217 7 option for increased quantity separately priced line item. 52.217 8 option to extend services. 52.217 9 option to extend the term of the contract. 52.217 10 reverse auction 52.217 11 reverse auction orders. 52.217 12 reverse auction services. 52.218 [reserved] 52.219 [reserved] 52.219 1 small business program representations. 52.219 2 equal low bids. 52.219 3 notice of hubzone set aside or sole source award. 52.219 4 notice of price evaluation preference for hubzone small business concerns. 52.219 5 [reserved] 52.219 6 notice of total small business set aside. 52.219 7 notice of partial small business set aside. 52.219 8 utilization of small business concerns. 52.219 9 small business subcontracting plan. 52.219 10 incentive subcontracting program. 52.219 11 special 8(a) contract conditions. 52.219 12 special 8(a) subcontract conditions. 52.219 13 notice of set aside of orders. 52.219 14 limitations on subcontracting. 52.219 15 [reserved] 52.219 16 liquidated damages subcontracting plan. 52.219 17 section 8(a) award. 52.219 18 notification of competition limited to eligible 8(a) participants. 52.219 19 [reserved] 52.219 20 [reserved] 52.219 21 [reserved] 52.219 22 [reserved] 52.219 23 [reserved] 52.219 24 [reserved] 52.219 25 [reserved] 52.219 26 [reserved] 52.219 27 notice of set aside for, or sole source award to, service disabled veteran owned small business (sdvosb) concerns eligible under the sdvosb program. 52.219 28 postaward small business program rerepresentation. 52.219 29 notice of set aside for, or sole source award to, economically disadvantaged women owned small business concerns. 52.219 30 notice of set aside for, or sole source award to, women owned small business concerns eligible under the women owned small business program. 52.219 31 notice of small business reserve. 52.219 32 orders issued directly under small business reserves 52.219 33 nonmanufacturer rule. 52.220 [reserved] 52.221 [reserved] 52.222 [reserved] 52.222 1 notice to the government of labor disputes. 52.222 2 payment for overtime premiums. 52.222 3 convict labor. 52.222 4 contract work hours and safety standards  overtime compensation. 52.222 5 construction wage rate requirements secondary site of the work. 52.222 6 construction wage rate requirements. 52.222 7 withholding of funds. 52.222 8 payrolls and basic records. 52.222 9 apprentices and trainees. 52.222 10 compliance with copeland act requirements. 52.222 11 subcontracts (labor standards). 52.222 12 contract termination debarment. 52.222 13 compliance with construction wage rate requirements and related regulations. 52.222 14 disputes concerning labor standards. 52.222 15 certification of eligibility. 52.222 16 approval of wage rates. 52.222 17 [reserved] 52.222 18 certification regarding knowledge of child labor for listed end products. 52.222 19 child labor cooperation with authorities and remedies. 52.222 20 contracts for materials, supplies, articles, and equipment. 52.222 21 prohibition of segregated facilities. 52.222 22 previous contracts and compliance reports. 52.222 23 notice of requirement for affirmative action to ensure equal employment opportunity for construction. 52.222 24 preaward on site equal opportunity compliance evaluation. 52.222 25 affirmative action compliance. 52.222 26 equal opportunity. 52.222 27 affirmative action compliance requirements for construction. 52.222 28 [reserved] 52.222 29 notification of visa denial. 52.222 30 construction wage rate requirements price adjustment (none or separately specified method). 52.222 31 construction wage rate requirements price adjustment (percentage method). 52.222 32 construction wage rate requirements price adjustment (actual method). 52.222 33 notice of requirement for project labor agreement. 52.222 34 project labor agreement. 52.222 35 equal opportunity for veterans. 52.222 36 equal opportunity for workers with disabilities. 52.222 37 employment reports on veterans. 52.222 38 compliance with veterans’ employment reporting requirements. 52.222 39 [reserved] 52.222 40 notification of employee rights under the national labor relations act. 52.222 41 service contract labor standards. 52.222 42 statement of equivalent rates for federal hires. 52.222 43 fair labor standards act and service contract labor standards price adjustment (multiple year and option contracts). 52.222 44 fair labor standards act and service contract labor standards price adjustment. 52.222 45 [reserved] 52.222 46 evaluation of compensation for professional employees. 52.222 47 [reserved] 52.222 48 exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment certification. 52.222 49 service contract labor standards place of performance unknown. 52.222 50 combating trafficking in persons. 52.222 51 exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements. 52.222 52 exemption from application of the service contract labor standards to contracts for certain services certification. 52.222 53 exemption from application of the service contract labor standards to contracts for certain services requirements. 52.222 54 employment eligibility verification. 52.222 55 minimum wages for contractor workers under executive order 14026. 52.222 56 certification regarding trafficking in persons compliance plan. 52.222 57 [reserved]. 52.222 58 [reserved]. 52.222 59 [reserved]. 52.222 60 [reserved]. 52.222 61 [reserved]. 52.222 62 paid sick leave under executive order 13706. 52.223 [reserved] 52.223 1 biobased product certification. 52.223 2 reporting of biobased products under service and construction contracts. 52.223 3 hazardous material identification and material safety data. 52.223 4 recovered material certification. 52.223 5 pollution prevention and right to know information. 52.223 6 [reserved] 52.223 7 notice of radioactive materials. 52.223 8 [reserved] 52.223 9 estimate of percentage of recovered material content for epa designated items. 52.223 10 waste reduction program. 52.223 11 ozone depleting substances and high global warming potential hydrofluorocarbons. 52.223 12 maintenance, service, repair, or disposal of refrigeration equipment and air conditioners. 52.223 13 [reserved] 52.223 14 [reserved] 52.223 15 [reserved] 52.223 16 [reserved] 52.223 17 [reserved] 52.223 18 [reserved] 52.223 19 compliance with environmental management systems. 52.223 20 aerosols. 52.223 21 foams. 52.223 22 public disclosure of greenhouse gas emissions and reduction goals representation. 52.223 23 sustainable products and services. 52.224 [reserved] 52.224 1 privacy act notification. 52.224 2 privacy act. 52.224 3 privacy training. 52.225 [reserved] 52.225 1 buy american supplies 52.225 2 buy american certificate. 52.225 3 buy american free trade agreements israeli trade act. 52.225 4 buy american free trade agreements israeli trade act certificate. 52.225 5 trade agreements. 52.225 6 trade agreements certificate. 52.225 7 waiver of buy american statute for civil aircraft and related articles. 52.225 8 duty free entry. 52.225 9 buy american construction materials. 52.225 10 notice of buy american requirement construction materials. 52.225 11 buy american construction materials under trade agreements. 52.225 12 notice of buy american requirement construction materials under trade agreements. 52.225 13 restrictions on certain foreign purchases. 52.225 14 inconsistency between english version and translation of contract. 52.225 15 [reserved] 52.225 16 [reserved] 52.225 17 evaluation of foreign currency offers. 52.225 18 place of manufacture. 52.225 19 contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the united states. 52.225 20 prohibition on conducting restricted business operations in sudan certification. 52.225 21 required use of american iron, steel, and manufactured goods buy american statute construction materials. 52.225 22 notice of required use of american iron, steel, and manufactured goods buy american statute construction materials. 52.225 23 required use of american iron, steel, and manufactured goods buy american statute construction materials under trade agreements. 52.225 24 notice of required use of american iron, steel, and manufactured goods buy american statute construction materials under trade agreements. 52.225 25 prohibition on contracting with entities engaging in certain activities or transactions relating to iran representation and certifications. 52.225 26 contractors performing private security functions outside the united states. 52.226 [reserved] 52.226 1 utilization of indian organizations and indian owned economic enterprises. 52.226 2 historically black college or university and minority institution representation. 52.226 3 disaster or emergency area representation. 52.226 4 notice of disaster or emergency area set aside. 52.226 5 restrictions on subcontracting outside disaster or emergency area. 52.226 6 promoting excess food donation to nonprofit organizations. 52.226 7 drug free workplace. 52.226 8 encouraging contractor policies to ban text messaging while driving. 52.227 [reserved] 52.227 1 authorization and consent. 52.227 2 notice and assistance regarding patent and copyright infringement. 52.227 3 patent indemnity. 52.227 4 patent indemnity construction contracts. 52.227 5 waiver of indemnity. 52.227 6 royalty information. 52.227 7 patents notice of government licensee. 52.227 8 [reserved] 52.227 9 refund of royalties. 52.227 10 filing of patent applications classified subject matter. 52.227 11 patent rights ownership by the contractor. 52.227 12 [reserved] 52.227 13 patent rights ownership by the government. 52.227 14 rights in data general. 52.227 15 representation of limited rights data and restricted computer software. 52.227 16 additional data requirements. 52.227 17 rights in data special works. 52.227 18 rights in data existing works. 52.227 19 commercial computer software license. 52.227 20 rights in data sbir program. 52.227 21 technical data declaration, revision, and withholding of payment major systems. 52.227 22 major system minimum rights. 52.227 23 rights to proposal data (technical). 52.228 [reserved] 52.228 1 bid guarantee. 52.228 2 additional bond security. 52.228 3 workers’ compensation insurance (defense base act). 52.228 4 workers’ compensation and war hazard insurance overseas. 52.228 5 insurance work on a government installation. 52.228 6 [reserved] 52.228 7 insurance liability to third persons. 52.228 8 liability and insurance leased motor vehicles. 52.228 9 cargo insurance. 52.228 10 vehicular and general public liability insurance. 52.228 11 individual surety pledge of assets. 52.228 12 prospective subcontractor requests for bonds. 52.228 13 alternative payment protections. 52.228 14 irrevocable letter of credit. 52.228 15 performance and payment bonds construction. 52.228 16 performance and payment bonds other than construction. 52.228 17 individual surety pledge of assets (bid guarantee). 52.229 [reserved] 52.229 1 state and local taxes. 52.229 2 north carolina state and local sales and use tax. 52.229 3 federal, state, and local taxes. 52.229 4 federal, state, and local taxes (state and local adjustments). 52.229 5 [reserved] 52.229 6 taxes foreign fixed price contracts. 52.229 7 taxes fixed price contracts with foreign governments. 52.229 8 taxes foreign cost reimbursement contracts. 52.229 9 taxes cost reimbursement contracts with foreign governments. 52.229 10 state of new mexico gross receipts and compensating tax. 52.229 11 tax on certain foreign procurements notice and representation. 52.229 12 tax on certain foreign procurements. 52.229 13 taxes foreign contracts in afghanistan. 52.229 14 taxes foreign contracts in afghanistan (north atlantic treaty organization status of forces agreement). 52.230 [reserved] 52.230 1 cost accounting standards notices and certification. 52.230 2 cost accounting standards. 52.230 3 disclosure and consistency of cost accounting practices. 52.230 4 disclosure and consistency of cost accounting practices foreign concerns. 52.230 5 cost accounting standards educational institution. 52.230 6 administration of cost accounting standards. 52.230 7 proposal disclosure cost accounting practice changes. 52.231 [reserved] 52.232 [reserved] 52.232 1 payments. 52.232 2 payments under fixed price research and development contracts. 52.232 3 payments under personal services contracts. 52.232 4 payments under transportation contracts and transportation related services contracts. 52.232 5 payments under fixed price construction contracts. 52.232 6 payment under communication service contracts with common carriers. 52.232 7 payments under time and materials and labor hour contracts. 52.232 8 discounts for prompt payment. 52.232 9 limitation on withholding of payments. 52.232 10 payments under fixed price architect engineer contracts. 52.232 11 extras. 52.232 12 advance payments. 52.232 13 notice of progress payments. 52.232 14 notice of availability of progress payments exclusively for small business concerns. 52.232 15 progress payments not included. 52.232 16 progress payments. 52.232 17 interest. 52.232 18 availability of funds. 52.232 19 availability of funds for the next fiscal year. 52.232 20 limitation of cost. 52.232 21 [reserved] 52.232 22 limitation of funds. 52.232 23 assignment of claims. 52.232 24 prohibition of assignment of claims. 52.232 25 prompt payment. 52.232 26 prompt payment for fixed price architect engineer contracts. 52.232 27 prompt payment for construction contracts. 52.232 28 invitation to propose performance based payments. 52.232 29 terms for financing of purchases of commercial products and commercial services. 52.232 30 installment payments for commercial products and commercial services. 52.232 31 invitation to propose financing terms. 52.232 32 performance based payments. 52.232 33 payment by electronic funds transfer system for award management. 52.232 34 payment by electronic funds transfer other than system for award management. 52.232 35 designation of office for government receipt of electronic funds transfer information. 52.232 36 payment by third party. 52.232 37 multiple payment arrangements. 52.232 38 submission of electronic funds transfer information with offer. 52.232 39 unenforceability of unauthorized obligations. 52.232 40 providing accelerated payments to small business subcontractors. 52.233 [reserved] 52.233 1 disputes. 52.233 2 service of protest. 52.233 3 protest after award. 52.233 4 applicable law for breach of contract claim. 52.234 [reserved] 52.234 1 industrial resources developed under title iii, defense production act. 52.234 2 notice of earned value management system preaward integrated baseline review. 52.234 3 notice of earned value management system post award postaward integrated baseline review. 52.234 4 earned value management system. 52.235 [reserved] 52.236 [reserved] 52.236 1 performance of work by the contractor. 52.236 2 differing site conditions. 52.236 3 site investigation and conditions affecting the work. 52.236 4 physical data. 52.236 5 material and workmanship. 52.236 6 superintendence by the contractor. 52.236 7 permits and responsibilities. 52.236 8 other contracts. 52.236 9 protection of existing vegetation, structures, equipment, utilities, and improvements. 52.236 10 operations and storage areas. 52.236 11 use and possession prior to completion. 52.236 12 cleaning up. 52.236 13 accident prevention. 52.236 14 availability and use of utility services. 52.236 15 schedules for construction contracts. 52.236 16 quantity surveys. 52.236 17 layout of work. 52.236 18 work oversight in cost reimbursement construction contracts. 52.236 19 organization and direction of the work. 52.236 20 [reserved] 52.236 21 specifications and drawings for construction. 52.236 22 design within funding limitations. 52.236 23 responsibility of the architect engineer contractor. 52.236 24 work oversight in architect engineer contracts. 52.236 25 requirements for registration of designers. 52.236 26 preconstruction conference. 52.236 27 site visit (construction). 52.236 28 preparation of proposals construction. 52.237 [reserved] 52.237 1 site visit. 52.237 2 protection of government buildings, equipment, and vegetation. 52.237 3 continuity of services. 52.237 4 payment by government to contractor. 52.237 5 payment by contractor to government. 52.237 6 incremental payment by contractor to government. 52.237 7 indemnification and medical liability insurance. 52.237 8 restriction on severance payments to foreign nationals. 52.237 9 waiver of limitation on severance payments to foreign nationals. 52.237 10 identification of uncompensated overtime. 52.238 [reserved] 52.239 [reserved] 52.239 1 privacy or security safeguards. 52.240 [reserved] 52.240 1 prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities. 52.241 utility services provisions and clauses. 52.241 1 electric service territory compliance representation. 52.241 2 order of precedence utilities. 52.241 3 scope and duration of contract. 52.241 4 change in class of service. 52.241 5 contractor’s facilities. 52.241 6 service provisions. 52.241 7 change in rates or terms and conditions of service for regulated services. 52.241 8 change in rates or terms and conditions of service for unregulated services. 52.241 9 connection charge. 52.241 10 termination liability. 52.241 11 multiple service locations. 52.241 12 nonrefundable, nonrecurring service charge. 52.241 13 capital credits. 52.242 [reserved] 52.242 1 notice of intent to disallow costs. 52.242 2 production progress reports. 52.242 3 penalties for unallowable costs. 52.242 4 certification of final indirect costs. 52.242 5 payments to small business subcontractors. 52.242 6 [reserved] 52.242 7 [reserved] 52.242 8 [reserved] 52.242 9 [reserved] 52.242 10 [reserved] 52.242 11 [reserved] 52.242 12 [reserved] 52.242 13 bankruptcy. 52.242 14 suspension of work. 52.242 15 stop work order. 52.242 16 [reserved] 52.242 17 government delay of work. 52.243 [reserved] 52.243 1 changes fixed price. 52.243 2 changes cost reimbursement. 52.243 3 changes time and materials or labor hours. 52.243 4 changes. 52.243 5 changes and changed conditions. 52.243 6 change order accounting. 52.243 7 notification of changes. 52.244 [reserved] 52.244 1 [reserved] 52.244 2 subcontracts. 52.244 3 [reserved] 52.244 4 subcontractors and outside associates and consultants (architect engineer services). 52.244 5 competition in subcontracting. 52.244 6 subcontracts for commercial products and commercial services. 52.245 [reserved] 52.245 1 government property. 52.245 2 government property installation operation services. 52.245 3 [reserved] 52.245 4 [reserved] 52.245 5 [reserved] 52.245 6 [reserved] 52.245 7 [reserved] 52.245 8 [reserved] 52.245 9 use and charges. 52.246 [reserved] 52.246 1 contractor inspection requirements. 52.246 2 inspection of supplies fixed price. 52.246 3 inspection of supplies cost reimbursement. 52.246 4 inspection of services fixed price. 52.246 5 inspection of services cost reimbursement. 52.246 6 inspection time and material and labor hour. 52.246 7 inspection of research and development fixed price. 52.246 8 inspection of research and development cost reimbursement. 52.246 9 inspection of research and development (short form). 52.246 10 [reserved] 52.246 11 higher level contract quality requirement. 52.246 12 inspection of construction. 52.246 13 inspection dismantling, demolition, or removal of improvements. 52.246 14 inspection of transportation. 52.246 15 certificate of conformance. 52.246 16 responsibility for supplies. 52.246 17 warranty of supplies of a noncomplex nature. 52.246 18 warranty of supplies of a complex nature. 52.246 19 warranty of systems and equipment under performance specifications or design criteria. 52.246 20 warranty of services. 52.246 21 warranty of construction. 52.246 22 [reserved] 52.246 23 limitation of liability. 52.246 24 limitation of liability high value items. 52.246 25 limitation of liability services. 52.246 26 reporting nonconforming items. 52.247 [reserved] 52.247 1 commercial bill of lading notations. 52.247 2 permits, authorities, or franchises. 52.247 3 capability to perform a contract for the relocation of a federal office. 52.247 4 inspection of shipping and receiving facilities. 52.247 5 familiarization with conditions. 52.247 6 financial statement. 52.247 7 freight excluded. 52.247 8 estimated weights or quantities not guaranteed. 52.247 9 agreed weight general freight. 52.247 10 net weight general freight. 52.247 11 net weight household goods or office furniture. 52.247 12 supervision, labor, or materials. 52.247 13 accessorial services moving contracts. 52.247 14 contractor responsibility for receipt of shipment. 52.247 15 contractor responsibility for loading and unloading. 52.247 16 contractor responsibility for returning undelivered freight. 52.247 17 charges. 52.247 18 multiple shipments. 52.247 19 stopping in transit for partial unloading. 52.247 20 estimated quantities or weights for evaluation of offers. 52.247 21 contractor liability for personal injury and/or property damage. 52.247 22 contractor liability for loss of and/or damage to freight other than household goods. 52.247 23 contractor liability for loss of and/or damage to household goods. 52.247 24 advance notification by the government. 52.247 25 government furnished equipment with or without operators. 52.247 26 government direction and marking. 52.247 27 contract not affected by oral agreement. 52.247 28 contractor’s invoices. 52.247 29 f.o.b. origin. 52.247 30 f.o.b. origin, contractor’s facility. 52.247 31 f.o.b. origin, freight allowed. 52.247 32 f.o.b. origin, freight prepaid. 52.247 33 f.o.b. origin, with differentials. 52.247 34 f.o.b. destination. 52.247 35 f.o.b. destination, within consignee’s premises. 52.247 36 f.a.s. vessel, port of shipment. 52.247 37 f.o.b. vessel, port of shipment. 52.247 38 f.o.b. inland carrier, point of exportation. 52.247 39 f.o.b. inland point, country of importation. 52.247 40 ex dock, pier, or warehouse, port of importation. 52.247 41 c.& f. destination. 52.247 42 c.i.f. destination. 52.247 43 f.o.b. designated air carrier’s terminal, point of exportation. 52.247 44 f.o.b. designated air carrier’s terminal, point of importation. 52.247 45 f.o.b. origin and/or f.o.b. destination evaluation. 52.247 46 shipping point(s) used in evaluation of f.o.b. origin offers. 52.247 47 evaluation f.o.b. origin. 52.247 48 f.o.b. destination evidence of shipment. 52.247 49 destination unknown. 52.247 50 no evaluation of transportation costs. 52.247 51 evaluation of export offers. 52.247 52 clearance and documentation requirements shipments to dod air or water terminal transshipment points. 52.247 53 freight classification description. 52.247 54 [reserved] 52.247 55 f.o.b. point for delivery of government furnished property. 52.247 56 transit arrangements. 52.247 57 transportation transit privilege credits. 52.247 58 loading, blocking, and bracing of freight car shipments. 52.247 59 f.o.b. origin carload and truckload shipments. 52.247 60 guaranteed shipping characteristics. 52.247 61 f.o.b. origin minimum size of shipments. 52.247 62 specific quantities unknown. 52.247 63 preference for u.s. flag air carriers. 52.247 64 preference for privately owned u.s. flag commercial vessels. 52.247 65 f.o.b. origin, prepaid freight small package shipments. 52.247 66 returnable cylinders. 52.247 67 submission of transportation documents for audit. 52.247 68 report of shipment (repship). 52.247 69 reporting requirement for u.s. flag air carriers regarding training to prevent human trafficking. 52.248 [reserved] 52.248 1 value engineering. 52.248 2 value engineering architect engineer. 52.248 3 value engineering construction. 52.249 [reserved] 52.249 1 termination for convenience of the government (fixed price) (short form). 52.249 2 termination for convenience of the government (fixed price). 52.249 3 termination for convenience of the government (dismantling, demolition, or removal of improvements). 52.249 4 termination for convenience of the government (services) (short form). 52.249 5 termination for convenience of the government (educational and other nonprofit institutions). 52.249 6 termination (cost reimbursement). 52.249 7 termination (fixed price architect engineer). 52.249 8 default (fixed price supply and service). 52.249 9 default (fixed price research and development). 52.249 10 default (fixed price construction). 52.249 11 [reserved] 52.249 12 termination (personal services). 52.249 13 [reserved] 52.249 14 excusable delays. 52.250 [reserved] 52.250 1 indemnification under public law85 804. 52.250 2 safety act coverage not applicable. 52.250 3 safety act block designation/certification. 52.250 4 safety act pre qualification designation notice. 52.250 5 safety actequitable adjustment. 52.251 [reserved] 52.251 1 government supply sources. 52.251 2 interagency fleet management system vehicles and related services. 52.252 [reserved] 52.252 1 solicitation provisions incorporated by reference. 52.252 2 clauses incorporated by reference. 52.252 3 alterations in solicitation. 52.252 4 alterations in contract. 52.252 5 authorized deviations in provisions. 52.252 6 authorized deviations in clauses. 52.253 [reserved] 52.253 1 computer generated forms. subpart 52.3   provision and clause matrix 52.300 scope of subpart. 52.301 solicitation provisions and contract clauses (matrix). 52.301 1 far matrix 52.301 2 matrix notes this part  (a) gives instructions for using provisions and clauses in solicitations and/or contracts; (b) sets forth the solicitation provisions and contract clauses prescribed by this regulation; and (c) presents a matrix listing the far provisions and clauses applicable to each principal contract type and/or purpose (e.g., fixed price supply, cost reimbursement research and development). this subpart  (a) gives instructions for using part 52, including the explanation and use of provision and clause numbers, prescriptions, prefaces, and the matrix; (b) prescribes procedures for incorporating, identifying, and modifying provisions and clauses in solicitations and contracts, and for using alternates; and (c) describes the derivation of far provisions and clauses. (a) definition. "modification," as used in this subpart, means a minor change in the details of a provision or clause that is specifically authorized by the far and does not alter the substance of the provision or clause (see 52.104). (b) numbering  (1) far provisions and clauses. subpart 52.2 sets forth the text of all far provisions and clauses, each in its own separate subsection. the subpart is arranged by subject matter, in the same order as, and keyed to, the parts of the far. each far provision or clause is uniquely identified. all far provision and clause numbers begin with "52.2," since the text of all far provisions and clauses appear in subpart 52.2. the next two digits of the provision or clause number correspond to the number of the far subject part in which the provision or clause is prescribed. the far provision or clause number is then completed by a hyphen and a sequential number assigned within each section of subpart 52.2. the following example illustrates the makeup of the far provision or clause number (see figure 1 below). (2) provisions or clauses that supplement the far. (i) provisions or clauses that supplement the far are  (a) prescribed and included in authorized agency acquisition regulations issued within an agency to satisfy the specific needs of the agency as a whole; (b) prescribed and included in a regulation issued by a suborganization of an agency to satisfy the needs of that particular suborganization; or (c) developed for use at a suborganizational level of an agency, not meant for repetitive use, but intended to meet the needs of an individual acquisition and, thus, impractical to include in either an agency or suborganization acquisition regulation. (see 1.301(c).) (ii) supplemental provisions or clauses published in agency acquisition regulations shall be in full text and the prescription for the use of each shall be included. supplemental provisions or clauses published in agency acquisition regulations shall be numbered in the same manner in which far provisions and clauses are numbered except that  (a) if it is included in an agency acquisition regulation that is published in the federal register and is codified in title 48, code of federal regulations (48 cfr), the number shall be preceded by the chapter number within 48 cfr assigned by the cfr staff; and (b) the sequential number shall be "70" or a higher number (see 1.303). (iii) the sequential number at the end of the number of a provision or clause that supplements the far, like its counterpart at the end of any far provision or clause number, indicates the subsection location of the provision or clause in subpart 52.2 of the agency acquisition regulation that contains its full text. if, for example, an agency acquisition regulation contains only one provision followed by only one clause supplementing the far in its section 52.236 (construction and architect engineer contracts), then the sequential numbers would be "70" for the provision and "71" for the clause. (c) prescriptions. each provision or clause in subpart 52.2 is prescribed at that place in the far text where the subject matter of the provision or clause receives its primary treatment. the prescription includes all conditions, requirements, and instructions for using the provision or clause and its alternates, if any. the provision or clause may be referred to in other far locations. (d) introductory text. within subpart 52.2, the introductory text of each provision or clause includes a cross reference to the location in the far subject text that prescribes its use. (e) matrix. (1) the matrix in subpart 52.3 contains a column for each principal type and/or purpose of contract (e.g., fixed price supply, cost reimbursement research and development). the matrix lists the  (i) required solicitation provisions; (ii) required when applicable solicitation provisions; (iii) optional solicitation provisions; (iv) required contract clauses; (v) required when applicable contract clauses; and (vi) optional contract clauses. (2) for each provision or clause listed, the matrix provides information on  (i) whether incorporation by reference is or is not authorized (see 52.102); (ii) the section of the uniform contract format (ucf) in which it is to be located, if it is used in an acquisition that is subject to the ucf; (iii) its number; (iv) the citation of the far text that prescribes its use; and (v) its title. (3) since the matrix does not provide sufficient information to determine the applicability of a provision or clause in the "required when applicable" and "optional" categories, contracting officers shall refer to the far text (cited in the matrix) that prescribes its use. (4) the far matrix may be reproduced at agency levels, and at subordinate levels, for the purpose of supplementing it with agency developed provisions and clauses. the resulting consolidated matrices may be included in agency acquisition regulations. (f) dates. since they are subject to revision from time to time, all provisions, clauses, and alternates are dated; e.g.,(dec 1983). to avoid questions concerning which version of any provision, clause, or alternate is operative in any given solicitation or contract, its date shall be included whether it is incorporated by reference or in full text. (a) provisions and clauses should be incorporated by reference to the maximum practical extent, rather than being incorporated in full text, even if they  (1) are used with one or more alternates or on an optional basis; (2) are prescribed on a "substantially as follows" or "substantially the same as" basis, provided they are used verbatim; (3) require modification or the insertion by the government of fill in material (see 52.104); or (4) require completion by the offeror or prospective contractor. this instruction also applies to provisions completed as annual representations and certifications. (b) except for provisions and clauses prescribed in 52.107, any provision or clause that can be accessed electronically by the offeror or prospective contractor may be incorporated by reference in solicitations and/or contracts. however, the contracting officer, upon request, shall provide the full text of any provision or clause incorporated by reference. (c) agency approved provisions and clauses prescribed in agency acquisition regulations, and provisions and clauses not authorized by subpart 52.3 to be incorporated by reference, need not be incorporated in full text, provided the contracting officer includes in the solicitation and contract a statement that  (1) identifies all provisions and clauses that require completion by the offeror or prospective contractor; (2) specifies that the provisions and clauses must be completed by the offeror or prospective contractor and must be submitted with the quotation or offer; and (3) identifies to the offeror or prospective contractor at least one electronic address where the full text may be accessed. (d) an agency may develop a group listing of provisions and clauses that apply to a specific category of contracts. an agency group listing may be incorporated by reference in solicitations and/or contracts in lieu of citing the provisions and clauses individually, provided the group listing is made available electronically to offerors and prospective contractors. (e) a provision or clause that is not available electronically to offerors and prospective contractors shall be incorporated in solicitations and/or contracts in full text if it is  (1) a far provision or clause that otherwise is not authorized to be incorporated by reference (see sub part 52.3); or (2) a provision or clause prescribed for use in an agency acquisition regulation. (f) provisions or clauses may not be incorporated by reference by being listed in the  (1) provision at 52.252 3, alterations in solicitations; or (2) clause at 52.252 4, alterations in contract. (a) whenever any far provision or clause is used without deviation in a solicitation or contract, whether it is incorporated by reference or in full text, it shall be identified by number, title, and date. this identification shall also be used if the far provision or clause is used with an authorized deviation, except that the contracting officer shall then insert "(deviation)" after the date. solicited firms and contractors will be advised of the meaning of this insertion through the use of the (1) provision at 52.252 5, authorized deviations in provisions, or (2) clause at 52.252 6, authorized deviations in clauses. the above mentioned provision and clause are prescribed in 52.107(e) and (f). (b) any provision or clause that supplements the far whether it is incorporated by reference or in full text shall be clearly identified by number, title, date, and name of the regulation. when a supplemental provision or clause is used with an authorized deviation, insert "(deviation)" after the name of the regulation. (c) a provision or clause of the type described in 52.101(b)(2)(i)(c) shall be identified by the title, date, and the name of the agency or suborganization within the agency that developed it. (d) except for provisions or clauses covered by 52.103(c), the following hypothetical examples illustrate how a provision or clause that supplements the far shall be identified when it is incorporated in solicitations and/or contracts by reference or in full text: (1) if part 14 (sealed bidding) of the x agency acquisition regulation, published in the federal register and codified as chapter 99 in 48 cfr, prescribes the use of a provision entitled "bid envelopes," dated october 1983, and that provision is sequentially the first provision or clause appearing in section 52.214 of the x agency acquisition regulation, then the identification of that provision shall be "9952.214 70 bid envelopes (oct 1983)." (2) assume that y, a major organizational element of the x agency, is authorized to issue the y acquisition regulation, which is not published in the federal register and codified in 48 cfr. if part 36 (construction and architect engineer contracts) of the y acquisition regulation prescribes the use of a clause entitled "refrigerated display cases," dated march 1983, pertaining to a specialized type of construction work, and that clause is sequentially the second provision or clause appearing in section 52.236 of the y acquisition regulation, then the identification of that clause shall be "52.236 71 refrigerated display cases (mar 1983) y acquisition regulation." (a) the contracting officer must not modify provisions and clauses unless the far authorizes their modification. for example  (1) "the contracting officer may use a period shorter than 60 days (but not less than 30 days) in paragraph (x) of the clause"; or (2) "the contracting officer may substitute the words ‘task order’ for the word ‘schedule’ wherever that word appears in the clause." (b) when modifying provisions or clauses incorporated by reference, insert the changed wording directly below the title of the provision or clause identifying to the lowest level necessary (e.g., paragraph, sentence, word), to clearly indicate what is being modified. (c) when modifying provisions or clauses incorporated in full text, modify the language directly by substituting the changed wording as permitted. (d) when completing blanks in provisions or clauses incorporated by reference, insert the fill in information directly below the title of the provision or clause identifying to the lowest level necessary to clearly indicate the blanks being filled in. (e) when completing blanks in provisions or clauses incorporated in full text, insert the fill in information in the blanks of the provision or clause. (a) the far accommodates a major variation in a provision or clause by use of an alternate. the far prescribes alternates to a given provision or clause in the far subject text where the provision or clause is prescribed. the alternates to each provision or clause are titled "alternate i," "alternate ii," "alternate iii," etc. (b) when an alternate is used, its date shall be cited along with the date of the basic provision or clause; e.g., 52.209 3 first article approval contractor testing (oct 1983) alternate i (dec 1983). (c) under certain circumstances, a provision or clause may be used with two or more alternates. in these circumstances, each of the applicable alternates shall be cited, whether incorporated by reference or in full text; e.g., 52.209 3 first article approval contractor testing (oct 1983) alternate i (dec 1983) and alternate ii (feb 1984). however, under no circumstances may an alternate to a specific provision or clause be applied to any other provision or clause. (a) the contracting officer shall insert the provision at 52.252 1, solicitation provisions incorporated by reference, in solicitations in order to incorporate provisions by reference. (b) the contracting officer shall insert the clause at 52.252 2, clauses incorporated by reference, in solicitations and contracts in order to incorporate clauses by reference. (c) the contracting officer shall insert the provision at 52.252 3, alterations in solicitation, in solicitations in order to revise or supplement, as necessary, other parts of the solicitation that apply to the solicitation phase only, except for any provision authorized for use with a deviation. (d) the contracting officer shall insert the clause at 52.252 4, alterations in contract, in solicitations and contracts in order to revise or supplement, as necessary, other parts of the contract, or parts of the solicitations that apply to the contract phase, except for any clause authorized for use with a deviation. (e) the contracting officer shall insert the provision at 52.252 5, authorized deviations in provisions, in solicitations that include any far or supplemental provision with an authorized deviation. whenever any far or supplemental provision is used with an authorized deviation, the contracting officer shall identify it by the same number, title, and date assigned to the provision when it is used without deviation, include regulation name for any supplemental provision, except that the contracting officer shall insert "(deviation)" after the date of the provision. (f) the contracting officer shall insert the clause at 52.252 6, authorized deviations in clauses, in solicitations and contracts that include any far or supplemental clause with an authorized deviation. whenever any far or supplemental clause is used with an authorized deviation, the contracting officer shall identify it by the same number, title, and date assigned to the clause when it is used without deviation, include regulation name for any supplemental clause, except that the contracting officer shall insert "(deviation)" after the date of the clause. this subpart sets forth the text of all far provisions and clauses (see 52.101(b)(1)) and gives a cross reference to the location in the far that prescribes the provision or clause. as prescribed in 1.102 3(b), insert the following provision: acquisition 360: voluntary survey (sep 2023) (a)all actual and potential offerors are encouraged to provide feedback on the preaward and debriefing processes, as applicable. feedback may be provided to agencies up to 45 days after award. the feedback is anonymous, unless the participant self identifies in the survey. actual and potential offerors can participate in the survey by selecting the following link: https://www.acquisition.gov/​360. (b)the contracting officer will not review the information provided until after contract award and will not consider it in the award decision. the survey is voluntary and does not convey any protections, rights, or grounds for protest. it creates a way for actual and potential offerors to provide the government constructive feedback about the preaward and debriefing processes, as applicable, used for a specific acquisition. (end of provision) as prescribed in 2.201 , insert the following clause: definitions (jun 2020) when a solicitation provision or contract clause uses a word or term that is defined in the federal acquisition regulation (far), the word or term has the same meaning as the definition in far 2.101 in effect at the time the solicitation was issued, unless  (a) the solicitation, or amended solicitation, provides a different definition; (b) the contracting parties agree to a different definition; (c) the part, subpart, or section of the far where the provision or clause is prescribed provides a different meaning; (d) the word or term is defined in far part 31, for use in the cost principles and procedures; or (e) the word or term defines an acquisition related threshold, and if the threshold is adjusted for inflation as set forth in far 1.109(a), then the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment; see far 1.109(d). (end of clause) as prescribed in 3.103 1 , insert the following provision. if the solicitation is a request for quotations, the terms "quotation" and "quoter" may be substituted for "offer" and "offeror." certificate of independent price determination (apr 1985) (a) the offeror certifies that  (1) the prices in this offer have been arrived at independently, without, for the purpose of restricting competition, any consultation, communication, or agreement with any other offeror or competitor relating to  (i) those prices; (ii) the intention to submit an offer; or (iii) the methods or factors used to calculate the prices offered. (2) the prices in this offer have not been and will not be knowingly disclosed by the offeror, directly or indirectly, to any other offeror or competitor before bid opening (in the case of a sealed bid solicitation) or contract award (in the case of a negotiated solicitation) unless otherwise required by law; and (3) no attempt has been made or will be made by the offeror to induce any other concern to submit or not to submit an offer for the purpose of restricting competition. (b) each signature on the offer is considered to be a certification by the signatory that the signatory  (1) is the person in the offeror’s organization responsible for determining the prices being offered in this bid or proposal, and that the signatory has not participated and will not participate in any action contrary to paragraphs (a)(1) through (a)(3) of this provision; or (2) (i) has been authorized, in writing, to act as agent for the following principals in certifying that those principals have not participated, and will not participate in any action contrary to paragraphs (a)(1) through (a)(3) of this provision ____________ [insert full name of person(s) in the offeror’s organization responsible for determining the prices offered in this bid or proposal, and the title of his or her position in the offeror’s organization]; (ii) as an authorized agent, does certify that the principals named in subdivision (b)(2)(i) of this provision have not participated, and will not participate, in any action contrary to paragraphs (a)(1) through (a)(3) of this provision; and (iii) as an agent, has not personally participated, and will not participate, in any action contrary to paragraphs (a)(1) through (a)(3) of this provision. (c) if the offeror deletes or modifies subparagraph (a)(2) above, the offeror must furnish with its offer a signed statement setting forth in detail the circumstances of the disclosure. (end of provision) as prescribed in 3.202 , insert the following clause: gratuities (apr 1984) (a) the right of the contractor to proceed may be terminated by written notice if, after notice and hearing, the agency head or a designee determines that the contractor, its agent, or another representative  (1) offered or gave a gratuity (e.g., an entertainment or gift) to an officer, official, or employee of the government; and (2) intended, by the gratuity, to obtain a contract or favorable treatment under a contract. (b) the facts supporting this determination may be reviewed by any court having lawful jurisdiction. (c) if this contract is terminated under paragraph (a) of this clause, the government is entitled  (1) to pursue the same remedies as in a breach of the contract; and (2) in addition to any other damages provided by law, to exemplary damages of not less than 3 nor more than 10 times the cost incurred by the contractor in giving gratuities to the person concerned, as determined by the agency head or a designee. (this paragraph (c)(2) is applicable only if this contract uses money appropriated to the department of defense.) (d) the rights and remedies of the government provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract. (end of clause) as prescribed in 3.404 , insert the following clause: covenant against contingent fees (may 2014) (a) the contractor warrants that no person or agency has been employed or retained to solicit or obtain this contract upon an agreement or understanding for a contingent fee, except a bona fide employee or agency. for breach or violation of this warranty, the government shall have the right to annul this contract without liability or, to deduct from the contract price or consideration, or otherwise recover, the full amount of the contingent fee. (b) "bona fide agency," as used in this clause, means an established commercial or selling agency, maintained by a contractor for the purpose of securing business, that neither exerts nor proposes to exert improper influence to solicit or obtain government contracts nor holds itself out as being able to obtain any government contract or contracts through improper influence. bona fide employee, as used in this clause, means a person, employed by a contractor and subject to the contractor’s supervision and control as to time, place, and manner of performance, who neither exerts nor proposes to exert improper influence to solicit or obtain government contracts nor holds out as being able to obtain any government contract or contracts through improper influence. contingent fee, as used in this clause, means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person or concern has in securing a government contract. improper influence, as used in this clause, means any influence that induces or tends to induce a government employee or officer to give consideration or to act regarding a government contract on any basis other than the merits of the matter. (end of clause) as prescribed in 3.503 2 , insert the following clause: restrictions on subcontractor sales to the government (jun 2020) (a) except as provided in (b) of this clause, the contractor shall not enter into any agreement with an actual or prospective subcontractor, nor otherwise act in any manner, which has or may have the effect of restricting sales by such subcontractors directly to the government of any item or process (including computer software) made or furnished by the subcontractor under this contract or under any follow on production contract. (b) the prohibition in (a) of this clause does not preclude the contractor from asserting rights that are otherwise authorized by law or regulation. (c) the contractor agrees to incorporate the substance of this clause, including this paragraph (c), in all subcontracts under this contract which exceed the simplified acquisition threshold, as defined in federal acquisition regulation 2.101 on the date of subcontract award. (end of clause) alternate i (nov 2021). as prescribed in 3.503 2 , substitute the following paragraph in place of paragraph (b) of the basic clause: (b) the prohibition in paragraph (a) of this clause does not preclude the contractor from asserting rights that are otherwise authorized by law or regulation. for acquisitions of commercial products or commercial services). the prohibition in paragraph (a) applies only to the extent that any agreement restricting sales by subcontractors results in the federal government being treated differently from any other prospective purchaser for the sale of the commercial product(s) and commercial service(s). as prescribed in 3.502 3 , insert the following clause: anti kickback procedures (jun 2020) (a) definitions. kickback, as used in this clause, means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided to any prime contractor, prime contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract. person, as used in this clause, means a corporation, partnership, business association of any kind, trust, joint stock company, or individual. prime contract, as used in this clause, means a contract or contractual action entered into by the united states for the purpose of obtaining supplies, materials, equipment, or services of any kind. prime contractor as used in this clause, means a person who has entered into a prime contract with the united states. prime contractor employee, as used in this clause, means any officer, partner, employee, or agent of a prime contractor. subcontract, as used in this clause, means a contract or contractual action entered into by a prime contractor or subcontractor for the purpose of obtaining supplies, materials, equipment, or services of any kind under a prime contract. subcontractor, as used in this clause, (1) means any person, other than the prime contractor, who offers to furnish or furnishes any supplies, materials, equipment, or services of any kind under a prime contract or a subcontract entered into in connection with such prime contract, and (2) includes any person who offers to furnish or furnishes general supplies to the prime contractor or a higher tier subcontractor. subcontractor employee, as used in this clause, means any officer, partner, employee, or agent of a subcontractor. (b) 41 u.s.c. chapter 87, kickbacks, prohibits any person from  (1) providing or attempting to provide or offering to provide any kickback; (2) soliciting, accepting, or attempting to accept any kickback; or (3) including, directly or indirectly, the amount of any kickback in the contract price charged by a prime contractor to the united states or in the contract price charged by a subcontractor to a prime contractor or higher tier subcontractor. (c) (1) the contractor shall have in place and follow reasonable procedures designed to prevent and detect possible violations described in paragraph (b) of this clause in its own operations and direct business relationships. (2) when the contractor has reasonable grounds to believe that a violation described in paragraph (b) of this clause may have occurred, the contractor shall promptly report in writing the possible violation. such reports shall be made to the inspector general of the contracting agency, the head of the contracting agency if the agency does not have an inspector general, or the attorney general. (3) the contractor shall cooperate fully with any federal agency investigating a possible violation described in paragraph (b) of this clause. (4) the contracting officer may (i) offset the amount of the kickback against any monies owed by the united states under the prime contract and/or (ii) direct that the prime contractor withhold from sums owed a subcontractor under the prime contract the amount of the kickback. the contracting officer may order that monies withheld under subdivision (c)(4)(ii) of this clause be paid over to the government unless the government has already offset those monies under subdivision (c)(4)(i) of this clause. in either case, the prime contractor shall notify the contracting officer when the monies are withheld. (5) the contractor agrees to incorporate the substance of this clause, including this paragraph (c)(5) but excepting paragraph (c)(1) of this clause, in all subcontracts under this contract that exceed the threshold specified in federal acquisition regulation 3.502 2(i) on the date of subcontract award. (end of clause) as prescribed in 3.104 9(a), insert the following clause: cancellation, rescission, and recovery of funds for illegal or improper activity (may 2014) (a) if the government receives information that a contractor or a person has violated 41 u.s.c. 2102  2104, restrictions on obtaining and disclosing certain information, the government may  (1) cancel the solicitation, if the contract has not yet been awarded or issued; or (2) rescind the contract with respect to which  (i) the contractor or someone acting for the contractor has been convicted for an offense where the conduct violates 41 u.s.c.2102 for the purpose of either  (a) exchanging the information covered by such subsections for anything of value; or (b) obtaining or giving anyone a competitive advantage in the award of a federal agency procurement contract; or (ii) the head of the contracting activity has determined, based upon a preponderance of the evidence, that the contractor or someone acting for the contractor has engaged in conduct punishable under 41 u.s.c. 2105(a). (b) if the government rescinds the contract under paragraph (a) of this clause, the government is entitled to recover, in addition to any penalty prescribed by law, the amount expended under the contract. (c) the rights and remedies of the government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law, regulation, or under this contract. (end of clause) as prescribed in 3.104 9(b), insert the following clause: price or fee adjustment for illegal or improper activity (may 2014) (a) the government, at its election, may reduce the price of a fixed price type contract and the total cost and fee under a cost type contract by the amount of profit or fee determined as set forth in paragraph (b) of this clause if the head of the contracting activity or designee determines that there was a violation of 41 u.s.c.2102 or 2103, as implemented in section 3.104 of the federal acquisition regulation. (b) the price or fee reduction referred to in paragraph (a) of this clause shall be  (1) for cost plus fixed fee contracts, the amount of the fee specified in the contract at the time of award; (2) for cost plus incentive fee contracts, the target fee specified in the contract at the time of award, notwithstanding any minimum fee or "fee floor" specified in the contract; (3) for cost plus award fee contracts  (i) the base fee established in the contract at the time of contract award; (ii) if no base fee is specified in the contract, 30 percent of the amount of each award fee otherwise payable to the contractor for each award fee evaluation period or at each award fee determination point. (4) for fixed price incentive contracts, the government may  (i) reduce the contract target price and contract target profit both by an amount equal to the initial target profit specified in the contract at the time of contract award; or (ii) if an immediate adjustment to the contract target price and contract target profit would have a significant adverse impact on the incentive price revision relationship under the contract, or adversely affect the contract financing provisions, the contracting officer may defer such adjustment until establishment of the total final price of the contract. the total final price established in accordance with the incentive price revision provisions of the contract shall be reduced by an amount equal to the initial target profit specified in the contract at the time of contract award and such reduced price shall be the total final contract price. (5) for firm fixed price contracts, by 10 percent of the initial contract price or a profit amount determined by the contracting officer from records or documents in existence prior to the date of the contract award. (c) the government may, at its election, reduce a prime contractor’s price or fee in accordance with the procedures of paragraph (b) of this clause for violations of the statute by its subcontractors by an amount not to exceed the amount of profit or fee reflected in the subcontract at the time the subcontract was first definitively priced. (d) in addition to the remedies in paragraphs (a) and (c) of this clause, the government may terminate this contract for default. the rights and remedies of the government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law or under this contract. (end of clause) as prescribed in 3.808(a), insert the following provision: certification and disclosure regarding payments to influence certain federal transactions (sep 2024) (a) definitions. as used in this provision "lobbying contact" has the meaning provided at 2 u.s.c. 1602(8). the terms "agency," "influencing or attempting to influence," "officer or employee of an agency," "person," "reasonable compensation," and "regularly employed" are defined in the far clause of this solicitation entitled "limitation on payments to influence certain federal transactions" ( 52.203 12). (b) prohibition. the prohibition and exceptions contained in the far clause of this solicitation entitled "limitation on payments to influence certain federal transactions" ( 52.203 12) are hereby incorporated by reference in this provision. (c) certification. the offeror, by signing its offer, hereby certifies to the best of its knowledge and belief that no federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a member of congress, an officer or employee of congress, or an employee of a member of congress on its behalf in connection with the awarding of this contract. (d) disclosure. if any registrants under the lobbying disclosure act of 1995 have made a lobbying contact on behalf of the offeror with respect to this contract, the offeror shall complete and submit, with its offer, omb standard form lll, disclosure of lobbying activities, to provide the name of the registrants. the offeror need not report regularly employed officers or employees of the offeror to whom payments of reasonable compensation were made. (e) penalty. submission of this certification and disclosure is a prerequisite for making or entering into this contract imposed by 31 u.s.c. 1352. any person who makes an expenditure prohibited under this provision or who fails to file or amend the disclosure required to be filed or amended by this provision, shall be subject to civil penalties as provided in 31 u.s.c. 1352. an imposition of a civil penalty does not prevent the government from seeking any other remedy that may be applicable. (end of provision) as prescribed in 3.808(b), insert the following clause: limitation on payments to influence certain federal transactions (jun 2020) (a) definitions. as used in this clause  agency means "executive agency" as defined in federal acquisition regulation (far) 2.101. covered federal action means any of the following actions: (1) awarding any federal contract. (2) making any federal grant. (3) making any federal loan. (4) entering into any cooperative agreement. (5) extending, continuing, renewing, amending, or modifying any federal contract, grant, loan, or cooperative agreement. indian tribe and "tribal organization" have the meaning provided in section 4 of the indian self determination and education assistance act ( 25 u.s.c. 450b) and include alaskan natives. influencing or attempting to influence means making, with the intent to influence, any communication to or appearance before an officer or employee of any agency, a member of congress, an officer or employee of congress, or an employee of a member of congress in connection with any covered federal action. local government means a unit of government in a state and, if chartered, established, or otherwise recognized by a state for the performance of a governmental duty, including a local public authority, a special district, an intrastate district, a council of governments, a sponsor group representative organization, and any other instrumentality of a local government. officer or employee of an agency includes the following individuals who are employed by an agency: (1) an individual who is appointed to a position in the government under title 5, united states code, including a position under a temporary appointment. (2) a member of the uniformed services, as defined in subsection 101(3), title 37, united states code. (3) a special government employee, as defined in section 202, title 18, united states code. (4) an individual who is a member of a federal advisory committee, as defined by the federal advisory committee act, title 5, united states code, appendix 2. person means an individual, corporation, company, association, authority, firm, partnership, society, state, and local government, regardless of whether such entity is operated for profit, or not for profit. this term excludes an indian tribe, tribal organization, or any other indian organization eligible to receive federal contracts, grants, cooperative agreements, or loans from an agency, but only with respect to expenditures by such tribe or organization that are made for purposes specified in paragraph (b) of this clause and are permitted by other federal law. reasonable compensation means, with respect to a regularly employed officer or employee of any person, compensation that is consistent with the normal compensation for such officer or employee for work that is not furnished to, not funded by, or not furnished in cooperation with the federal government. reasonable payment means, with respect to professional and other technical services, a payment in an amount that is consistent with the amount normally paid for such services in the private sector. recipient includes the contractor and all subcontractors. this term excludes an indian tribe, tribal organization, or any other indian organization eligible to receive federal contracts, grants, cooperative agreements, or loans from an agency, but only with respect to expenditures by such tribe or organization that are made for purposes specified in paragraph (b) of this clause and are permitted by other federal law. regularly employed means, with respect to an officer or employee of a person requesting or receiving a federal contract, an officer or employee who is employed by such person for at least 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person for receipt of such contract. an officer or employee who is employed by such person for less than 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person shall be considered to be regularly employed as soon as he or she is employed by such person for 130 working days. state means a state of the united states, the district of columbia, or an outlying area of the united states, an agency or instrumentality of a state, and multi state, regional, or interstate entity having governmental duties and powers. (b) prohibition. 31 u.s.c. 1352 prohibits a recipient of a federal contract, grant, loan, or cooperative agreement from using appropriated funds to pay any person for influencing or attempting to influence an officer or employee of any agency, a member of congress, an officer or employee of congress, or an employee of a member of congress in connection with any covered federal actions. in accordance with 31 u.s.c. 1352 the contractor shall not use appropriated funds to pay any person for influencing or attempting to influence an officer or employee of any agency, a member of congress, an officer or employee of congress, or an employee of a member of congress in connection with the award of this contractor the extension, continuation, renewal, amendment, or modification of this contract. (1) the term appropriated funds does not include profit or fee from a covered federal action. (2) to the extent the contractor can demonstrate that the contractor has sufficient monies, other than federal appropriated funds, the government will assume that these other monies were spent for any influencing activities that would be unallowable if paid for with federal appropriated funds. (c) exceptions. the prohibition in paragraph (b) of this clause does not apply under the following conditions: (1) agency and legislative liaison by contractor employees. (i) payment of reasonable compensation made to an officer or employee of the contractor if the payment is for agency and legislative liaison activities not directly related to this contract. for purposes of this paragraph, providing any information specifically requested by an agency or congress is permitted at any time. (ii) participating with an agency in discussions that are not related to a specific solicitation for any covered federal action, but that concern  (a) the qualities and characteristics (including individual demonstrations) of the person’s products or services, conditions or terms of sale, and service capabilities; or (b) the application or adaptation of the person’s products or services for an agency’s use. (iii) providing prior to formal solicitation of any covered federal action any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered federal action; (iv) participating in technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and (v) making capability presentations prior to formal solicitation of any covered federal action by persons seeking awards from an agency pursuant to the provisions of the small business act, as amended by pub. l. 95 507, and subsequent amendments. (2) professional and technical services. (i) a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a covered federal action or an extension, continuation, renewal, amendment, or modification of a covered federal action, if payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that federal action. (ii) any reasonable payment to a person, other than an officer or employee of a person requesting or receiving a covered federal action or an extension, continuation, renewal, amendment, or modification of a covered federal action if the payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that federal action. persons other than officers or employees of a person requesting or receiving a covered federal action include consultants and trade associations. (iii) as used in paragraph (c)(2) of this clause, "professional and technical services" are limited to advice and analysis directly applying any professional or technical discipline (for examples, see far 3.803(a)(2)(iii)). (iv) requirements imposed by or pursuant to law as a condition for receiving a covered federal award include those required by law or regulation and any other requirements in the actual award documents. (3) only those communications and services expressly authorized by paragraphs (c)(1) and (2) of this clause are permitted. (d) disclosure. (1) if the contractor did not submit omb standard form lll, disclosure of lobbying activities, with its offer, but registrants under the lobbying disclosure act of 1995 have subsequently made a lobbying contact on behalf of the contractor with respect to this contract, the contractor shall complete and submit omb standard form lll to provide the name of the lobbying registrants, including the individuals performing the services. (2) if the contractor did submit omb standard form lll disclosure pursuant to paragraph (d) of the provision at far 52.203 11, certification and disclosure regarding payments to influence certain federal transactions, and a change occurs that affects block 10 of the omb standard form lll (name and address of lobbying registrant or individuals performing services), the contractor shall, at the end of the calendar quarter in which the change occurs, submit to the contracting officer within 30 days an updated disclosure using omb standard form lll. (e) penalties. (1) any person who makes an expenditure prohibited under paragraph (b) of this clause or who fails to file or amend the disclosure to be filed or amended by paragraph (d) of this clause shall be subject to civil penalties as provided for by 31 u.s.c. 1352. an imposition of a civil penalty does not prevent the government from seeking any other remedy that may be applicable. (2) contractors may rely without liability on the representation made by their subcontractors in the certification and disclosure form. (f) cost allowability. nothing in this clause makes allowable or reasonable any costs which would otherwise be unallowable or unreasonable. conversely, costs made specifically unallowable by the requirements in this clause will not be made allowable under any other provision. (g) subcontracts. (1) the contractor shall obtain a declaration, including the certification and disclosure in paragraphs (c) and (d) of the provision at 52.203 11, certification and disclosure regarding payments to influence certain federal transactions, from each person requesting or receiving a subcontract under this contract that exceeds the threshold specified in far 3.808 on the date of subcontract award. the contractor or subcontractor that awards the subcontract shall retain the declaration. (2) a copy of each subcontractor disclosure form (but not certifications) shall be forwarded from tier to tier until received by the prime contractor. the prime contractor shall, at the end of the calendar quarter in which the disclosure form is submitted by the subcontractor, submit to the contracting officer within 30 days a copy of all disclosures. each subcontractor certification shall be retained in the subcontract file of the awarding contractor. (3) the contractor shall include the substance of this clause, including this paragraph (g), in any subcontract that exceeds the threshold specified in far 3.808 on the date of subcontract award. (end of clause) as prescribed in 3.1004(a), insert the following clause: contractor code of business ethics and conduct (nov 2021) (a) definitions. as used in this clause  agent means any individual, including a director, an officer, an employee, or an independent contractor, authorized to act on behalf of the organization. full cooperation  (1) means disclosure to the government of the information sufficient for law enforcement to identify the nature and extent of the offense and the individuals responsible for the conduct. it includes providing timely and complete response to government auditors’ and investigators' request for documents and access to employees with information; (2) does not foreclose any contractor rights arising in law, the far, or the terms of the contract. it does not require  (i) a contractor to waive its attorney client privilege or the protections afforded by the attorney work product doctrine; or (ii) any officer, director, owner, or employee of the contractor, including a sole proprietor, to waive his or her attorney client privilege or fifth amendment rights; and (3) does not restrict a contractor from  (i) conducting an internal investigation; or (ii) defending a proceeding or dispute arising under the contract or related to a potential or disclosed violation. principal means an officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity (e.g., general manager; plant manager; head of a division or business segment; and similar positions). subcontract means any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. subcontractor means any supplier, distributor, vendor, or firm that furnished supplies or services to or for a prime contractor or another subcontractor. united states, means the 50 states, the district of columbia, and outlying areas. (b) code of business ethics and conduct. (1) within 30 days after contract award, unless the contracting officer establishes a longer time period, the contractor shall  (i) have a written code of business ethics and conduct; and (ii) make a copy of the code available to each employee engaged in performance of the contract. (2) the contractor shall  (i) exercise due diligence to prevent and detect criminal conduct; and (ii) otherwise promote an organizational culture that encourages ethical conduct and a commitment to compliance with the law. (3) (i) the contractor shall timely disclose, in writing, to the agency office of the inspector general (oig), with a copy to the contracting officer, whenever, in connection with the award, performance, or closeout of this contract or any subcontract thereunder, the contractor has credible evidence that a principal, employee, agent, or subcontractor of the contractor has committed  (a) a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in title 18 of the united states code; or (b) a violation of the civil false claims act ( 31 u.s.c. 3729  3733). (ii) the government, to the extent permitted by law and regulation, will safeguard and treat information obtained pursuant to the contractor’s disclosure as confidential where the information has been marked "confidential" or "proprietary" by the company. to the extent permitted by law and regulation, such information will not be released by the government to the public pursuant to a freedom of information act request, 5 u.s.c. section 552, without prior notification to the contractor. the government may transfer documents provided by the contractor to any department or agency within the executive branch if the information relates to matters within the organization’s jurisdiction. (iii) if the violation relates to an order against a governmentwide acquisition contract, a multi agency contract, a multiple award schedule contract such as the federal supply schedule, or any other procurement instrument intended for use by multiple agencies, the contractor shall notify the oig of the ordering agency and the ig of the agency responsible for the basic contract. (c) business ethics awareness and compliance program and internal control system. this paragraph (c) does not apply if the contractor has represented itself as a small business concern pursuant to the award of this contract or if this contract is for the acquisition of a commercial product or commercial service as defined at far 2.101. the contractor shall establish the following within 90 days after contract award, unless the contracting officer establishes a longer time period: (1) an ongoing business ethics awareness and compliance program. (i) this program shall include reasonable steps to communicate periodically and in a practical manner the contractor’s standards and procedures and other aspects of the contractor’s business ethics awareness and compliance program and internal control system, by conducting effective training programs and otherwise disseminating information appropriate to an individual’s respective roles and responsibilities. (ii) the training conducted under this program shall be provided to the contractor’s principals and employees, and as appropriate, the contractor’s agents and subcontractors. (2) an internal control system. (i) the contractor’s internal control system shall  (a) establish standards and procedures to facilitate timely discovery of improper conduct in connection with government contracts; and (b) ensure corrective measures are promptly instituted and carried out. (ii) at a minimum, the contractor’s internal control system shall provide for the following: (a) assignment of responsibility at a sufficiently high level and adequate resources to ensure effectiveness of the business ethics awareness and compliance program and internal control system. (b) reasonable efforts not to include an individual as a principal, whom due diligence would have exposed as having engaged in conduct that is in conflict with the contractor’s code of business ethics and conduct. (c) periodic reviews of company business practices, procedures, policies, and internal controls for compliance with the contractor’s code of business ethics and conduct and the special requirements of government contracting, including  (1) monitoring and auditing to detect criminal conduct; (2) periodic evaluation of the effectiveness of the business ethics awareness and compliance program and internal control system, especially if criminal conduct has been detected; and (3) periodic assessment of the risk of criminal conduct, with appropriate steps to design, implement, or modify the business ethics awareness and compliance program and the internal control system as necessary to reduce the risk of criminal conduct identified through this process. (d) an internal reporting mechanism, such as a hotline, which allows for anonymity or confidentiality, by which employees may report suspected instances of improper conduct, and instructions that encourage employees to make such reports. (e) disciplinary action for improper conduct or for failing to take reasonable steps to prevent or detect improper conduct. (f) timely disclosure, in writing, to the agency oig, with a copy to the contracting officer, whenever, in connection with the award, performance, or closeout of any government contract performed by the contractor or a subcontract thereunder, the contractor has credible evidence that a principal, employee, agent, or subcontractor of the contractor has committed a violation of federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations found in title 18 u.s.c. or a violation of the civil false claims act ( 31 u.s.c. 3729  3733). (1) if a violation relates to more than one government contract, the contractor may make the disclosure to the agency oig and contracting officer responsible for the largest dollar value contract impacted by the violation. (2) if the violation relates to an order against a governmentwide acquisition contract, a multi agency contract, a multiple award schedule contract such as the federal supply schedule, or any other procurement instrument intended for use by multiple agencies, the contractor shall notify the oig of the ordering agency and the ig of the agency responsible for the basic contract, and the respective agencies’ contracting officers. (3) the disclosure requirement for an individual contract continues until at least 3 years after final payment on the contract. (4) the government will safeguard such disclosures in accordance with paragraph (b)(3)(ii) of this clause. (g) full cooperation with any government agencies responsible for audits, investigations, or corrective actions. (d) subcontracts. (1) the contractor shall include the substance of this clause, including this paragraph (d), in subcontracts that exceed the threshold specified in far 3.1004(a) on the date of subcontract award and a performance period of more than 120 days. (2) in altering this clause to identify the appropriate parties, all disclosures of violation of the civil false claims act or of federal criminal law shall be directed to the agency office of the inspector general, with a copy to the contracting officer. (end of clause) as prescribed in 3.1004(b), insert the following clause: display of hotline poster(s) (nov 2021) (a) definition. united states, as used in this clause, means the 50 states, the district of columbia, and outlying areas. (b) display of fraud hotline poster(s). except as provided in paragraph (c)  (1) during contract performance in the united states, the contractor shall prominently display in common work areas within business segments performing work under this contract and at contract work sites  (i) any agency fraud hotline poster or department of homeland security (dhs) fraud hotline poster identified in paragraph (b)(3) of this clause; and (ii) any dhs fraud hotline poster subsequently identified by the contracting officer. (2) additionally, if the contractor maintains a company website as a method of providing information to employees, the contractor shall display an electronic version of the poster(s) at the website. (3) any required posters may be obtained as follows: ______________ _________________ ______________ _________________ (contracting officer shall insert  (i) appropriate agency name(s) and/or title of applicable department of homeland security fraud hotline poster); and (ii) the website(s) or other contact information for obtaining the poster(s).) (c) if the contractor has implemented a business ethics and conduct awareness program, including a reporting mechanism, such as a hotline poster, then the contractor need not display any agency fraud hotline posters as required in paragraph (b) of this clause, other than any required dhs posters. (d) subcontracts. the contractor shall include the substance of this clause, including this paragraph (d), in all subcontracts that exceed the threshold specified in federal acquisition regulation 3.1004(b)(1) on the date of subcontract award, except when the subcontract  (1) is for the acquisition of a commercial product or commercial service; or (2) is performed entirely outside the united states. (end of clause) as prescribed in 3.907 7 , use the following clause: whistleblower protections under the american recovery and reinvestment act of 2009 (june 2010) (a) the contractor shall post notice of employees rights and remedies for whistleblower protections provided under section 1553 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act). (b) the contractor shall include the substance of this clause, including this paragraph (b), in all subcontracts that are funded in whole or in part with recovery act funds. (end of clause) as prescribed in 3.1106 , insert the following clause: preventing personal conflicts of interest (jun 2020) (a) definitions. as used in this clause  acquisition function closely associated with inherently governmental functions means supporting or providing advice or recommendations with regard to the following activities of a federal agency: (1) planning acquisitions. (2) determining what supplies or services are to be acquired by the government, including developing statements of work. (3) developing or approving any contractual documents, to include documents defining requirements, incentive plans, and evaluation criteria. (4) evaluating contract proposals. (5) awarding government contracts. (6) administering contracts (including ordering changes or giving technical direction in contract performance or contract quantities, evaluating contractor performance, and accepting or rejecting contractor products or services). (7) terminating contracts. (8) determining whether contract costs are reasonable, allocable, and allowable. covered employee means an individual who performs an acquisition function closely associated with inherently governmental functions and is  (1) an employee of the contractor; or (2) a subcontractor that is a self employed individual treated as a covered employee of the contractor because there is no employer to whom such an individual could submit the required disclosures. non public information means any government or third party information that  (1) is exempt from disclosure under the freedom of information act ( 5 u.s.c. 552) or otherwise protected from disclosure by statute, executive order, or regulation; or (2) has not been disseminated to the general public and the government has not yet determined whether the information can or will be made available to the public. personal conflict of interest means a situation in which a covered employee has a financial interest, personal activity, or relationship that could impair the employee’s ability to act impartially and in the best interest of the government when performing under the contract. (a de minimis interest that would not "impair the employee’s ability to act impartially and in the best interest of the government" is not covered under this definition.) (1) among the sources of personal conflicts of interest are  (i) financial interests of the covered employee, of close family members, or of other members of the covered employee’s household; (ii) other employment or financial relationships (including seeking or negotiating for prospective employment or business); and (iii) gifts, including travel. (2) for example, financial interests referred to in paragraph (1) of this definition may arise from  (i) compensation, including wages, salaries, commissions, professional fees, or fees for business referrals; (ii) consulting relationships (including commercial and professional consulting and service arrangements, scientific and technical advisory board memberships, or serving as an expert witness in litigation); (iii) services provided in exchange for honorariums or travel expense reimbursements; (iv) research funding or other forms of research support; (v) investment in the form of stock or bond ownership or partnership interest (excluding diversified mutual fund investments); (vi) real estate investments; (vii) patents, copyrights, and other intellectual property interests; or (viii) business ownership and investment interests. (b) requirements. the contractor shall  (1) have procedures in place to screen covered employees for potential personal conflicts of interest, by  (i) obtaining and maintaining from each covered employee, when the employee is initially assigned to the task under the contract, a disclosure of interests that might be affected by the task to which the employee has been assigned, as follows: (a) financial interests of the covered employee, of close family members, or of other members of the covered employee’s household. (b) other employment or financial relationships of the covered employee (including seeking or negotiating for prospective employment or business). (c) gifts, including travel; and (ii) requiring each covered employee to update the disclosure statement whenever the employee’s personal or financial circumstances change in such a way that a new personal conflict of interest might occur because of the task the covered employee is performing. (2) for each covered employee  (i) prevent personal conflicts of interest, including not assigning or allowing a covered employee to perform any task under the contract for which the contractor has identified a personal conflict of interest for the employee that the contractor or employee cannot satisfactorily prevent or mitigate in consultation with the contracting agency; (ii) prohibit use of non public information accessed through performance of a government contract for personal gain; and (iii) obtain a signed non disclosure agreement to prohibit disclosure of non public information accessed through performance of a government contract. (3) inform covered employees of their obligation  (i) to disclose and prevent personal conflicts of interest; (ii) not to use non public information accessed through performance of a government contract for personal gain; and (iii) to avoid even the appearance of personal conflicts of interest; (4) maintain effective oversight to verify compliance with personal conflict of interest safeguards; (5) take appropriate disciplinary action in the case of covered employees who fail to comply with policies established pursuant to this clause; and (6) report to the contracting officer any personal conflict of interest violation by a covered employee as soon as it is identified. this report shall include a description of the violation and the proposed actions to be taken by the contractor in response to the violation. provide follow up reports of corrective actions taken, as necessary. personal conflict of interest violations include  (i) failure by a covered employee to disclose a personal conflict of interest; (ii) use by a covered employee of non public information accessed through performance of a government contract for personal gain; and (iii) failure of a covered employee to comply with the terms of a non disclosure agreement. (c) mitigation or waiver. (1) in exceptional circumstances, if the contractor cannot satisfactorily prevent a personal conflict of interest as required by paragraph (b)(2)(i) of this clause, the contractor may submit a request through the contracting officer to the head of the contracting activity for  (i) agreement to a plan to mitigate the personal conflict of interest; or (ii) a waiver of the requirement. (2) the contractor shall include in the request any proposed mitigation of the personal conflict of interest. (3) the contractor shall  (i) comply, and require compliance by the covered employee, with any conditions imposed by the government as necessary to mitigate the personal conflict of interest; or (ii) remove the contractor employee or subcontractor employee from performance of the contract or terminate the applicable subcontract. (d) subcontracts. the contractor shall include the substance of this clause, including this paragraph (d), in subcontracts  (1) that exceed the simplified acquisition threshold, as defined in federal acquisition regulation 2.101 on the date of subcontract award; and (2) in which subcontractor employees will perform acquisition functions closely associated with inherently governmental functions (i.e., instead of performance only by a self employed individual). (end of clause) as prescribed in 3.906 , insert the following clause: contractor employee whistleblower rights (nov 2023) (a) this contract and employees working on this contract will be subject to the whistleblower rights and remedies established at 41 u.s.c. 4712 and federal acquisition regulation (far) 3.900 through 3.905. (b) the contractor shall inform its employees in writing, in the predominant language of the workforce, of employee whistleblower rights and protections under 41 u.s.c. 4712, as described in far 3.900 through 3.905. (c) the contractor shall insert the substance of this clause, including this paragraph (c), in all subcontracts. (end of clause) as prescribed in 3.909 3(a), insert the following provision: prohibition on contracting with entities that require certain internal confidentiality agreements or statements representation (jan 2017) (a) definition. as used in this provision  internal confidentiality agreement or statement, subcontract, and subcontractor , are defined in the clause at 52.203 19, prohibition on requiring certain internal confidentiality agreements or statements. (b) in accordance with section 743 of division e, title vii, of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), government agencies are not permitted to use funds appropriated (or otherwise made available) for contracts with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a federal department or agency authorized to receive such information. (c) the prohibition in paragraph (b) of this provision does not contravene requirements applicable to standard form 312, (classified information nondisclosure agreement), form 4414 (sensitive compartmented information nondisclosure agreement), or any other form issued by a federal department or agency governing the nondisclosure of classified information. (d) representation. by submission of its offer, the offeror represents that it will not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a government contract to a designated investigative or law enforcement representative of a federal department or agency authorized to receive such information (e.g., agency office of the inspector general). (end of provision) as prescribed in 3.909 3(b), insert the following clause: prohibition on requiring certain internal confidentiality agreements or statements (jan 2017) (a) definitions. as used in this clause  internal confidentiality agreement or statement means a confidentiality agreement or any other written statement that the contractor requires any of its employees or subcontractors to sign regarding nondisclosure of contractor information, except that it does not include confidentiality agreements arising out of civil litigation or confidentiality agreements that contractor employees or subcontractors sign at the behest of a federal agency. subcontract means any contract as defined in subpart 2.1 entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. it includes but is not limited to purchase orders, and changes and modifications to purchase orders. subcontractor means any supplier, distributor, vendor, or firm (including a consultant) that furnishes supplies or services to or for a prime contractor or another subcontractor. (b) the contractor shall not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a government contract to a designated investigative or law enforcement representative of a federal department or agency authorized to receive such information (e.g., agency office of the inspector general). (c) the contractor shall notify current employees and subcontractors that prohibitions and restrictions of any preexisting internal confidentiality agreements or statements covered by this clause, to the extent that such prohibitions and restrictions are inconsistent with the prohibitions of this clause, are no longer in effect. (d) the prohibition in paragraph (b) of this clause does not contravene requirements applicable to standard form 312 (classified information nondisclosure agreement), form 4414 (sensitive compartmented information nondisclosure agreement), or any other form issued by a federal department or agency governing the nondisclosure of classified information. (e) in accordance with section 743 of division e, title vii, of the consolidated and further continuing appropriations act, 2015, (pub. l. 113 235), and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions) use of funds appropriated (or otherwise made available) is prohibited, if the government determines that the contractor is not in compliance with the provisions of this clause. (f) the contractor shall include the substance of this clause, including this paragraph (f), in subcontracts under such contracts. (end of clause) as prescribed in 4.103 , insert the following clause: approval of contract (dec 1989) this contract is subject to the written approval of [identify title of designated agency official here] and shall not be binding until so approved. (end of clause) as prescribed in 4.404(a), insert the following clause: security requirements (mar 2021) (a) this clause applies to the extent that this contract involves access to information classified "confidential," "secret," or "top secret." (b) the contractor shall comply with  (1) the security agreement dd form441), including the national industrial security program operating manual (32 cfr part 117); and (2) any revisions to that manual, notice of which has been furnished to the contractor. (c) if, subsequent to the date of this contract, the security classification or security requirements under this contract are changed by the government and if the changes cause an increase or decrease in security costs or otherwise affect any other term or condition of this contract, the contract shall be subject to an equitable adjustment as if the changes were directed under the changes clause of this contract. (d) the contractor agrees to insert terms that conform substantially to the language of this clause, including this paragraph (d) but excluding any reference to the changes clause of this contract, in all subcontracts under this contract that involve access to classified information. (end of clause) alternate i (apr 1984). if a cost contract for research and development with an educational institution is contemplated, add the following paragraphs (e), (f), and (g) to the basic clause: (e) if a change in security requirements, as provided in paragraphs (b) and (c), results (1)in a change in the security classification of this contract or any of its elements from an unclassified status or a lower classification to a higher classification, or (2)in more restrictive area controls than previously required, the contractor shall exert every reasonable effort compatible with the contractor’s established policies to continue the performance of work under the contract in compliance with the change in security classification or requirements. if, despite reasonable efforts, the contractor determines that the continuation of work under this contract is not practicable because of the change in security classification or requirements, the contractor shall notify the contracting officer in writing. until resolution of the problem is made by the contracting officer, the contractor shall continue safeguarding all classified material as required by this contract. (f) after receiving the written notification, the contracting officer shall explore the circumstances surrounding the proposed change in security classification or requirements, and shall endeavor to work out a mutually satisfactory method whereby the contractor can continue performance of the work under this contract. (g) if, 15 days after receipt by the contracting officer of the notification of the contractor’s stated inability to proceed, (1) the application to this contract of the change in security classification or requirements has not been withdrawn, or (2)a mutually satisfactory method for continuing performance of work under this contract has not been agreed upon, the contractor may request the contracting officer to terminate the contract in whole or in part. the contracting officer shall terminate the contract in whole or in part, as may be appropriate, and the termination shall be deemed a termination under the terms of the termination for the convenience of the government clause. alternate ii (apr 1984). if employee identification is required for security or other reasons in a construction contract or architect engineer contract, add the following paragraph (e) to the basic clause: (e) the contractor shall be responsible for furnishing to each employee and for requiring each employee engaged on the work to display such identification as may be approved and directed by the contracting officer. all prescribed identification shall immediately be delivered to the contracting officer, for cancellation upon the release of any employee. when required by the contracting officer, the contractor shall obtain and submit fingerprints of all persons employed or to be employed on the project. as prescribed in 4.905 , insert the following provision: taxpayer identification (oct 1998) (a) definitions. common parent, as used in this provision, means that corporate entity that owns or controls an affiliated group of corporations that files its federal income tax returns on a consolidated basis, and of which the offeror is a member. taxpayer identification number (tin), as used in this provision, means the number required by the internal revenue service (irs) to be used by the offeror in reporting income tax and other returns. the tin may be either a social security number or an employer identification number. (b) all offerors must submit the information required in paragraphs (d) through (f) of this provision to comply with debt collection requirements of 31 u.s.c. 7701(c) and 3325(d), reporting requirements of 26 u.s.c.6041, 6041 a, and 6050 m, and implementing regulations issued by the irs. if the resulting contract is subject to the payment reporting requirements described in federal acquisition regulation (far) 4.904, the failure or refusal by the offeror to furnish the information may result in a 31 percent reduction of payments otherwise due under the contract. (c) the tin may be used by the government to collect and report on any delinquent amounts arising out of the offeror’s relationship with the government ( 31 u.s.c. 7701(c)(3)). if the resulting contract is subject to the payment reporting requirements described in far 4.904, the tin provided hereunder may be matched with irs records to verify the accuracy of the offeror’s tin. (d) taxpayer identification number (tin). □ tin: __________________. □ tin has been applied for. □ tin is not required because: □ offeror is a nonresident alien, foreign corporation, or foreign partnership that does not have income effectively connected with the conduct of a trade or business in the united states and does not have an office or place of business or a fiscal paying agent in the united states; □ offeror is an agency or instrumentality of a foreign government; □ offeror is an agency or instrumentality of the federal government. (e) type of organization. □ sole proprietorship; □ partnership; □ corporate entity (not tax exempt); □ corporate entity (tax exempt); □ government entity (federal, state, or local); □ foreign government; □ international organization per 26 cfr 1.6049 4; □ other__________________. (f) common parent. □ offeror is not owned or controlled by a common parent as defined in paragraph (a) of this provision. □ name and tin of common parent: □ name__________________. □ tin__________________. (end of provision) as prescribed in 4.607(a), insert the following provision: women owned business (other than small business) (oct 2014) (a) definition."women owned business concern," as used in this provision, means a concern that is at least 51 percent owned by one or more women; or in the case of any publicly owned business, at least 51 percent of its stock is owned by one or more women; and whose management and daily business operations are controlled by one or more women. (b) representation. [complete only if the offeror is a women owned business concern and has not represented itself as a small business concern in paragraph (c)(1) of far 52.219 1, small business program representations, of this solicitation.] the offeror represents that it □ is a women owned business concern. (end of provision) as prescribed in 4.607(b), insert the following provision: unique entity identifier (oct 2016) (a) definition. as used in this provision  electronic funds transfer (eft) indicator means a four character suffix to the unique entity identifier. the suffix is assigned at the discretion of the commercial, nonprofit, or government entity to establish additional system for award management records for identifying alternative eft accounts (see subpart 32.11) for the same entity. unique entity identifier means a number or other identifier used to identify a specific commercial, nonprofit, or government entity. see www.sam.gov for the designated entity for establishing unique entity identifiers. (b) the offeror shall enter, in the block with its name and address on the cover page of its offer, the annotation "unique entity identifier" followed by the unique entity identifier that identifies the offeror's name and address exactly as stated in the offer. the offeror also shall enter its eft indicator, if applicable. (c) if the offeror does not have a unique entity identifier, it should contact the entity designated at www.sam.gov for establishment of the unique entity identifier directly to obtain one. the offeror should be prepared to provide the following information: (1) company legal business name. (2) tradestyle, doing business, or other name by which your entity is commonly recognized. (3) company physical street address, city, state and zip code. (4) company mailing address, city, state and zip code (if separate from physical). (5) company telephone number. (6) date the company was started. (7) number of employees at your location. (8) chief executive officer/key manager. (9) line of business (industry). (10) company headquarters name and address (reporting relationship within your entity). (end of provision) as prescribed in 4.1105(a)(1), use the following provision: system for award management (nov 2024) (a) definitions. as used in this provision  "electronic funds transfer (eft) indicator means a four character suffix to the unique entity identifier. the suffix is assigned at the discretion of the commercial, nonprofit, or government entity to establish additional system for award management records for identifying alternative eft accounts (see subpart 32.11) for the same entity. registered in the system for award management (sam) means that  (1) the offeror has entered all mandatory information, including the unique entity identifier and the eft indicator, if applicable, the commercial and government entity (cage) code, as well as data required by the federal funding accountability and transparency act of 2006 (see subpart 4.14) into sam (2) the offeror has completed the core, assertions, and representations and certifications, and points of contact sections of the registration in sam; (3) the government has validated all mandatory data fields, to include validation of the taxpayer identification number (tin) with the internal revenue service (irs). the offeror will be required to provide consent for tin validation to the government as a part of the sam registration process; and (4) the government has marked the record "active". unique entity identifier means a number or other identifier used to identify a specific commercial, nonprofit, or government entity. see www.sam.gov for the designated entity for establishing unique entity identifiers. (b) (1) an offeror is required to be registered in sam when submitting an offer or quotation and at time of award (see far clause 52.204 13, system for award management maintenance, for the requirement to maintain sam registration during performance and through final payment). (2) the offeror shall enter, in the block with its name and address on the cover page of its offer, the annotation "unique entity identifier" followed by the unique entity identifier that identifies the offeror's name and address exactly as stated in the offer. the offeror also shall enter its eft indicator, if applicable. the unique entity identifier will be used by the contracting officer to verify that the offeror is registered in the sam. (c) if the offeror does not have a unique entity identifier, it should contact the entity designated at www.sam.gov for establishment of the unique entity identifier directly to obtain one. the offeror should be prepared to provide the following information: (1) company legal business name. (2) tradestyle, doing business, or other name by which your entity is commonly recognized. (3) company physical street address, city, state, and zip code. (4) company mailing address, city, state and zip code (if separate from physical). (5) company telephone number. (6) date the company was started. (7) number of employees at your location. (8) chief executive officer/key manager. (9) line of business (industry). (10) company headquarters name and address (reporting relationship within your entity). (d) processing time should be taken into consideration when registering. offerors who are not registered in sam should consider applying for registration immediately upon receipt of this solicitation. see https://ww.sam.gov for information on registration. (end of provision) alternate i (oct 2018). as prescribed in 4.1105(a)(2) , substitute the following paragraph (b)(1) for paragraph (b)(1) of the basic provision: (b)(1) an offeror is required to be registered in sam as soon as possible. if registration is not possible when submitting an offer or quotation, the awardee shall be registered in sam in accordance with the requirements of clause 52.204 13, system for award management maintenance. as prescribed in 4.1202(a), insert the following provision: annual representations and certifications (jan 2025) (a) (1) the north american industry classification system (naics) code for this acquisition is__________________ [insert naics code]. (2) the small business size standard is _____________ [insert size standard]. (3) the small business size standard for a concern that submits an offer, other than on a construction or service acquisition, but proposes to furnish an end item that it did not itself manufacture, process, or produce is 500 employees, or 150 employees for information technology value added resellers under naics code 541519 if the acquisition  (i) is set aside for small business and has a value above the simplified acquisition threshold; (ii) uses the hubzone price evaluation preference regardless of dollar value, unless the offeror waives the price evaluation preference; or (iii) is an 8(a), hubzone, service disabled veteran owned, economically disadvantaged women owned, or women owned small business set aside or sole source award regardless of dollar value. (b) (1) if the provision at 52.204 7, system for award management, is included in this solicitation, paragraph (d) of this provision applies. (2) if the provision at 52.204 7, system for award management, is not included in this solicitation, and the offeror has an active registration in the system for award management (sam), the offeror may choose to use paragraph (d) of this provision instead of completing the corresponding individual representations and certifications in the solicitation. the offeror shall indicate which option applies by checking one of the following boxes: (i) □ paragraph (d) applies. (ii) □ paragraph (d) does not apply and the offeror has completed the individual representations and certifications in the solicitation. (c) (1) the following representations or certifications in sam are applicable to this solicitation as indicated: (i) 52.203 2, certificate of independent price determination. this provision applies to solicitations when a firm fixed price contract or fixed price contract with economic price adjustment is contemplated, unless  (a) the acquisition is to be made under the simplified acquisition procedures in part 13; (b) the solicitation is a request for technical proposals under two step sealed bidding procedures; or (c) the solicitation is for utility services for which rates are set by law or regulation. (ii) 52.203 11, certification and disclosure regarding payments to influence certain federal transactions. this provision applies to solicitations expected to exceed $150,000. (iii) 52.203 18, prohibition on contracting with entities that require certain internal confidentiality agreements or statements representation. this provision applies to all solicitations. (iv) 52.204 3, taxpayer identification. this provision applies to solicitations that do not include the provision at 52.204 7, system for award management. (v) 52.204 5, women owned business (other than small business). this provision applies to solicitations that  (a) are not set aside for small business concerns; (b) exceed the simplified acquisition threshold; and (c) are for contracts that will be performed in the united states or its outlying areas. (vi) 52.204 26, covered telecommunications equipment or services representation. this provision applies to all solicitations. (vii) 52.209 2, prohibition on contracting with inverted domestic corporations representation. (viii) 52.209 5, certification regarding responsibility matters. this provision applies to solicitations where the contract value is expected to exceed the simplified acquisition threshold. (ix) 52.209 11, representation by corporations regarding delinquent tax liability or a felony conviction under any federal law. this provision applies to all solicitations. (x) 52.214 14, place of performance sealed bidding. this provision applies to invitations for bids except those in which the place of performance is specified by the government. (xi) 52.215 6, place of performance. this provision applies to solicitations unless the place of performance is specified by the government. (xii) 52.219 1, small business program representations (basic, alternates i, and ii). this provision applies to solicitations when the contract is for supplies to be delivered or services to be performed in the united states or its outlying areas, or when the contracting officer has applied part 19 in accordance with 19.000(b)(1)(ii). (a) the basic provision applies when the solicitations are issued by other than dod, nasa, and the coast guard. (b) the provision with its alternate i applies to solicitations issued by dod, nasa, or the coast guard. (c) the provision with its alternate ii applies to solicitations that will result in a multiple award contract with more than one naics code assigned. (xiii) 52.219 2, equal low bids. this provision applies to solicitations when contracting by sealed bidding and the contract is for supplies to be delivered or services to be performed in the united states or its outlying areas, or when the contracting officer has applied part 19 in accordance with 19.000(b)(1)(ii). (xiv) 52.222 22, previous contracts and compliance reports. this provision applies to solicitations that include the clause at 52.222 26, equal opportunity. (xv) 52.222 25, affirmative action compliance. this provision applies to solicitations, other than those for construction, when the solicitation includes the clause at 52.222 26, equal opportunity. (xvi) 52.222 38, compliance with veterans’ employment reporting requirements. this provision applies to solicitations when it is anticipated the contract award will exceed the simplified acquisition threshold and the contract is not for acquisition of commercial products or commercial services. (xvii) 52.223 1, biobased product certification. this provision applies to solicitations that require the delivery or specify the use of biobased products in usda designated product categories; or include the clause at 52.223 2, reporting of biobased products under service and construction contracts. (xviii) 52.223 4, recovered material certification. this provision applies to solicitations that are for, or specify the use of, epa designated items. (xix) 52.223 22, public disclosure of greenhouse gas emissions and reduction goals representation. this provision applies to solicitations that include the provision at 52.204 7. (xx) 52.225 2, buy american certificate. this provision applies to solicitations containing the clause at 52.225 1. (xxi) 52.225 4, buy american free trade agreements israeli trade act certificate. (basic, alternates ii and iii.) this provision applies to solicitations containing the clause at 52.225 3. (a) if the acquisition value is less than $50,000, the basic provision applies. (b) if the acquisition value is $50,000 or more but is less than $100,000, the provision with its alternate ii applies. (c) if the acquisition value is $100,000 or more but is less than $102,280, the provision with its alternate iii applies. (xxii) 52.225 6, trade agreements certificate. this provision applies to solicitations containing the clause at 52.225 5. (xxiii) 52.225 20, prohibition on conducting restricted business operations in sudan certification. this provision applies to all solicitations. (xxiv) 52.225 25, prohibition on contracting with entities engaging in certain activities or transactions relating to iran representation and certifications. this provision applies to all solicitations. (xxv) 52.226 2, historically black college or university and minority institution representation. this provision applies to solicitations for research, studies, supplies, or services of the type normally acquired from higher educational institutions. (2) the following representations or certifications are applicable as indicated by the contracting officer: [contracting officer check as appropriate.] __ (i) 52.204 17, ownership or control of offeror. __ (ii) 52.204 20, predecessor of offeror. __ (iii) 52.222 18, certification regarding knowledge of child labor for listed end products. __ (iv) 52.222 48, exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment  certification. __ (v) 52.222 52, exemption from application of the service contract labor standards to contracts for certain services certification. __ (vi) 52.227 6, royalty information. __ (a) basic. __ (b) alternate i. __ (vii) 52.227 15, representation of limited rights data and restricted computer software. (d) the offeror has completed the annual representations and certifications electronically in sam website accessed through https://www.sam.gov. after reviewing the sam information, the offeror verifies by submission of the offer that the representations and certifications currently posted electronically that apply to this solicitation as indicated in paragraph (c) of this provision have been entered or updated within the last 12 months, are current, accurate, complete, and applicable to this solicitation (including the business size standard applicable to the naics code referenced for this solicitation), as of the date of this offer and are incorporated in this offer by reference (see far 4.1201); except for the changes identified below [offeror to insert changes, identifying change by clause number, title, date]. these amended representation(s) and/or certification(s) are also incorporated in this offer and are current, accurate, and complete as of the date of this offer. far clause # title date change any changes provided by the offeror are applicable to this solicitation only, and do not result in an update to the representations and certifications posted on sam. (end of provision) alternate i (mar 2023). as prescribed in 4.1202(a) , substitute the following paragraph (a) for paragraph (a) of the basic provision: (a)(1) the north american industry classification system (naics) codes and corresponding size standards for this acquisition are as follows; the categories or portions these naics codes are assigned to are specified elsewhere in the solicitation: naics code size standard ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ [contracting officer to insert naics codes and size standards]. (2) the small business size standard for a concern that submits an offer, other than on a construction or service acquisition, but proposes to furnish an end item that it did not itself manufacture, process, or produce, (i.e., nonmanufacturer), is 500 employees, or 150 employees for information technology value added resellers under naics code 541519, if the acquisition  (i) is set aside for small business and has a value above the simplified acquisition threshold; (ii) uses the hubzone price evaluation preference regardless of dollar value, unless the offeror waives the price evaluation preference; or (iii) is an 8(a), hubzone, service disabled veteran owned, economically disadvantaged women owned, or women owned small business set aside or sole source award regardless of dollar value. as prescribed in 4.1303 , insert the following clause: personal identity verification of contractor personnel (jan 2011) (a) the contractor shall comply with agency personal identity verification procedures identified in the contract that implement homeland security presidential directive 12 (hspd 12), office of management and budget (omb) guidance m 05 24 and federal information processing standards publication (fips pub) number 201. (b) the contractor shall account for all forms of government provided identification issued to the contractor employees in connection with performance under this contract. the contractor shall return such identification to the issuing agency at the earliest of any of the following, unless otherwise determined by the government: (1) when no longer needed for contract performance. (2) upon completion of the contractor employee’s employment. (3) upon contract completion or termination. (c) the contracting officer may delay final payment under a contract if the contractor fails to comply with these requirements. (d) the contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts when the subcontractor’s employees are required to have routine physical access to a federally controlled facility and/or routine access to a federally controlled information system. it shall be the responsibility of the prime contractor to return such identification to the issuing agency in accordance with the terms set forth in paragraph (b) of this section, unless otherwise approved in writing by the contracting officer. (end of clause) as prescribed in 4.1403(a), insert the following clause: reporting executive compensation and first tier subcontract awards (jun 2020) (a) definitions. as used in this clause: executive means officers, managing partners, or any other employees in management positions. first tier subcontract means a subcontract awarded directly by the contractor for the purpose of acquiring supplies or services (including construction) for performance of a prime contract. it does not include the contractor’s supplier agreements with vendors, such as long term arrangements for materials or supplies that benefit multiple contracts and/or the costs of which are normally applied to a contractor’s general and administrative expenses or indirect costs. month of award means the month in which a contract is signed by the contracting officer or the month in which a first tier subcontract is signed by the contractor. total compensation means the cash and noncash dollar value earned by the executive during the contractor’s preceding fiscal year and includes the following (for more information see 17 cfr 229.402(c)(2)): (1) salary and bonus. (2) awards of stock, stock options, and stock appreciation rights. use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the financial accounting standards board’s accounting standards codification (fasb asc) 718, compensation stock compensation. (3) earnings for services under non equity incentive plans. this does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees. (4) change in pension value. this is the change in present value of defined benefit and actuarial pension plans. (5) above market earnings on deferred compensation which is not tax qualified. (6) other compensation, if the aggregate value of all such other compensation (e.g., severance, termination payments, value of life insurance paid on behalf of the employee, perquisites or property) for the executive exceeds $10,000. (b) section 2(d)(2) of the federal funding accountability and transparency act of 2006 (pub. l. 109 282), as amended by section 6202 of the government funding transparency act of 2008 (pub. l. 110 252), requires the contractor to report information on subcontract awards. the law requires all reported information be made public, therefore, the contractor is responsible for notifying its subcontractors that the required information will be made public. (c) nothing in this clause requires the disclosure of classified information (d) (1) executive compensation of the prime contractor. as a part of its annual registration requirement in the system for award management (sam) (federal acquisition regulation (far) provision 52.204 7), the contractor shall report the names and total compensation of each of the five most highly compensated executives for its preceding completed fiscal year, if  (i) in the contractor’s preceding fiscal year, the contractor received  (a) 80 percent or more of its annual gross revenues from federal contracts (and subcontracts), loans, grants (and subgrants), cooperative agreements, and other forms of federal financial assistance; and (b) $25,000,000 or more in annual gross revenues from federal contracts (and subcontracts), loans, grants (and subgrants), cooperative agreements, and other forms of federal financial assistance; and (ii) the public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the securities exchange act of 1934 ( 15 u.s.c. 78m(a), 78o(d)) or section 6104 of the internal revenue code of 1986. (to determine if the public has access to the compensation information, see the u.s. security and exchange commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (2) first tier subcontract information. unless otherwise directed by the contracting officer, or as provided in paragraph (g) of this clause, by the end of the month following the month of award of a first tier subcontract valued at or above the threshold specified in far 4.1403(a) on the date of subcontract award, the contractor shall report the following information at http://www.fsrs.gov for that first tier subcontract. (the contractor shall follow the instructions at http://www.fsrs.gov to report the data.) (i) unique entity identifier for the subcontractor receiving the award and for the subcontractor's parent company, if the subcontractor has a parent company. (ii) name of the subcontractor. (iii) amount of the subcontract award. (iv) date of the subcontract award. (v) a description of the products or services (including construction) being provided under the subcontract, including the overall purpose and expected outcomes or results of the subcontract. (vi) subcontract number (the subcontract number assigned by the contractor). (vii) subcontractor’s physical address including street address, city, state, and country. also include the nine digit zip code and congressional district. (viii) subcontractor’s primary performance location including street address, city, state, and country. also include the nine digit zip code and congressional district. (ix) the prime contract number, and order number if applicable. (x) awarding agency name and code. (xi) funding agency name and code. (xii) government contracting office code. (xiii) treasury account symbol (tas) as reported in fpds. (xiv) the applicable north american industry classification system code (naics). (3) executive compensation of the first tier subcontractor. unless otherwise directed by the contracting officer, by the end of the month following the month of award of a first tier subcontract valued at or above the threshold specified in far 4.1403(a) on the date of subcontract award, and annually thereafter (calculated from the prime contract award date), the contractor shall report the names and total compensation of each of the five most highly compensated executives for that first tier subcontractor for the first tier subcontractor’s preceding completed fiscal year at http://www.fsrs.gov, if  (i) in the subcontractor’s preceding fiscal year, the subcontractor received  (a) 80 percent or more of its annual gross revenues from federal contracts (and subcontracts), loans, grants (and subgrants), cooperative agreements, and other forms of federal financial assistance; and (b) $25,000,000 or more in annual gross revenues from federal contracts (and subcontracts), loans, grants (and subgrants), cooperative agreements, and other forms of federal financial assistance; and (ii) the public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the securities exchange act of 1934 ( 15 u.s.c. 78m(a), 78o(d)) or section 6104 of the internal revenue code of 1986. (to determine if the public has access to the compensation information, see the u.s. security and exchange commission total compensation filings at http://www.sec.gov/answers/execomp.htm.) (e) the contractor shall not split or break down first tier subcontract awards to a value below the threshold specified in far 4.1403(a), on the date of subcontract award, to avoid the reporting requirements in paragraph (d) of this clause. (f) the contractor is required to report information on a first tier subcontract covered by paragraph (d) when the subcontract is awarded. continued reporting on the same subcontract is not required unless one of the reported data elements changes during the performance of the subcontract. the contractor is not required to make further reports after the first tier subcontract expires. (g) (1) if the contractor in the previous tax year had gross income, from all sources, under $300,000, the contractor is exempt from the requirement to report subcontractor awards. (2) if a subcontractor in the previous tax year had gross income from all sources under $300,000, the contractor does not need to report awards for that subcontractor. (h) the fsrs database at http://www.fsrs.gov will be prepopulated with some information from sam and the fpds database. if fpds information is incorrect, the contractor should notify the contracting officer. if the sam information is incorrect, the contractor is responsible for correcting this information. (end of clause) as prescribed in 4.607(c), insert the following clause: unique entity identifier maintenance (oct 2016) (a) definition. unique entity identifier, as used in this clause, means a number or other identifier used to identify a specific commercial, nonprofit, or government entity. see www.sam.gov for the designated entity for establishing unique entity identifiers. (b) the contractor shall ensure that the unique entity identifier is maintained with the entity designated at the system for award management (sam) for establishment of the unique entity identifier throughout the life of the contract. the contractor shall communicate any change to the unique entity identifier to the contracting officer within 30 days after the change, so an appropriate modification can be issued to update the data on the contract. a change in the unique entity identifier does not necessarily require a novation be accomplished. (end of clause) as prescribed in 4.1105(b), use the following clause: system for award management maintenance. (oct 2018) (a) definitions. as used in this clause  electronic funds transfer (eft) indicator means a four character suffix to the unique entity identifier. the suffix is assigned at the discretion of the commercial, nonprofit, or government entity to establish additional system for award management (sam) records for identifying alternative eft accounts (see subpart 32.11) for the same entity. registered in the system for award management (sam) means that  (1) the contractor has entered all mandatory information, including the unique entity identifier and the eft indicator (if applicable), the commercial and government entity (cage) code, as well as data required by the federal funding accountability and transparency act of 2006 (see subpart 4.14), into sam; (2) the contractor has completed the core, assertions, representations and certifications, and points of contact sections of the registration in sam; (3) the government has validated all mandatory data fields, to include validation of the taxpayer identification number (tin) with the internal revenue service (irs). the contractor will be required to provide consent for tin validation to the government as a part of the sam registration process; and (4) the government has marked the record "active". system for award management (sam) means the primary government repository for prospective federal awardee and federal awardee information and the centralized government system for certain contracting, grants, and other assistance related processes. it includes  (1) data collected from prospective federal awardees required for the conduct of business with the government; (2) prospective contractor submitted annual representations and certifications in accordance with far subpart 4.12; and (3) identification of those parties excluded from receiving federal contracts, certain subcontracts, and certain types of federal financial and non financial assistance and benefits. unique entity identifier means a number or other identifier used to identify a specific commercial, nonprofit, or government entity. see www.sam.gov for the designated entity for establishing unique entity identifiers. (b) if the solicitation for this contract contained the provision 52.204 7 with its alternate i, and the contractor was unable to register prior to award, the contractor shall be registered in sam within 30 days after award or before three days prior to submission of the first invoice, whichever occurs first. (c) the contractor shall maintain registration in sam during contract performance and through final payment of any contract, basic agreement, basic ordering agreement, or blanket purchasing agreement. the contractor is responsible for the currency, accuracy and completeness of the data within sam, and for any liability resulting from the government's reliance on inaccurate or incomplete data. to remain registered in sam after the initial registration, the contractor is required to review and update on an annual basis, from the date of initial registration or subsequent updates, its information in sam to ensure it is current, accurate and complete. updating information in sam does not alter the terms and conditions of this contract and is not a substitute for a properly executed contractual document. (d) (1) (i) if a contractor has legally changed its business name or "doing business as" name (whichever is shown on the contract), or has transferred the assets used in performing the contract, but has not completed the necessary requirements regarding novation and change of name agreements in subpart 42.12, the contractor shall provide the responsible contracting officer a minimum of one business day's written notification of its intention to  (a) change the name in sam; (b) comply with the requirements of subpart 42.12 of the far; and (c) agree in writing to the timeline and procedures specified by the responsible contracting officer. the contractor shall provide with the notification sufficient documentation to support the legally changed name. (ii) if the contractor fails to comply with the requirements of paragraph (d)(1)(i) of this clause, or fails to perform the agreement at paragraph (d)(1)(i)(c) of this clause, and, in the absence of a properly executed novation or change of name agreement, the sam information that shows the contractor to be other than the contractor indicated in the contract will be considered to be incorrect information within the meaning of the "suspension of payment" paragraph of the electronic funds transfer (eft) clause of this contract. (2) the contractor shall not change the name or address for eft payments or manual payments, as appropriate, in sam record to reflect an assignee for the purpose of assignment of claims (see far subpart 32.8, assignment of claims). assignees shall be separately registered in the sam. information provided to the contractor’s sam record that indicates payments, including those made by eft, to an ultimate recipient other than that contractor will be considered to be incorrect information within the meaning of the "suspension of payment" paragraph of the eft clause of this contract. (3) the contractor shall ensure that the unique entity identifier is maintained with the entity designated at www.sam.gov for establishment of the unique entity identifier throughout the life of the contract. the contractor shall communicate any change to the unique entity identifier to the contracting officer within 30 days after the change, so an appropriate modification can be issued to update the data on the contract. a change in the unique entity identifier does not necessarily require a novation be accomplished. (e) contractors may obtain additional information on registration and annual confirmation requirements at https://www.sam.gov. (end of clause) as prescribed in 4.1705(a), insert the following clause: service contract reporting requirements (oct 2016) (a) definition. first tier subcontract means a subcontract awarded directly by the contractor for the purpose of acquiring supplies or services (including construction) for performance of a prime contract. it does not include the contractor’s supplier agreements with vendors, such as long term arrangements for materials or supplies that benefit multiple contracts and/or the costs of which are normally applied to a contractor’s general and administrative expenses or indirect costs. (b) the contractor shall report, in accordance with paragraphs (c) and (d) of this clause, annually by october 31, for services performed under this contract during the preceding government fiscal year (october 1 september 30). (c) the contractor shall report the following information: (1) contract number and, as applicable, order number. (2) the total dollar amount invoiced for services performed during the previous government fiscal year under the contract. (3) the number of contractor direct labor hours expended on the services performed during the previous government fiscal year. (4) data reported by subcontractors under paragraph (f) of this clause. (d) the information required in paragraph (c) of this clause shall be submitted via the internet at www.sam.gov. (see sam user guide). if the contractor fails to submit the report in a timely manner, the contracting officer will exercise appropriate contractual remedies. in addition, the contracting officer will make the contractor’s failure to comply with the reporting requirements a part of the contractor’s performance information under far subpart 42.15. (e) agencies will review contractor reported information for reasonableness and consistency with available contract information. in the event the agency believes that revisions to the contractor reported information are warranted, the agency will notify the contractor no later than november 15. by november 30, the contractor shall revise the report, or document its rationale for the agency. (f) (1) the contractor shall require each first tier subcontractor providing services under this contract, with subcontract(s) each valued at or above the thresholds set forth in 4.1703(a)(2), to provide the following detailed information to the contractor in sufficient time to submit the report: (i) subcontract number (including subcontractor name and unique entity identifier); and (ii) the number of first tier subcontractor direct labor hours expended on the services performed during the previous government fiscal year. (2) the contractor shall advise the subcontractor that the information will be made available to the public as required by section 743 of division c of the consolidated appropriations act, 2010. (end of clause) as prescribed in 4.1705(b), insert the following clause: service contract reporting requirements for indefinite delivery contracts (oct 2016) (a) definitions. first tier subcontract means a subcontract awarded directly by the contractor for the purpose of acquiring supplies or services (including construction) for performance of a prime contract. it does not include the contractor’s supplier agreements with vendors, such as long term arrangements for materials or supplies that benefit multiple contracts and/or the costs of which are normally applied to a contractor’s general and administrative expenses or indirect costs. (b) the contractor shall report, in accordance with paragraphs (c) and (d) of this clause, annually by october 31, for services performed during the preceding government fiscal year (october 1 september 30) under this contract for orders that exceed the thresholds established in 4.1703(a)(2). (c) the contractor shall report the following information: (1) contract number and order number. (2) the total dollar amount invoiced for services performed during the previous government fiscal year under the order. (3) the number of contractor direct labor hours expended on the services performed during the previous government fiscal year. (4) data reported by subcontractors under paragraph (f) of this clause. (d) the information required in paragraph (c) of this clause shall be submitted via the internet at www.sam.gov. (see sam user guide). if the contractor fails to submit the report in a timely manner, the contracting officer will exercise appropriate contractual remedies. in addition, the contracting officer will make the contractor’s failure to comply with the reporting requirements a part of the contractor’s performance information under far subpart 42.15. (e) agencies will review contractor reported information for reasonableness and consistency with available contract information. in the event the agency believes that revisions to the contractor reported information are warranted, the agency will notify the contractor no later than november 15. by november 30, the contractor shall revise the report, or document its rationale for the agency. (f) (1) the contractor shall require each first tier subcontractor providing services under this contract, with subcontract(s) each valued at or above the thresholds set forth in 4.1703(a)(2), to provide the following detailed information to the contractor in sufficient time to submit the report: (i) subcontract number (including subcontractor name and unique entity identifier), and (ii) the number of first tier subcontractor direct labor hours expended on the services performed during the previous government fiscal year. (2) the contractor shall advise the subcontractor that the information will be made available to the public as required by section 743 of division c of the consolidated appropriations act, 2010. (end of clause) as prescribed in 4.1804(a), use the following provision: commercial and government entity code reporting (aug 2020) (a) definition. as used in this provision   commercial and government entity (cage) code means  (1) an identifier assigned to entities located in the united states or its outlying areas by the defense logistics agency (dla) commercial and government entity (cage) branch to identify a commercial or government entity by unique location; or (2) an identifier assigned by a member of the north atlantic treaty organization (nato) or by the nato support and procurement agency (nspa) to entities located outside the united states and its outlying areas that the dla commercial and government entity (cage) branch records and maintains in the cage master file. this type of code is known as a nato cage (ncage) code. (b) the offeror shall provide its cage code with its offer with its name and location address or otherwise include it prominently in its proposal. the cage code must be for that name and location address. insert the word "cage" before the number. the cage code is required prior to award. (c) cage codes may be obtained via  (1) registration in the system for award management (sam) at www.sam.gov. if the offeror is located in the united states or its outlying areas and does not already have a cage code assigned, the dla commercial and government entity (cage) branch will assign a cage code as a part of the sam registration process. sam registrants located outside the united states and its outlying areas shall obtain a ncage code prior to registration in sam (see paragraph (c)(3) of this provision). (2) the dla contractor and government entity (cage) branch. if registration in sam is not required for the subject procurement, and the offeror does not otherwise register in sam, an offeror located in the united states or its outlying areas may request that a cage code be assigned by submitting a request at https://cage.dla.mil. (3) the appropriate country codification bureau. entities located outside the united states and its outlying areas may obtain an ncage code by contacting the codification bureau in the foreign entity's country if that country is a member of nato or a sponsored nation. ncage codes may be obtained from the nspa at https://eportal.nspa.nato.int/ac135public/scage/cagelist.aspx if the foreign entity’s country is not a member of nato or a sponsored nation. points of contact for codification bureaus, as well as additional information on obtaining ncage codes, are available at http://www.nato.int/structur/ac/135/main/links/contacts.htm. (d) additional guidance for establishing and maintaining cage codes is available at https://cage.dla.mil. (e) when a cage code is required for the immediate owner and/or the highest level owner by federal acquisition regulation (far) 52.204 17 or 52.212 3(p), the offeror shall obtain the respective cage code from that entity to supply the cage code to the government. (f) do not delay submission of the offer pending receipt of a cage code. (g) if the solicitation includes far clause 52.204 2, security requirements, a subcontractor requiring access to classified information under a contract shall be identified with a cage code on the dd form 254. the contractor shall require a subcontractor requiring access to classified information to provide its cage code with its name and location address or otherwise include it prominently in the proposal. each location of subcontractor performance listed on the dd form 254 is required to reflect a corresponding unique cage code for each listed location unless the work is being performed at a government facility, in which case the agency location code shall be used. the cage code must be for that name and location address. insert the word "cage" before the number. the cage code is required prior to award. (end of provision) as prescribed in 4.1804(b), use the following provision: ownership or control of offeror (aug 2020) (a) definitions. as used in this provision  commercial and government entity (cage) code means  (1) an identifier assigned to entities located in the united states or its outlying areas by the defense logistics agency (dla) commercial and government entity (cage) branch to identify a commercial or government entity by unique location; or (2) an identifier assigned by a member of the north atlantic treaty organization (nato) or by the nato support and procurement agency (nspa) to entities located outside the united states and its outlying areas that the dla commercial and government entity (cage) branch records and maintains in the cage master file. this type of code is known as a nato cage (ncage) code. highest level owner means the entity that owns or controls an immediate owner of the offeror, or that owns or controls one or more entities that control an immediate owner of the offeror. no entity owns or exercises control of the highest level owner. immediate owner means an entity, other than the offeror, that has direct control of the offeror. indicators of control include, but are not limited to, one or more of the following: ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees. (b) the offeror represents that it □ has or □ does not have an immediate owner. if the offeror has more than one immediate owner (such as a joint venture), then the offeror shall respond to paragraph (c) and if applicable, paragraph (d) of this provision for each participant in the joint venture. (c) if the offeror indicates "has" in paragraph (b) of this provision, enter the following information: immediate owner cage code: ____________ immediate owner legal name: ____________ (do not use a "doing business as" name) is the immediate owner owned or controlled by another entity?: □ yes or □ no. (d) if the offeror indicates "yes" in paragraph (c) of this provision, indicating that the immediate owner is owned or controlled by another entity, then enter the following information: highest level owner cage code: ____________ highest level owner legal name: ____________ (do not use a "doing business as" name) (end of provision) as prescribed in 4.1804(c), use the following clause: commercial and government entity code maintenance (aug 2020) (a) definition. as used in this clause  commercial and government entity (cage) code means  (1) an identifier assigned to entities located in the united states or its outlying areas by the defense logistics agency (dla) commercial and government entity (cage) branch to identify a commercial or government entity by unique location; or (2) an identifier assigned by a member of the north atlantic treaty organization (nato) or by the nato support and procurement agency (nspa) to entities located outside the united states and its outlying areas that the dla commercial and government entity (cage) branch records and maintains in the cage master file. this type of code is known as a nato cage (ncage) code. (b) contractors shall ensure that the cage code is maintained throughout the life of the contract for each location of contract, including subcontract, performance. for contractors registered in the system for award management (sam), the dla commercial and government entity (cage) branch shall only modify data received from sam in the cage master file if the contractor initiates those changes via update of its sam registration. contractors undergoing a novation or change of name agreement shall notify the contracting officer in accordance with subpart 42.12. the contractor shall communicate any change to the cage code to the contracting officer within 30 days after the change, so that a modification can be issued to update the cage code on the contract. (c) contractors located in the united states or its outlying areas that are not registered in sam shall submit written change requests to the dla commercial and government entity (cage) branch. requests for changes shall be provided at https://cage.dla.mil. change requests to the cage master file are accepted from the entity identified by the code. (d) contractors located outside the united states and its outlying areas that are not registered in sam shall contact the appropriate national codification bureau (points of contact available at http://www.nato.int/structur/ac/135/main/links/contacts.htm) or nspa at https://eportal.nspa.nato.int/ac135public/scage/cagelist.aspx to request cage changes. (e) additional guidance for maintaining cage codes is available at https://cage.dla.mil. (f) if the contract includes federal acquisition regulation clause 52.204 2, security requirements, the contractor shall ensure that subcontractors maintain their cage code(s) throughout the life of the contract. (end of clause) as prescribed in 4.1202(b), insert the following clause: incorporation by reference of representations and certifications (dec 2014) the contractor’s representations and certifications, including those completed electronically via the system for award management (sam), are incorporated by reference into the contract. (end of clause) as prescribed in 4.1804(d), insert the following provision: predecessor of offeror (aug 2020) (a) definitions. as used in this provision  commercial and government entity (cage) code means  (1) an identifier assigned to entities located in the united states or its outlying areas by the defense logistics agency (dla) commercial and government entity (cage) branch to identify a commercial or government entity by unique location; or (2) an identifier assigned by a member of the north atlantic treaty organization (nato) or by the nato support and procurement agency (nspa) to entities located outside the united states and its outlying areas that the dla commercial and government entity (cage) branch records and maintains in the cage master file. this type of code is known as a nato cage (ncage) code. predecessor means an entity that is replaced by a successor and includes any predecessors of the predecessor. successor means an entity that has replaced a predecessor by acquiring the assets and carrying out the affairs of the predecessor under a new name (often through acquisition or merger). the term "successor" does not include new offices/divisions of the same company or a company that only changes its name. the extent of the responsibility of the successor for the liabilities of the predecessor may vary, depending on state law and specific circumstances. (b) the offeror represents that it □ is or □ is not a successor to a predecessor that held a federal contract or grant within the last three years. (c) if the offeror has indicated "is" in paragraph (b) of this provision, enter the following information for all predecessors that held a federal contract or grant within the last three years (if more than one predecessor, list in reverse chronological order): predecessor cage code:____________ (or mark "unknown"). predecessor legal name: ____________. (do not use a "doing business as" name). (end of provision) as prescribed in 4.1903 , insert the following clause: basic safeguarding of covered contractor information systems (nov 2021) (a) definitions. as used in this clause  covered contractor information system means an information system that is owned or operated by a contractor that processes, stores, or transmits federal contract information. federal contract information means information, not intended for public release, that is provided by or generated for the government under a contract to develop or deliver a product or service to the government, but not including information provided by the government to the public (such as on public websites) or simple transactional information, such as necessary to process payments. information means any communication or representation of knowledge such as facts, data, or opinions, in any medium or form, including textual, numerical, graphic, cartographic, narrative, or audiovisual (committee on national security systems instruction (cnssi) 4009). information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information ( 44 u.s.c. 3502). safeguarding means measures or controls that are prescribed to protect information systems. (b) safeguarding requirements and procedures. (1) the contractor shall apply the following basic safeguarding requirements and procedures to protect covered contractor information systems. requirements and procedures for basic safeguarding of covered contractor information systems shall include, at a minimum, the following security controls: (i) limit information system access to authorized users, processes acting on behalf of authorized users, or devices (including other information systems). (ii) limit information system access to the types of transactions and functions that authorized users are permitted to execute. (iii) verify and control/limit connections to and use of external information systems. (iv) control information posted or processed on publicly accessible information systems. (v) identify information system users, processes acting on behalf of users, or devices. (vi) authenticate (or verify) the identities of those users, processes, or devices, as a prerequisite to allowing access to organizational information systems. (vii) sanitize or destroy information system media containing federal contract information before disposal or release for reuse. (viii) limit physical access to organizational information systems, equipment, and the respective operating environments to authorized individuals. (ix) escort visitors and monitor visitor activity; maintain audit logs of physical access; and control and manage physical access devices. (x) monitor, control, and protect organizational communications (i.e., information transmitted or received by organizational information systems) at the external boundaries and key internal boundaries of the information systems. (xi) implement subnetworks for publicly accessible system components that are physically or logically separated from internal networks. (xii) identify, report, and correct information and information system flaws in a timely manner. (xiii) provide protection from malicious code at appropriate locations within organizational information systems. (xiv) update malicious code protection mechanisms when new releases are available. (xv) perform periodic scans of the information system and real time scans of files from external sources as files are downloaded, opened, or executed. (2) other requirements. this clause does not relieve the contractor of any other specific safeguarding requirements specified by federal agencies and departments relating to covered contractor information systems generally or other federal safeguarding requirements for controlled unclassified information (cui) as established by executive order 13556. (c) subcontracts. the contractor shall include the substance of this clause, including this paragraph (c), in subcontracts under this contract (including subcontracts for the acquisition of commercial products or commercial services, other than commercially available off the shelf items), in which the subcontractor may have federal contract information residing in or transiting through its information system. (end of clause) as prescribed in 4.1008 , insert the following provision: alternative line item proposal (jan 2017) (a) the government recognizes that the line items established in this solicitation may not conform to the offeror’s practices. failure to correct these issues can result in difficulties in acceptance of deliverables and processing payments. therefore, the offeror is invited to propose alternative line items for which bids, proposals, or quotes are requested in this solicitation to ensure that the resulting contract is economically and administratively advantageous to the government and the offeror. (b) the offeror may submit one or more additional proposals with alternative line items, provided that alternative line items are consistent with subpart 4.10 of the federal acquisition regulation. however, acceptance of an alternative proposal is a unilateral decision made solely at the discretion of the government. offers that do not comply with the line items specified in this solicitation may be determined to be nonresponsive or unacceptable. (end of provision) as prescribed in 4.2004 , insert the following clause: prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities. (dec 2023) (a) definitions. as used in this clause  kaspersky lab covered article means any hardware, software, or service that  (1) is developed or provided by a kaspersky lab covered entity; (2) includes any hardware, software, or service developed or provided in whole or in part by a kaspersky lab covered entity; or (3) contains components using any hardware or software developed in whole or in part by a kaspersky lab covered entity. kaspersky lab covered entity means  (1) kaspersky lab; (2) any successor entity to kaspersky lab, including any change in name, e.g., “kaspersky”; (3) any entity that controls, is controlled by, or is under common control with kaspersky lab; or (4) any entity of which kaspersky lab has a majority ownership. (b) prohibition. section 1634 of division a of the national defense authorization act for fiscal year 2018 (pub. l. 115 91) prohibits government use of any kaspersky lab covered article. the contractor is prohibited from  (1) providing any kaspersky lab covered article that the government will use on or after october 1, 2018; and (2) using any kaspersky lab covered article on or after october 1, 2018, in the development of data or deliverables first produced in the performance of the contract. (c) reporting requirement. (1) in the event the contractoridentifies a kaspersky lab covered article provided to the government during contract performance, or the contractor is notified of such by a subcontractor at any tier or any other source, the contractor shall report, in writing, to the contracting officer or, in the case of the department of defense, to the website at https://dibnet.dod.mil. for indefinite delivery contracts, the contractor shall report to the contracting officer for the indefinite delivery contract and the contracting officer(s) for any affected order or, in the case of the department of defense, identify both the indefinite delivery contract and any affected orders in the report provided at https://dibnet.dod.mil. (2) the contractor shall report the following information pursuant to paragraph (c)(1) of this clause: (i) within 3 business days from the date of such identification or notification: the contract number; the order number(s), if applicable; supplier name; brand; model number (original equipment manufacturer (oem) number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended. (ii) within 10 business days of submitting the report pursuant to paragraph (c)(1) of this clause: any further available information about mitigation actions undertaken or recommended. in addition, the contractor shall describe the efforts it undertook to prevent use or submission of a kaspersky lab covered article, any reasons that led to the use or submission of the kaspersky lab covered article, and any additional efforts that will be incorporated to prevent future use or submission of kaspersky lab covered articles. (d) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts including subcontracts for the acquisition of commercial products or commercial services. (end of clause) as prescribed in 4.2105(a), insert the following provision: representation regarding certain telecommunications and video surveillance services or equipment (nov 2021) the offeror shall not complete the representation at paragraph (d)(1) of this provision if the offeror has represented that it "does not provide covered telecommunications equipment or services as a part of its offered products or services to the government in the performance of any contract, subcontract, or other contractual instrument" in paragraph (c)(1) in the provision at 52.204 26, covered telecommunications equipment or services representation, or in paragraph (v)(2)(i) of the provision at 52.212 3, offeror representations and certifications commercial products or commercial services. the offeror shall not complete the representation in paragraph (d)(2) of this provision if the offeror has represented that it "does not use covered telecommunications equipment or services, or any equipment, system, or service that uses covered telecommunications equipment or services" in paragraph (c)(2) of the provision at 52.204 26, or in paragraph (v)(2)(ii) of the provision at 52.212 3. (a) definitions. as used in this provision  backhaul, covered telecommunications equipment or services, critical technology, interconnection arrangements, reasonable inquiry, roaming, and substantial or essential component have the meanings provided in the clause 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (b) prohibition. (1) section 889(a)(1)(a) of the john s. mccain national defense authorization act for fiscal year 2019 (pub. l. 115 232) prohibits the head of an executive agency on or after august 13, 2019, from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. nothing in the prohibition shall be construed to  (i) prohibit the head of an executive agency from procuring with an entity to provide a service that connects to the facilities of a third party, such as backhaul, roaming, or interconnection arrangements; or (ii) cover telecommunications equipment that cannot route or redirect user data traffic or cannot permit visibility into any user data or packets that such equipment transmits or otherwise handles. (2) section 889(a)(1)(b) of the john s. mccain national defense authorization act for fiscal year 2019 (pub. l. 115 232) prohibits the head of an executive agency on or after august 13, 2020, from entering into a contract or extending or renewing a contract with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. this prohibition applies to the use of covered telecommunications equipment or services, regardless of whether that use is in performance of work under a federal contract. nothing in the prohibition shall be construed to  (i) prohibit the head of an executive agency from procuring with an entity to provide a service that connects to the facilities of a third party, such as backhaul, roaming, or interconnection arrangements; or (ii) cover telecommunications equipment that cannot route or redirect user data traffic or cannot permit visibility into any user data or packets that such equipment transmits or otherwise handles. (c) procedures. the offeror shall review the list of excluded parties in the system for award management (sam) ( https://www.sam.gov) for entities excluded from receiving federal awards for "covered telecommunications equipment or services". (d) representation. the offeror represents that  (1) it □ will, □ will not provide covered telecommunications equipment or services to the government in the performance of any contract, subcontract or other contractual instrument resulting from this solicitation. the offeror shall provide the additional disclosure information required at paragraph (e)(1) of this section if the offeror responds "will" in paragraph (d)(1) of this section; and (2) after conducting a reasonable inquiry, for purposes of this representation, the offeror represents that  it □ does, □ does not use covered telecommunications equipment or services, or use any equipment, system, or service that uses covered telecommunications equipment or services. the offeror shall provide the additional disclosure information required at paragraph (e)(2) of this section if the offeror responds "does" in paragraph (d)(2) of this section. (e) disclosures. (1) disclosure for the representation in paragraph (d)(1) of this provision. if the offeror has responded "will" in the representation in paragraph (d)(1) of this provision, the offeror shall provide the following information as part of the offer: (i) for covered equipment  (a) the entity that produced the covered telecommunications equipment (include entity name, unique entity identifier, cage code, and whether the entity was the original equipment manufacturer (oem) or a distributor, if known); (b) a description of all covered telecommunications equipment offered (include brand; model number, such as oem number, manufacturer part number, or wholesaler number; and item description, as applicable); and (c) explanation of the proposed use of covered telecommunications equipment and any factors relevant to determining if such use would be permissible under the prohibition in paragraph (b)(1) of this provision. (ii) for covered services  (a) if the service is related to item maintenance: a description of all covered telecommunications services offered (include on the item being maintained: brand; model number, such as oem number, manufacturer part number, or wholesaler number; and item description, as applicable); or (b) if not associated with maintenance, the product service code (psc) of the service being provided; and explanation of the proposed use of covered telecommunications services and any factors relevant to determining if such use would be permissible under the prohibition in paragraph (b)(1) of this provision. (2) disclosure for the representation in paragraph (d)(2) of this provision. if the offeror has responded "does" in the representation in paragraph (d)(2) of this provision, the offeror shall provide the following information as part of the offer: (i) for covered equipment  (a) the entity that produced the covered telecommunications equipment (include entity name, unique entity identifier, cage code, and whether the entity was the oem or a distributor, if known); (b) a description of all covered telecommunications equipment offered (include brand; model number, such as oem number, manufacturer part number, or wholesaler number; and item description, as applicable); and (c) explanation of the proposed use of covered telecommunications equipment and any factors relevant to determining if such use would be permissible under the prohibition in paragraph (b)(2) of this provision. (ii) for covered services  (a) if the service is related to item maintenance: a description of all covered telecommunications services offered (include on the item being maintained: brand; model number, such as oem number, manufacturer part number, or wholesaler number; and item description, as applicable); or (b) if not associated with maintenance, the psc of the service being provided; and explanation of the proposed use of covered telecommunications services and any factors relevant to determining if such use would be permissible under the prohibition in paragraph (b)(2) of this provision. (end of provision) as prescribed in 4.2105(b), insert the following clause: prohibition on contracting for certain telecommunications and video surveillance services or equipment (nov 2021) (a) definitions. as used in this clause  backhaul means intermediate links between the core network, or backbone network, and the small subnetworks at the edge of the network (e.g., connecting cell phones/towers to the core telephone network). backhaul can be wireless (e.g., microwave) or wired (e.g., fiber optic, coaxial cable, ethernet). covered foreign country means the people’s republic of china. covered telecommunications equipment or services means  (1) telecommunications equipment produced by huawei technologies company or zte corporation (or any subsidiary or affiliate of such entities); (2) for the purpose of public safety, security of government facilities, physical security surveillance of critical infrastructure, and other national security purposes, video surveillance and telecommunications equipment produced by hytera communications corporation, hangzhou hikvision digital technology company, or dahua technology company (or any subsidiary or affiliate of such entities); (3) telecommunications or video surveillance services provided by such entities or using such equipment; or (4) telecommunications or video surveillance equipment or services produced or provided by an entity that the secretary of defense, in consultation with the director of national intelligence or the director of the federal bureau of investigation, reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country. critical technology means  (1) defense articles or defense services included on the united states munitions list set forth in the international traffic in arms regulations under subchapter m of chapter i of title 22, code of federal regulations; (2) items included on the commerce control list set forth in supplement no. 1 to part 774 of the export administration regulations under subchapter c of chapter vii of title 15, code of federal regulations, and controlled  (i) pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or (ii) for reasons relating to regional stability or surreptitious listening; (3) specially designed and prepared nuclear equipment, parts and components, materials, software, and technology covered by part 810 of title 10, code of federal regulations (relating to assistance to foreign atomic energy activities); (4) nuclear facilities, equipment, and material covered by part 110 of title 10, code of federal regulations (relating to export and import of nuclear equipment and material); (5) select agents and toxins covered by part 331 of title 7, code of federal regulations, part 121 of title 9 of such code, or part 73 of title 42 of such code; or (6) emerging and foundational technologies controlled pursuant to section 1758 of the export control reform act of 2018 ( 50 u.s.c. 4817). interconnection arrangements means arrangements governing the physical connection of two or more networks to allow the use of another's network to hand off traffic where it is ultimately delivered (e.g., connection of a customer of telephone provider a to a customer of telephone company b) or sharing data and other information resources. reasonable inquiry means an inquiry designed to uncover any information in the entity's possession about the identity of the producer or provider of covered telecommunications equipment or services used by the entity that excludes the need to include an internal or third party audit. roaming means cellular communications services (e.g., voice, video, data) received from a visited network when unable to connect to the facilities of the home network either because signal coverage is too weak or because traffic is too high. substantial or essential component means any component necessary for the proper function or performance of a piece of equipment, system, or service. (b) prohibition. (1) section 889(a)(1)(a) of the john s. mccain national defense authorization act for fiscal year 2019 (pub. l. 115 232) prohibits the head of an executive agency on or after august 13, 2019, from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system. the contractor is prohibited from providing to the government any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless an exception at paragraph (c) of this clause applies or the covered telecommunication equipment or services are covered by a waiver described in far 4.2104. (2) section 889(a)(1)(b) of the john s. mccain national defense authorization act for fiscal year 2019 (pub. l. 115 232) prohibits the head of an executive agency on or after august 13, 2020, from entering into a contract, or extending or renewing a contract, with an entity that uses any equipment, system, or service that uses covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless an exception at paragraph (c) of this clause applies or the covered telecommunication equipment or services are covered by a waiver described in far 4.2104. this prohibition applies to the use of covered telecommunications equipment or services, regardless of whether that use is in performance of work under a federal contract. (c) exceptions. this clause does not prohibit contractors from providing  (1) a service that connects to the facilities of a third party, such as backhaul, roaming, or interconnection arrangements; or (2) telecommunications equipment that cannot route or redirect user data traffic or permit visibility into any user data or packets that such equipment transmits or otherwise handles. (d) reporting requirement. (1) in the event the contractor identifies covered telecommunications equipment or services used as a substantial or essential component of any system, or as critical technology as part of any system, during contract performance, or the contractor is notified of such by a subcontractor at any tier or by any other source, the contractor shall report the information in paragraph (d)(2) of this clause to the contracting officer, unless elsewhere in this contract are established procedures for reporting the information; in the case of the department of defense, the contractor shall report to the website at https://dibnet.dod.mil. for indefinite delivery contracts, the contractor shall report to the contracting officer for the indefinite delivery contract and the contracting officer(s) for any affected order or, in the case of the department of defense, identify both the indefinite delivery contract and any affected orders in the report provided at https://dibnet.dod.mil. (2) the contractor shall report the following information pursuant to paragraph (d)(1) of this clause (i) within one business day from the date of such identification or notification: the contract number; the order number(s), if applicable; supplier name; supplier unique entity identifier (if known); supplier commercial and government entity (cage) code (if known); brand; model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended. (ii) within 10 business days of submitting the information in paragraph (d)(2)(i) of this clause: any further available information about mitigation actions undertaken or recommended. in addition, the contractor shall describe the efforts it undertook to prevent use or submission of covered telecommunications equipment or services, and any additional efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services. (e) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (e) and excluding paragraph (b)(2), in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial products or commercial services. (end of clause) as prescribed in 4.2105(c), insert the following provision: covered telecommunications equipment or services representation (oct 2020) (a) definitions. as used in this provision, "covered telecommunications equipment or services" and "reasonable inquiry" have the meaning provided in the clause 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (b) procedures. the offeror shall review the list of excluded parties in the system for award management (sam) ( https://www.sam.gov) for entities excluded from receiving federal awards for "covered telecommunications equipment or services". (c) (1) representation. the offeror represents that it □ does, □ does not provide covered telecommunications equipment or services as a part of its offered products or services to the government in the performance of any contract, subcontract, or other contractual instrument. (2) after conducting a reasonable inquiry for purposes of this representation, the offeror represents that it □ does, □ does not use covered telecommunications equipment or services, or any equipment, system, or service that uses covered telecommunications equipment or services. (end of provision) as prescribed in 4.2203 , insert the following clause: prohibition on a bytedance covered application (jun 2023) (a) definitions. as used in this clause  covered application means the social networking service tiktok or any successor application or service developed or provided by bytedance limited or an entity owned by bytedance limited. information technology, as defined in 40 u.s.c. 11101(6)  (1) means any equipment or interconnected system or subsystem of equipment, used in the automatic acquisition, storage, analysis, evaluation, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information by the executive agency, if the equipment is used by the executive agency directly or is used by a contractor under a contract with the executive agency that requires the use  (i) of that equipment; or (ii) of that equipment to a significant extent in the performance of a service or the furnishing of a product; (2) includes computers, ancillary equipment (including imaging peripherals, input, output, and storage devices necessary for security and surveillance), peripheral equipment designed to be controlled by the central processing unit of a computer, software, firmware and similar procedures, services (including support services), and related resources; but (3) does not include any equipment acquired by a federal contractor incidental to a federal contract. (b) prohibition. section 102 of division r of the consolidated appropriations act, 2023 (pub. l. 117 328), the no tiktok on government devices act, and its implementing guidance under office of management and budget (omb) memorandum m 23 13, dated february 27, 2023, “no tiktok on government devices” implementation guidance, collectively prohibit the presence or use of a covered application on executive agency information technology, including certain equipment used by federal contractors. the contractor is prohibited from having or using a covered application on any information technology owned or managed by the government, or on any information technology used or provided by the contractor under this contract, including equipment provided by the contractor’s employees; however, this prohibition does not apply if the contracting officer provides written notification to the contractor that an exception has been granted in accordance with omb memorandum m 23 13. (c) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (c), in all subcontracts, including subcontracts for the acquisition of commercial products or commercial services. (end of clause) as prescribed in 4.2306(a), insert the following clause: federal acquisition supply chain security act orders federal supply schedules, governmentwide acquisition contracts, and multi agency contracts (dec 2023) (a) definitions. as used in this clause  covered article as defined in 41 u.s.c. 4713(k), means  (1) information technology, as defined in 40 u.s.c. 11101, including cloud computing services of all types; (2) telecommunications equipment or telecommunications service, as those terms are defined in section 3 of the communications act of 1934 ( 47 u.s.c. 153); (3) the processing of information on a federal or non federal information system, subject to the requirements of the controlled unclassified information program (see 32 cfr part 2002); or (4) hardware, systems, devices, software, or services that include embedded or incidental information technology. fascsa order, means any of the following orders issued under the federal acquisition supply chain security act (fascsa) requiring the removal of covered articles from executive agency information systems or the exclusion of one or more named sources or named covered articles from executive agency procurement actions, as described in 41 cfr 201 1.303(d) and (e): (1) the secretary of homeland security may issue fascsa orders applicable to civilian agencies, to the extent not covered by paragraph (2) or (3) of this definition. this type of fascsa order may be referred to as a department of homeland security (dhs) fascsa order. (2) the secretary of defense may issue fascsa orders applicable to the department of defense (dod) and national security systems other than sensitive compartmented information systems. this type of fascsa order may be referred to as a dod fascsa order. (3) the director of national intelligence (dni) may issue fascsa orders applicable to the intelligence community and sensitive compartmented information systems, to the extent not covered by paragraph (2) of this definition. this type of fascsa order may be referred to as a dni fascsa order. intelligence community, as defined by 50 u.s.c. 3003(4), means the following  (1) the office of the director of national intelligence; (2) the central intelligence agency; (3) the national security agency; (4) the defense intelligence agency; (5) the national geospatial intelligence agency; (6) the national reconnaissance office; (7) other offices within the department of defense for the collection of specialized national intelligence through reconnaissance programs; (8) the intelligence elements of the army, the navy, the air force, the marine corps, the coast guard, the federal bureau of investigation, the drug enforcement administration, and the department of energy (9) the bureau of intelligence and research of the department of state; (10) the office of intelligence and analysis of the department of the treasury; (11) the office of intelligence and analysis of the department of homeland security; or (12) such other elements of any department or agency as may be designated by the president, or designated jointly by the director of national intelligence and the head of the department or agency concerned, as an element of the intelligence community. national security system, as defined in 44 u.s.c. 3552, means any information system (including any telecommunications system) used or operated by an agency or by a contractor of an agency, or other organization on behalf of an agency  (1) the function, operation, or use of which involves intelligence activities; involves cryptologic activities related to national security; involves command and control of military forces; involves equipment that is an integral part of a weapon or weapons system; or is critical to the direct fulfillment of military or intelligence missions, but does not include a system that is to be used for routine administrative and business applications (including payroll, finance, logistics, and personnel management applications); or (2) is protected at all times by procedures established for information that have been specifically authorized under criteria established by an executive order or an act of congress to be kept classified in the interest of national defense or foreign policy sensitive compartmented information means classified information concerning or derived from intelligence sources, methods, or analytical processes, which is required to be handled within formal access control systems established by the director of national intelligence. sensitive compartmented information system means a national security system authorized to process or store sensitive compartmented information. source means a non federal supplier, or potential supplier, of products or services, at any tier. (b) notice. during contract performance, the contractor shall be required to comply with any of the following that apply: dhs fascsa orders, dod fascsa orders, or dni fascsa orders. the applicable fascsa order(s) will be identified in the request for quotation (see 8.405 2), or in the notice of intent to place an order (see 16.505(b)). fascsa orders will be identified in paragraph (b)(1) of far 52.204 30, federal acquisition supply chain security act orders prohibition, with its alternate ii. (c) removal. upon notification from the contracting officer, during the performance of the contract, the contractor shall promptly make any necessary changes or modifications to remove any covered article or any product or service produced or provided by a source that is subject to an applicable governmentwide fascsa order (see far 4.2303(b)). (end of clause) as prescribed in 4.2306(b), insert the following provision: federal acquisition supply chain security act orders representation and disclosures (dec 2023) (a) definitions. as used in this provision, covered article, fascsa order, intelligence community, national security system, reasonable inquiry, sensitive compartmented information, sensitive compartmented information system, and source have the meaning provided in the clause 52.204 30, federal acquisition supply chain security act orders prohibition. (b) prohibition. contractors are prohibited from providing or using as part of the performance of the contract any covered article, or any products or services produced or provided by a source, if the prohibition is set out in an applicable federal acquisition supply chain security act (fascsa) order, as described in paragraph (b)(1) of far 52.204 30, federal acquisition supply chain security act orders prohibition. (c) procedures. (1) the offeror shall search for the phrase “fascsa order” in the system for award management (sam)( https://www.sam.gov) for any covered article, or any products or services produced or provided by a source, if there is an applicable fascsa order described in paragraph (b)(1) of far 52.204 30, federal acquisition supply chain security act orders prohibition. (2) the offeror shall review the solicitation for any fascsa orders that are not in sam, but are effective and do apply to the solicitation and resultant contract (see far 4.2303(c)(2)). (3) fascsa orders issued after the date of solicitation do not apply unless added by an amendment to the solicitation. (d) representation. by submission of this offer, the offeror represents that it has conducted a reasonable inquiry, and that the offeror does not propose to provide or use in response to this solicitation any covered article, or any products or services produced or provided by a source, if the covered article or the source is prohibited by an applicable fascsa order in effect on the date the solicitation was issued, except as waived by the solicitation, or as disclosed in paragraph (e). (e) disclosures. the purpose for this disclosure is so the government may decide whether to issue a waiver. for any covered article, or any products or services produced or provided by a source, if the covered article or the source is subject to an applicable fascsa order, and the offeror is unable to represent compliance, then the offeror shall provide the following information as part of the offer: (1) name of the product or service provided to the government; (2) name of the covered article or source subject to a fascsa order; (3) if applicable, name of the vendor, including the commercial and government entity code and unique entity identifier (if known), that supplied the covered article or the product or service to the offeror; (4) brand; (5) model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); (6) item description; (7) reason why the applicable covered article or the product or service is being provided or used; (f) executive agency review of disclosures. the contracting officer will review disclosures provided in paragraph (e) to determine if any waiver may be sought. a contracting officer may choose not to pursue a waiver for covered articles or sources otherwise subject to a fascsa order and may instead make an award to an offeror that does not require a waiver. (end of provision) as prescribed in 4.2306(c), insert the following clause: federal acquisition supply chain security act orders prohibition (dec 2023) (a) definitions. as used in this clause  covered article, as defined in 41 u.s.c. 4713(k), means  (1) information technology, as defined in 40 u.s.c. 11101, including cloud computing services of all types; (2) telecommunications equipment or telecommunications service, as those terms are defined in section 3 of the communications act of 1934 ( 47 u.s.c. 153); (3) the processing of information on a federal or non federal information system, subject to the requirements of the controlled unclassified information program (see 32 cfr part 2002); or (4) hardware, systems, devices, software, or services that include embedded or incidental information technology. fascsa order means any of the following orders issued under the federal acquisition supply chain security act (fascsa) requiring the removal of covered articles from executive agency information systems or the exclusion of one or more named sources or named covered articles from executive agency procurement actions, as described in 41 cfr 201 1.303(d) and (e): (1) the secretary of homeland security may issue fascsa orders applicable to civilian agencies, to the extent not covered by paragraph (2) or (3) of this definition. this type of fascsa order may be referred to as a department of homeland security (dhs) fascsa order. (2) the secretary of defense may issue fascsa orders applicable to the department of defense (dod) and national security systems other than sensitive compartmented information systems. this type of fascsa order may be referred to as a dod fascsa order. (3) the director of national intelligence (dni) may issue fascsa orders applicable to the intelligence community and sensitive compartmented information systems, to the extent not covered by paragraph (2) of this definition. this type of fascsa order may be referred to as a dni fascsa order. intelligence community, as defined by 50 u.s.c. 3003(4), means the following  (1) the office of the director of national intelligence; (2) the central intelligence agency; (3) the national security agency; (4) the defense intelligence agency; (5) the national geospatial intelligence agency; (6) the national reconnaissance office; (7) other offices within the department of defense for the collection of specialized national intelligence through reconnaissance programs; (8) the intelligence elements of the army, the navy, the air force, the marine corps, the coast guard, the federal bureau of investigation, the drug enforcement administration, and the department of energy; (9) the bureau of intelligence and research of the department of state; (10) the office of intelligence and analysis of the department of the treasury; (11) the office of intelligence and analysis of the department of homeland security; or (12) such other elements of any department or agency as may be designated by the president, or designated jointly by the director of national intelligence and the head of the department or agency concerned, as an element of the intelligence community. national security system, as defined in 44 u.s.c. 3552, means any information system (including any telecommunications system) used or operated by an agency or by a contractor of an agency, or other organization on behalf of an agency  (1) the function, operation, or use of which involves intelligence activities; involves cryptologic activities related to national security; involves command and control of military forces; involves equipment that is an integral part of a weapon or weapons system; or is critical to the direct fulfillment of military or intelligence missions, but does not include a system that is to be used for routine administrative and business applications (including payroll, finance, logistics, and personnel management applications); or (2) is protected at all times by procedures established for information that have been specifically authorized under criteria established by an executive order or an act of congress to be kept classified in the interest of national defense or foreign policy. reasonable inquiry means an inquiry designed to uncover any information in the entity's possession about the identity of any covered articles, or any products or services produced or provided by a source. this applies when the covered article or the source is subject to an applicable fascsa order. a reasonable inquiry excludes the need to include an internal or third party audit. sensitive compartmented information means classified information concerning or derived from intelligence sources, methods, or analytical processes, which is required to be handled within formal access control systems established by the director of national intelligence. sensitive compartmented information system means a national security system authorized to process or store sensitive compartmented information. source means a non federal supplier, or potential supplier, of products or services, at any tier. (b) prohibition. (1) unless an applicable waiver has been issued by the issuing official, contractors shall not provide or use as part of the performance of the contract any covered article, or any products or services produced or provided by a source, if the covered article or the source is prohibited by an applicable fascsa orders as follows: (i) for solicitations and contracts awarded by a department of defense contracting office, dod fascsa orders apply. (ii) for all other solicitations and contracts dhs fascsa orders apply. (2) the contractor shall search for the phrase “fascsa order” in the system for award management (sam) at https://www.sam.gov to locate applicable fascsa orders identified in paragraph (b)(1). (3) the government may identify in the solicitation additional fascsa orders that are not in sam, which are effective and apply to the solicitation and resultant contract. (4) a fascsa order issued after the date of solicitation applies to this contract only if added by an amendment to the solicitation or modification to the contract (see far 4.2304(c)). however, see paragraph (c) of this clause. (5) (i) if the contractor wishes to ask for a waiver of the requirements of a new fascsa order being applied through modification, then the contractor shall disclose the following: (a) name of the product or service provided to the government; (b) name of the covered article or source subject to a fascsa order; (c) if applicable, name of the vendor, including the commercial and government entity code and unique entity identifier (if known), that supplied or supplies the covered article or the product or service to the offeror; (d) brand; (e) model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); (f) item description; (g) reason why the applicable covered article or the product or service is being provided or used; (ii) executive agency review of disclosures. the contracting officer will review disclosures provided in paragraph (b)(5)(i) to determine if any waiver is warranted. a contracting officer may choose not to pursue a waiver for covered articles or sources otherwise covered by a fascsa order and to instead pursue other appropriate action. (c) notice and reporting requirement. (1) during contract performance, the contractor shall review sam.gov at least once every three months, or as advised by the contracting officer, to check for covered articles subject to fascsa order(s), or for products or services produced by a source subject to fascsa order(s) not currently identified under paragraph (b) of this clause. (2) if the contractor identifies a new fascsa order(s) that could impact their supply chain, then the contractor shall conduct a reasonable inquiry to identify whether a covered article or product or service produced or provided by a source subject to the fascsa order(s) was provided to the government or used during contract performance. (3) (i) the contractor shall submit a report to the contracting office as identified in paragraph (c)(3)(ii) of this clause, if the contractor identifies, including through any notification by a subcontractor at any tier, that a covered article or product or service produced or provided by a source was provided to the government or used during contract performance and is subject to a fascsa order(s) identified in paragraph (b) of this clause, or a new fascsa order identified in paragraph (c)(2) of this clause. for indefinite delivery contracts, the contractor shall report to both the contracting office for the indefinite delivery contract and the contracting office for any affected order. (ii) if a report is required to be submitted to a contracting office under (c)(3)(i) of this clause, the contractor shall submit the report as follows: (a) if a department of defense contracting office, the contractor shall report to the website at https://dibnet.dod.mil. (b) for all other contracting offices, the contractor shall report to the contracting officer. (4) the contractor shall report the following information for each covered article or each product or service produced or provided by a source, where the covered article or source is subject to a fascsa order, pursuant to paragraph (c)(3)(i) of this clause: (i) within 3 business days from the date of such identification or notification: (a) contract number; (b) order number(s), if applicable; (c) name of the product or service provided to the government or used during performance of the contract; (d) name of the covered article or source subject to a fascsa order; (e) if applicable, name of the vendor, including the commercial and government entity code and unique entity identifier (if known), that supplied the covered article or the product or service to the contractor; (f) brand; (g) model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); (h) item description; and (i) any readily available information about mitigation actions undertaken or recommended. (ii) within 10 business days of submitting the information in paragraph (c)(4)(i) of this clause: (a) any further available information about mitigation actions undertaken or recommended. (b) in addition, the contractor shall describe the efforts it undertook to prevent submission or use of the covered article or the product or service produced or provided by a source subject to an applicable fascsa order, and any additional efforts that will be incorporated to prevent future submission or use of the covered article or the product or service produced or provided by a source that is subject to an applicable fascsa order. (d) removal. for federal supply schedules, governmentwide acquisition contracts, multi agency contracts or any other procurement instrument intended for use by multiple agencies, upon notification from the contracting officer, during the performance of the contract, the contractor shall promptly make any necessary changes or modifications to remove any product or service produced or provided by a source that is subject to an applicable fascsa order. (e) subcontracts. (1) the contractor shall insert the substance of this clause, including this paragraph (e) and excluding paragraph (c)(1) of this clause, in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial products and commercial services. (2) the government may identify in the solicitation additional fascsa orders that are not in sam, which are effective and apply to the contract and any subcontracts and other contractual instruments under the contract. the contractor or higher tier subcontractor shall notify their subcontractors, and suppliers under other contractual instruments, that the fascsa orders in the solicitation that are not in sam apply to the contract and all subcontracts. (end of clause) alternate i (dec 2023). as prescribed in 4.2306(c), substitute the following paragraph (b)(1) for paragraph (b)(1) of the basic clause: (b) prohibition. (1) contractors are prohibited from providing or using as part of the performance of the contract any covered article, or any products or services produced or provided by a source, if the covered article or the source is prohibited by any applicable fascsa orders identified by the checkbox(es) in this paragraph (b)(1). [ contracting officer must select either “yes” or “no” for each of the following types of fascsa orders:] yes □ no □ dhs fascsa order yes □ no □ dod fascsa order yes □ no □ dni fascsa order alternate ii (dec 2023). as prescribed in 4.2306(c)(2)(ii), substitute the following paragraph (b) in place of paragraph (b) of the basic clause. this clause applies to each order as identified by the contracting officer. (b) prohibition. (1) contractors are prohibited from providing or using as part of the performance of the contract any covered article, or any products or services produced or provided by a source, if the covered article or the source is prohibited by any applicable fascsa orders identified by the checkbox(es) in this paragraph (b)(1). [ contracting officer must select either “yes” or “no” for each of the following types of fascsa orders:] yes □ no □ dhs fascsa order yes □ no □ dod fascsa order yes □ no □ dni fascsa order (2) the contractor shall search for the phrase “fascsa order” in the system for award management (sam) at https://www.sam.gov to locate applicable fascsa orders identified in paragraph (b)(1) of this clause. (3) the government may identify in the request for quotation (rfq) or in the notice of intent to place an order additional fascsa orders that are not in sam, but are effective and apply to the order. (4) a fascsa order issued after the date of the rfq or the notice of intent to place an order applies to this contract only if added by an amendment to the rfq or in the notice of intent to place an order or added by modification to the order (see far 4.2304(c)). however, see paragraph (c) of this clause. (5)(i) if the contractor wishes to ask for a waiver, the contractor shall disclose the following: (a) name of the product or service provided to the government; (b) name of the covered article or source subject to a fascsa order; (c) if applicable, name of the vendor, including the commercial and government entity code and unique entity identifier (if known), that supplied the covered article or the product or service to the offeror; (d) brand; (e) model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); (f) item description; (g) reason why the applicable covered article or the product or service is being provided or used; (ii) executive agency review of disclosures. the contracting officer will review disclosures provided in paragraph (b)(5)(i) of this clause to determine if any waiver may be sought. a contracting officer may choose not to pursue a waiver for covered articles or sources otherwise covered by a fascsa order and may instead make award to an offeror that does not require a waiver. as prescribed in 7.305(a), insert the following provision: notice of standard competition (may 2006) (a) this solicitation is part of a standard competition under office of management and budget circular no. a 76 (revised), performance of commercial activities, dated may 29, 2003 (hereafter "the circular"), to determine whether to accomplish the specified work under contract or by government performance. (b) the government will evaluate private sector offers, the agency tender, and public reimbursable tenders, as provided in this solicitation and the circular. (c) a performance decision resulting from this standard competition will be publicly announced in accordance with the circular. if the performance decision favors a private sector offeror, a contract will be awarded. if the performance decision favors an agency or a public reimbursable tender, the contracting officer shall establish, respectively, either a most efficient organization letter of obligation or a fee for service agreement, as those terms are defined in the circular. (d) as provided in the circular, directly interested parties may file contests, which are governed by the procedures in federal acquisition regulation 33.103. until resolution of any contest, or the expiration of the time for filing a contest, only legal agents for directly interested parties shall have access to the certified standard competition form, the agency tender, and public reimbursable tenders. (end of provision) as prescribed in 7.305(b), insert the following provision: notice of streamlined competition (may 2006) (a) this solicitation is part of a streamlined competition under office of management and budget circular no. a 76 (revised), performance of commercial activities, dated may 29, 2003 (hereafter "the circular"), to determine whether to accomplish the specified work under contract or by government performance. (b) the government will evaluate the cost of private sector and agency or public reimbursable performance, as provided in this solicitation and the circular. (c) a performance decision resulting from this streamlined competition will be publicly announced in accordance with the circular. if the performance decision favors private sector performance, the contracting officer shall either award a contract or issue a competitive solicitation for private sector offers. if the performance decision favors agency or public reimbursable performance, the agency shall establish, respectively, either a letter of obligation or a fee for service agreement, as those terms are defined in the circular. (end of provision) as prescribed in 7.305(c), insert the following clause: right of first refusal of employment (may 2006) (a) the contractor shall give government personnel who have been or will be adversely affected or separated as a result of award of this contract the right of first refusal for employment openings under the contract in positions for which they are qualified, if that employment is consistent with post government employment conflict of interest standards. (b) within 10 days after contract award, the contracting officer will provide to the contractor a list of all government personnel who have been or will be adversely affected or separated as a result of award of this contract. (c) the contractor shall report to the contracting officer the names of individuals identified on the list who are hired within 90 days after contract performance begins. this report shall be forwarded within 120 days after contract performance begins. (end of clause) as prescribed in 7.203 , insert the following provision: economic purchase quantity supplies (aug 1987) (a) offerors are invited to state an opinion on whether the quantity(ies) of supplies on which bids, proposals or quotes are requested in this solicitation is (are) economically advantageous to the government. _________________________________________________________________________________ _________________________________________________________________________________ (b) each offeror who believes that acquisitions in different quantities would be more advantageous is invited to recommend an economic purchase quantity. if different quantities are recommended, a total and a unit price must be quoted for applicable items. an economic purchase quantity is that quantity at which a significant price break occurs. if there are significant price breaks at different quantity points, this information is desired as well. offeror recommendations item quantity price quotation total ____________ ____________ ____________ ____________ (c) the information requested in this provision is being solicited to avoid acquisitions in disadvantageous quantities and to assist the government in developing a data base for future acquisitions of these items. however, the government reserves the right to amend or cancel the solicitation and resolicit with respect to any individual item in the event quotations received and the government’s requirements indicate that different quantities should be acquired. (end of provision) as prescribed in 7.404 , insert a clause substantially the same as the following: option to purchase equipment (feb 1995) (a) the government may purchase the equipment provided on a lease or rental basis under this contract. the contracting officer may exercise this option only by providing a unilateral modification to the contractor. the effective date of the purchase will be specified in the unilateral modification and may be any time during the period of the contract, including any extensions thereto. (b) except for final payment and transfer of title to the government, the lease or rental portion of the contract becomes complete and lease or rental charges shall be discontinued on the day immediately preceding the effective date of purchase specified in the unilateral modification required in paragraph (a) of this clause. (c) the purchase conversion cost of the equipment shall be computed as of the effective date specified in the unilateral modification required in paragraph (a) of this clause, on the basis of the purchase price set forth in the contract, minus the total purchase option credits accumulated during the period of lease or rental, calculated by the formula contained elsewhere in this contract. (d) the accumulated purchase option credits available to determine the purchase conversion cost will also include any credits accrued during a period of lease or rental of the equipment under any previous government contract if the equipment has been on continuous lease or rental. the movement of equipment from one site to another site shall be "continuous rental." (end of clause) as prescribed in 7.107 6 , insert the following provision: solicitation of offers from small business concerns and small business teaming arrangements or joint ventures (multiple award contracts) (aug 2024) (a) definition. "small business teaming arrangement," as used in this provision  (1) means an arrangement where  (i) two or more small business concerns have formed a joint venture; or (ii) a small business offeror agrees with one or more other small business concerns to have them act as its subcontractors under a specified government contract. a small business teaming arrangement between the offeror and its small business subcontractor(s) exists through a written agreement between the parties that  (a) is specifically referred to as a "small business teaming arrangement"; and (b) sets forth the different responsibilities, roles, and percentages (or other allocations) of work as it relates to the acquisition; (2) (i) for civilian agencies, may include two business concerns in a mentor protégé relationship when both the mentor and the protégé are small or the protégé is small and the concerns have received an exception to affiliation pursuant to 13 cfr 121.103(h)(3)(ii) or (iii). (ii) for dod, may include two business concerns in a mentor protégé relationship in the department of defense mentor protégé program (see 10 u.s.c. 4902) when both the mentor and the protégé are small. there is no exception to joint venture size affiliation for offers received from teaming arrangements under the dod mentor protégé program; and (3) see 13 cfr 121.103(b)(9) regarding the exception to affiliation for offers received from small business teaming arrangements in the case of a solicitation of offers for a bundled contract with a reserve. (b) the government is soliciting and will consider offers from any responsible source, including responsible small business concerns and offers from small business teaming arrangements or joint ventures of small business concerns. (end of provision) as prescribed in 8.1104(a), insert the following clause in solicitations and contracts for leasing motor vehicles, unless the motor vehicles are leased in foreign countries: vehicle lease payments (apr 1984) (a) upon the submission of proper invoices or vouchers, the government shall pay rent for each vehicle at the rate(s) specified in this contract. (b) rent shall accrue from the beginning of this contract, or from the date each vehicle is delivered to the government, whichever is later, and shall continue until the expiration of the contract term or the termination of this contract. however, rent shall accrue only for the period that each vehicle is in the possession of the government. (c) rent shall not accrue for any vehicle that the contracting officer determines does not comply with the condition of leased vehicles clause of this contract or otherwise does not comply with the requirements of this contract, until the vehicle is replaced or the defects are corrected. (d) rent shall not accrue for any vehicle during any period when the vehicle is unavailable or unusable as a result of the contractor’s failure to render services for the operation and maintenance of the vehicle as prescribed by this contract. (e) rent stated in monthly terms shall be prorated on the basis of 1/30 th of the monthly rate for each day the vehicle is in the government’s possession. if this contract contains a mileage provision, the government shall pay rent as provided in the schedule. (end of clause) as prescribed in 8.1104(b), insert the following clause in solicitations and contracts for leasing motor vehicles, unless the motor vehicles are leased in foreign countries: condition of leased vehicles (apr 1984) each vehicle furnished under this contract shall be of good quality and in safe operating condition, and shall comply with the federal motor vehicle safety standards (49 cfr571) and state safety regulations applicable to the vehicle. the government shall accept or reject the vehicles promptly after receipt. if the contracting officer determines that any vehicle furnished is not in compliance with this contract, the contracting officer shall promptly inform the contractor in writing. if the contractor fails to replace the vehicle or correct the defects as required by the contracting officer, the government may  (a) by contract or otherwise, correct the defect or arrange for the lease of a similar vehicle and shall charge or set off against the contractor any excess costs occasioned thereby; or (b) terminate the contract under the default clause of this contract. (end of clause) as prescribed in 8.1104(c), insert the following clause in solicitations and contracts for leasing motor vehicles, unless the motor vehicles are leased in foreign countries: marking of leased vehicles (apr 1984) (a) the government may place nonpermanent markings or decals, identifying the using agency, on each side, and on the front and rear bumpers, of any motor vehicle leased under this contract. the government shall use markings or decals that are removable without damage to the vehicle. (b) the contractor may use placards for temporary identification of vehicles except that the placards may not contain any references to the contractor that may be construed as advertising or endorsement by the government of the contractor. (end of clause) as prescribed in 8.1104(d), insert a clause substantially as follows: tagging of leased vehicles (may 1986) while it is the intent that vehicles leased under this contract will operate on federal tags, the government reserves the right to utilize state tags if necessary to accomplish its mission. should state tags be required, the contractor shall furnish the government documentation necessary to allow acquisition of such tags. federal tags are the responsibility of the government. (end of clause) as prescribed in 8.005 , insert the following clause: contractor use of mandatory sources of supply or services (may 2014) (a) certain supplies or services to be provided under this contract for use by the government are required by law to be obtained from nonprofit agencies participating in the program operated by the committee for purchase from people who are blind or severely disabled (the committee) under 41 u.s.c. 8504. additionally, certain of these supplies are available from the defense logistics agency (dla), the general services administration (gsa), or the department of veterans affairs (va). the contractor shall obtain mandatory supplies or services to be provided for government use under this contract from the specific sources indicated in the contract schedule. (b) the contractor shall immediately notify the contracting officer if a mandatory source is unable to provide the supplies or services by the time required, or if the quality of supplies or services provided by the mandatory source is unsatisfactory. the contractor shall not purchase the supplies or services from other sources until the contracting officer has notified the contractor that the committee or an abilityone central nonprofit agency has authorized purchase from other sources. (c) price and delivery information for the mandatory supplies is available from the contracting officer for the supplies obtained through the dla/gsa/va distribution facilities. for mandatory supplies or services that are not available from dla/gsa/va, price and delivery information is available from the appropriate central nonprofit agency. payments shall be made directly to the source making delivery. points of contact for abilityone central nonprofit agencies are: (1) national industries for the blind 1310 braddock place alexandria, va 22314 1691 (703) 310 0500; and (2) nish 8401 old courthouse road vienna, va 22182 (571) 226 4660. (end of clause) as prescribed in 9.206 2 , insert the following clause: qualification requirements (feb 1995) (a) definition. "qualification requirement," as used in this clause, means a government requirement for testing or other quality assurance demonstration that must be completed before award. (b) one or more qualification requirements apply to the supplies or services covered by this contract. for those supplies or services requiring qualification, whether the covered product or service is an end item under this contract or simply a component of an end item, the product, manufacturer, or source must have demonstrated that it meets the standards prescribed for qualification before award of this contract. the product, manufacturer, or source must be qualified at the time of award whether or not the name of the product, manufacturer, or source is actually included on a qualified products list, qualified manufacturers list, or qualified bidders list. offerors should contact the agency activity designated below to obtain all requirements that they or their products or services, or their subcontractors or their products or services, must satisfy to become qualified and to arrange for an opportunity to demonstrate their abilities to meet the standards specified for qualification. (name) ___________________________________________ (address) _________________________________________ (c) if an offeror, manufacturer, source, product or service covered by a qualification requirement has already met the standards specified, the relevant information noted below should be provided. offeror’s name _____________________________________ manufacturer’s name________________________________ source’s name _____________________________________ item name ________________________________________ service identification ________________________________ test number _______________________________________ (to the extent known) (d) even though a product or service subject to a qualification requirement is not itself an end item under this contract, the product, manufacturer, or source must nevertheless be qualified at the time of award of this contract. this is necessary whether the contractor or a subcontractor will ultimately provide the product or service in question. if, after award, the contracting officer discovers that an applicable qualification requirement was not in fact met at the time of award, the contracting officer may either terminate this contract for default or allow performance to continue if adequate consideration is offered and the action is determined to be otherwise in the government’s best interests. (e) if an offeror, manufacturer, source, product or service has met the qualification requirement but is not yet on a qualified products list, qualified manufacturers list, or qualified bidders list, the offeror must submit evidence of qualification prior to award of this contract. unless determined to be in the government’s interest, award of this contract shall not be delayed to permit an offeror to submit evidence of qualification. (f) any change in location or ownership of the plant where a previously qualified product or service was manufactured or performed requires reevaluation of the qualification. similarly, any change in location or ownership of a previously qualified manufacturer or source requires reevaluation of the qualification. the reevaluation must be accomplished before the date of award. (end of provision) as prescribed in 9.108 5(a), insert the following provision: prohibition on contracting with inverted domestic corporations representation (nov 2015) (a) definitions. "inverted domestic corporation" and "subsidiary" have the meaning given in the clause of this contract entitled prohibition on contracting with inverted domestic corporations ( 52.209 10). (b) government agencies are not permitted to use appropriated (or otherwise made available) funds for contracts with either an inverted domestic corporation, or a subsidiary of an inverted domestic corporation, unless the exception at 9.108 2(b) applies or the requirement is waived in accordance with the procedures at 9.108 4. (c) representation. the offeror represents that  (1) it □ is, □ is not an inverted domestic corporation; and (2) it □ is, □ is not a subsidiary of an inverted domestic corporation. (end of provision) as prescribed in 9.308 1(a) and (b), insert the following clause: first article approval contractor testing (sept 1989) [contracting officer shall insert details] (a) the contractor shall test _____ unit(s) of lot/item _____ as specified in this contract. at least _____ calendar days before the beginning of first article tests, the contractor shall notify the contracting officer, in writing, of the time and location of the testing so that the government may witness the tests. (b) the contractor shall submit the first article test report within _____ calendar days from the date of this contract to _____ [insert address of the government activity to receive the report] marked "first article test report: contract no. _______, lot/item no. _______" within _____ calendar days after the government receives the test report, the contracting officer shall notify the contractor, in writing, of the conditional approval, approval, or disapproval of the first article. the notice of conditional approval or approval shall not relieve the contractor from complying with all requirements of the specifications and all other terms and conditions of this contract. a notice of conditional approval shall state any further action required of the contractor. a notice of disapproval shall cite reasons for the disapproval. (c) if the first article is disapproved, the contractor, upon government request, shall repeat any or all first article tests. after each request for additional tests, the contractor shall make any necessary changes, modifications, or repairs to the first article or select another first article for testing. all costs related to these tests are to be borne by the contractor, including any and all costs for additional tests following a disapproval. the contractor shall then conduct the tests and deliver another report to the government under the terms and conditions and within the time specified by the government. the government shall take action on this report within the time specified in paragraph (b) of this subsection. the government reserves the right to require an equitable adjustment of the contract price for any extension of the delivery schedule, or for any additional costs to the government related to these tests. (d) if the contractor fails to deliver any first article report on time, or the contracting officer disapproves any first article, the contractor shall be deemed to have failed to make delivery within the meaning of the default clause of this contract. (e) unless otherwise provided in the contract, and if the approved first article is not consumed or destroyed in testing, the contractor may deliver the approved first article as part of the contract quantity if it meets all contract requirements for acceptance. (f) if the government does not act within the time specified in paragraph (b) or (c) of this subsection, the contracting officer shall, upon timely written request from the contractor, equitably adjust under the changes clause of this contract the delivery or performance dates and/or the contract price, and any other contractual term affected by the delay. (g) before first article approval, the acquisition of materials or components for, or the commencement of production of, the balance of the contract quantity is at the sole risk of the contractor. before first article approval, the costs thereof shall not be allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the government. (h) the government may waive the requirement for first article approval test where supplies identical or similar to those called for in the schedule have been previously furnished by the offeror/contractor and have been accepted by the government. the offeror/contractor may request a waiver. (end of clause) alternate i (jan 1997). as prescribed in 9.308 1(a)(2) and (b)(2), add the following paragraph (i) to the basic clause: (i) the contractor shall produce both the first article and the production quantity at the same facility. alternate ii (sept1989). as prescribed in 9.308 1(a)(3) and (b)(3), substitute the following paragraph (g) for paragraph (g) of the basic clause: (g) before first article approval, the contracting officer may, by written authorization, authorize the contractor to acquire specific materials or components or to commence production to the extent essential to meet the delivery schedules. until first article approval is granted, only costs for the first article and costs incurred under this authorization are allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the government. if first article tests reveal deviations from contract requirements, the contractor shall, at the location designated by the government, make the required changes or replace all items produced under this contract at no change in the contract price. as prescribed in 9.308 2 (a) and (b), insert the following clause: first article approval government testing (sep 1989) [contracting officer shall insert details] (a) the contractor shall deliver ___ unit(s) of lot/item ___ within ____ calendar days from the date of this contract to the government at ______ [insert name and address of the testing facility] for first article tests. the shipping documentation shall contain this contract number and the lot/item identification. the characteristics that the first article must meet and the testing requirements are specified elsewhere in this contract. (b) within _____ calendar days after the government receives the first article, the contracting officer shall notify the contractor, in writing, of the conditional approval, approval, or disapproval of the first article. the notice of conditional approval or approval shall not relieve the contractor from complying with all requirements of the specifications and all other terms and conditions of this contract. a notice of conditional approval shall state any further action required of the contractor. a notice of disapproval shall cite reasons for the disapproval. (c) if the first article is disapproved, the contractor, upon government request, shall submit an additional first article for testing. after each request, the contractor shall make any necessary changes, modifications, or repairs to the first article or select another first article for testing. all costs related to these tests are to be borne by the contractor, including any and all costs for additional tests following a disapproval. the contractor shall furnish any additional first article to the government under the terms and conditions and within the time specified by the government. the government shall act on this first article within the time limit specified in paragraph (b) of this clause. the government reserves the right to require an equitable adjustment of the contract price for any extension of the delivery schedule or for any additional costs to the government related to these tests. (d) if the contractor fails to deliver any first article on time, or the contracting officer disapproves any first article, the contractor shall be deemed to have failed to make delivery within the meaning of the default clause of this contract. (e) unless otherwise provided in the contract, the contractor  (1) may deliver the approved first article as a part of the contract quantity, provided it meets all contract requirements for acceptance and was not consumed or destroyed in testing; and (2) shall remove and dispose of any first article from the government test facility at the contractor’s expense. (f) if the government does not act within the time specified in paragraph (b) or (c) of this clause, the contracting officer shall, upon timely written request from the contractor, equitably adjust under the changes clause of this contract the delivery or performance dates and/or the contract price, and any other contractual term affected by the delay. (g) the contractor is responsible for providing operating and maintenance instructions, spare parts support, and repair of the first article during any first article test. (h) before first article approval, the acquisition of materials or components for, or the commencement of production of, the balance of the contract quantity is at the sole risk of the contractor. before first article approval, the costs thereof shall not be allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the government. (i) the government may waive the requirement for first article approval test where supplies identical or similar to those called for in the schedule have been previously furnished by the offeror/contractor and have been accepted by the government. the offeror/contractor may request a waiver. (end of clause) alternate i (jan 1997). as prescribed in 9.308 2 (a)(2) and (b)(2), add the following paragraph (j) to the basic clause: (j) the contractor shall produce both the first article and the production quantity at the same facility. alternate ii (sept 1989). as prescribed in 9.308 2 (a)(3) and (b)(3), substitute the following paragraph (h) for paragraph (h) of the basic clause: (h) before first article approval, the contracting officer may, by written authorization, authorize the contractor to acquire specific materials or components or to commence production to the extent essential to meet the delivery schedules. until first article approval is granted, only costs for the first article and costs incurred under this authorization are allocable to this contract for (1) progress payments, or (2) termination settlements if the contract is terminated for the convenience of the government. if first article tests reveal deviations from contract requirements, the contractor shall, at the location designated by the government, make the required changes or replace all items produced under this contract at no change in the contract price. as prescribed in 9.104 7(a), insert the following provision: certification regarding responsibility matters (aug 2020) (a) (1) the offeror certifies, to the best of its knowledge and belief, that  (i) the offeror and/or any of its principals  (a) are □ are not □ presently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any federal agency; (b) have □ have not □, within a three year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a public (federal, state, or local) contract or subcontract; violation of federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal criminal tax laws, or receiving stolen property (if offeror checks "have", the offeror shall also see 52.209 7, if included in this solicitation); (c) are □ are not □ presently indicted for, or otherwise criminally or civilly charged by a governmental entity with, commission of any of the offenses enumerated in paragraph (a)(1)(i)(b) of this provision; (d) have □, have not □, within a three year period preceding this offer, been notified of any delinquent federal taxes in an amount that exceeds the threshold at 9.104 5(a)(2) for which the liability remains unsatisfied. (1) federal taxes are considered delinquent if both of the following criteria apply: (i) the tax liability is finally determined. the liability is finally determined if it has been assessed. a liability is not finally determined if there is a pending administrative or judicial challenge. in the case of a judicial challenge to the liability, the liability is not finally determined until all judicial appeal rights have been exhausted. (ii) the taxpayer is delinquent in making payment. a taxpayer is delinquent if the taxpayer has failed to pay the tax liability when full payment was due and required. a taxpayer is not delinquent in cases where enforced collection action is precluded. (2) examples. (i) the taxpayer has received a statutory notice of deficiency, under i.r.c. § 6212, which entitles the taxpayer to seek tax court review of a proposed tax deficiency. this is not a delinquent tax because it is not a final tax liability. should the taxpayer seek tax court review, this will not be a final tax liability until the taxpayer has exercised all judicial appeal rights. (ii) the irs has filed a notice of federal tax lien with respect to an assessed tax liability, and the taxpayer has been issued a notice under i.r.c. § 6320 entitling the taxpayer to request a hearing with the irs office of appeals contesting the lien filing, and to further appeal to the tax court if the irs determines to sustain the lien filing. in the course of the hearing, the taxpayer is entitled to contest the underlying tax liability because the taxpayer has had no prior opportunity to contest the liability. this is not a delinquent tax because it is not a final tax liability. should the taxpayer seek tax court review, this will not be a final tax liability until the taxpayer has exercised all judicial appeal rights. (iii) the taxpayer has entered into an installment agreement pursuant to i.r.c. § 6159. the taxpayer is making timely payments and is in full compliance with the agreement terms. the taxpayer is not delinquent because the taxpayer is not currently required to make full payment. (iv) the taxpayer has filed for bankruptcy protection. the taxpayer is not delinquent because enforced collection action is stayed under 11 u.s.c. 362 (the bankruptcy code). (ii) the offeror has □ has not □, within a three year period preceding this offer, had one or more contracts terminated for default by any federal agency. (2) "principal," for the purposes of this certification, means an officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity (e.g., general manager; plant manager; head of a division or business segment; and similar positions). this certification concerns a matter within the jurisdiction of an agency of the united states and the making of a false, fictitious, or fraudulent certification may render the maker subject to prosecution under section 1001, title 18, united states code. (b) the offeror shall provide immediate written notice to the contracting officer if, at any time prior to contract award, the offeror learns that its certification was erroneous when submitted or has become erroneous by reason of changed circumstances. (c) a certification that any of the items in paragraph (a) of this provision exists will not necessarily result in withholding of an award under this solicitation. however, the certification will be considered in connection with a determination of the offeror’s responsibility. failure of the offeror to furnish a certification or provide such additional information as requested by the contracting officer may render the offeror nonresponsible. (d) nothing contained in the foregoing shall be construed to require establishment of a system of records in order to render, in good faith, the certification required by paragraph (a) of this provision. the knowledge and information of an offeror is not required to exceed that which is normally possessed by a prudent person in the ordinary course of business dealings. (e) the certification in paragraph (a) of this provision is a material representation of fact upon which reliance was placed when making award. if it is later determined that the offeror knowingly rendered an erroneous certification, in addition to other remedies available to the government, the contracting officer may terminate the contract resulting from this solicitation for default. (end of provision) as prescribed in 9.409 , insert the following clause: protecting the government's interest when subcontracting with contractors debarred, suspended, proposed for debarment, or voluntarily excluded (jan 2025) (a) definition. commercially available off the shelf (cots) item, as used in this clause  (1) means any item of supply (including construction material) that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” in federal acquisition regulation (far) 2.101); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and (2) does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. (b) the government suspends or debars contractors to protect the government’s interests. other than a subcontract for a commercially available off the shelf item, the contractor shall not enter into any subcontract, in excess of the threshold specified in far 9.405 2(b) on the date of subcontract award, with a contractor that is debarred, suspended, or proposed for debarment by any executive agency unless there is a compelling reason to do so. (c) the contractor shall require each proposed subcontractor whose subcontract will exceed the threshold specified in far 9.405 2(b) on the date of subcontract award, other than a subcontractor providing a commercially available off the shelf item, to disclose to the contractor, in writing, whether as of the time of award of the subcontract, the subcontractor, or its principals, is or is not debarred, suspended, proposed for debarment, or voluntarily excluded, by the federal government. (d) a corporate officer or a designee of the contractor shall notify the contracting officer, in writing, before entering into a subcontract with a party (other than a subcontractor providing a commercially available off the shelf item) that is debarred, suspended, proposed for debarment, or voluntarily excluded (see far 9.404 for information on the system for award management (sam) exclusions). the notice must include the following: (1) the name of the subcontractor. (2) the contractor’s knowledge of the reasons for the subcontractor being listed with an exclusion in sam. (3) the compelling reason(s) for doing business with the subcontractor notwithstanding its being listed with an exclusion in sam. (4) the systems and procedures the contractor has established to ensure that it is fully protecting the government's interests when dealing with such subcontractor in view of the specific basis for the party’s debarment, suspension, proposed debarment, or voluntary exclusion. (e) subcontracts. unless this is a contract for the acquisition of commercial products or commercial services, the contractor shall include the requirements of this clause, including this paragraph (e) (appropriately modified for the identification of the parties), in each subcontract that  (1) exceeds the threshold specified in far 9.405 2(b) on the date of subcontract award; and (2) is not a subcontract for commercially available off the shelf items. (end of clause) as prescribed at 9.104 7(b), insert the following provision: information regarding responsibility matters (oct 2018) (a) definitions. as used in this provision  administrative proceeding means a non judicial process that is adjudicatory in nature in order to make a determination of fault or liability (e.g., securities and exchange commission administrative proceedings, civilian board of contract appeals proceedings, and armed services board of contract appeals proceedings). this includes administrative proceedings at the federal and state level but only in connection with performance of a federal contract or grant. it does not include agency actions such as contract audits, site visits, corrective plans, or inspection of deliverables. federal contracts and grants with total value greater than $10,000,000 means  (1) the total value of all current, active contracts and grants, including all priced options; and (2) the total value of all current, active orders including all priced options under indefinite delivery, indefinite quantity, 8(a), or requirements contracts (including task and delivery and multiple award schedules). principal means an officer, director, owner, partner, or a person having primary management or supervisory responsibilities within a business entity (e.g., general manager; plant manager; head of a division or business segment; and similar positions). (b) the offeror □ has □ does not have current active federal contracts and grants with total value greater than $10,000,000. (c) if the offeror checked "has" in paragraph (b) of this provision, the offeror represents, by submission of this offer, that the information it has entered in the federal awardee performance and integrity information system (fapiis) is current, accurate, and complete as of the date of submission of this offer with regard to the following information: (1) whether the offeror, and/or any of its principals, has or has not, within the last five years, in connection with the award to or performance by the offeror of a federal contract or grant, been the subject of a proceeding, at the federal or state level that resulted in any of the following dispositions: (i) in a criminal proceeding, a conviction. (ii) in a civil proceeding, a finding of fault and liability that results in the payment of a monetary fine, penalty, reimbursement, restitution, or damages of $5,000 or more. (iii) in an administrative proceeding, a finding of fault and liability that results in  (a) the payment of a monetary fine or penalty of $5,000 or more; or (b) the payment of a reimbursement, restitution, or damages in excess of $100,000. (iv) in a criminal, civil, or administrative proceeding, a disposition of the matter by consent or compromise with an acknowledgment of fault by the contractor if the proceeding could have led to any of the outcomes specified in paragraphs (c)(1)(i), (c)(1)(ii), or (c)(1)(iii) of this provision. (2) if the offeror has been involved in the last five years in any of the occurrences listed in (c)(1) of this provision, whether the offeror has provided the requested information with regard to each occurrence. (d) the offeror shall post the information in paragraphs (c)(1)(i) through (c)(1)(iv) of this provision in fapiis as required through maintaining an active registration in the system for award management, which can be accessed via https://www.sam.gov (see 52.204 7). (end of provision) as prescribed at 9.104 7(c), insert the following clause: updates of publicly available information regarding responsibility matters (oct 2018) (a) the contractor shall update the information in the federal awardee performance and integrity information system (fapiis) on a semi annual basis, throughout the life of the contract, by posting the required information in the system for award management via https://www.sam.gov. (b) as required by section 3010 of the supplemental appropriations act, 2010 (pub. l. 111 212), all information posted in fapiis on or after april 15, 2011, except past performance reviews, will be publicly available. fapiis consists of two segments  (1) the non public segment, into which government officials and the contractor post information, which can only be viewed by  (i) government personnel and authorized users performing business on behalf of the government; or (ii) the contractor, when viewing data on itself; and (2) the publicly available segment, to which all data in the non public segment of fapiis is automatically transferred after a waiting period of 14 calendar days, except for  (i) past performance reviews required by subpart 42.15; (ii) information that was entered prior to april 15, 2011; or (iii) information that is withdrawn during the 14 calendar day waiting period by the government official who posted it in accordance with paragraph (c)(1) of this clause. (c) the contractor will receive notification when the government posts new information to the contractor’s record. (1) if the contractor asserts in writing within 7 calendar days, to the government official who posted the information, that some of the information posted to the non public segment of fapiis is covered by a disclosure exemption under the freedom of information act, the government official who posted the information must within 7 calendar days remove the posting from fapiis and resolve the issue in accordance with agency freedom of information procedures, prior to reposting the releasable information. the contractor must cite 52.209 9 and request removal within 7 calendar days of the posting to fapiis. (2) the contractor will also have an opportunity to post comments regarding information that has been posted by the government. the comments will be retained as long as the associated information is retained, i.e., for a total period of 6 years. contractor comments will remain a part of the record unless the contractor revises them. (3) as required by section 3010 of pub. l. 111 212, all information posted in fapiis on or after april 15, 2011, except past performance reviews, will be publicly available. (d) public requests for system information posted prior to april 15, 2011, will be handled under freedom of information act procedures, including, where appropriate, procedures promulgated under e.o. 12600. (end of clause) as prescribed in 9.108 5(b), insert the following clause: prohibition on contracting with inverted domestic corporations (nov 2015) (a) definitions. as used in this clause  inverted domestic corporation means a foreign incorporated entity that meets the definition of an inverted domestic corporation under 6 u.s.c. 395(b), applied in accordance with the rules and definitions of 6 u.s.c. 395(c). subsidiary means an entity in which more than 50 percent of the entity is owned  (1) directly by a parent corporation; or (2) through another subsidiary of a parent corporation. (b) if the contractor reorganizes as an inverted domestic corporation or becomes a subsidiary of an inverted domestic corporation at any time during the period of performance of this contract, the government may be prohibited from paying for contractor activities performed after the date when it becomes an inverted domestic corporation or subsidiary. the government may seek any available remedies in the event the contractor fails to perform in accordance with the terms and conditions of the contract as a result of government action under this clause. (c) exceptions to this prohibition are located at 9.108 2. (d) in the event the contractor becomes either an inverted domestic corporation, or a subsidiary of an inverted domestic corporation during contract performance, the contractor shall give written notice to the contracting officer within five business days from the date of the inversion event. (end of clause) as prescribed in 9.104 7(d), insert the following provision: representation by corporations regarding delinquent tax liability or a felony conviction under any federal law (feb 2016) (a) as required by sections 744 and 745 of division e of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235), and similar provisions, if contained in subsequent appropriations acts, the government will not enter into a contract with any corporation that  (1) has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, where the awarding agency is aware of the unpaid tax liability, unless an agency has considered suspension or debarment of the corporation and made a determination that suspension or debarment is not necessary to protect the interests of the government; or (2) was convicted of a felony criminal violation under any federal law within the preceding 24 months, where the awarding agency is aware of the conviction, unless an agency has considered suspension or debarment of the corporation and made a determination that this action is not necessary to protect the interests of the government. (b) the offeror represents that  (1) it is □ is not □ a corporation that has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability; and (2) it is □ is not □ a corporation that was convicted of a felony criminal violation under a federal law within the preceding 24 months. (end of provision) as prescribed in 9.104 7(e), insert the following provision: certification regarding tax matters (oct 2020) (a) this provision implements section 523 of division b of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235), and similar provisions, if contained in subsequent appropriations acts. (b) if the offeror is proposing a total contract price that will exceed $5.5 million (including options), the offeror shall certify that, to the best of its knowledge and belief, it (1) has □ filed all federal tax returns required during the three years preceding the certification; (2) has not □ been convicted of a criminal offense under the internal revenue code of 1986; and (3) has not □, more than 90 days prior to certification, been notified of any unpaid federal tax assessment for which the liability remains unsatisfied, unless the assessment is the subject of an installment agreement or offer in compromise that has been approved by the internal revenue service and is not in default, or the assessment is the subject of a non frivolous administrative or judicial proceeding. (end of provision) as prescribed in 9.109 5 , insert the following provision: violation of arms control treaties or agreements certification (nov 2021) (a) this provision does not apply to acquisitions at or below the simplified acquisition threshold or to acquisitions of commercial products and commercial services as defined in federal acquisition regulation 2.101. (b) certification. [offeror shall check either (1) or (2).] __ (1) the offeror certifies that  (i) it does not engage and has not engaged in any activity that contributed to or was a significant factor in the president's or secretary of state's determination that a foreign country is in violation of its obligations undertaken in any arms control, nonproliferation, or disarmament agreement to which the united states is a party, or is not adhering to its arms control, nonproliferation, or disarmament commitments in which the united states is a participating state. the determinations are described in the most recent unclassified annual report provided to congress pursuant to section 403 of the arms control and disarmament act ( 22 u.s.c. 2593a). the report is available at https://www.state.gov/bureaus offices/under secretary for arms control and international security affairs/bureau of arms control verification and compliance/; and (ii) no entity owned or controlled by the offeror has engaged in any activity that contributed to or was a significant factor in the president's or secretary of state's determination that a foreign country is in violation of its obligations undertaken in any arms control, nonproliferation, or disarmament agreement to which the united states is a party, or is not adhering to its arms control, nonproliferation, or disarmament commitments in which the united states is a participating state. the determinations are described in the most recent unclassified annual report provided to congress pursuant to section 403 of the arms control and disarmament act ( 22 u.s.c. 2593a). the report is available at https://www.state.gov/bureaus offices/under secretary for arms control and international security affairs/bureau of arms control verification and compliance/; or __ (2) the offeror is providing separate information with its offer in accordance with paragraph (d)(2) of this provision. (c) procedures for reviewing the annual unclassified report (see paragraph (b)(1) of this provision). for clarity, references to the report in this section refer to the entirety of the annual unclassified report, including any separate reports that are incorporated by reference into the annual unclassified report. (1) check the table of contents of the annual unclassified report and the country section headings of the reports incorporated by reference to identify the foreign countries listed there. determine whether the offeror or any person owned or controlled by the offeror may have engaged in any activity related to one or more of such foreign countries. (2) if there may have been such activity, review all findings in the report associated with those foreign countries to determine whether or not each such foreign country was determined to be in violation of its obligations undertaken in an arms control, nonproliferation, or disarmament agreement to which the united states is a party, or to be not adhering to its arms control, nonproliferation, or disarmament commitments in which the united states is a participating state. for clarity, in the annual report an explicit certification of non compliance is equivalent to a determination of violation. however, the following statements in the annual report are not equivalent to a determination of violation: (i) an inability to certify compliance. (ii) an inability to conclude compliance. (iii) a statement about compliance concerns. (3) if so, determine whether the offeror or any person owned or controlled by the offeror has engaged in any activity that contributed to or is a significant factor in the determination in the report that one or more of these foreign countries is in violation of its obligations undertaken in an arms control, nonproliferation, or disarmament agreement to which the united states is a party, or is not adhering to its arms control, nonproliferation, or disarmament commitments in which the united states is a participating state. review the narrative for any such findings reflecting a determination of violation or non adherence related to those foreign countries in the report, including the finding itself, and to the extent necessary, the conduct giving rise to the compliance or adherence concerns, the analysis of compliance or adherence concerns, and efforts to resolve compliance or adherence concerns. (4) the offeror may submit any questions with regard to this report by email to ndaa1290cert@state.gov. to the extent feasible, the department of state will respond to such email inquiries within 3 business days. (d) do not submit an offer unless  (1) a certification is provided in paragraph (b)(1) of this provision and submitted with the offer; or (2) in accordance with paragraph (b)(2) of this provision, the offeror provides with its offer information that the president of the united states has (i) waived application under 22 u.s.c. 2593e(d) or (e); or (ii) determined under 22 u.s.c. 2593e(g)(2) that the entity has ceased all activities for which measures were imposed under 22 u.s.c. 2593e(b). (e) remedies. the certification in paragraph (b)(1) of this provision is a material representation of fact upon which reliance was placed when making award. if it is later determined that the offeror knowingly submitted a false certification, in addition to other remedies available to the government, such as suspension or debarment, the contracting officer may terminate any contract resulting from the false certification. (end of provision) as prescribed in 9.110 5 , insert the following clause: reserve officer training corps and military recruiting on campus (nov 2021) (a) definitions. as used in this clause  covered agency means  (1)the department of defense; (2)any department or agency for which regular appropriations are made in a department of labor, health and human services; and education, and related agencies appropriations act; (3)the department of homeland security; (4)the national nuclear security administration of the department of energy; (5)the department of transportation; or (6)the central intelligence agency. institution of higher education means an institution that meets the requirements of 20 u.s.c. 1001 and includes all sub elements of such an institution. (b) limitation on contract award. except as provided in paragraph (c) of this clause, an institution of higher education is ineligible for contract award if the secretary of defense determines that the institution has a policy or practice (regardless of when implemented) that prohibits or in effect prevents  (1) the secretary of a military department from maintaining, establishing, or operating a unit of the senior reserve officer training corps (rotc) at that institution (or any sub element of that institution); (2) a student at that institution (or any sub element of that institution) from enrolling in a unit of the senior rotc at another institution of higher education; (3) the secretary of a military department or the secretary of homeland security from gaining access to campuses, or access to students (who are 17 years of age or older) on campuses, for purposes of military recruiting; or (4) military recruiters from accessing, for purposes of military recruiting, the following information pertaining to students (who are 17 years of age or older) enrolled at that institution: (i) name, address, and telephone listings. (ii) date and place of birth, educational level, academic majors, degrees received, and the most recent educational institution enrolled in by the student. (c) exception. the limitation in paragraph (b) of this clause does not apply to an institution of higher education if the secretary of defense determines that  (1) the institution has ceased the policy or practice described in paragraph (b) of this clause; or (2) the institution has a long standing policy of pacifism based on historical religious affiliation. (d) notwithstanding any other clause of this contract, if the secretary of defense determines that the institution has violated the contract in paragraph (b) of this clause  (1) the institution will be ineligible for further payments under this and any other contracts with this agency and any other covered agency, except for contracts at or below the simplified acquisition threshold or contracts for the acquisition of commercial products or commercial services; and (2) the government will terminate this contract for default for the institution's material failure to comply with the terms and conditions of award. (end of clause) as prescribed in 10.003 , insert the following clause: market research (nov 2021) (a) definition. as used in this clause  commercial product, commercial service, and nondevelopmental item have the meaning contained in federal acquisition regulation 2.101. (b) before awarding subcontracts for other than commercial acquisitions, where the subcontracts are over the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, the contractor shall conduct market research to  (1) determine if commercial products, commercial services, or, to the extent commercial products suitable to meet the agency’s needs are not available, nondevelopmental items are available that  (i) meet the agency’s requirements; (ii) could be modified to meet the agency’s requirements; or (iii) could meet the agency’s requirements if those requirements were modified to a reasonable extent; and (2) determine the extent to which commercial products, commercial services, or nondevelopmental items could be incorporated at the component level. (end of clause) as prescribed in 11.204(a), insert the following provision: availability of specifications listed in the gsa index of federal specifications, standards and commercial item descriptions, fpmr part 101 29 (sep 2023) (a) the gsa index of federal specifications, standards and commercial item descriptions, fpmr part 101 29, and copies of federal specifications, standards, and product descriptions can be downloaded from the assist website at https://assist.dla.mil. (b) if the general services administration, department of agriculture, or department of veterans affairs issued this solicitation, a copy of specifications, standards, and commercial item descriptions cited in this solicitation may be obtained from the assist website identified in paragraph (a) of this provision. (end of provision) as prescribed in 11.204(b), insert the following provision: availability of defense specifications, standards, and data item descriptions in the acquisition streamlining and standardization information system (assist) website (sep 2023) (a) most unclassified defense specifications and standards may be downloaded from the assist website at https://assist.dla.mil. (b) defense documents not available from assist may be requested from the defense standardization program office by  (1) using the assist feedback module ( https://assist.dla.mil/​feedback ); or (2) contacting the defense standardization program office by telephone at 571 767 6888 or email at assisthelp@dla.mil. (end of provision) as prescribed in 11.204(c), insert a provision substantially the same as the following: availability of specifications not listed in the gsa index of federal specifications, standards and commercial item descriptions (june 1988) the specifications cited in this solicitation may be obtained from: (activity) address) ________________________________________________________________ _______________________________________________________________________________ _______________________________________________________________________________ (telephone number) _________________________________ (person to be contacted) ______________________________ the request should identify the solicitation number and the specification requested by date, title, and number, as cited in the solicitation. (end of clause) as prescribed in 11.204(d), insert a provision substantially the same as the following: availability for examination of specifications not listed in the gsa index of federal specifications, standards and commercial item descriptions (june 1988) (activity) _________________________________________ (complete address) ____________________________________________________________________ ____________________________________________________________________ ____________________________________________________________________ (telephone number) _________________________________ (person to be contacted) ______________________________ (time(s) for viewing) ________________________________ (end of clause) as prescribed in 11.302 , insert the following clause: material requirements (aug 2000) (a) definitions. as used in this clause  new means composed of previously unused components, whether manufactured from virgin material, recovered material in the form of raw material, or materials and by products generated from, and reused within, an original manufacturing process; provided that the supplies meet contract requirements, including but not limited to, performance, reliability, and life expectancy. reconditioned means restored to the original normal operating condition by readjustments and material replacement. recovered material means waste materials and by products recovered or diverted from solid waste, but the term does not include those materials and by products generated from, and commonly reused within, an original manufacturing process. remanufactured means factory rebuilt to original specifications. virgin material means  (1) previously unused raw material, including previously unused copper, aluminum, lead, zinc, iron, other metal or metal ore; or (2) any undeveloped resource that is, or with new technology will become, a source of raw materials. (b) unless this contract otherwise requires virgin material or supplies composed of or manufactured from virgin material, the contractor shall provide supplies that are new, reconditioned, or remanufactured, as defined in this clause. (c) a proposal to provide unused former government surplus property shall include a complete description of the material, the quantity, the name of the government agency from which acquired, and the date of acquisition. (d) a proposal to provide used, reconditioned, or remanufactured supplies shall include a detailed description of such supplies and shall be submitted to the contracting officer for approval. (e) used, reconditioned, or remanufactured supplies, or unused former government surplus property, may be used in contract performance if the contractor has proposed the use of such supplies, and the contracting officer has authorized their use. (end of clause) as prescribed in 11.107(a), insert the following provision: brand name or equal (aug 1999) (a) if an item in this solicitation is identified as "brand name or equal," the purchase description reflects the characteristics and level of quality that will satisfy the government’s needs. the salient physical, functional, or performance characteristics that "equal" products must meet are specified in the solicitation. (b) to be considered for award, offers of "equal" products, including "equal" products of the brand name manufacturer, must  (1) meet the salient physical, functional, or performance characteristic specified in this solicitation; (2) clearly identify the item by  (i) brand name, if any; and (ii) make or model number; (3) include descriptive literature such as illustrations, drawings, or a clear reference to previously furnished descriptive data or information available to the contracting officer; and (4) clearly describe any modifications the offeror plans to make in a product to make it conform to the solicitation requirements. mark any descriptive material to clearly show the modifications. (c) the contracting officer will evaluate "equal" products on the basis of information furnished by the offeror or identified in the offer and reasonably available to the contracting officer. the contracting officer is not responsible for locating or obtaining any information not identified in the offer. (d) unless the offeror clearly indicates in its offer that the product being offered is an "equal" product, the offeror shall provide the brand name product referenced in the solicitation. (end of provision) as prescribed in 11.107(b), insert the following provision: alternatives to government unique standards (nov 1999) (a) this solicitation includes government unique standards. the offeror may propose voluntary consensus standards that meet the government’s requirements as alternatives to the government unique standards. the government will accept use of the voluntary consensus standard instead of the government unique standard if it meets the government’s requirements unless inconsistent with law or otherwise impractical. (b) if an alternative standard is proposed, the offeror must furnish data and/or information regarding the alternative in sufficient detail for the government to determine if it meets the government’s requirements. acceptance of the alternative standard is a unilateral decision made solely at the discretion of the government. (c) offers that do not comply with the government unique standards specified in this solicitation may be determined to be nonresponsive or unacceptable. the offeror may submit an offer that complies with the government unique standards specified in this solicitation, in addition to any proposed alternative standard(s). (end of provision) as prescribed in 11.404(a)(2), insert the following clause: time of delivery (june 1997) (a) the government requires delivery to be made according to the following schedule: required delivery schedule [contracting officer insert specific details] item no. quantity within days after date of contract the government will evaluate equally, as regards time of delivery, offers that propose delivery of each quantity within the applicable delivery period specified above. offers that propose delivery that will not clearly fall within the applicable required delivery period specified above, will be considered nonresponsive and rejected. the government reserves the right to award under either the required delivery schedule or the proposed delivery schedule, when an offeror offers an earlier delivery schedule than required above. if the offeror proposes no other delivery schedule, the required delivery schedule above will apply. offeror’s proposed delivery schedule item no. quantity within days after date of contract (b) attention is directed to the contract award provision of the solicitation that provides that a written award or acceptance of offer mailed, or otherwise furnished to the successful offeror, results in a binding contract. the government will mail or otherwise furnish to the offeror an award or notice of award not later than the day award is dated. therefore, the offeror should compute the time available for performance beginning with the actual date of award, rather than the date the written notice of award is received from the contracting officer through the ordinary mails. however, the government will evaluate an offer that proposes delivery based on the contractor’s date of receipt of the contract or notice of award by adding (1) five calendar days for delivery of the award through the ordinary mails, or (2) one working day if the solicitation states that the contract or notice of award will be transmitted electronically. (the term "working day" excludes weekends and u.s. federal holidays.) if, as so computed, the offered delivery date is later than the required delivery date, the offer will be considered nonresponsive and rejected. (end of clause) alternate i (apr 1984). if the delivery schedule is expressed in terms of specific calendar dates or specific periods and is based on an assumed date of award, the contracting officer may substitute the following paragraph (b) for paragraph (b) of the basic clause. the time may be expressed by substituting "on or before"; "during the months __________"; or "not sooner than __________ or later than ___________" as headings for the third column of paragraph (a) the basic clause. (b) the delivery dates or specific periods above are based on the assumption that the government will make award by __ [contracting officer insert date]. each delivery date in the delivery schedule above will be extended by the number of calendar days after the above date that the contract is in fact awarded. attention is directed to the contract award provision of the solicitation that provides that a written award or acceptance of offer mailed or otherwise furnished to the successful offeror results in a binding contract. therefore, the offeror should compute the time available for performance beginning with the actual date of award, rather than the date the written notice of award is received from the contracting officer through the ordinary mails. alternate ii (apr 1984). if the delivery schedule is expressed in terms of specific calendar dates or specific periods and is based on an assumed date the contractor will receive notice of award, the contracting officer may substitute the following paragraph (b) for paragraph (b) of the basic clause. the time may be expressed by substituting within days after the date of receipt of a written notice of award as the heading for the third column of paragraph (a) of the basic clause. (b) the delivery dates or specific periods above are based on the assumption that the successful offeror will receive notice of award by__ [contracting officer insert date]. each delivery date in the delivery schedule above will be extended by the number of calendar days after the above date that the contractor receives notice of award; provided, that the contractor promptly acknowledges receipt of notice of award. alternate iii (apr 1984). if the delivery schedule is to be based on the actual date the contractor receives a written notice of award, the contracting officer may delete paragraph (b) of the basic clause. the time may be expressed by substituting "within days after the date of receipt of a written notice of award" as the heading for the third column of paragraph (a) of the basic clause. as prescribed in 11.404(a)(3), insert the following clause: desired and required time of delivery (june 1997) (a) the government desires delivery to be made according to the following schedule: desired delivery schedule [contracting officer insert specific details] item no. quantity within days after date of contract if the offeror is unable to meet the desired delivery schedule, it may, without prejudicing evaluation of its offer, propose a delivery schedule below. however, the offeror’s proposed delivery schedule must not extend the delivery period beyond the time for delivery in the government’s required delivery schedule as follows: required delivery schedule [contracting officer insert specific details] item no. quantity within days after date of contract offers that propose delivery of a quantity under such terms or conditions that delivery will not clearly fall within the applicable required delivery period specified above, will be considered nonresponsive and rejected. if the offeror proposes no other delivery schedule, the desired delivery schedule above will apply. offeror’s proposed delivery schedule item no. quantity within days after date of contract (b) attention is directed to the contract award provision of the solicitation that provides that a written award or acceptance of offer mailed or otherwise furnished to the successful offeror results in a binding contract. the government will mail or otherwise furnish to the offeror an award or notice of award not later than the day the award is dated. therefore, the offeror shall compute the time available for performance beginning with the actual date of award, rather than the date the written notice of award is received from the contracting officer through the ordinary mails. however, the government will evaluate an offer that proposes delivery based on the contractor’s date of receipt of the contract or notice of award by adding (1) five calendar days for delivery of the award through the ordinary mails, or (2) one working day if the solicitation states that the contract or notice of award will be transmitted electronically. (the term "working day" excludes weekends and u.s. federal holidays.) if, as so computed, the offered delivery date is later than the required delivery date, the offer will be considered nonresponsive and rejected. (end of clause) alternate i (apr 1984). if the delivery schedule is expressed in terms of specific calendar dates or specific periods and is based on an assumed date of award, the contracting officer may substitute the following paragraph (b) for paragraph (b) of the basic clause. the time may be expressed by substituting "on or before"; "during the months _______"; or "not sooner than ______, or later than ______" as headings for the third column of paragraph (a) of the basic clause. (b) the delivery dates or specific periods above are based on the assumption that the government will make award by _________ [contracting officer insert date]. each delivery date in the delivery schedule above will be extended by the number of calendar days after the above date that the contract is in fact awarded. attention is directed to the contract award provision of the solicitation that provides that a written award or acceptance of offer mailed or otherwise furnished to the successful offeror results in a binding contract. therefore, the offeror shall compute the time available for performance beginning with the actual date of award, rather than the date the written notice of award is received from the contracting officer through the ordinary mails. alternate ii (apr 1984). if the delivery schedule is expressed in terms of specific calendar dates or specific periods and is based on an assumed date the contractor receives notice of award, the contracting officer may substitute the following paragraph (b) for paragraph (b) of the basic clause. the time may be expressed by substituting "within days after the date of receipt of a written notice of award" as the heading of the third column of paragraph (a) of the basic clause. (b) the delivery dates or specific periods above are based on the assumption that the successful offeror will receive notice of award by ___________ [contracting officer insert date]. each delivery date in the delivery schedule above will be extended by the number of calendar days after the above date that the contractor receives notice of award; provided, that the contractor promptly acknowledges receipt of notice of award. alternate iii (apr 1984). if the delivery schedule is to be based on the actual date the contractor receives a written notice of award, the contracting officer may delete paragraph (b) of the basic clause. the time may be expressed by substituting "within days after the date of receipt of a written notice of award" as the heading of the third column of paragraph (a) of the basic clause. as prescribed in 11.404(b), insert the following clause in solicitations and contracts when a fixed price construction contract is contemplated. the clause may be changed to accommodate the issuance of orders under indefinite delivery contracts for construction. commencement, prosecution, and completion of work (apr 1984) the contractor shall be required to (a) commence work under this contract within _________ [contracting officer insert number] calendar days after the date the contractor receives the notice to proceed, (b) prosecute the work diligently, and (c) complete the entire work ready for use not later than ______________.* the time stated for completion shall include final cleanup of the premises. * the contracting officer shall specify either a number of days after the date the contractor receives the notice to proceed, or a calendar date. (end of clause) alternate i (apr 1984). if the completion date is expressed as a specific calendar date, computed on the basis of the contractor receiving the notice to proceed by a certain day, add the following paragraph to the basic clause: the completion date is based on the assumption that the successful offeror will receive the notice to proceed by _______________ [contracting officer insert date]. the completion date will be extended by the number of calendar days after the above date that the contractor receives the notice to proceed, except to the extent that the delay in issuance of the notice to proceed results from the failure of the contractor to execute the contract and give the required performance and payment bonds within the time specified in the offer. as prescribed in 11.503(a), insert the following clause in solicitations and contracts: liquidated damages supplies, services, or research and development (sept 2000) (a) if the contractor fails to deliver the supplies or perform the services within the time specified in this contract, the contractor shall, in place of actual damages, pay to the government liquidated damages of $__________ per calendar day of delay [contracting officer insert amount]. (b) if the government terminates this contract in whole or in part under the default fixed price supply and service clause, the contractor is liable for liquidated damages accruing until the government reasonably obtains delivery or performance of similar supplies or services. these liquidated damages are in addition to excess costs of repurchase under the termination clause. (c) the contractor will not be charged with liquidated damages when the delay in delivery or performance is beyond the control and without the fault or negligence of the contractor as defined in the default fixed price supply and service clause in this contract. (end of clause) as prescribed in 11.503(b), insert the following clause in solicitations and contracts: liquidated damages construction (sept 2000) (a) if the contractor fails to complete the work within the time specified in the contract, the contractor shall pay liquidated damages to the government in the amount of ____________ [contracting officer insert amount] for each calendar day of delay until the work is completed or accepted. (b) if the government terminates the contractor’s right to proceed, liquidated damages will continue to accrue until the work is completed. these liquidated damages are in addition to excess costs of repurchase under the termination clause. (end of clause) as prescribed in 11.503(c), insert the following clause: time extensions (sept 2000) time extensions for contract changes will depend upon the extent, if any, by which the changes cause delay in the completion of the various elements of construction. the change order granting the time extension may provide that the contract completion date will be extended only for those specific elements related to the changed work and that the remaining contract completion dates for all other portions of the work will not be altered. the change order also may provide an equitable readjustment of liquidated damages under the new completion schedule. (end of clause) as prescribed in 11.604(a), insert the following provision: notice of priority rating for national defense, emergency preparedness, and energy program use (apr 2008) any contract awarded as a result of this solicitation will be □ dx rated order; □ do rated order certified for national defense, emergency preparedness, and energy program use under the defense priorities and allocations system (dpas) (15 cfr700), and the contractor will be required to follow all of the requirements of this regulation. [contracting officer check appropriate box.] (end of provision) as prescribed in 11.604(b), insert the following clause: defense priority and allocation requirement (apr 2008) this is a rated order certified for national defense, emergency preparedness, and energy program use, and the contractor shall follow all the requirements of the defense priorities and allocations system regulation (15 cfr 700). (end of clause) as prescribed in 11.703(a), insert the following clause: variation in quantity (apr 1984) (a) a variation in the quantity of any item called for by this contract will not be accepted unless the variation has been caused by conditions of loading, shipping, or packing, or allowances in manufacturing processes, and then only to the extent, if any, specified in paragraph (b) of this clause. (b) the permissible variation shall be limited to: ___ percent increase [contracting officer insert percentage] ___ percent decrease [contracting officer insert percentage] this increase or decrease shall apply to ____________.* * contracting officer shall insert in the blank the designation(s) to which the percentages apply, such as  (1) the total contract quantity; (2) item1 only; (3) each quantity specified in the delivery schedule; (4) the total item quantity for each destination; or (5) the total quantity of each item without regard to destination. (end of clause) as prescribed in 11.703(b), insert the following clause: delivery of excess quantities (sept 1989) the contractor is responsible for the delivery of each item quantity within allowable variations, if any. if the contractor delivers and the government receives quantities of any item in excess of the quantity called for (after considering any allowable variation in quantity), such excess quantities will be treated as being delivered for the convenience of the contractor. the government may retain such excess quantities up to $250 in value without compensating the contractor therefor, and the contractor waives all right, title, or interests therein. quantities in excess of $250 will, at the option of the government, either be returned at the contractor’s expense or retained and paid for by the government at the contract unit price. (end of clause) as prescribed in 11.703(c), insert the following clause in solicitations and contracts when a fixed price construction contract is contemplated that authorizes a variation in the estimated quantity of unit priced items: variation in estimated quantity (apr 1984) if the quantity of a unit priced item in this contract is an estimated quantity and the actual quantity of the unit priced item varies more than 15 percent above or below the estimated quantity, an equitable adjustment in the contract price shall be made upon demand of either party. the equitable adjustment shall be based upon any increase or decrease in costs due solely to the variation above 115 percent or below 85 percent of the estimated quantity. if the quantity variation is such as to cause an increase in the time necessary for completion, the contractor may request, in writing, an extension of time, to be received by the contracting officer within 10 days from the beginning of the delay, or within such further period as may be granted by the contracting officer before the date of final settlement of the contract. upon the receipt of a written request for an extension, the contracting officer shall ascertain the facts and make an adjustment for extending the completion date as, in the judgement of the contracting officer, is justified. (end of clause) as prescribed in 12.301(b)(1), insert the following provision: instructions to offerors commercial products and commercial services (sep 2023) (a) north american industry classification system (naics) code and small business size standard. the naics code(s) and small business size standard(s) for this acquisition appear elsewhere in the solicitation. however, the small business size standard for a concern that submits an offer, other than on a construction or service acquisition, but proposes to furnish an end item that it did not itself manufacture, process, or produce is 500 employees, or 150 employees for information technology value added resellers under naics code 541519, if the acquisition  (1)is set aside for small business and has a value above the simplified acquisition threshold; (2)uses the hubzone price evaluation preference regardless of dollar value, unless the offeror waives the price evaluation preference; or (3)is an 8(a), hubzone, service disabled veteran owned, economically disadvantaged women owned, or women owned small business set aside or sole source award regardless of dollar value. (b) submission of offers. submit signed and dated offers to the office specified in this solicitation at or before the exact time specified in this solicitation. offers may be submitted on the sf 1449, letterhead stationery, or as otherwise specified in the solicitation. as a minimum, offers must show  (1) the solicitation number; (2) the time specified in the solicitation for receipt of offers; (3) the name, address, and telephone number of the offeror; (4) a technical description of the items being offered in sufficient detail to evaluate compliance with the requirements in the solicitation. this may include product literature, or other documents, if necessary; (5) terms of any express warranty; (6) price and any discount terms; (7) "remit to" address, if different than mailing address; (8) a completed copy of the representations and certifications at federal acquisition regulation (far) 52.212 3 (see far 52.212 3(b) for those representations and certifications that the offeror shall complete electronically); (9) acknowledgment of solicitation amendments; (10) past performance information, when included as an evaluation factor, to include recent and relevant contracts for the same or similar items and other references (including contract numbers, points of contact with telephone numbers and other relevant information); and (11) if the offer is not submitted on the sf 1449, include a statement specifying the extent of agreement with all terms, conditions, and provisions included in the solicitation. offers that fail to furnish required representations or information, or reject the terms and conditions of the solicitation may be excluded from consideration. (c) period for acceptance of offers. the offeror agrees to hold the prices in its offer firm for 30 calendar days from the date specified for receipt of offers, unless another time period is specified in an addendum to the solicitation. (d) product samples. when required by the solicitation, product samples shall be submitted at or prior to the time specified for receipt of offers. unless otherwise specified in this solicitation, these samples shall be submitted at no expense to the government, and returned at the sender’s request and expense, unless they are destroyed during preaward testing. (e) multiple offers. offerors are encouraged to submit multiple offers presenting alternative terms and conditions, including alternative line items (provided that the alternative line items are consistent with far subpart 4.10), or alternative commercial products or commercial services for satisfying the requirements of this solicitation. each offer submitted will be evaluated separately. (f) late submissions, modifications, revisions, and withdrawals of offers. (1) offerors are responsible for submitting offers, and any modifications, revisions, or withdrawals, so as to reach the government office designated in the solicitation by the time specified in the solicitation. if no time is specified in the solicitation, the time for receipt is 4:30 p.m., local time, for the designated government office on the date that offers or revisions are due. (2) (i) any offer, modification, revision, or withdrawal of an offer received at the government office designated in the solicitation after the exact time specified for receipt of offers is "late" and will not be considered unless it is received before award is made, the contracting officer determines that accepting the late offer would not unduly delay the acquisition; and  (a) if it was transmitted through an electronic commerce method authorized by the solicitation, it was received at the initial point of entry to the government infrastructure not later than 5:00 p.m. one working day prior to the date specified for receipt of offers; or (b) there is acceptable evidence to establish that it was received at the government installation designated for receipt of offers and was under the government’s control prior to the time set for receipt of offers; or (c) if this solicitation is a request for proposals, it was the only proposal received. (ii) however, a late modification of an otherwise successful offer, that makes its terms more favorable to the government, will be considered at any time it is received and may be accepted. (3) acceptable evidence to establish the time of receipt at the government installation includes the time/date stamp of that installation on the offer wrapper, other documentary evidence of receipt maintained by the installation, or oral testimony or statements of government personnel. (4) if an emergency or unanticipated event interrupts normal government processes so that offers cannot be received at the government office designated for receipt of offers by the exact time specified in the solicitation, and urgent government requirements preclude amendment of the solicitation or other notice of an extension of the closing date, the time specified for receipt of offers will be deemed to be extended to the same time of day specified in the solicitation on the first work day on which normal government processes resume. (5) offers may be withdrawn by written notice received at any time before the exact time set for receipt of offers. oral offers in response to oral solicitations may be withdrawn orally. if the solicitation authorizes facsimile offers, offers may be withdrawn via facsimile received at any time before the exact time set for receipt of offers, subject to the conditions specified in the solicitation concerning facsimile offers. an offer may be withdrawn in person by an offeror or its authorized representative if, before the exact time set for receipt of offers, the identity of the person requesting withdrawal is established and the person signs a receipt for the offer. (g) contract award (not applicable to invitation for bids). the government intends to evaluate offers and award a contract without discussions with offerors. therefore, the offeror’s initial offer should contain the offeror’s best terms from a price and technical standpoint. however, the government reserves the right to conduct discussions if later determined by the contracting officer to be necessary. the government may reject any or all offers if such action is in the public interest; accept other than the lowest offer; and waive informalities and minor irregularities in offers received. (h) multiple awards. the government may accept any item or group of items of an offer, unless the offeror qualifies the offer by specific limitations. unless otherwise provided in the schedule, offers may not be submitted for quantities less than those specified. the government reserves the right to make an award on any item for a quantity less than the quantity offered, at the unit prices offered, unless the offeror specifies otherwise in the offer. (i) availability of requirements documents cited in the solicitation. (1) (i) the gsa index of federal specifications, standards and commercial item descriptions, fpmr part 101 29, and copies of federal specifications, standards, and product descriptions can be downloaded from the assist website at https://assist.dla.mil. (ii) if the general services administration, department of agriculture, or department of veterans affairs issued this solicitation, a copy of specifications, standards, and commercial item descriptions cited in this solicitation may be obtained from the address in paragraph (i)(1)(i) of this provision. (2) most unclassified defense specifications and standards may be downloaded from the assist website at https://assist.dla.mil. (3) defense documents not available from the assist website may be requested from the defense standardization program office by  (i) using the assist feedback module ( https://assist.dla.mil/​feedback); or (ii) contacting the defense standardization program office by telephone at 571 767 6688 or email at assisthelp@dla.mil. (4) nongovernment (voluntary) standards must be obtained from the organization responsible for their preparation, publication, or maintenance. (j) unique entity identifier.(applies to all offers that exceed the micro purchase threshold, and offers at or below the micro purchase threshold if the solicitation requires the contractor to be registered in the system for award management (sam).) the offeror shall enter, in the block with its name and address on the cover page of its offer, the annotation "unique entity identifier" followed by the unique entity identifier that identifies the offeror's name and address. the offeror also shall enter its electronic funds transfer (eft) indicator, if applicable. the eft indicator is a four character suffix to the unique entity identifier. the suffix is assigned at the discretion of the offeror to establish additional sam records for identifying alternative eft accounts (see far subpart 32.11) for the same entity. if the offeror does not have a unique entity identifier, it should contact the entity designated at www.sam.gov for unique entity identifier establishment directly to obtain one. the offeror should indicate that it is an offeror for a government contract when contacting the entity designated at www.sam.gov for establishing the unique entity identifier. (k) [reserved] (l) debriefing. if a post award debriefing is given to requesting offerors, the government shall disclose the following information, if applicable: (1) the agency’s evaluation of the significant weak or deficient factors in the debriefed offeror’s offer. (2) the overall evaluated cost or price and technical rating of the successful and the debriefed offeror and past performance information on the debriefed offeror. (3) the overall ranking of all offerors, when any ranking was developed by the agency during source selection. (4) a summary of the rationale for award; (5) for acquisitions of commercial products, the make and model of the product to be delivered by the successful offeror. (6) reasonable responses to relevant questions posed by the debriefed offeror as to whether source selection procedures set forth in the solicitation, applicable regulations, and other applicable authorities were followed by the agency. (end of provision) as prescribed in 12.301(c), the contracting officer may insert a provision substantially as follows: evaluation commercial products and commercial services (nov 2021) (a) the government will award a contract resulting from this solicitation to the responsible offeror whose offer conforming to the solicitation will be most advantageous to the government, price and other factors considered. the following factors shall be used to evaluate offers: ________________________________________________ ________________________________________________ ________________________________________________[contracting officer shall insert the significant evaluation factors, such as (i) technical capability of the item offered to meet the government requirement; (ii) price; (iii) past performance (see far 15.304); and include them in the relative order of importance of the evaluation factors, such as in descending order of importance.] technical and past performance, when combined, are __________ [contracting officer state, in accordance with far 15.304, the relative importance of all other evaluation factors, when combined, when compared to price.] (b) options. the government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. the government may determine that an offer is unacceptable if the option prices are significantly unbalanced. evaluation of options shall not obligate the government to exercise the option(s). (c) a written notice of award or acceptance of an offer, mailed or otherwise furnished to the successful offeror within the time for acceptance specified in the offer, shall result in a binding contract without further action by either party. before the offer’s specified expiration time, the government may accept an offer (or part of an offer), whether or not there are negotiations after its receipt, unless a written notice of withdrawal is received before award. (end of provision) as prescribed in 12.301(b)(2), insert the following provision: offeror representations and certifications commercial products and commercial services (may 2024) the offeror shall complete only paragraph (b) of this provision if the offeror has completed the annual representations and certification electronically in the system for award management (sam) accessed through https://www.sam.gov. if the offeror has not completed the annual representations and certifications electronically, the offeror shall complete only paragraphs (c) through (v) of this provision. (a) definitions. as used in this provision  covered telecommunications equipment or services has the meaning provided in the clause 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. economically disadvantaged women owned small business (edwosb) concern means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the united states and who are economically disadvantaged in accordance with 13 cfr part 127, and the concern is certified by sba or an approved third party certifier in accordance with 13 cfr 127.300. it automatically qualifies as a women owned small business eligible under the wosb program. forced or indentured child labor means all work or service  (1) exacted from any person under the age of 18 under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily; or (2) performed by any person under the age of 18 pursuant to a contract the enforcement of which can be accomplished by process or penalties. highest level owner means the entity that owns or controls an immediate owner of the offeror, or that owns or controls one or more entities that control an immediate owner of the offeror. no entity owns or exercises control of the highest level owner. immediate owner means an entity, other than the offeror, that has direct control of the offeror. indicators of control include, but are not limited to, one or more of the following: ownership or interlocking management, identity of interests among family members, shared facilities and equipment, and the common use of employees. inverted domestic corporation, means a foreign incorporated entity that meets the definition of an inverted domestic corporation under 6 u.s.c. 395(b), applied in accordance with the rules and definitions of 6 u.s.c. 395(c). manufactured end product means any end product in product and service codes (pscs) 1000 9999, except  (1) psc 5510, lumber and related basic wood materials; (2) product or service group (psg) 87, agricultural supplies; (3) psg 88, live animals; (4) psg 89, subsistence; (5) psc 9410, crude grades of plant materials; (6) psc 9430, miscellaneous crude animal products, inedible; (7) psc 9440, miscellaneous crude agricultural and forestry products; (8) psc 9610, ores; (9) psc 9620, minerals, natural and synthetic; and (10) psc 9630, additive metal materials. place of manufacture means the place where an end product is assembled out of components, or otherwise made or processed from raw materials into the finished product that is to be provided to the government. if a product is disassembled and reassembled, the place of reassembly is not the place of manufacture. predecessor means an entity that is replaced by a successor and includes any predecessors of the predecessor. reasonable inquiry has the meaning provided in the clause 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. restricted business operations means business operations in sudan that include power production activities, mineral extraction activities, oil related activities, or the production of military equipment, as those terms are defined in the sudan accountability and divestment act of 2007 (pub. l. 110 174). restricted business operations do not include business operations that the person (as that term is defined in section 2 of the sudan accountability and divestment act of 2007) conducting the business can demonstrate  (1) are conducted under contract directly and exclusively with the regional government of southern sudan; (2) are conducted pursuant to specific authorization from the office of foreign assets control in the department of the treasury, or are expressly exempted under federal law from the requirement to be conducted under such authorization; (3) consist of providing goods or services to marginalized populations of sudan; (4) consist of providing goods or services to an internationally recognized peacekeeping force or humanitarian organization; (5) consist of providing goods or services that are used only to promote health or education; or (6) have been voluntarily suspended."sensitive technology"  sensitive technology  (1) means hardware, software, telecommunications equipment, or any other technology that is to be used specifically  (i) to restrict the free flow of unbiased information in iran; or (ii) to disrupt, monitor, or otherwise restrict speech of the people of iran; and (2) does not include information or informational materials the export of which the president does not have the authority to regulate or prohibit pursuant to section 203(b)(3)of the international emergency economic powers act ( 50 u.s.c. 1702(b)(3)). service disabled veteran owned small business (sdvosb) concern means a small business concern  (1) (i) not less than 51 percent of which is owned and controlled by one or more service disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service disabled veterans; and (ii) the management and daily business operations of which are controlled by one or more service disabled veterans or, in the case of a service disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran; or (2) a small business concern eligible under the sdvosb program in accordance with 13 cfr part 128 (see subpart 19.14). (3) service disabled veteran, as used in this definition, means a veteran as defined in 38 u.s.c. 101(2), with a disability that is service connected, as defined in 38 u.s.c. 101(16), and who is registered in the beneficiary identification and records locator subsystem, or successor system that is maintained by the department of veterans affairs’ veterans benefits administration, as a service disabled veteran. service disabled veteran owned small business (sdvosb) concern eligible under the sdvosb program means an sdvosb concern that  (1) effective january 1, 2024, is designated in the system for award management (sam) as certified by the small business administration (sba) in accordance with 13 cfr 128.300; or (2) has represented that it is an sdvosb concern in sam and submitted a complete application for certification to sba on or before december 31, 2023. service disabled veteran owned small business (sdvosb) program means a program that authorizes contracting officers to limit competition, including award on a sole source basis, to sdvosb concerns eligible under the sdvosb program. small business concern  (1) means a concern, including its affiliates, that is independently owned and operated, not dominant in its field of operation, and qualified as a small business under the criteria in 13 cfr part 121 and size standards in this solicitation. (2) affiliates, as used in this definition, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. in determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. sba determines affiliation based on the factors set forth at 13 cfr 121.103. small disadvantaged business concern, consistent with 13 cfr 124.1001, means a small business concern under the size standard applicable to the acquisition, that  (1) is at least 51 percent unconditionally and directly owned (as defined at 13 cfr 124.105) by  (i) one or more socially disadvantaged (as defined at13 cfr 124.103) and economically disadvantaged (as defined at 13 cfr 124.104) individuals who are citizens of the united states; and (ii) each individual claiming economic disadvantage has a net worth not exceeding the threshold at 13 cfr 124.104(c)(2) after taking into account the applicable exclusions set forth at 13 cfr124.104(c)(2); and (2) the management and daily business operations of which are controlled (as defined at 13.cfr 124.106) by individuals, who meet the criteria in paragraphs (1)(i) and (ii) of this definition. subsidiary means an entity in which more than 50 percent of the entity is owned  (1) directly by a parent corporation; or (2) through another subsidiary of a parent corporation successor means an entity that has replaced a predecessor by acquiring the assets and carrying out the affairs of the predecessor under a new name (often through acquisition or merger). the term "successor" does not include new offices/divisions of the same company or a company that only changes its name. the extent of the responsibility of the successor for the liabilities of the predecessor may vary, depending on state law and specific circumstances. veteran owned small business concern means a small business concern  (1) not less than 51 percent of which is owned and controlled by one or more veterans (as defined at 38 u.s.c. 101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and (2) the management and daily business operations of which are controlled by one or more veterans. women owned business concern means a concern which is at least 51 percent owned by one or more women; or in the case of any publicly owned business, at least 51 percent of its stock is owned by one or more women; and whose management and daily business operations are controlled by one or more women women owned small business concern means a small business concern  (1) that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least51 percent of the stock of which is owned by one or more women; and (2) whose management and daily business operations are controlled by one or more women. women owned small business (wosb) concern eligible under the wosb program (in accordance with 13 cfr part 127), means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the united states, and the concern is certified by sba or an approved third party certifier in accordance with 13 cfr 127.300. (b) (1) annual representations and certifications. any changes provided by the offeror in paragraph (b)(2) of this provision do not automatically change the representations and certifications in sam. (2) the offeror has completed the annual representations and certifications electronically in sam accessed through http://www.sam.gov. after reviewing sam information, the offeror verifies by submission of this offer that the representations and certifications currently posted electronically at far 52.212 3, offeror representations and certifications commercial products and commercial services, have been entered or updated in the last 12 months, are current, accurate, complete, and applicable to this solicitation (including the business size standard(s) applicable to the naics code(s) referenced for this solicitation), at the time this offer is submitted and are incorporated in this offer by reference (see far 4.1201), except for paragraphs __. [offeror to identify the applicable paragraphs at (c) through (v) of this provision that the offeror has completed for the purposes of this solicitation only, if any. these amended representation(s) and/or certification(s) are also incorporated in this offer and are current, accurate, and complete as of the date of this offer. any changes provided by the offeror are applicable to this solicitation only, and do not result in an update to the representations and certifications posted electronically on sam.] (c) offerors must complete the following representations when the resulting contract is for supplies to be delivered or services to be performed in the united states or its outlying areas, or when the contracting officer has applied part 19 in accordance with 19.000(b)(1)(ii). check all that apply. (1) small business concern. the offeror represents as part of its offer that  (i) it □ is, □ is not a small business concern; or (ii) it □ is, □ is not a small business joint venture that complies with the requirements of 13 cfr 121.103(h) and 13 cfr 125.8(a) and (b). [ the offeror shall enter the name and unique entity identifier of each party to the joint venture: ____________.] (2) veteran owned small business concern. [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents as part of its offer that it □ is, □ is not a veteran owned small business concern. (3) sdvosb concern. [complete only if the offeror represented itself as a veteran owned small business concern in paragraph (c)(2) of this provision.] the offeror represents that it □ is, □ is not an sdvosb concern. (4) sdvosb concern joint venture eligible under the sdvosb program. the offeror represents that it □ is, □ is not an sdvosb joint venture eligible under the sdvosb program that complies with the requirements of 13 cfr 128.402. [complete only if the offeror represented itself as an sdvosb concern in paragraph (c)(3) of this provision.] [the offeror shall enter the name and unique entity identifier of each party to the joint venture: ____________.] (5) small disadvantaged business concern. [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents that it □ is, □ is not a small disadvantaged business concern as defined in 13 cfr 124.1001. (6) women owned small business concern. [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents that it □ is, □ is not a women owned small business concern. (7) wosb joint venture eligible under the wosb program. the offeror represents that it □ is, □ is not a joint venture that complies with the requirements of 13 cfr 127.506(a) through (c). [ the offeror shall enter the name and unique entity identifier of each party to the joint venture: ____________.] (8) economically disadvantaged women owned small business (edwosb) joint venture. the offeror represents that it □ is, □ is not a joint venture that complies with the requirements of 13 cfr 127.506(a) through (c). [the offeror shall enter the name and unique entity identifier of each party to the joint venture: ____________.] note to paragraphs (c)(9) and (10): complete paragraphs (c)(9) and (10) only if this solicitation is expected to exceed the simplified acquisition threshold. (9) women owned business concern (other than small business concern). [complete only if the offeror is a women owned business concern and did not represent itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents that it □ is a women owned business concern. (10) tie bid priority for labor surplus area concerns. if this is an invitation for bid, small business offerors may identify the labor surplus areas in which costs to be incurred on account of manufacturing or production (by offeror or first tier subcontractors) amount to more than 50 percent of the contract price:____________ (11) hubzone small business concern. [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents, as part of its offer, that  (i) it □ is, □ is not a hubzone small business concern listed, on the date of this representation, as having been certified by sba as a hubzone small business concern in the dynamic small business search and sam, and will attempt to maintain an employment rate of hubzone residents of 35 percent of its employees during performance of a hubzone contract (see 13 cfr 126.200(e)(1)); and (ii) it □ is, □ is not a hubzone joint venture that complies with the requirements of 13 cfr 126.616(a) through (c). [the offeror shall enter the name and unique entity identifier of each party to the joint venture: ______.] each hubzone small business concern participating in the hubzone joint venture shall provide representation of its hubzone status. (d) representations required to implement provisions of executive order11246  (1) previous contracts and compliance. the offeror represents that  (i) it □ has, □ has not participated in a previous contract or subcontract subject to the equal opportunity clause of this solicitation; and (ii) it □ has, □ has not filed all required compliance reports. (2) affirmative action compliance. the offeror represents that  (i) it □ has developed and has on file, □ has not developed and does not have on file, at each establishment, affirmative action programs required by rules and regulations of the secretary of labor (41 cfr parts 60 1 and 60 2), or (ii) it □ has not previously had contracts subject to the written affirmative action programs requirement of the rules and regulations of the secretary of labor. (e) certification regarding payments to influence federal transactions (31 http://uscode.house.gov/ u.s.c. 1352). (applies only if the contract is expected to exceed $150,000.) by submission of its offer, the offeror certifies to the best of its knowledge and belief that no federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a member of congress, an officer or employee of congress or an employee of a member of congress on his or her behalf in connection with the award of any resultant contract. if any registrants under the lobbying disclosure act of 1995 have made a lobbying contact on behalf of the offeror with respect to this contract, the offeror shall complete and submit, with its offer, omb standard form lll, disclosure of lobbying activities, to provide the name of the registrants. the offeror need not report regularly employed officers or employees of the offeror to whom payments of reasonable compensation were made. (f) buy american certificate. (applies only if the clause at federal acquisition regulation (far) 52.225 1, buy american supplies, is included in this solicitation.) (1) (i) the offeror certifies that each end product, except those listed in paragraph (f)(2) of this provision, is a domestic end product and that each domestic end product listed in paragraph (f)(3) of this provision contains a critical component. (ii) the offeror shall list as foreign end products those end products manufactured in the united states that do not qualify as domestic end products. for those foreign end products that do not consist wholly or predominantly of iron or steel or a combination of both, the offeror shall also indicate whether these foreign end products exceed 55 percent domestic content, except for those that are cots items. if the percentage of the domestic content is unknown, select “no”. (iii) the offeror shall separately list the line item numbers of domestic end products that contain a critical component (see far 25.105). (iv) the terms “commercially available off the shelf (cots) item,” “critical component,” “domestic end product,” "end product," "foreign end product," and "united states" are defined in the clause of this solicitation entitled "buy american supplies." (2) foreign end products: ______________ _________________ _________________ ______________ _________________ _________________ ______________ _________________ _________________ [list as necessary] (3) domestic end products containing a critical component: line item no. ___ [list as necessary] (4) the government will evaluate offers in accordance with the policies and procedures of far part 25. (g) (1) buy american free trade agreements israeli trade act certificate. (applies only if the clause at far 52.225 3, buy american free trade agreements israeli trade act, is included in this solicitation.) (i) (a) the offeror certifies that each end product, except those listed in paragraph (g)(1)(ii) or (iii) of this provision, is a domestic end product and that each domestic end product listed in paragraph (g)(1)(iv) of this provision contains a critical component. (b) the terms "bahraini, moroccan, omani, panamanian, or peruvian end product," "commercially available off the shelf (cots) item," "critical component," "domestic end product," "end product," "foreign end product," "free trade agreement country," "free trade agreement country end product," "israeli end product," and "united states" are defined in the clause of this solicitation entitled "buy american free trade agreements israeli trade act." (ii) the offeror certifies that the following supplies are free trade agreement country end products (other than bahraini, moroccan, omani, panamanian, or peruvian end products) or israeli end products as defined in the clause of this solicitation entitled "buy american free trade agreements israeli trade act." free trade agreement country end products (other than bahraini, moroccan, omani, panamanian, or peruvian end products) or israeli end products: ______________ _________________ ______________ _________________ ______________ _________________ [list as necessary] (iii) the offeror shall list those supplies that are foreign end products (other than those listed in paragraph (g)(1)(ii) of this provision) as defined in the clause of this solicitation entitled "buy american free trade agreements israeli trade act." the offeror shall list as other foreign end products those end products manufactured in the united states that do not qualify as domestic end products. for those foreign end products that do not consist wholly or predominantly of iron or steel or a combination of both, the offeror shall also indicate whether these foreign end products exceed 55 percent domestic content, except for those that are cots items. if the percentage of the domestic content is unknown, select “no”. other foreign end products: ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________ ______________ [list as necessary] (iv) the offeror shall list the line item numbers of domestic end products that contain a critical component (see far 25.105). line item no. ___ [list as necessary] (v) the government will evaluate offers in accordance with the policies and procedures of far part 25. (2) buy american free trade agreements israeli trade act certificate, alternate ii. if alternate ii to the clause at far 52.225 3 is included in this solicitation, substitute the following paragraph (g)(1)(ii) for paragraph (g)(1)(ii) of the basic provision: (g)(1)(ii) the offeror certifies that the following supplies are israeli end products as defined in the clause of this solicitation entitled “buy american free trade agreements israeli trade act”: israeli end products: ____________ ______________ ______________ [list as necessary] (3) buy american free trade agreements israeli trade act certificate, alternate iii. if alternate iii to the clause at 52.225 3 is included in this solicitation, substitute the following paragraphs (g)(1)(i)(b) and (g)(1)(ii) for paragraphs (g)(1)(i)(b) and (g)(1)(ii) of the basic provision: (g)(1)(i)(b) the terms “korean end product”, “commercially available off the shelf (cots) item,” “critical component,” “domestic end product,” “end product,” “foreign end product,” “free trade agreement country,” “free trade agreement country end product,” “israeli end product,” and “united states” are defined in the clause of this solicitation entitled “buy american free trade agreements israeli trade act.” (g)(1)(ii) the offeror certifies that the following supplies are korean end products or israeli end products as defined in the clause of this solicitation entitled “buy american free trade agreements israeli trade act”: korean end products or israeli end products: __________________ __________________ __________________ __________________ __________________ __________________ [list as necessary] (4) trade agreements certificate. (applies only if the clause at far 52.225 5, trade agreements, is included in this solicitation.) (i) the offeror certifies that each end product, except those listed in paragraph (g)(4)(ii) of this provision, is a u.s. made or designated country end product, as defined in the clause of this solicitation entitled "trade agreements." (ii) the offeror shall list as other end products those end products that are not u.s. made or designated country end products. other end products: __________________ __________________ __________________ __________________ __________________ __________________ [list as necessary] (iii) the government will evaluate offers in accordance with the policies and procedures of far part 25. for line items covered by the wto gpa, the government will evaluate offers of u.s. made or designated country end products without regard to the restrictions of the buy american statute. the government will consider for award only offers of u.s. made or designated country end products unless the contracting officer determines that there are no offers for such products or that the offers for such products are insufficient to fulfill the requirements of the solicitation. (h) certification regarding responsibility matters (executive order 12689). (applies only if the contract value is expected to exceed the simplified acquisition threshold.) the offeror certifies, to the best of its knowledge and belief, that the offeror and/or any of its principals  (1) □ are, □ are not presently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any federal agency; (2) □ have, □ have not, within a three year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain, or performing a federal, state or local government contract or subcontract; violation of federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, violating federal criminal tax laws, or receiving stolen property; (3) □ are, □ are not presently indicted for, or otherwise criminally or civilly charged by a government entity with, commission of any of these offenses enumerated in paragraph (h)(2) of this clause; and (4) □ have, □ have not, within a three year period preceding this offer, been notified of any delinquent federal taxes in an amount that exceeds the threshold at 9.104 5(a)(2) for which the liability remains unsatisfied. (i) taxes are considered delinquent if both of the following criteria apply: (a) the tax liability is finally determined. the liability is finally determined if it has been assessed. a liability is not finally determined if there is a pending administrative or judicial challenge. in the case of a judicial challenge to the liability, the liability is not finally determined until all judicial appeal rights have been exhausted. (b) the taxpayer is delinquent in making payment. a taxpayer is delinquent if the taxpayer has failed to pay the tax liability when full payment was due and required. a taxpayer is not delinquent in cases where enforced collection action is precluded. (ii) examples. (a) the taxpayer has received a statutory notice of deficiency, under i.r.c. §6212, which entitles the taxpayer to seek tax court review of a proposed tax deficiency. this is not a delinquent tax because it is not a final tax liability. should the taxpayer seek tax court review, this will not be a final tax liability until the taxpayer has exercised all judicial appeal rights. (b) the irs has filed a notice of federal tax lien with respect to an assessed tax liability, and the taxpayer has been issued a notice under i.r.c. §6320 entitling the taxpayer to request a hearing with the irs office of appeals contesting the lien filing, and to further appeal to the tax court if the irs determines to sustain the lien filing. in the course of the hearing, the taxpayer is entitled to contest the underlying tax liability because the taxpayer has had no prior opportunity to contest the liability. this is not a delinquent tax because it is not a final tax liability. should the taxpayer seek tax court review, this will not be a final tax liability until the taxpayer has exercised all judicial appeal rights. (c) the taxpayer has entered into an installment agreement pursuant to i.r.c. §6159. the taxpayer is making timely payments and is in full compliance with the agreement terms. the taxpayer is not delinquent because the taxpayer is not currently required to make full payment. (d) the taxpayer has filed for bankruptcy protection. the taxpayer is not delinquent because enforced collection action is stayed under 11 u.s.c. §362 (the bankruptcy code). (i) certification regarding knowledge of child labor for listed end products (executive order 13126). [the contracting officer must list in paragraph (i)(1) any end products being acquired under this solicitation that are included in the list of products requiring contractor certification as to forced or indentured child labor, unless excluded at 22.1503(b).] (1) listed end products. ___________________ ___________________ ___________________ ___________________ (2) certification. [if the contracting officer has identified end products and countries of origin in paragraph (i)(1) of this provision, then the offeror must certify to either (i)(2)(i) or (i)(2)(ii) by checking the appropriate block.] ☐ (i) the offeror will not supply any end product listed in paragraph (i)(1) of this provision that was mined, produced, or manufactured in the corresponding country as listed for that product. ☐ (ii) the offeror may supply an end product listed in paragraph (i)(1) of this provision that was mined, produced, or manufactured in the corresponding country as listed for that product. the offeror certifies that it has made a good faith effort to determine whether forced or indentured child labor was used to mine, produce, or manufacture any such end product furnished under this contract. on the basis of those efforts, the offeror certifies that it is not aware of any such use of child labor. (j) place of manufacture. (does not apply unless the solicitation is predominantly for the acquisition of manufactured end products.) for statistical purposes only, the offeror shall indicate whether the place of manufacture of the end products it expects to provide in response to this solicitation is predominantly  (1) □ in the united states (check this box if the total anticipated price of offered end products manufactured in the united states exceeds the total anticipated price of offered end products manufactured outside the united states); or (2) □ outside the united states. (k) certificates regarding exemptions from the application of the service contract labor standards (certification by the offeror as to its compliance with respect to the contract also constitutes its certification as to compliance by its subcontractor if it subcontracts out the exempt services.) [the contracting officer is to check a box to indicate if paragraph (k)(1) or (k)(2) applies.] ☐ (1) maintenance, calibration, or repair of certain equipment as described in far 22.1003 4(c)(1). the offeror □ does □ does not certify that  (i) the items of equipment to be serviced under this contract are used regularly for other than governmental purposes and are sold or traded by the offeror (or subcontractor in the case of an exempt subcontract) in substantial quantities to the general public in the course of normal business operations; (ii) the services will be furnished at prices which are, or are based on, established catalog or market prices (see far 22.1003 4(c)(2)(ii)) for the maintenance, calibration, or repair of such equipment; and (iii) the compensation (wage and fringe benefits) plan for all service employees performing work under the contract will be the same as that used for these employees and equivalent employees servicing the same equipment of commercial customers. ☐ (2) certain services as described in far 22.1003 4(d)(1). the offeror □ does □ does not certify that  (i) the services under the contract are offered and sold regularly to non governmental customers, and are provided by the offeror (or subcontractor in the case of an exempt subcontract) to the general public in substantial quantities in the course of normal business operations; (ii) the contract services will be furnished at prices that are, or are based on, established catalog or market prices (see far 22.1003 4(d)(2)(iii)); (iii) each service employee who will perform the services under the contract will spend only a small portion of his or her time (a monthly average of less than 20 percent of the available hours on an annualized basis, or less than 20 percent of available hours during the contract period if the contract period is less than a month) servicing the government contract; and (iv) the compensation (wage and fringe benefits) plan for all service employees performing work under the contract is the same as that used for these employees and equivalent employees servicing commercial customers. (3) if paragraph (k)(1) or (k)(2) of this clause applies  (i) if the offeror does not certify to the conditions in paragraph (k)(1) or (k)(2) and the contracting officer did not attach a service contract labor standards wage determination to the solicitation, the offeror shall notify the contracting officer as soon as possible; and (ii) the contracting officer may not make an award to the offeror if the offeror fails to execute the certification in paragraph (k)(1) or (k)(2) of this clause or to contact the contracting officer as required in paragraph (k)(3)(i) of this clause. (l) taxpayer identification number (tin) ( 26 u.s.c. 6109, 31 u.s.c. 7701). (not applicable if the offeror is required to provide this information to the sam to be eligible for award.) (1) all offerors must submit the information required in paragraphs (l)(3) through (l)(5) of this provision to comply with debt collection requirements of 31 u.s.c. 7701(c) and 3325(d), reporting requirements of 26 u.s.c. 6041, 6041a, and 6050m, and implementing regulations issued by the internal revenue service (irs). (2) the tin may be used by the government to collect and report on any delinquent amounts arising out of the offeror’s relationship with the government ( 31 u.s.c. 7701(c)(3)). if the resulting contract is subject to the payment reporting requirements described in far 4.904, the tin provided hereunder may be matched with irs records to verify the accuracy of the offeror’s tin. (3) taxpayer identification number (tin). ☐tin: ________________________________. ☐tin has been applied for. ☐tin is not required because: ☐offeror is a nonresident alien, foreign corporation, or foreign partnership that does not have income effectively connected with the conduct of a trade or business in the united states and does not have an office or place of business or a fiscal paying agent in the united states; ☐offeror is an agency or instrumentality of a foreign government; ☐offeror is an agency or instrumentality of the federal government. (4) type of organization. ☐sole proprietorship; ☐partnership; ☐corporate entity (not tax exempt); ☐corporate entity (tax exempt); ☐government entity (federal, state, or local); ☐foreign government; ☐international organization per 26 cfr1.6049 4; ☐other ________________________________. (5) common parent. ☐offeror is not owned or controlled by a common parent; ☐name and tin of common parent: name ________________________________. tin _________________________________. (m) restricted business operations in sudan. by submission of its offer, the offeror certifies that the offeror does not conduct any restricted business operations in sudan. (n) prohibition on contracting with inverted domestic corporations. (1) government agencies are not permitted to use appropriated (or otherwise made available) funds for contracts with either an inverted domestic corporation, or a subsidiary of an inverted domestic corporation, unless the exception at 9.108 2(b) applies or the requirement is waived in accordance with the procedures at 9.108 4. (2) representation. the offeror represents that  (i) it □ is, □ is not an inverted domestic corporation; and (ii) it □ is, □ is not a subsidiary of an inverted domestic corporation. (o) prohibition on contracting with entities engaging in certain activities or transactions relating to iran. (1) the offeror shall e mail questions concerning sensitive technology to the department of state at cisada106@state.gov. (2) representation and certifications. unless a waiver is granted or an exception applies as provided in paragraph (o)(3) of this provision, by submission of its offer, the offeror  (i) represents, to the best of its knowledge and belief, that the offeror does not export any sensitive technology to the government of iran or any entities or individuals owned or controlled by, or acting on behalf or at the direction of, the government of iran; (ii) certifies that the offeror, or any person owned or controlled by the offeror, does not engage in any activities for which sanctions may be imposed under section 5 of the iran sanctions act; and (iii) certifies that the offeror, and any person owned or controlled by the offeror, does not knowingly engage in any transaction that exceeds the threshold at far 25.703 2(a)(2) with iran’s revolutionary guard corps or any of its officials, agents, or affiliates, the property and interests in property of which are blocked pursuant to the international emergency economic powers act (et seq.) (see ofac’s specially designated nationals and blocked persons list at https://www.treasury.gov/resource center/sanctions/sdn list/pages/default.aspx). (3) the representation and certification requirements of paragraph (o)(2) of this provision do not apply if  (i) this solicitation includes a trade agreements certification (e.g., 52.212 3(g) or a comparable agency provision); and (ii) the offeror has certified that all the offered products to be supplied are designated country end products. (p) ownership or control of offeror. (applies in all solicitations when there is a requirement to be registered in sam or a requirement to have a unique entity identifier in the solicitation). (1) the offeror represents that it □ has or □ does not have an immediate owner. if the offeror has more than one immediate owner (such as a joint venture), then the offeror shall respond to paragraph (2) and if applicable, paragraph (3) of this provision for each participant in the joint venture. (2) if the offeror indicates "has" in paragraph (p)(1) of this provision, enter the following information: immediate owner cage code: ____________________. immediate owner legal name: _____________________. (do not use a "doing business as" name) is the immediate owner owned or controlled by another entity: □ yes or □ no. (3) if the offeror indicates "yes" in paragraph (p)(2) of this provision, indicating that the immediate owner is owned or controlled by another entity, then enter the following information: highest level owner cage code: __________________. highest level owner legal name: ___________________. (do not use a "doing business as" name) (q) representation by corporations regarding delinquent tax liability or a felony conviction under any federal law. (1) as required by sections 744 and 745 of division e of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235), and similar provisions, if contained in subsequent appropriations acts, the government will not enter into a contract with any corporation that  (i) has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability, where the awarding agency is aware of the unpaid tax liability, unless an agency has considered suspension or debarment of the corporation and made a determination that suspension or debarment is not necessary to protect the interests of the government; or (ii) was convicted of a felony criminal violation under any federal law within the preceding 24 months, where the awarding agency is aware of the conviction, unless an agency has considered suspension or debarment of the corporation and made a determination that this action is not necessary to protect the interests of the government. (2) the offeror represents that  (i) it is □ is not □ a corporation that has any unpaid federal tax liability that has been assessed, for which all judicial and administrative remedies have been exhausted or have lapsed, and that is not being paid in a timely manner pursuant to an agreement with the authority responsible for collecting the tax liability; and (ii) it is □ is not □ a corporation that was convicted of a felony criminal violation under a federal law within the preceding 24 months. (r) predecessor of offeror. (applies in all solicitations that include the provision at 52.204 16, commercial and government entity code reporting.) (1) the offeror represents that it □ is or □ is not a successor to a predecessor that held a federal contract or grant within the last three years. (2) if the offeror has indicated "is" in paragraph (r)(1) of this provision, enter the following information for all predecessors that held a federal contract or grant within the last three years (if more than one predecessor, list in reverse chronological order): predecessor cage code: (or mark "unknown"). predecessor legal name: ____. (do not use a "doing business as" name). (s) [reserved]. (t) public disclosure of greenhouse gas emissions and reduction goals. applies in all solicitations that require offerors to register in sam ( 12.301(d)(1)). (1) this representation shall be completed if the offeror received $7.5 million or more in contract awards in the prior federal fiscal year. the representation is optional if the offeror received less than $7.5 million in federal contract awards in the prior federal fiscal year. (2) representation. [offeror to check applicable block(s) in paragraph (t)(2)(i) and (ii)]. (i) the offeror (itself or through its immediate owner or highest level owner) □ does, □ does not publicly disclose greenhouse gas emissions, i.e., makes available on a publicly accessible website the results of a greenhouse gas inventory, performed in accordance with an accounting standard with publicly available and consistently applied criteria, such as the greenhouse gas protocol corporate standard. (ii) the offeror (itself or through its immediate owner or highest level owner) □ does, □ does not publicly disclose a quantitative greenhouse gas emissions reduction goal, i.e., make available on a publicly accessible website a target to reduce absolute emissions or emissions intensity by a specific quantity or percentage. (iii) a publicly accessible website includes the offeror's own website or a recognized, third party greenhouse gas emissions reporting program. (3) if the offeror checked "does" in paragraphs (t)(2)(i) or (t)(2)(ii) of this provision, respectively, the offeror shall provide the publicly accessible website(s) where greenhouse gas emissions and/or reduction goals are reported:____________. (u) (1) in accordance with section 743 of division e, title vii, of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions), government agencies are not permitted to use appropriated (or otherwise made available) funds for contracts with an entity that requires employees or subcontractors of such entity seeking to report waste, fraud, or abuse to sign internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting such waste, fraud, or abuse to a designated investigative or law enforcement representative of a federal department or agency authorized to receive such information. (2) the prohibition in paragraph (u)(1) of this provision does not contravene requirements applicable to standard form 312 (classified information nondisclosure agreement), form 4414 (sensitive compartmented information nondisclosure agreement), or any other form issued by a federal department or agency governing the nondisclosure of classified information. (3) representation. by submission of its offer, the offeror represents that it will not require its employees or subcontractors to sign or comply with internal confidentiality agreements or statements prohibiting or otherwise restricting such employees or subcontractors from lawfully reporting waste, fraud, or abuse related to the performance of a government contract to a designated investigative or law enforcement representative of a federal department or agency authorized to receive such information (e.g., agency office of the inspector general). (v) covered telecommunications equipment or services representation. section 889(a)(1)(a) and section 889 (a)(1)(b) of public law 115 232. (1) the offeror shall review the list of excluded parties in the system for award management (sam) ( https://www.sam.gov) for entities excluded from receiving federal awards for "covered telecommunications equipment or services". (2) the offeror represents that  (i) it □ does, □ does not provide covered telecommunications equipment or services as a part of its offered products or services to the government in the performance of any contract, subcontract, or other contractual instrument. (ii) after conducting a reasonable inquiry for purposes of this representation, that it □ does, □ does not use covered telecommunications equipment or services, or any equipment, system, or service that uses covered telecommunications equipment or services. (end of provision) alternate i (feb 2024). as prescribed in 12.301 (b)(2), add the following paragraph (c)(12) to the basic provision: (12) (complete if the offeror has represented itself as disadvantaged in paragraph (c)(5) of this provision.) □ black american. □ hispanic american. □ native american (american indians, eskimos, aleuts, or native hawaiians). □ asian pacific american (persons with origins from burma, thailand, malaysia, indonesia, singapore, brunei, japan, china, taiwan, laos, cambodia (kampuchea), vietnam, korea, the philippines, republic of palau, republic of the marshall islands, federated states of micronesia, the commonwealth of the northern mariana islands, guam, samoa, macao, hong kong, fiji, tonga, kiribati, tuvalu, or nauru). □ subcontinent asian (asian indian) american (persons with origins from india, pakistan, bangladesh, sri lanka, bhutan, the maldives islands, or nepal). □ individual/concern, other than one of the preceding. as prescribed in 12.301(b)(3), insert the following clause: contract terms and conditions commercial products and commercial services (nov 2023) (a) inspection/acceptance. the contractor shall only tender for acceptance those items that conform to the requirements of this contract. the government reserves the right to inspect or test any supplies or services that have been tendered for acceptance. the government may require repair or replacement of nonconforming supplies or reperformance of nonconforming services at no increase in contract price. if repair/replacement or reperformance will not correct the defects or is not possible, the government may seek an equitable price reduction or adequate consideration for acceptance of nonconforming supplies or services. the government must exercise its post acceptance rights  (1) within a reasonable time after the defect was discovered or should have been discovered; and (2) before any substantial change occurs in the condition of the item, unless the change is due to the defect in the item. (b) assignment. the contractor or its assignee may assign its rights to receive payment due as a result of performance of this contract to a bank, trust company, or other financing institution, including any federal lending agency in accordance with the assignment of claims act (31 u.s.c. 3727). however, when a third party makes payment (e.g., use of the governmentwide commercial purchase card), the contractor may not assign its rights to receive payment under this contract. (c) changes. changes in the terms and conditions of this contract may be made only by written agreement of the parties. (d) disputes. this contract is subject to 41 u.s.c. chapter 71, contract disputes. failure of the parties to this contract to reach agreement on any request for equitable adjustment, claim, appeal or action arising under or relating to this contract shall be a dispute to be resolved in accordance with the clause at federal acquisition regulation (far) 52.233 1, disputes, which is incorporated herein by reference. the contractor shall proceed diligently with performance of this contract, pending final resolution of any dispute arising under the contract. (e) definitions. the clause at far 52.202 1, definitions, is incorporated herein by reference. (f) excusable delays. the contractor shall be liable for default unless nonperformance is caused by an occurrence beyond the reasonable control of the contractor and without its fault or negligence such as, acts of god or the public enemy, acts of the government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather, and delays of common carriers. the contractor shall notify the contracting officer in writing as soon as it is reasonably possible after the commencement of any excusable delay, setting forth the full particulars in connection therewith, shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to the contracting officer of the cessation of such occurrence. (g) invoice. (1) the contractor shall submit an original invoice and three copies (or electronic invoice, if authorized) to the address designated in the contract to receive invoices. an invoice must include  (i) name and address of the contractor; (ii) invoice date and number; (iii) contract number, line item number and, if applicable, the order number; (iv) description, quantity, unit of measure, unit price and extended price of the items delivered; (v) shipping number and date of shipment, including the bill of lading number and weight of shipment if shipped on government bill of lading; (vi) terms of any discount for prompt payment offered; (vii) name and address of official to whom payment is to be sent; (viii) name, title, and phone number of person to notify in event of defective invoice; and (ix) taxpayer identification number (tin). the contractor shall include its tin on the invoice only if required elsewhere in this contract. (x) electronic funds transfer (eft) banking information. (a) the contractor shall include eft banking information on the invoice only if required elsewhere in this contract. (b) if eft banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the contractor shall have submitted correct eft banking information in accordance with the applicable solicitation provision, contract clause (e.g., 52.232 33, payment by electronic funds transfer system for award management, or 52.232 34, payment by electronic funds transfer other than system for award management), or applicable agency procedures. (c) eft banking information is not required if the government waived the requirement to pay by eft. (2) invoices will be handled in accordance with the prompt payment act ( 31 u.s.c. 3903) and office of management and budget (omb) prompt payment regulations at 5 cfr part 1315. (h) patent indemnity. the contractor shall indemnify the government and its officers, employees and agents against liability, including costs, for actual or alleged direct or contributory infringement of, or inducement to infringe, any united states or foreign patent, trademark or copyright, arising out of the performance of this contract, provided the contractor is reasonably notified of such claims and proceedings. (i) payment.  (1) items accepted. payment shall be made for items accepted by the government that have been delivered to the delivery destinations set forth in this contract. (2) prompt payment. the government will make payment in accordance with the prompt payment act ( 31 u.s.c. 3903) and prompt payment regulations at 5 cfr part 1315. (3) electronic funds transfer (eft). if the government makes payment by eft, see 52.212 5(b) for the appropriate eft clause. (4) discount. in connection with any discount offered for early payment, time shall be computed from the date of the invoice. for the purpose of computing the discount earned, payment shall be considered to have been made on the date which appears on the payment check or the specified payment date if an electronic funds transfer payment is made. (5) overpayments. if the contractor becomes aware of a duplicate contract financing or invoice payment or that the government has otherwise overpaid on a contract financing or invoice payment, the contractor shall  (i) remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the  (a) circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (b) affected contract number and delivery order number, if applicable; (c) affected line item or subline item, if applicable; and (d) contractor point of contact. (ii) provide a copy of the remittance and supporting documentation to the contracting officer. (6) interest. (i) all amounts that become payable by the contractor to the government under this contract shall bear simple interest from the date due until paid unless paid within 30 days of becoming due. the interest rate shall be the interest rate established by the secretary of the treasury as provided in 41 u.s.c. 7109, which is applicable to the period in which the amount becomes due, as provided in (i)(6)(v) of this clause, and then at the rate applicable for each six month period as fixed by the secretary until the amount is paid. (ii) the government may issue a demand for payment to the contractor upon finding a debt is due under the contract. (iii) final decisions. the contracting officer will issue a final decision as required by 33.211 if  (a) the contracting officer and the contractor are unable to reach agreement on the existence or amount of a debt within 30 days; (b) the contractor fails to liquidate a debt previously demanded by the contracting officer within the timeline specified in the demand for payment unless the amounts were not repaid because the contractor has requested an installment payment agreement; or (c) the contractor requests a deferment of collection on a debt previously demanded by the contracting officer (see 32.607 2). (iv) if a demand for payment was previously issued for the debt, the demand for payment included in the final decision shall identify the same due date as the original demand for payment. (v) amounts shall be due at the earliest of the following dates: (a) the date fixed under this contract. (b) the date of the first written demand for payment, including any demand for payment resulting from a default termination. (vi) the interest charge shall be computed for the actual number of calendar days involved beginning on the due date and ending on  (a) the date on which the designated office receives payment from the contractor; (b) the date of issuance of a government check to the contractor from which an amount otherwise payable has been withheld as a credit against the contract debt; or (c) the date on which an amount withheld and applied to the contract debt would otherwise have become payable to the contractor. (vii) the interest charge made under this clause may be reduced under the procedures prescribed in far 32.608 2 in effect on the date of this contract. (j) risk of loss. unless the contract specifically provides otherwise, risk of loss or damage to the supplies provided under this contract shall remain with the contractor until, and shall pass to the government upon: (1) delivery of the supplies to a carrier, if transportation is f.o.b. origin; or (2) delivery of the supplies to the government at the destination specified in the contract, if transportation is f.o.b. destination. (k) taxes. the contract price includes all applicable federal, state, and local taxes and duties. (l) termination for the government’s convenience. the government reserves the right to terminate this contract, or any part hereof, for its sole convenience. in the event of such termination, the contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. subject to the terms of this contract, the contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges the contractor can demonstrate to the satisfaction of the government using its standard record keeping system, have resulted from the termination. the contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. this paragraph does not give the government any right to audit the contractor’s records. the contractor shall not be paid for any work performed or costs incurred which reasonably could have been avoided. (m) termination for cause. the government may terminate this contract, or any part hereof, for cause in the event of any default by the contractor, or if the contractor fails to comply with any contract terms and conditions, or fails to provide the government, upon request, with adequate assurances of future performance. in the event of termination for cause, the government shall not be liable to the contractor for any amount for supplies or services not accepted, and the contractor shall be liable to the government for any and all rights and remedies provided by law. if it is determined that the government improperly terminated this contract for default, such termination shall be deemed a termination for convenience. (n) title. unless specified elsewhere in this contract, title to items furnished under this contract shall pass to the government upon acceptance, regardless of when or where the government takes physical possession. (o) warranty. the contractor warrants and implies that the items delivered hereunder are merchantable and fit for use for the particular purpose described in this contract. (p) limitation of liability. except as otherwise provided by an express warranty, the contractor will not be liable to the government for consequential damages resulting from any defect or deficiencies in accepted items. (q) other compliances. the contractor shall comply with all applicable federal, state and local laws, executive orders, rules and regulations applicable to its performance under this contract. (r) compliance with laws unique to government contracts. the contractor agrees to comply with 31 u.s.c. 1352 relating to limitations on the use of appropriated funds to influence certain federal contracts; 18 u.s.c. 431 relating to officials not to benefit; 40 u.s.c. chapter 37, contract work hours and safety standards; 41 u.s.c. chapter 87, kickbacks; 49 u.s.c. 40118, fly american; and 41 u.s.c. chapter 21 relating to procurement integrity. (s) order of precedence. any inconsistencies in this solicitation or contract shall be resolved by giving precedence in the following order: (1) the schedule of supplies/services. (2) the assignments, disputes, payments, invoice, other compliances, compliance with laws unique to government contracts, and unauthorized obligations paragraphs of this clause; (3) the clause at 52.212 5. (4) addenda to this solicitation or contract, including any license agreements for computer software. (5) solicitation provisions if this is a solicitation. (6) other paragraphs of this clause. (7) the standard form 1449. (8) other documents, exhibits, and attachments. (9) the specification. (t) [reserved] (u) unauthorized obligations. (1) except as stated in paragraph (u)(2) of this clause, when any supply or service acquired under this contract is subject to any end user license agreement (eula), terms of service (tos), or similar legal instrument or agreement, that includes any clause requiring the government to indemnify the contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an anti deficiency act violation ( 31 u.s.c. 1341), the following shall govern: (i) any such clause is unenforceable against the government. (ii) neither the government nor any government authorized end user shall be deemed to have agreed to such clause by virtue of it appearing in the eula, tos, or similar legal instrument or agreement. if the eula, tos, or similar legal instrument or agreement is invoked through an "i agree" click box or other comparable mechanism (e.g., "click wrap" or "browse wrap" agreements), execution does not bind the government or any government authorized end user to such clause. (iii) any such clause is deemed to be stricken from the eula, tos, or similar legal instrument or agreement. (2) paragraph (u)(1) of this clause does not apply to indemnification by the government that is expressly authorized by statute and specifically authorized under applicable agency regulations and procedures. (v) incorporation by reference. the contractor’s representations and certifications, including those completed electronically via the system for award management (sam), are incorporated by reference into the contract. (end of clause) alternate i (nov 2021). when a time and materials or labor hour contract is contemplated, substitute the following paragraphs (a), (e), (i), (l), and (m) for those in the basic clause. (a) inspection/acceptance. (1) the government has the right to inspect and test all materials furnished and services performed under this contract, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance. the government may also inspect the plant or plants of the contractor or any subcontractor engaged in contract performance. the government will perform inspections and tests in a manner that will not unduly delay the work. (2) if the government performs inspection or tests on the premises of the contractor or a subcontractor, the contractor shall furnish and shall require subcontractors to furnish all reasonable facilities and assistance for the safe and convenient performance of these duties. (3) unless otherwise specified in the contract, the government will accept or reject services and materials at the place of delivery as promptly as practicable after delivery, and they will be presumed accepted 60 days after the date of delivery, unless accepted earlier. (4) at any time during contract performance, but not later than 6 months (or such other time as may be specified in the contract) after acceptance of the services or materials last delivered under this contract, the government may require the contractor to replace or correct services or materials that at time of delivery failed to meet contract requirements. except as otherwise specified in paragraph (a)(6) of this clause, the cost of replacement or correction shall be determined under paragraph (i) of this 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. unless otherwise specified below, the portion of the "hourly rate" attributable to profit shall be 10 percent. the contractor 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. [insert portion of labor rate attributable to profit.] (5)(i) if the contractor 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 government), the government may  (a) by contract or otherwise, perform the replacement or correction, charge to the contractor any increased cost, or deduct such increased cost from any amounts paid or due under this contract; or (b) terminate this contract for cause. (ii) failure to agree to the amount of increased cost to be charged to the contractor shall be a dispute under the disputes clause of the contract. (6) notwithstanding paragraphs (a)(4) and (5) above, the government may at any time require the contractor to remedy by correction or replacement, without cost to the government, any failure by the contractor to comply with the requirements of this contract, if the failure is due to  (i) fraud, lack of good faith, or willful misconduct on the part of the contractor's managerial personnel; or (ii) the conduct of one or more of the contractor’s employees selected or retained by the contractor after any of the contractor’s managerial personnel has reasonable grounds to believe that the employee is habitually careless or unqualified. (7) 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. (8) the contractor has no obligation or liability under this contract to correct or replace materials and services that at time of delivery do not meet contract requirements, except as provided in this clause or as may be otherwise specified in the contract. (9) unless otherwise specified in the contract, the contractor's obligation to correct or replace government furnished property shall be governed by the clause pertaining to government property. (e) definitions. (1) the clause at far 52.202 1, definitions, is incorporated herein by reference. as used in this clause  (i) "direct materials" means those materials that enter directly into the end product, or that are used or consumed directly in connection with the furnishing of the end product or service. (ii) "hourly rate" means the rate(s) prescribed in the contract for payment for labor that meets the labor category qualifications of a labor category specified in the contract that are  (a) performed by the contractor; (b) performed by the subcontractors; or (c) transferred between divisions, subsidiaries, or affiliates of the contractor under a common control. (iii) "materials" means  (a) direct materials, including supplies transferred between divisions, subsidiaries, or affiliates of the contractor under a common control; (b) subcontracts for supplies and incidental services for which there is not a labor category specified in the contract; (c) other direct costs (e.g., incidental services for which there is not a labor category specified in the contract, travel, computer usage charges, etc.); (d) the following subcontracts for services which are specifically excluded from the hourly rate: [insert any subcontracts for services to be excluded from the hourly rates prescribed in the schedule.]; and (e) indirect costs specifically provided for in this clause. (iv) "subcontract" means any contract, as defined in far subpart 2.1, entered into with a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract including transfers between divisions, subsidiaries, or affiliates of a contractor or subcontractor. it includes, but is not limited to, purchase orders, and changes and modifications to purchase orders. (i) payments. (1) work performed. the government will pay the contractor as follows upon the submission of commercial invoices approved by the contracting officer: (i) hourly rate. (a) the amounts shall be computed by multiplying the appropriate hourly rates prescribed in the contract by the number of direct labor hours performed. fractional parts of an hour shall be payable on a prorated basis. (b) the rates shall be paid for all labor performed on the contract that meets the labor qualifications specified in the contract. labor hours incurred to perform tasks for which labor qualifications were specified in the contract will not be paid to the extent the work is performed by individuals that do not meet the qualifications specified in the contract, unless specifically authorized by the contracting officer. (c) invoices may be submitted once each month (or at more frequent intervals, if approved by the contracting officer) to the contracting officer or the authorized representative. (d) when requested by the contracting officer or the authorized representative, the contractor shall substantiate invoices (including any subcontractor hours reimbursed at the hourly rate in the schedule) by evidence of actual payment, individual daily job timecards, records that verify the employees meet the qualifications for the labor categories specified in the contract, or other substantiation specified in the contract. (e) unless the schedule prescribes otherwise, the hourly rates in the schedule shall not be varied by virtue of the contractor having performed work on an overtime basis. (1) if no overtime rates are provided in the schedule and the contracting officer approves overtime work in advance, overtime rates shall be negotiated. (2) failure to agree upon these overtime rates shall be treated as a dispute under the disputes clause of this contract. (3) 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 the contracting officer. (ii) materials. (a) if the contractor furnishes materials that meet the definition of a commercial product at far 2.101, the price to be paid for such materials shall not exceed the contractor’s established catalog or market price, adjusted to reflect the  (1) quantities being acquired; and (2) any modifications necessary because of contract requirements. (b) except as provided for in paragraph (i)(1)(ii)(a) and (d)(2) of this clause, the government will reimburse the contractor the actual cost of materials (less any rebates, refunds, or discounts received by the contractor that are identifiable to the contract) provided the contractor  (1) has made payments for materials in accordance with the terms and conditions of the agreement or invoice; or (2) makes these payments within 30 days of the submission of the contractor’s payment request to the government and such payment is in accordance with the terms and conditions of the agreement or invoice. (c) to the extent able, the contractor shall  (1) obtain materials at the most advantageous prices available with due regard to securing prompt delivery of satisfactory materials; and (2) give credit to the government for cash and trade discounts, rebates, scrap, commissions, and other amounts that are identifiable to the contract. (d) other costs. unless listed below, other direct and indirect costs will not be reimbursed. (1) other direct costs. the government will reimburse the contractor on the basis of actual cost for the following, provided such costs comply with the requirements in paragraph (i)(1)(ii)(b) of this clause:[insert each element of other direct costs (e.g., travel, computer usage charges, etc. insert "none" if no reimbursement for other direct costs will be provided. if this is an indefinite delivery contract, the contracting officer may insert "each order must list separately the elements of other direct charge(s) for that order or, if no reimbursement for other direct costs will be provided, insert ‘none’."] (2) indirect costs (material handling, subcontract administration, etc.). the government will reimburse the contractor for indirect costs on a pro rata basis over the period of contract performance at the following fixed price:[insert a fixed amount for the indirect costs and payment schedule. insert "$0" if no fixed price reimbursement for indirect costs will be provided. (if this is an indefinite delivery contract, the contracting officer may insert "each order must list separately the fixed amount for the indirect costs and payment schedule or, if no reimbursement for indirect costs, insert ‘none’)."] (2) total cost. it is estimated that the total cost to the government for the performance of this contract shall not exceed the ceiling price set forth in the schedule and the contractor agrees to use its best efforts to perform the work specified in the schedule and all obligations under this contract within such ceiling price. if at any time the contractor has reason to believe that the hourly rate payments and material costs that will accrue in performing this contract 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, the contractor shall notify the contracting officer giving a revised estimate of the total price to the government for performing this contract with supporting reasons and documentation. if at any time during the performance of this contract, the contractor has reason to believe that the total price to the government for performing this contract will be substantially greater or less than the then stated ceiling price, the contractor shall so notify the contracting officer, giving a revised estimate of the total price for performing this contract, with supporting reasons and documentation. if at any time during performance of this contract, the government has reason to believe that the work to be required in performing this contract will be substantially greater or less than the stated ceiling price, the contracting officer will so advise the contractor, giving the then revised estimate of the total amount of effort to be required under the contract. (3) ceiling price. the government will not be obligated to pay the contractor any amount in excess of the ceiling price in the schedule, and the contractor shall not be obligated to continue performance if to do so would exceed the ceiling price set forth in the schedule, unless and until the contracting officer notifies the contractor in writing that the ceiling price has been increased and specifies in the notice a revised ceiling that shall constitute the ceiling price for performance under this contract. 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 the contractor 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. (4) access to records. at any time before final payment under this contract, the contracting officer (or authorized representative) will have access to the following (access shall be limited to the listing below unless otherwise agreed to by the contractor and the contracting officer): (i) records that verify that the employees whose time has been included in any invoice meet the qualifications for the labor categories specified in the contract; (ii) for labor hours (including any subcontractor hours reimbursed at the hourly rate in the schedule), when timecards are required as substantiation for payment  (a) the original timecards (paper based or electronic); (b) the contractor’s timekeeping procedures; (c) contractor records that show the distribution of labor between jobs or contracts; and (d) employees whose time has been included in any invoice for the purpose of verifying that these employees have worked the hours shown on the invoices. (iii) for material and subcontract costs that are reimbursed on the basis of actual cost  (a) any invoices or subcontract agreements substantiating material costs; and (b) any documents supporting payment of those invoices. (5) overpayments/underpayments. each payment previously made shall be subject to reduction to the extent of amounts, on preceding invoices, that are found by the contracting officer not to have been properly payable and shall also be subject to reduction for overpayments or to increase for underpayments. the contractor shall promptly pay any such reduction within 30 days unless the parties agree otherwise. the government within 30 days will pay any such increases, unless the parties agree otherwise. the contractor’s payment will be made by check. if the contractor becomes aware of a duplicate invoice payment or that the government has otherwise overpaid on an invoice payment, the contractor shall  (i) remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the  (a) circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (b) affected contract number and delivery order number, if applicable; (c) affected line item or subline item, if applicable; and (d) contractor point of contact. (ii) provide a copy of the remittance and supporting documentation to the contracting officer. (6)(i) all amounts that become payable by the contractor to the government under this contract shall bear simple interest from the date due until paid unless paid within 30 days of becoming due. the interest rate shall be the interest rate established by the secretary of the treasury, as provided in 41 u.s.c. 7109, which is applicable to the period in which the amount becomes due, and then at the rate applicable for each six month period as established by the secretary until the amount is paid. (ii) the government may issue a demand for payment to the contractor upon finding a debt is due under the contract. (iii) final decisions. the contracting officer will issue a final decision as required by 33.211 if  (a) the contracting officer and the contractor are unable to reach agreement on the existence or amount of a debt in a timely manner; (b) the contractor fails to liquidate a debt previously demanded by the contracting officer within the timeline specified in the demand for payment unless the amounts were not repaid because the contractor has requested an installment payment agreement; or (c) the contractor requests a deferment of collection on a debt previously demanded by the contracting officer (see far 32.607 2). (iv) if a demand for payment was previously issued for the debt, the demand for payment included in the final decision shall identify the same due date as the original demand for payment. (v) amounts shall be due at the earliest of the following dates: (a) the date fixed under this contract. (b) the date of the first written demand for payment, including any demand for payment resulting from a default termination. (vi) the interest charge shall be computed for the actual number of calendar days involved beginning on the due date and ending on  (a) the date on which the designated office receives payment from the contractor; (b) the date of issuance of a government check to the contractor from which an amount otherwise payable has been withheld as a credit against the contract debt; or (c) the date on which an amount withheld and applied to the contract debt would otherwise have become payable to the contractor. (vii) the interest charge made under this clause may be reduced under the procedures prescribed in far 32.608 2 in effect on the date of this contract. (viii) upon receipt and approval of the invoice designated by the contractor as the "completion invoice" and supporting documentation, and upon compliance by the contractor with all terms of this contract, any outstanding balances will be paid within 30 days unless the parties agree otherwise. the completion invoice, and supporting documentation, shall be submitted by the contractor as promptly as practicable following completion of the work under this contract, but in no event later than 1 year (or such longer period as the contracting officer may approve in writing) from the date of completion. (7) release of claims. the contractor, and each assignee under an assignment entered into under this contract and in effect at the time of final payment under this contract, shall execute and deliver, at the time of and as a condition precedent to final payment under this contract, a release discharging the government, its officers, agents, and employees of and from all liabilities, obligations, and claims arising out of or under this contract, subject only to the following exceptions. (i) specified claims in stated amounts, or in estimated amounts if the amounts are not susceptible to exact statement by the contractor. (ii) claims, together with reasonable incidental expenses, based upon the liabilities of the contractor to third parties arising out of performing this contract, that are not known to the contractor on the date of the execution of the release, and of which the contractor gives notice in writing to the contracting officer not more than 6 years after the date of the release or the date of any notice to the contractor that the government is prepared to make final payment, whichever is earlier. (iii) claims for reimbursement of costs (other than expenses of the contractor by reason of its indemnification of the government against patent liability), including reasonable incidental expenses, incurred by the contractor under the terms of this contract relating to patents. (8) prompt payment. the government will make payment in accordance with the prompt payment act (31 u.s.c. 3903) and prompt payment regulations at 5 cfr part 1315. (9) electronic funds transfer (eft). if the government makes payment by eft, see 52.212 5(b) for the appropriate eft clause. (10) discount. in connection with any discount offered for early payment, time shall be computed from the date of the invoice. for the purpose of computing the discount earned, payment shall be considered to have been made on the date that appears on the payment check or the specified payment date if an electronic funds transfer payment is made. (l) termination for the government’s convenience. the government reserves the right to terminate this contract, or any part hereof, for its sole convenience. in the event of such termination, the contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. subject to the terms of this contract, the contractor shall be paid an amount for direct labor hours (as defined in the schedule of the contract) determined by multiplying the number of direct labor hours expended before the effective date of termination by the hourly rate(s) in the contract, less any hourly rate payments already made to the contractor plus reasonable charges the contractor can demonstrate to the satisfaction of the government using its standard record keeping system that have resulted from the termination. the contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. this paragraph does not give the government any right to audit the contractor’s records. the contractor shall not be paid for any work performed or costs incurred that reasonably could have been avoided. (m) termination for cause. the government may terminate this contract, or any part hereof, for cause in the event of any default by the contractor, or if the contractor fails to comply with any contract terms and conditions, or fails to provide the government, upon request, with adequate assurances of future performance. in the event of termination for cause, the government shall not be liable to the contractor for any amount for supplies or services not accepted, and the contractor shall be liable to the government for any and all rights and remedies provided by law. if it is determined that the government improperly terminated this contract for default, such termination shall be deemed a termination for convenience. as prescribed in 12.301(b)(4), insert the following clause: contract terms and conditions required to implement statutes or executive orders commercial products and commercial services (jan 2025) (a) the contractor shall comply with the following federal acquisition regulation (far) clauses, which are incorporated in this contract by reference, to implement provisions of law or executive orders applicable to acquisitions of commercial products and commercial services: (1) 52.203 19, prohibition on requiring certain internal confidentiality agreements or statements (jan 2017) (section 743 of division e, title vii, of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions)). (2) 52.204 23, prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities (dec 2023) (section 1634 of pub. l. 115 91). (3) 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (nov 2021) (section 889(a)(1)(a) of pub. l. 115 232). (4) 52.209 10, prohibition on contracting with inverted domestic corporations (nov 2015). (5) 52.232 40, providing accelerated payments to small business subcontractors (mar 2023) ( 31 u.s.c. 3903 and 10 u.s.c. 3801). (6) 52.233 3, protest after award (aug 1996) (31 u.s.c. 3553). (7) 52.233 4, applicable law for breach of contract claim (oct 2004) (public laws 108 77 and 108 78 ( 19 u.s.c. 3805 note)). (b) the contractor shall comply with the far clauses in this paragraph (b) that the contracting officer has indicated as being incorporated in this contract by reference to implement provisions of law or executive orders applicable to acquisitions of commercial products and commercial services: [contracting officer check as appropriate.] __ (1) 52.203 6, restrictions on subcontractor sales to the government (jun 2020), with alternate i (nov 2021) (41 u.s.c. 4704 and 10 u.s.c. 4655). __ (2) 52.203 13, contractor code of business ethics and conduct (nov 2021) (41 u.s.c. 3509)). __ (3) 52.203 15, whistleblower protections under the american recovery and reinvestment act of 2009 (jun 2010) (section 1553 of pub. l. 111 5). (applies to contracts funded by the american recovery and reinvestment act of 2009.) __ (4) 52.203 17, contractor employee whistleblower rights (nov 2023) ( 41 u.s.c. 4712); this clause does not apply to contracts of dod, nasa, the coast guard, or applicable elements of the intelligence community see far 3.900(a). __ (5) 52.204 10, reporting executive compensation and first tier subcontract awards (jun 2020) (pub. l. 109 282) ( 31 u.s.c. 6101 note). __ (6) [reserved]. __ (7) 52.204 14, service contract reporting requirements (oct 2016) (pub. l. 111 117, section 743 of div. c). __ (8) 52.204 15, service contract reporting requirements for indefinite delivery contracts (oct 2016) (pub. l. 111 117, section 743 of div. c). __ (9) 52.204 27, prohibition on a bytedance covered application (jun 2023) (section 102 of division r of pub. l. 117 328). __ (10) 52.204 28, federal acquisition supply chain security act orders federal supply schedules, governmentwide acquisition contracts, and multi agency contracts. (dec 2023) ( pub. l. 115 390, title ii). __ (11) (i) 52.204 30, federal acquisition supply chain security act orders prohibition. (dec 2023) ( pub. l. 115 390, title ii). __ (ii) alternate i (dec 2023) of 52.204 30. __ (12) 52.209 6, protecting the government's interest when subcontracting with contractors debarred, suspended, proposed for debarment, or voluntarily excluded. (jan 2025) ( 31 u.s.c. 6101 note). __ (13) 52.209 9, updates of publicly available information regarding responsibility matters (oct 2018) ( 41 u.s.c. 2313). __ (14) [reserved]. __ (15) 52.219 3, notice of hubzone set aside or sole source award (oct 2022) ( 15 u.s.c. 657a). __ (16) 52.219 4, notice of price evaluation preference for hubzone small business concerns (oct 2022) (if the offeror elects to waive the preference, it shall so indicate in its offer) (15 u.s.c. 657a). __ (17) [reserved] __ (18) (i) 52.219 6, notice of total small business set aside (nov 2020) (15 u.s.c. 644). __ (ii) alternate i (mar 2020) of 52.219 6. __ (19) (i) 52.219 7, notice of partial small business set aside (nov 2020) (15 u.s.c. 644). __ (ii) alternate i (mar 2020) of 52.219 7. __ (20) 52.219 8, utilization of small business concerns (jan 2025)( 15 u.s.c. 637(d)(2) and (3)). __ (21) (i) 52.219 9, small business subcontracting plan (jan 2025) ( 15 u.s.c. 637(d)(4)). __ (ii) alternate i (nov 2016) of 52.219 9. __ (iii) alternate ii (nov 2016) of 52.219 9. __ (iv) alternate iii (jun 2020) of 52.219 9. __ (v) alternate iv (jan 2025) of 52.219 9. __ (22) (i) 52.219 13, notice of set aside of orders (mar 2020) (15 u.s.c. 644(r)). __ (ii) alternate i (mar 2020) of 52.219 13. __ (23) 52.219 14, limitations on subcontracting (oct 2022) (15 u.s.c. 657s). __ (24) 52.219 16, liquidated damages subcontracting plan (sep 2021) (15 u.s.c. 637(d)(4)(f)(i)). __ (25) 52.219 27, notice of set aside for, or sole source award to, service disabled veteran owned small business (sdvosb) concerns eligible under the sdvosb program (feb 2024) (15 u.s.c. 657f). __ (26) (i) 52.219 28, postaward small business program rerepresentation (jan 2025) (15 u.s.c. 632(a)(2)). __ (ii) alternate i (mar 2020) of 52.219 28. __ (27) 52.219 29, notice of set aside for, or sole source award to, economically disadvantaged women owned small business concerns (oct 2022) (15 u.s.c. 637(m)). __ (28) 52.219 30, notice of set aside for, or sole source award to, women owned small business concerns eligible under the women owned small business program (oct 2022) (15 u.s.c. 637(m)). __ (29) 52.219 32, orders issued directly under small business reserves (mar 2020) ( 15 u.s.c. 644(r)). __ (30) 52.219 33, nonmanufacturer rule (sep 2021) ( 15 u.s.c. 637(a)(17)). __ (31) 52.222 3, convict labor (jun 2003) (e.o.11755). __ (32) 52.222 19, child labor cooperation with authorities and remedies (jan 2025)( e.o. 13126). __ (33) 52.222 21, prohibition of segregated facilities (apr 2015). __ (34) (i) 52.222 26, equal opportunity (sep 2016) (e.o.11246). __ (ii) alternate i (feb 1999) of 52.222 26. __ (35) (i) 52.222 35, equal opportunity for veterans (jun 2020) ( 38 u.s.c. 4212). __ (ii) alternate i (jul 2014) of 52.222 35. __ (36) (i) 52.222 36, equal opportunity for workers with disabilities (jun 2020) ( 29 u.s.c. 793). __ (ii) alternate i (jul 2014) of 52.222 36. __ (37) 52.222 37, employment reports on veterans (jun 2020) ( 38 u.s.c. 4212). __ (38) 52.222 40, notification of employee rights under the national labor relations act (dec 2010) (e.o. 13496). __ (39) (i) 52.222 50, combating trafficking in persons (nov 2021) (22 u.s.c. chapter 78 and e.o. 13627). __ (ii) alternate i (mar 2015) of 52.222 50 (22 u.s.c. chapter 78 and e.o. 13627). __ (40) 52.222 54, employment eligibility verification (jan 2025) ( executive order 12989). (not applicable to the acquisition of commercially available off the shelf items or certain other types of commercial products or commercial services as prescribed in far 22.1803.) __ (41) (i) 52.223 9, estimate of percentage of recovered material content for epa designated items (may 2008) ( 42 u.s.c. 6962(c)(3)(a)(ii)). (not applicable to the acquisition of commercially available off the shelf items.) __ (ii) alternate i (may 2008) of 52.223 9 (42 u.s.c. 6962(i)(2)(c)). (not applicable to the acquisition of commercially available off the shelf items.) __ (42) 52.223 11, ozone depleting substances and high global warming potential hydrofluorocarbons (may 2024) ( 42 u.s.c. 7671, et seq.). __ (43) 52.223 12, maintenance, service, repair, or disposal of refrigeration equipment and air conditioners (may 2024) ( 42 u.s.c. 7671, et seq.). __ (44) 52.223 20, aerosols (may 2024) ( 42 u.s.c. 7671, et seq.). __ (45) 52.223 21, foams (may 2024) ( 42 u.s.c. 7671, et seq.). __ (46) 52.223 23, sustainable products and services (may 2024) ( e.o. 14057, 7 u.s.c. 8102, 42 u.s.c. 6962, 42 u.s.c. 8259b, and 42 u.s.c. 7671l). __ (47) (i) 52.224 3 privacy training (jan 2017) ( 5 u.s.c. 552 a). __ (ii) alternate i (jan 2017) of 52.224 3. __ (48) (i) 52.225 1, buy american supplies (oct 2022) (41 u.s.c. chapter 83). __ (ii) alternate i (oct 2022) of 52.225 1. __ (49) (i) 52.225 3, buy american free trade agreements israeli trade act (nov 2023) ( 19 u.s.c. 3301 note, 19 u.s.c. 2112 note, 19 u.s.c. 3805 note, 19 u.s.c. 4001 note, 19 u.s.c. chapter 29 (sections 4501 4732), public law 103 182, 108 77, 108 78, 108 286, 108 302, 109 53, 109 169, 109 283, 110 138, 112 41, 112 42, and 112 43. __ (ii) alternate i [reserved]. __ (iii) alternate ii (jan 2025) of 52.225 3. __ (iv) alternate iii (feb 2024) of 52.225 3. __ (v) alternate iv (oct 2022) of 52.225 3. __ (50) 52.225 5, trade agreements (nov 2023) ( 19 u.s.c. 2501, et seq., 19 u.s.c. 3301 note). __ (51) 52.225 13, restrictions on certain foreign purchases (feb 2021) (e.o.’s, proclamations, and statutes administered by the office of foreign assets control of the department of the treasury). __ (52) 52.225 26, contractors performing private security functions outside the united states (oct 2016) (section 862, as amended, of the national defense authorization act for fiscal year 2008; 10 u.s.c. subtitle a, part v, subpart g note). __ (53) 52.226 4, notice of disaster or emergency area set aside (nov 2007) (42 u.s.c. 5150). __ (54) 52.226 5, restrictions on subcontracting outside disaster or emergency area (nov 2007) (42 u.s.c. 5150). __ (55) 52.226 8, encouraging contractor policies to ban text messaging while driving (may 2024) ( e.o. 13513). __ (56) 52.229 12, tax on certain foreign procurements (feb 2021). __ (57) 52.232 29, terms for financing of purchases of commercial products and commercial services (nov 2021) (41 u.s.c. 4505, 10 u.s.c. 3805). __ (58) 52.232 30, installment payments for commercial products and commercial services (nov 2021) (41 u.s.c. 4505, 10 u.s.c. 3805). __ (59) 52.232 33, payment by electronic funds transfer system for award management (oct2018) ( 31 u.s.c. 3332). __ (60) 52.232 34, payment by electronic funds transfer other than system for award management (jul 2013) (31 u.s.c. 3332). __ (61) 52.232 36, payment by third party (may 2014) (31 u.s.c. 3332). __ (62) 52.239 1, privacy or security safeguards (aug 1996) ( 5 u.s.c. 552a). __ (63) 52.240 1, prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities (nov 2024) (sections 1821 1826, pub. l. 118 31, 41 u.s.c. 3901 note prec.). __ (64) 52.242 5, payments to small business subcontractors (jan 2017) (15 u.s.c. 637(d)(13)). __ (65) (i) 52.247 64, preference for privately owned u.s. flag commercial vessels (nov 2021) ( 46 u.s.c. 55305 and 10 u.s.c. 2631). __ (ii) alternate i (apr 2003) of 52.247 64. __ (iii) alternate ii (nov 2021) of 52.247 64. (c) the contractor shall comply with the far clauses in this paragraph (c), applicable to commercial services, that the contracting officer has indicated as being incorporated in this contract by reference to implement provisions of law or executive orders applicable to acquisitions of commercial products and commercial services: [contracting officer check as appropriate.] __ (1) 52.222 41, service contract labor standards (aug 2018) (41 u.s.c. chapter67). __ (2) 52.222 42, statement of equivalent rates for federal hires (may 2014) (29 u.s.c. 206 and 41 u.s.c. chapter 67). __ (3) 52.222 43, fair labor standards act and service contract labor standards price adjustment (multiple year and option contracts) (aug 2018) (29 u.s.c. 206 and 41 u.s.c. chapter 67). __ (4) 52.222 44, fair labor standards act and service contract labor standards price adjustment (may 2014) ( 29u.s.c.206 and 41 u.s.c. chapter 67). __ (5) 52.222 51, exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements (may 2014) (41 u.s.c. chapter 67). __ (6) 52.222 53, exemption from application of the service contract labor standards to contracts for certain services requirements (may 2014) (41 u.s.c. chapter 67). __ (7) 52.222 55, minimum wages for contractor workers under executive order 14026 (jan 2022). __ (8) 52.222 62, paid sick leave under executive order 13706 (jan 2022) (e.o. 13706). __ (9) 52.226 6, promoting excess food donation to nonprofit organizations (jun 2020) (42 u.s.c. 1792). __ (10) 52.247 69, reporting requirement for u.s. flag air carriers regarding training to prevent human trafficking (jan 2025) ( 49 u.s.c. 40118(g)). (d) comptroller general examination of record. the contractor shall comply with the provisions of this paragraph (d) if this contract was awarded using other than sealed bid, is in excess of the simplified acquisition threshold, as defined in far 2.101, on the date of award of this contract, and does not contain the clause at 52.215 2, audit and records negotiation. (1) the comptroller general of the united states, or an authorized representative of the comptroller general, shall have access to and right to examine any of the contractor’s directly pertinent records involving transactions related to this contract. (2) the contractor shall make available at its offices at all reasonable times the records, materials, and other evidence for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in far subpart 4.7, contractor records retention, of the other clauses of this contract. if this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. records relating to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to this contract shall be made available until such appeals, litigation, or claims are finally resolved. (3) as used in this clause, records include books, documents, accounting procedures and practices, and other data, regardless of type and regardless of form. this does not require the contractor to create or maintain any record that the contractor does not maintain in the ordinary course of business or pursuant to a provision of law. (e) (1) notwithstanding the requirements of the clauses in paragraphs (a), (b), (c), and (d) of this clause, the contractor is not required to flow down any far clause, other than those in this paragraph (e)(1), in a subcontract for commercial products or commercial services. unless otherwise indicated below, the extent of the flow down shall be as required by the clause  (i) 52.203 13, contractor code of business ethics and conduct (nov 2021) (41 u.s.c. 3509). (ii) 52.203 17, contractor employee whistleblower rights (nov 2023) ( 41 u.s.c. 4712). (iii) 52.203 19, prohibition on requiring certain internal confidentiality agreements or statements (jan 2017) (section 743 of division e, title vii, of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions)). (iv) 52.204 23, prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities (dec 2023) (section 1634 of pub. l. 115 91). (v) 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (nov 2021) (section 889(a)(1)(a) of pub. l. 115 232). (vi) 52.204 27, prohibition on a bytedance covered application (jun 2023) (section 102 of division r of pub. l. 117 328). (vii) (a) 52.204 30, federal acquisition supply chain security act orders prohibition. (dec 2023) ( pub. l. 115 390, title ii). (b) alternate i (dec 2023) of 52.204 30. (viii) 52.219 8, utilization of small business concerns (jan 2025) ( 15 u.s.c. 637(d)(2) and (3)), in all subcontracts that offer further subcontracting opportunities. if the subcontract (except subcontracts to small business concerns) exceeds the applicable threshold specified in far 19.702(a) on the date of subcontract award, the subcontractor must include 52.219 8 in lower tier subcontracts that offer subcontracting opportunities. (ix) 52.222 21, prohibition of segregated facilities (apr 2015). (x) 52.222 26, equal opportunity (sep 2016) (e.o.11246). (xi) 52.222 35, equal opportunity for veterans (jun 2020) (38 u.s.c. 4212). (xii) 52.222 36, equal opportunity for workers with disabilities (jun 2020) (29 u.s.c. 793). (xiii) 52.222 37, employment reports on veterans (jun 2020) (38 u.s.c. 4212). (xiv) 52.222 40, notification of employee rights under the national labor relations act (dec 2010) (e.o. 13496). flow down required in accordance with paragraph (f) of far clause 52.222 40. (xv) 52.222 41, service contract labor standards (aug 2018) ( 41 u.s.c. chapter 67). (xvi) (a) 52.222 50, combating trafficking in persons (nov 2021) (22 u.s.c. chapter 78 and e.o 13627). (b) alternate i (mar 2015) of 52.222 50 (22 u.s.c. chapter 78 and e.o. 13627). (xvii) 52.222 51, exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements (may 2014) (41 u.s.c. chapter 67). (xviii) 52.222 53, exemption from application of the service contract labor standards to contracts for certain services requirements (may 2014) (41 u.s.c. chapter 67). (xix) 52.222 54, employment eligibility verification (jan 2025) ( e.o. 12989). (xx) 52.222 55, minimum wages for contractor workers under executive order 14026 (jan 2022). (xxi) 52.222 62, paid sick leave under executive order 13706 (jan 2022) (e.o. 13706). (xxii) (a) 52.224 3, privacy training (jan 2017) ( 5 u.s.c. 552a). (b) alternate i (jan 2017) of 52.224 3. (xxiii) 52.225 26, contractors performing private security functions outside the united states (oct 2016) (section 862, as amended, of the national defense authorization act for fiscal year 2008; 10 u.s.c. subtitle a, part v, subpart g note). (xxiv) 52.226 6, promoting excess food donation to nonprofit organizations (jun 2020) (42 u.s.c. 1792). flow down required in accordance with paragraph (e) of far clause 52.226 6. (xxv) 52.232 40, providing accelerated payments to small business subcontractors (mar 2023) ( 31 u.s.c. 3903 and 10 u.s.c. 3801). flow down required in accordance with paragraph (c) of 52.232 40. (xxvi) 52.240 1, prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities (nov 2024) (sections 1821 1826, pub. l. 118 31, 41 u.s.c. 3901 note prec.). (xxvii) 52.247 64, preference for privately owned u.s. flag commercial vessels (nov 2021) ( 46 u.s.c. 55305 and 10 u.s.c. 2631). flow down required in accordance with paragraph (d) of far clause 52.247 64. (2) while not required, the contractor may include in its subcontracts for commercial products and commercial services a minimal number of additional clauses necessary to satisfy its contractual obligations. (end of clause) alternate i (feb 2000). as prescribed in 12.301 (b)(4)(i), delete paragraph (d) from the basic clause, redesignate paragraph (e) as paragraph (d), and revise the reference to "paragraphs (a), (b), (c), or (d) of this clause" in the redesignated paragraph (d) to read "paragraphs (a), (b), and (c) of this clause". alternate ii (jan 2025). as prescribed in 12.301 (b)(4)(ii), substitute the following paragraphs (d)(1) and (e)(1) for paragraphs (d)(1) and (e)(1) of the basic clause as follows: (d)(1) the comptroller general of the united states, an appropriate inspector general appointed under section 3 or 8 g of the inspector general act of 1978 ( 5 u.s.c. app.), or an authorized representative of either of the foregoing officials shall have access to and right to  (i) examine any of the contractor’s or any subcontractors’ records that pertain to, and involve transactions relating to, this contract; and (ii) interview any officer or employee regarding such transactions. (e)(1) notwithstanding the requirements of the clauses in paragraphs (a), (b), and (c), of this clause, the contractor is not required to flow down any far clause in a subcontract for commercial products or commercial services, other than  (i) paragraph (d) of this clause. this paragraph flows down to all subcontracts, except the authority of the inspector general under paragraph (d)(1)(ii) does not flow down; and (ii) those clauses listed in this paragraph (e)(1). unless otherwise indicated below, the extent of the flow down shall be as required by the clause  (a) 52.203 13, contractor code of business ethics and conduct (nov 2021) (41 u.s.c. 3509). (b) 52.203 15, whistleblower protections under the american recovery and reinvestment act of 2009 (jun 2010) (section 1553 of pub. l. 111 5). (c) 52.203 17, contractor employee whistleblower rights (nov 2023) ( 41 u.s.c. 4712). (d) 52.204 23, prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities (dec 2023) (section 1634 of pub. l. 115 91). (e) 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (nov 2021) (section 889(a)(1)(a) of pub. l. 115 232). (f) 52.204 27, prohibition on a bytedance covered application (jun 2023) (section 102 of division r of pub. l. 117 328). (g)__( 1) 52.204 30, federal acquisition supply chain security act orders  prohibition. (dec 2023) ( pub. l. 115 390, title ii). __(2) alternate i (dec 2023) 52.204 30. (h) 52.219 8, utilization of small business concerns (jan 2025) ( 15 u.s.c. 637(d)(2) and (3)), in all subcontracts that offer further subcontracting opportunities. if the subcontract (except subcontracts to small business concerns) exceeds the applicable threshold specified in far 19.702(a) on the date of subcontract award, the subcontractor must include 52.219 8 in lower tier subcontracts that offer subcontracting opportunities. (i) 52.222 21, prohibition of segregated facilities (apr 2015). (j) 52.222 26, equal opportunity (sep 2016) (e.o. 11246). (k) 52.222 35, equal opportunity for veterans (jun 2020) (38 u.s.c. 4212). (l) 52.222 36, equal opportunity for workers with disabilities (jun 2020) (29 u.s.c. 793). (m) 52.222 40, notification of employee rights under the national labor relations act (dec 2010) (e.o. 13496). flow down required in accordance with paragraph (f) of far clause 52.222 40. (n) 52.222 41, service contract labor standards (aug 2018) ( 41 u.s.c. chapter 67). (o) __ (1) 52.222 50, combating trafficking in persons (nov 2021) (22 u.s.c. chapter 78 and e.o 13627). __ (2) alternate i (mar 2015) of 52.222 50 (22 u.s.c. chapter 78 and e.o. 13627). (p) 52.222 51, exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements (may 2014) ( 41 u.s.c. chapter 67). (q) 52.222 53, exemption from application of the service contract labor standards to contracts for certain services requirements (may 2014) ( 41 u.s.c. chapter 67). (r) 52.222 54, employment eligibility verification (jan 2025) ( executive order 12989). (s) 52.222 55, minimum wages for contractor workers under executive order 14026 (jan 2022). (t) 52.222 62, paid sick leave under executive order 13706 (jan 2022) (e.o. 13706). (u)__ (1) 52.224 3, privacy training (jan 2017) ( 5 u.s.c. 552a). __ (2) alternate i (jan 2017) of 52.224 3. (v) 52.225 26, contractors performing private security functions outside the united states (oct 2016) (section 862, as amended, of the national defense authorization act for fiscal year 2008; 10 u.s.c. subtitle a, part v, subpart g note). (w) 52.226 6, promoting excess food donation to nonprofit organizations. (jun 2020) (42 u.s.c. 1792). flow down required in accordance with paragraph (e) of far clause 52.226 6. (x) 52.232 40, providing accelerated payments to small business subcontractors (mar 2023) ( 31 u.s.c. 3903 and 10 u.s.c. 3801). flow down required in accordance with paragraph (c) of 52.232 40. (y) 52.240 1, prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities (nov 2024) (sections 1821 1826, pub. l. 118 31, 41 u.s.c. 3901 note prec.). (z) 52.247 64, preference for privately owned u.s. flag commercial vessels (nov 2021) ( 46 u.s.c. 55305 and 10 u.s.c. 2631). flow down required in accordance with paragraph (d) of far clause 52.247 64. as prescribed in 13.404 , insert the following clause: fast payment procedure (may 2006) (a) general. the government will pay invoices based on the contractor’s delivery to a post office or common carrier (or, if shipped by other means, to the point of first receipt by the government). (b) responsibility for supplies. (1) titleto the supplies passes to the government upon delivery to  (i) a post office or common carrier for shipment to the specific destination; or (ii) the point of first receipt by the government, if shipment is by means other than postal service or common carrier. (2) notwithstanding any other provision of the contract, order, or blanket purchase agreement, the contractor shall  (i) assume all responsibility and risk of loss for supplies not received at destination, damaged in transit, or not conforming to purchase requirements; and (ii) replace, repair, or correct those supplies promptly at the contractor’s expense, if instructed to do so by the contracting officer within 180 days from the date title to the supplies vests in the government. (c) preparation of invoice. (1) upon delivery to a post office or common carrier (or, if shipped by other means, the point of first receipt by the government), the contractor shall  (i) prepare an invoice as provided in this contract, order, or blanket purchase agreement; and (ii) display prominently on the invoice "fast pay." invoices not prominently marked "fast pay" via manual or electronic means may be accepted by the payment office for fast payment. if the payment office declines to make fast payment, the contractor shall be paid in accordance with procedures applicable to invoices to which the fast payment clause does not apply. (2) if the purchase price excludes the cost of transportation, the contractor shall enter the prepaid shipping cost on the invoice as a separate item. the contractor shall not include the cost of parcel post insurance. if transportation charges are stated separately on the invoice, the contractor shall retain related paid freight bills or other transportation billings paid separately for a period of 3 years and shall furnish the bills to the government upon request. (3) if this contract, order, or blanket purchase agreement requires the preparation of a receiving report, the contractor shall either  (i) submit the receiving report on the prescribed form with the invoice; or (ii) include the following information on the invoice: (a) shipment number. (b) mode of shipment. (c) at line item level  (1) national stock number and/or manufacturer’s part number; (2) unit of measure; (3) ship to point; (4) mark for point, if in the contract; and (5) fedstrip/milstrip document number, if in the contract. (4) if this contract, order, or blanket purchase agreement does not require preparation of a receiving report on a prescribed form, the contractor shall include on the invoice the following information at the line item level, in addition to that required in paragraph (c)(1) of this clause: (i) ship to point. (ii) mark for point. (iii) fedstrip/milstrip document number, if in the contract. (5) where a receiving report is not required, the contractor shall include a copy of the invoice in each shipment. (d) certification of invoice. the contractor certifies by submitting an invoice to the government that the supplies being billed to the government have been shipped or delivered in accordance with shipping instructions issued by the ordering officer, in the quantities shown on the invoice, and that the supplies are in the quantity and of the quality designated by the contract, order, or blanket purchase agreement. (e) fast pay container identification. the contractorshall mark all outer shipping containers "fast pay" when outer shipping containers are not marked "fast pay," the payment office may make fast payment. if the payment office declines to make fast payment, the contractor shall be paid in accordance with procedures applicable to invoices to which the fast payment clause does not apply. (end of clause) as prescribed in 13.302 5(b), insert the following clause: invoices (apr 1984) the contractor’s invoices must be submitted before payment can be made. the contractor will be paid on the basis of the invoice, which must state  (a) the starting and ending dates of the subscription delivery; and (b) either that orders have been placed in effect for the addressees required, or that the orders will be placed in effect upon receipt of payment. (end of clause) as prescribed in 13.302 5(c), insert the following clause: notice to supplier (apr 1984) this is a firm order only if your price does not exceed the maximum line item or total price in the schedule. submit invoices to the contracting officer. if you cannot perform in exact accordance with this order, withhold performance, and notify the contracting officer immediately, giving your quotation. (end of clause) as prescribed in 13.302 5(d), insert the following clause: terms and conditions simplified acquisitions (other than commercial products and commercial services) (jan 2025) (a) the contractor shall comply with the following federal acquisition regulation (far) clauses that are incorporated by reference: (1) the clauses listed below implement provisions of law or executive order: (i) 52.203 19, prohibition on requiring certain internal confidentiality agreements or statements (jan 2017) (section 743 of division e, title vii, of the consolidated and further continuing appropriations act, 2015 (pub. l. 113 235) and its successor provisions in subsequent appropriations acts (and as extended in continuing resolutions)). (ii) 52.204 23, prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities (dec 2023) (section 1634 of pub. l. 115 91). (iii) 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (nov 2021) (section 889(a)(1)(a) of pub. l. 115 232). (iv) 52.204 27, prohibition on a bytedance covered application (jun 2023) (section 102 of division r of pub. l. 117 328), unless the agency grants an exception   see paragraph (b) of 52.204 27. (v) 52.204 30, federal acquisition supply chain security act orders prohibition. (dec 2023) (pub. l. 115 390, title ii). (vi) 52.222 3, convict labor (jun 2003) (e.o.11755). (vii) 52.222 21, prohibition of segregated facilities (apr 2015). (viii) 52.222 26, equal opportunity (sep 2016) (e.o.11246). (ix) 52.225 13, restrictions on certain foreign purchases (feb 2021) (e.o.s, proclamations, and statutes administered by the office of foreign assets control of the department of the treasury). (x) 52.232 40, providing accelerated payments to small business subcontractors (mar 2023) ( 31 u.s.c. 3903 and 10 u.s.c. 3801). (xi) 52.233 3, protest after award (aug 1996) ( 31 u.s.c. 3553). (xii) 52.233 4, applicable law for breach of contract claim (oct 2004) ( pub. l. 108 77 and 108 78 ( 19 u.s.c. 3805 note)). (2) listed below are additional clauses that apply: (i) 52.232 1, payments (apr 1984). (ii) 52.232 8, discounts for prompt payment (feb 2002). (iii) 52.232 11, extras (apr 1984). (iv) 52.232 25, prompt payment (jan 2017). (v) 52.232 39, unenforceability of unauthorized obligations (jun 2013). (vi) 52.233 1, disputes (may 2014). (vii) 52.244 6, subcontracts for commercial products and commercial services (jan 2025). (viii) 52.253 1, computer generated forms (jan 1991). (b) the contractor shall comply with the following far clauses, incorporated by reference, unless the circumstances do not apply: (1) the clauses listed below implement provisions of law or executive order: (i) 52.203 17, contractor employee whistleblower rights (nov 2023) ( 41 u.s.c. 4712); this clause does not apply to contracts of dod, nasa, the coast guard, or applicable elements of the intelligence community see far 3.900(a). (ii) 52.204 10, reporting executive compensation and first tier subcontract awards (jun 2020)(pub. l. 109 282) ( 31 u.s.c. 6101 note) (applies to contracts valued at or above the threshold specified in far 4.1403(a) on the date of award of this contract). (iii) 52.222 19, child labor cooperation with authorities and remedies (jan 2025) ( e.o. 13126) (applies to contracts for supplies exceeding the micro purchase threshold, as defined in 2.101 on the date of award of this contract). (iv) 52.222 20, contracts for materials, supplies, articles, and equipment., contracts for materials, supplies, articles, and equipment (jun 2020) ( 41 u.s.c. chapter 65) (applies to supply contracts over the threshold specified in far 22.602 on the date of award of this contract, in the united states, puerto rico, or the u.s. virgin islands). (v) 52.222 35, equal opportunity for veterans (jun 2020) ( 38 u.s.c. 4212) (applies to contracts valued at or above the threshold specified in far 22.1303(a) on the date of award of this contract). (vi) 52.222 36, equal employment for workers with disabilities (jun 2020) ( 29 u.s.c. 793) (applies to contracts over the threshold specified in far 22.1408(a) on the date of award of this contract, unless the work is to be performed outside the united states by employees recruited outside the united states). (for purposes of this clause, "united states" includes the 50 states, the district of columbia, puerto rico, the northern mariana islands, american samoa, guam, the u.s. virgin islands, and wake island.) (vii) 52.222 37, employment reports on veterans (jun 2020) (38 u.s.c. 4212) (applies to contracts valued at or above the threshold specified in far 22.1303(a) on the date of award of this contract). (viii) 52.222 41, service contract labor standards (aug 2018) ( 41 u.s.c. chapter 67) (applies to service contracts over $2,500 that are subject to the service contract labor standards statute and will be performed in the united states, district of columbia, puerto rico, the northern mariana islands, american samoa, guam, the u.s. virgin islands, johnston island, wake island, or the outer continental shelf). (ix) (a) 52.222 50, combating trafficking in persons (nov 2021) (22 u.s.c. chapter 78 and e.o. 13627) (applies to all solicitations and contracts). (b) alternate i (mar 2015) (applies if the contracting officer has filled in the following information with regard to applicable directives or notices: document title(s), source for obtaining document(s), and contract performance location outside the united states to which the document applies). (x) 52.222 55, minimum wages for contractor workers under executive order 14026 (jan 2022) (applies when 52.222 6 or 52.222 41 are in the contract and performance in whole or in part is in the united states (the 50 states, the district of columbia, puerto rico, the northern mariana islands, american samoa, guam, the u.s. virgin islands, johnston island, wake island, and the outer continental shelf as defined in the outer continental shelf lands act ( 43 u.s.c. 1331, et seq.))). (xi) 52.222 62, paid sick leave under executive order 13706 (jan 2022) (e.o. 13706) (applies when 52.222 6 or 52.222 41 are in the contract and performance in whole or in part is in the united states (the 50 states and the district of columbia.)) (xii) 52.223 5, pollution prevention and right to know information (may 2024) ( 42 u.s.c. 11001 11050 and 13101 13109) (applies to services performed on federal facilities). (xiii) 52.223 11, ozone depleting substances and high global warming potential hydrofluorocarbons (may 2024) ( 42 u.s.c. 7671, et seq.) (applies to contracts for products as prescribed at far 23.109(d)(1)). (xiv) 52.223 12, maintenance, service, repair, or disposal of refrigeration equipment and air conditioners (may 2024) ( 42 u.s.c. 7671, et seq.) (applies to maintenance, service, repair, or disposal of refrigeration equipment and air conditioners). (xv) 52.223 20, aerosols (may 2024) ( 42 u.s.c. 7671, et seq.) (applies to contracts for products that may contain high global warming potential hydrofluorocarbons as a propellant or as a solvent; or contracts for maintenance or repair of electronic or mechanical devices). (xvi) 52.223 21, foams (may 2024) ( 42 u.s.c. 7671, et seq.) (applies to contracts for products that may contain high global warming potential hydrofluorocarbons or refrigerant blends containing hydrofluorocarbons as a foam blowing agent; or contracts for construction of buildings or facilities. (xvii) 52.223 23, sustainable products and services (may 2024) ( e.o. 14057, 7 u.s.c. 8102, 42 u.s.c. 6962, 42 u.s.c. 8259b, and 42 u.s.c. 7671l) (applies to contracts when the agency identifies in the statement of work, or elsewhere in the contract, the sustainable products and services that apply to the acquisition). (xviii) (a) 52.225 1, buy american supplies (oct 2022) (41 u.s.c. chapter 67) (applies to contracts for supplies, and to contracts for services involving the furnishing of supplies, for use in the united states or its outlying areas, if the value of the supply contract or supply portion of a service contract exceeds the micro purchase threshold, as defined in 2.101 on the date of award of this contract, and the acquisition  (1) is set aside for small business concerns; or (2) cannot be set aside for small business concerns (see 19.502 2), and does not exceed $50,000). (b) alternate i (oct 2022) (applies if the contracting officer has filled in the domestic content threshold below, which will apply to the entire contract period of performance. substitute the following sentence for the first sentence of paragraph (1)(ii)(a) of the definition of domestic end product in paragraph (a) of 52.225 1: (a) the cost of its components mined, produced, or manufactured in the united states exceeds ____ percent of the cost of all its components. [ contracting officer to insert the percentage per instructions at 13.302 5(d)(4). ]) (xix) 52.226 6, promoting excess food donation to nonprofit organizations., promoting excess food donation to nonprofit organizations (jun 2020) (42 u.s.c. 1792) (applies to contracts greater than the threshold specified in far 26.404 on the date of award of this contract, that provide for the provision, the service, or the sale of food in the united states). (xx) 52.232 33, payment by electronic funds transfer system for award management (oct 2013)(applies when the payment will be made by electronic funds transfer (eft) and the payment office uses the system for award management (sam) as its source of eft information). (xxi) 52.232 34, payment by electronic funds transfer other than system for award management (jul 2013) (applies when the payment will be made by eft and the payment office does not use the sam database as its source of eft information). (xxii) 52.240 1, prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities (nov 2024) (sections 1821 1826, pub. l. 118 31, 41 u.s.c. 3901 note prec.). (xxiii) 52.247 64, preference for privately owned u.s. flag commercial vessels (nov 2021) ( 46 u.s.c. 55305)(applies to supplies transported by ocean vessels (except for the types of subcontracts listed at 47.504(d)). (xxiv) 52.247 69, reporting requirement for u.s. flag air carriers regarding training to prevent human trafficking (jan 2025) ( 49 u.s.c. 40118(g)). (applies to contracts with a u.s. flag carrier for the transportation by air of passengers; does not apply to contracts awarded by the department of defense or contracts for commercial products). (2) listed below are additional clauses that may apply: (i) 52.204 21, basic safeguarding of covered contractor information systems (nov 2021) (applies to contracts when the contractor or a subcontractor at any tier may have federal contract information residing in or transiting through its information system.) (ii) 52.209 6, protecting the government's interest when subcontracting with contractors debarred, suspended, proposed for debarment, or voluntarily excluded (jan 2025) (applies to contracts over the threshold specified in far 9.405 2(b) on the date of award of this contract). (iii) 52.211 17, delivery of excess quantities (sept 1989) (applies to fixed price supplies). (iv) 52.247 29, f.o.b. origin (feb 2006) (applies to supplies if delivery is f.o.b. origin). (v) 52.247 34, f.o.b. destination (jan 1991) (applies to supplies if delivery is f.o.b. destination). (c) far 52.252 2, clauses incorporated by reference (feb 1998). this contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. upon request, the contracting officer will make their full text available. also, the full text of a clause may be accessed electronically at this/these address(es): _________________________________________________________________________________ _________________________________________________________________________________ [insert one or more internet addresses] (d) inspection/acceptance. the contractor shall tender for acceptance only those items that conform to the requirements of this contract. the government reserves the right to inspect or test any supplies or services that have been tendered for acceptance. the government may require repair or replacement of nonconforming supplies or reperformance of nonconforming services at no increase in contract price. the government must exercise its postacceptance rights  (1) within a reasonable period of time after the defect was discovered or should have been discovered; and (2) before any substantial change occurs in the condition of the item, unless the change is due to the defect in the item. (e) excusable delays. the contractor shall be liable for default unless nonperformance is caused by an occurrence beyond the reasonable control of the contractor and without its fault or negligence, such as acts of god or the public enemy, acts of the government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, unusually severe weather, and delays of common carriers. the contractor shall notify the contracting officer in writing as soon as it is reasonably possible after the commencement of any excusable delay, setting forth the full particulars in connection therewith, shall remedy such occurrence with all reasonable dispatch, and shall promptly give written notice to the contracting officer of the cessation of such occurrence. (f) termination for the government's convenience. the government reserves the right to terminate this contract, or any part hereof, for its sole convenience. in the event of such termination, the contractor shall immediately stop all work hereunder and shall immediately cause any and all of its suppliers and subcontractors to cease work. subject to the terms of this contract, the contractor shall be paid a percentage of the contract price reflecting the percentage of the work performed prior to the notice of termination, plus reasonable charges that the contractor can demonstrate to the satisfaction of the government, using its standard record keeping system, have resulted from the termination. the contractor shall not be required to comply with the cost accounting standards or contract cost principles for this purpose. this paragraph does not give the government any right to audit the contractor’s records. the contractor shall not be paid for any work performed or costs incurred that reasonably could have been avoided. (g) termination for cause. the government may terminate this contract, or any part hereof, for cause in the event of any default by the contractor, or if the contractor fails to comply with any contract terms and conditions, or fails to provide the government, upon request, with adequate assurances of future performance. in the event of termination for cause, the government shall not be liable to the contractor for any amount for supplies or services not accepted, and the contractor shall be liable to the government for any and all rights and remedies provided by law. if it is determined that the government improperly terminated this contract for default, such termination shall be deemed a termination for convenience. (h) warranty. the contractor warrants and implies that the items delivered hereunder are merchantable and fit for use for the particular purpose described in this contract. (end of clause) as prescribed in 14.201 6(b)(1), insert the following provision: amendments to invitations for bids (dec 2016) (a) if this solicitation is amended, then all terms and conditions which are not modified remain unchanged. (b) (1) bidders shall acknowledge receipt of any amendment to this solicitation  (i) by signing and returning the amendment; (ii) by identifying the amendment number and date in space provided for this purpose on the form for submitting a bid; (iii) by letter; (iv) by facsimile, if facsimile bids are authorized in the solicitation; or (v) by email, if email bids are authorized in the solicitation. (2) the government must receive the acknowledgement by the time and at the place specified for receipt of bids. (end of provision) as prescribed in 14.201 6(b)(2), insert the following provision in all invitations for bids: false statements in bids (apr 1984) bidders must provide full, accurate, and complete information as required by this solicitation and its attachments. the penalty for making false statements in bids is prescribed in 18 u.s.c. 1001. (end of provision) as prescribed in 14.201 6(c)(1), insert the following provision: submission of bids (dec 2016) (a) bids and bid modifications shall be submitted in sealed envelopes or packages (unless submitted by electronic means)  (1) addressed to the office specified in the solicitation; and (2) showing the time and date specified for receipt, the solicitation number, and the name and address of the bidder. (b) bidders using commercial carrier services shall ensure that the bid is addressed and marked on the outermost envelope or wrapper as prescribed in paragraphs (a)(1) and (2) of this provision when delivered to the office specified in the solicitation. (c) facsimile bids, modifications, or withdrawals, will not be considered unless authorized by the solicitation. (d) bids submitted by electronic commerce shall be considered only if the electronic commerce method was specifically stipulated or permitted by the solicitation. (end of provision) as prescribed in 14.201 6(c)(2), insert the following provision: explanation to prospective bidders (apr 1984) any prospective bidder desiring an explanation or interpretation of the solicitation, drawings, specifications, etc., must request it in writing soon enough to allow a reply to reach all prospective bidders before the submission of their bids. oral explanations or instructions given before the award of a contract will not be binding. any information given a prospective bidder concerning a solicitation will be furnished promptly to all other prospective bidders as an amendment to the solicitation, if that information is necessary in submitting bids or if the lack of it would be prejudicial to other prospective bidders. (end of provision) as prescribed in 14.201 6(c)(3), insert the following provision: late submissions, modifications, and withdrawals of bids (nov 1999) (a) bidders are responsible for submitting bids, and any modifications or withdrawals, so as to reach the government office designated in the invitation for bids (ifb) by the time specified in the ifb. if no time is specified in the ifb, the time for receipt is 4:30 p.m., local time, for the designated government office on the date that bids are due. (b) (1) any bid, modification, or withdrawal received at the government office designated in the ifb after the exact time specified for receipt of bids is "late" and will not be considered unless it is received before award is made, the contracting officer determines that accepting the late bid would not unduly delay the acquisition; and  (i) if it was transmitted through an electronic commerce method authorized by the ifb, it was received at the initial point of entry to the government infrastructure not later than 5:00 p.m. oneworking day prior to the date specified for receipt of bids; or (ii) there is acceptable evidence to establish that it was received at the government installation designated for receipt of bids and was under the government’s control prior to the time set for receipt of bids. (2) however, a late modification of an otherwise successful bid that makes its terms more favorable to the government, will be considered at any time it is received and may be accepted. (c) acceptable evidence to establish the time of receipt at the government installation includes the time/date stamp of that installation on the bid wrapper, other documentary evidence of receipt maintained by the installation, or oral testimony or statements of government personnel. (d) if an emergency or unanticipated event interrupts normal government processes so that bids cannot be received at the government office designated for receipt of bids by the exact time specified in the ifb and urgent government requirements preclude amendment of the ifb, the time specified for receipt of bids will be deemed to be extended to the same time of day specified in the solicitation on the first work day on which normal government processes resume. (e) bids may be withdrawn by written notice received at any time before the exact time set for receipt of bids. if the ifb authorizes facsimile bids, bids may be withdrawn via facsimile received at any time before the exact time set for receipt of bids, subject to the conditions specified in the provision at 52.214 31, facsimile bids. a bid may be withdrawn in person by a bidder or its authorized representative if, before the exact time set for receipt of bids, the identity of the person requesting withdrawal is established and the person signs a receipt for the bid. (end of provision) as prescribed in 14.201 6(e), insert the following provision: contract award sealed bidding (july 1990) (a) the government will evaluate bids in response to this solicitation without discussions and will award a contract to the responsible bidder whose bid, conforming to the solicitation, will be most advantageous to the government considering only price and the price related factors specified elsewhere in the solicitation. (b) the government may  (1) reject any or all bids; (2) accept other than the lowest bid; and (3) waive informalities or minor irregularities in bids received. (c) the government may accept any item or group of items of a bid, unless the bidder qualifies the bid by specific limitations. unless otherwise provided in the schedule, bids may be submitted for quantities less than those specified. the government reserves the right to make an award on any item for a quantity less than the quantity offered, at the unit prices offered, unless the bidder specifies otherwise in the bid. (d) a written award or acceptance of a bid mailed or otherwise furnished to the successful bidder within the time for acceptance specified in the bid shall result in a binding contract without further action by either party. (e) the government may reject a bid as nonresponsive if the prices bid are materially unbalanced between line items or subline items. a bid is materially unbalanced when it is based on prices significantly less than cost for some work and prices which are significantly overstated in relation to cost for other work, and if there is a reasonable doubt that the bid will result in the lowest overall cost to the government even though it may be the low evaluated bid, or if it is so unbalanced as to be tantamount to allowing an advance payment. (end of provision) as prescribed in 14.201 6(f), insert the following provision: preparation of bids (apr 1984) (a) bidders are expected to examine the drawings, specifications, schedule, and all instructions. failure to do so will be at the bidder’s risk. (b) each bidder shall furnish the information required by the solicitation. the bidder shall sign the bid and print or type its name on the schedule and each continuation sheet on which it makes an entry. erasures or other changes must be initialed by the person signing the bid. bids signed by an agent shall be accompanied by evidence of that agent’s authority, unless that evidence has been previously furnished to the issuing office. (c) for each item offered, bidders shall (1) show the unit price, including, unless otherwise specified, packaging, packing, and preservation and (2) enter the extended price for the quantity of each item offered in the "amount" column of the schedule. in case of discrepancy between a unit price and an extended price, the unit price will be presumed to be correct, subject, however, to correction to the same extent and in the same manner as any other mistake. (d) bids for supplies or services other than those specified will not be considered unless authorized by the solicitation. (e) bidders must state a definite time for delivery of supplies or for performance of services, unless otherwise specified in the solicitation. (f) time, if stated as a number of days, will include saturdays, sundays, and holidays. (end of provision) as prescribed in 14.201 6(h), insert the following provision: place of performance sealed bidding (apr 1985) (a) the bidder, in the performance of any contract resulting from this solicitation, □ intends, □ does not intend [check applicable box] to use one or more plants or facilities located at a different address from the address of the bidder as indicated in this bid. (b) if the bidder checks "intends" in paragraph (a) of this provision, it shall insert in the spaces provided below the required information: ____________________ ____________________ ____________________ ____________________ (end of provision) as prescribed in 14.201 6(i), insert the following provision: period for acceptance of bids (apr 1984) in compliance with the solicitation, the bidder agrees, if this bid is accepted within ______ calendar days (60 calendar days unless a different period is inserted by the bidder) from the date specified in the solicitation for receipt of bids, to furnish any or all items upon which prices are bid at the price set opposite each item, delivered at the designated point(s), within the time specified in the schedule. (end of provision) as prescribed in 14.201 6(j), insert the following provision in invitations for bids, except for construction, if the contracting officer determines that a minimum acceptance period must be specified: minimum bid acceptance period (apr 1984) (a) "acceptance period," as used in this provision, means the number of calendar days available to the government for awarding a contract from the date specified in this solicitation for receipt of bids. (b) this provision supersedes any language pertaining to the acceptance period that may appear elsewhere in this solicitation. (c) the government requires a minimum acceptance period of __________ calendar days [the contracting officer shall insert the number of days]. (d) in the space provided immediately below, bidders may specify a longer acceptance period than the government’s minimum requirement. the bidder allows the following acceptance period: __________ calendar days. (e) a bid allowing less than the government’s minimum acceptance period will be rejected. (f) the bidder agrees to execute all that it has undertaken to do, in compliance with its bid, if that bid is accepted in writing within  (1) the acceptance period stated in paragraph (c) of this clause; or (2) any longer acceptance period stated in paragraph (d) of this clause. (end of provision) as prescribed in 14.201 6(l), insert the following provision: preparation of bids construction (apr 1984) (a) bids must be  (1) submitted on the forms furnished by the government or on copies of those forms, and (2) manually signed. the person signing a bid must initial each erasure or change appearing on any bid form. (b) the bid form may require bidders to submit bid prices for one or more items on various bases, including  (1) lump sum bidding; (2) alternate prices; (3) units of construction; or (4) any combination of paragraphs (b)(1) through (b)(3) of this provision. (c) if the solicitation requires bidding on all items, failure to do so will disqualify the bid. if bidding on all items is not required, bidders should insert the words "no bid" in the space provided for any item on which no price is submitted. (d) alternate bids will not be considered unless this solicitation authorizes their submission. (end of provision) as prescribed in 14.201 6(m), insert the following provision: contract award sealed bidding construction (aug 1996) (a) the government will evaluate bids in response to this solicitation without discussions and will award a contract to the responsible bidder whose bid, conforming to the solicitation, will be most advantageous to the government, considering only price and the price related factors specified elsewhere in the solicitation. (b) the government may reject any or all bids, and waive informalities or minor irregularities in bids received. (c) the government may accept any item or combination of items, unless doing so is precluded by a restrictive limitation in the solicitation or the bid. (d) the government may reject a bid as nonresponsive if the prices bid are materially unbalanced between line items or subline items. a bid is materially unbalanced when it is based on prices significantly less than cost for some work and prices which are significantly overstated in relation to cost for other work, and if there is a reasonable doubt that the bid will result in the lowest overall cost to the government even though it may be the low evaluated bid, or if it is so unbalanced as to be tantamount to allowing an advance payment. (end of provision) as prescribed in 14.201 6(o)(1), insert the following provision: bid samples (apr 2002) (a) "bid sample" means a product sample required to be submitted by a bidder to show those characteristics of the offered products that cannot adequately be described by specifications, purchase descriptions, or the invitation for bid (e.g., balance, facility of use, or pattern). (b) bidders must furnish bid samples as part of the bid. the government must receive the bid samples by the time specified in the invitation for bids. if the bidder fails to submit samples on time, the government will reject the bid, except that the contracting officer will consider a late sample sent by mail under the late submissions, modifications, and withdrawals of bids provision of this solicitation. (c) the government will test or evaluate bid samples to determine compliance with all the characteristics listed for examination in this solicitation. the government will reject the bid when the sample fails to conform to the required characteristics. products delivered under any resulting contract must conform to  (1) the approved sample for the characteristics listed for test or evaluation; and (2) the specifications for all other characteristics. (d) unless otherwise specified in the solicitation, bid samples shall be  (1) submitted at no expense to the government; and (2) returned at the bidder’s request and expense, unless they are destroyed during preaward testing. (end of provision) alternate i (may 2002). as prescribed in 14.201 6 (o)(2)(i), insert the following alternate i: (e) at the discretion of the contracting officer, the requirement for furnishing bid samples may be waived for a bidder if  (1) the bid states that the offered product is the same as a product offered by the bidder to the _______________ [as appropriate, the contracting officer shall designate the contracting office or an alternate activity or office]; and (2) the contracting officer determines that the previously offered product was accepted or tested and found to comply with specification and other requirements for technical acceptability conforming in every material respect with those in this solicitation. alternate ii (may 2002). as prescribed in 14.201 6 (o)(2)(ii), insert the following alternate ii: (e) at the discretion of the contracting officer, the requirements for furnishing bid samples may be waived for a bidder if  (1) the bid states that the offered product is the same as a product offered by the bidder to the _________ [as appropriate, the contracting officer shall designate the contracting office or an alternate activity or office] on a previous acquisition; (2) the contracting officer determines that the previously offered product was accepted or tested and found to comply with specification and other requirements for technical acceptability conforming in every material respect with those of this solicitation; and (3) the product offered under this solicitation will be produced under a resulting contract at the same plant in which the previously acquired or tested product was produced. as prescribed in 14.201 6(p)(1), insert the following provision: descriptive literature (apr 2002) (a) "descriptive literature," as used in this provision, means information furnished by a bidder, such as cuts, illustrations, drawings, and brochures, that shows a product’s characteristics or construction or explains its operation. the term includes only that information required to evaluate the acceptability of the product and excludes other information for operating or maintaining the product. (b) descriptive literature is required to establish, for the purpose of evaluation and award, details of the product offered that are specified elsewhere in the solicitation and pertain to significant elements such as  (1) design; (2) materials; (3) components; (4) performance characteristics; and (5) methods of manufacture, assembly, construction, or operation. (c) descriptive literature, required elsewhere in this solicitation, shall be  (1) identified to show the item(s) of the offer to which it applies; and (2) received by the time specified in this solicitation. (d) if the bidder fails to submit descriptive literature on time, the government will reject the bid, except that late descriptive literature sent by mail may be considered under the late submissions, modifications, and withdrawals of bids provision of this solicitation. (e) if the descriptive literature fails to show that the product offered conforms to the requirements of the solicitation, the government will reject the bid. (end of provision) alternate i (jan 2017). as prescribed in 14.201 6 (p)(2), add the following paragraphs (f) and (g) to the basic provision: (f) the contracting officer may waive the requirement for furnishing descriptive literature if the offeror has supplied a product that is the same as that required by this solicitation under a prior contract. a bidder that requests a waiver of this requirement shall provide the following information: prior contract number ____________ date of prior contract ____________ line item number of product supplied ______ name and address of government activity to which delivery was made ___________________________ date of final delivery of product supplied ____________ (g) bidders shall submit bids on the basis of required descriptive literature or on the basis of a previously supplied product under paragraph (f) of this provision. a bidder submitting a bid on one of these two bases may not elect to have its bid considered on the alternative basis after the time specified for receipt of bids. the government will disregard a bidder's request for a waiver under paragraph (f) if that bidder has submitted the descriptive literature requested under this solicitation. as prescribed in 14.201 6(q), insert the following provision: evaluation of bids for multiple awards (mar 1990) in addition to other factors, bids will be evaluated on the basis of advantages and disadvantages to the government that might result from making more than one award (multiple awards). it is assumed, for the purpose of evaluating bids, that $500 would be the administrative cost to the government for issuing and administering each contract awarded under this solicitation, and individual awards will be for the items or combinations of items that result in the lowest aggregate cost to the government, including the assumed administrative costs. (end of provision) as prescribed in 14.201 6(r), insert the following provision: late submissions, modifications, revisions, and withdrawals of technical proposals under two step sealed bidding (nov 1999) (a) bidders are responsible for submitting technical proposals, and any modifications or revisions, so as to reach the government office designated in the request for technical proposals by the time specified in the invitation for bids (ifb). if no time is specified in the ifb, the time for receipt is 4:30 p.m., local time, for the designated government office on the date that bids or revisions are due. (b) (1) any technical proposal under step one of two step sealed bidding, modification, revision, or withdrawal of such proposal received at the government office designated in the request for technical proposals after the exact time specified for receipt will not be considered unless the contracting officer determines that accepting the late technical proposal would not unduly delay the acquisition; and  (i) if it was transmitted through an electronic commerce method authorized by the request for technical proposals, it was received at the initial point of entry to the government infrastructure not later than 5:00 p.m. oneworking day prior to the date specified for receipt of proposals; or (ii) there is acceptable evidence to establish that it was received at the government installation designated for receipt of offers and was under the government’s control prior to the time set for receipt; or (iii) it is the only proposal received and it is negotiated under part 15 of the federal acquisition regulation. (2) however, a late modification of an otherwise successful proposal that makes its terms more favorable to the government will be considered at any time it is received and may be accepted. (c) acceptable evidence to establish the time of receipt at the government installation includes the time/date stamp of that installation on the technical proposal wrapper, other documentary evidence of receipt maintained by the installation, or oral testimony or statements of government personnel. (d) if an emergency or unanticipated event interrupts normal government processes so that technical proposals cannot be received at the government office designated for receipt of technical proposals by the exact time specified in the request for technical proposals, and urgent government requirements preclude amendment of the request for technical proposals, the time specified for receipt of technical proposals will be deemed to be extended to the same time of day specified in the request for technical proposals on the first work day on which normal government processes resume. (e) technical proposals may be withdrawn by written notice received at any time before the exact time set for receipt of technical proposals. if the request for technical proposals authorizes facsimile technical proposals, they may be withdrawn via facsimile received at any time before the exact time set for receipt of proposals, subject to the conditions specified in the provision at 52.214 31, facsimile bids. a technical proposal may be withdrawn in person by a bidder or its authorized representative if, before the exact time set for receipt of technical proposals, the identity of the person requesting withdrawal is established and the person signs a receipt for the technical proposal. (end of provision) as prescribed in 14.201 6(s), insert the following provision: multiple technical proposals (apr 1984) in the first step of this two step acquisition, solicited sources are encouraged to submit multiple technical proposals presenting different basic approaches. each technical proposal submitted will be separately evaluated and the submitter will be notified as to its acceptability. (end of provision) as prescribed in 14.201 6(t), insert the following provision: step two of two step sealed bidding (apr 1985) (a) this invitation for bids is issued to initiate step two of two step sealed bidding under subpart 14.5 of the federal acquisition regulation. (b) the only bids that the contracting officer may consider for award of a contract are those received from bidders that have submitted acceptable technical proposals in step one of this acquisition under _________________[the contracting officer shall insert the identification of the step one request for technical proposals]. (c) any bidder that has submitted multiple technical proposals in step one of this acquisition may submit a separate bid on each technical proposal that was determined to be acceptable to the government. (end of provision) as prescribed in 14.201 7(a)(1), insert the following clause: audit and records sealed bidding (jun 2020) (a) as used in this clause, "records" includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. (b) certified cost or pricing data. if the contractor has been required to submit certified cost or pricing data in connection with the pricing of any modification to this contract, the contracting officer, or an authorized representative of the contracting officer, in order to evaluate the accuracy, completeness, and currency of the certified cost or pricing data, shall have the right to examine and audit all of the contractor’s records, including computations and projections, related to  (1) the proposal for the modification; (2) the discussions conducted on the proposal(s), including those related to negotiating; (3) pricing of the modification; or (4) performance of the modification. (c) comptroller general. in the case of pricing any modification, the comptroller general of the united states, or an authorized representative, shall have the same rights as specified in paragraph (b) of this clause and also the right to interview any current employee regarding such transactions. (d) availability. the contractor shall make available at its office at all reasonable times the materials described in paragraph (b) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract, or for any other period specified in subpart 4.7 of the federal acquisition regulation (far). far subpart 4.7, contractor records retention, in effect on the date of this contract, is incorporated by reference in its entirety and made a part of this contract. (1) if this contract is completely or partially terminated, the records relating to the work terminated shall be made available for 3 years after any resulting final termination settlement. (2) records pertaining to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to the performance of this contract shall be made available until disposition of such appeals, litigation, or claims. (e) subcontracts. the contractor shall insert a clause containing all the provisions of this clause, including this paragraph (e), in all subcontracts expected to exceed the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1) on the date of subcontract award. (end of clause) alternate i (mar 2009). as prescribed in 14.201 7 (a)(2), substitute the following paragraphs (c) and (e) for paragraphs (c) and (e) of the basic clause: (c) the comptroller general of the united states, an appropriate inspector general appointed under section 3 or 8 g of the inspector general act of 1978 ( 5 u.s.c. app.), or an authorized representative of either of the foregoing officials, shall have access to and the right to  (1) examine any of the contractor’s or any subcontractors' records that pertain to, and involve transactions relating to, this contract or a subcontract hereunder; and (2) interview any officer or employee regarding such transactions. (e)(1) except as provided in paragraph (e)(2), the contractor shall insert a clause containing the provisions of this clause, including this paragraph (e), in all subcontracts. (2) the authority of the inspector general under paragraph (c)(2) of this clause does not flow down to subcontracts. as prescribed in 14.201 7(b), insert the following clause: price reduction for defective certified cost or pricing data modifications sealed bidding (jun 2020) (a) this clause shall become operative only for any modification to this contract involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for the submission of certified cost or pricing data in federal acquisition regulation (far) 15.403 4(a)(1) on the date of execution of the modification, except that this clause does not apply to a modification if an exception under far 15.403 1(b) applies. (b) if any price, including profit, negotiated in connection with any modification under this clause, was increased by any significant amount because (1) the contractor or a subcontractor furnished certified cost or pricing data that were not complete, accurate, and current as certified in its certificate of current cost or pricing data, (2)a subcontractor or prospective subcontractor furnished the contractor certified cost or pricing data that were not complete, accurate, and current as certified in the contractor’s certificate of current cost or pricing data, or (3) any of these parties furnished data of any description that were not accurate, the price shall be reduced accordingly and the contract shall be modified to reflect the reduction. this right to a price reduction is limited to that resulting from defects in data relating to modifications for which this clause becomes operative under paragraph (a) of this clause (c) any reduction in the contract price under paragraph (b) of this clause due to defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which (1) the actual subcontract or (2) the actual cost to the contractor, if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the contractor; provided, that the actual subcontract price was not itself affected by defective certified cost or pricing data. (d) (1) if the contracting officer determines under paragraph (b) of this clause that a price or cost reduction should be made, the contractor agrees not to raise the following matters as a defense: (i) the contractor or subcontractor was a sole source supplier or otherwise was in a superior bargaining position and thus the price of the contract would not have been modified even if accurate, complete, and current certified cost or pricing data had been submitted. (ii) the contracting officer should have known that the certified cost or pricing data in issue were defective even though the contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the contracting officer. (iii) the contract was based on an agreement about the total cost of the contract and there was no agreement about the cost of each item procured under the contract. (iv) the contractor or subcontractor did not submit a certificate of current cost or pricing data. (2) (i) except as prohibited by subdivision (d)(2)(ii) of this clause, an offset in an amount determined appropriate by the contracting officer based upon the facts shall be allowed against the amount of a contract price reduction if  (a) the contractor certifies to the contracting officer that, to the best of the contractor’s knowledge and belief, the contractor is entitled to the offset in the amount requested; and (b) the contractor proves that the certified cost or pricing data were available before the date of agreement on the price of the contract (or price of the modification) and that the data were not submitted before such date. (ii) an offset shall not be allowed if  (a) the understated data was known by the contractor to be understated when the certificate of current cost or pricing data was signed; or (b) the government proves that the facts demonstrate that the contract price would not have increased in the amount to be offset even if the available data had been submitted before the date of agreement on price. (e) if any reduction in the contract price under this clause reduces the price of items for which payment was made prior to the date of the modification reflecting the price reduction, the contractor shall be liable to and shall pay the united states at the time such overpayment is repaid  (1) interest compounded daily, as required by 26u.s.c.6622, the amount of such overpayment to be computed from the date(s) of overpayment to the contractor to the date the government is repaid by the contractor at the applicable underpayment rate effective for each quarter prescribed by the secretary of the treasury under 26 u.s.c. 6621(a)(2); and (2) a penalty equal to the amount of the overpayment, if the contractor or subcontractor knowingly submitted certified cost or pricing data which were incomplete, inaccurate, or noncurrent. (end of clause) as prescribed in 14.201 7(c)(1)(i), insert the following clause in solicitations and contracts: subcontractor certified cost or pricing data modifications sealed bidding (jun 2020) (a) the requirements of paragraphs (b) and (c) of this clause shall  (1) become operative only for any modification to this contract involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for submission of certified cost or pricing data in federal acquisition regulation (far) 15.403 4(a)(1) on the date of execution of the modification; and (2) be limited to such modifications. (b) before awarding any subcontract expected to exceed the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1), on the date of agreement on price or the date of award, whichever is later, or before pricing any subcontract modifications involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1), the contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), as part of the subcontractor’s proposal in accordance with far 15.408, table 15 2 (to include any information reasonably required to explain the subcontractor’s estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price), unless an exception under far 15.403 1(b) applies. if the threshold for submission of certified cost or pricing data specified in far 15.403 4(a)(1) is adjusted for inflation as set forth in far 1.109(a), then pursuant to far 1.109(d) the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. (c) the contractor shall require the subcontractor to certify in substantially the form prescribed in far subsection 15.406 2 that, to the best of its knowledge and belief, the data submitted under paragraph (b) of this clause were accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or subcontract modification. (d) the contractor shall insert the substance of this clause, including this paragraph (d), in each subcontract that, when entered into, exceeds the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1). (end of clause) alternate i (aug 2020). as prescribed in 14.201 7(c)(1)(ii), substitute the following paragraph (b) in place of paragraph (b) of the basic clause: (b) unless an exception under far 15.403 1(b) applies, the contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), as part of the subcontractor's proposal in accordance with far 15.408, table 15 2 (to include any information reasonably required to explain the subcontractor's estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price)  (1) before modifying any subcontract that was awarded prior to july 1, 2018, involving a pricing adjustment expected to exceed $750,000; or (2) before awarding any subcontract expected to exceed $2 million on or after july 1, 2018, or modifying any subcontract that was awarded on or after july 1, 2018, involving a pricing adjustment expected to exceed $2 million. as prescribed in 14.201 7(d), insert the following clause: order of precedence sealed bidding (jan 1986) any inconsistency in this solicitation or contract shall be resolved by giving precedence in the following order: (a) the schedule (excluding the specifications); (b) representations and other instructions; (c) contract clauses; (d) other documents, exhibits, and attachments; and (e) the specifications. (end of clause) as prescribed in 14.201 6(v), insert the following provision: facsimile bids (dec 1989) (a) definition. "facsimile bid," as used in this solicitation, means a bid, modification of a bid, or withdrawal of a bid that is transmitted to and received by the government via electronic equipment that communicates and reproduces both printed and handwritten material. (b) bidders may submit facsimile bids as responses to this solicitation. these responses must arrive at the place and by the time, specified in the solicitation. (c) facsimile bids that fail to furnish required representations or information or that reject any of the terms, conditions, and provisions of the solicitation may be excluded from consideration. (d) facsimile bids must contain the required signatures. (e) the government reserves the right to make award solely on the facsimile bid. however, if requested to do so by the contracting officer, the apparently successful bidder agrees to promptly submit the complete original signed bid. (f) facsimile receiving data and compatibility characteristics are as follows: (1) telephone number of receiving facsimile equipment:_____________________ (2) compatibility characteristics of receiving facsimile equipment (e.g., make and model number, receiving speed, communications protocol):_____________________ (g) if the bidder chooses to transmit a facsimile bid, the government will not be responsible for any failure attributable to the transmission or receipt of the facsimile bid including, but not limited to, the following: (1) receipt of garbled or incomplete bid. (2) availability or condition of the receiving facsimile equipment. (3) incompatibility between the sending and receiving equipment. (4) delay in transmission or receipt of bid. (5) failure of the bidder to properly identify the bid. (6) illegibility of bid. (7) security of bid data. (end of provision) as prescribed in 14.201 6(w), insert the following provision: submission of offers in the english language (apr 1991) offers submitted in response to this solicitation shall be in the english language. offers received in other than english shall be rejected. (end of provision) as prescribed in 14.201 6(x), insert the following provision: submission of offers in u.s. currency (apr 1991) offers submitted in response to this solicitation shall be in terms of u.s. dollars. offers received in other than u.s. dollars shall be rejected. (end of provision) as prescribed in 15.209(a), insert the following provision: instructions to offerors competitive acquisition (nov 2021) (a) definitions. as used in this provision  discussions are negotiations that occur after establishment of the competitive range that may, at the contracting officer’s discretion, result in the offeror being allowed to revise its proposal. in writing, "writing," or "written" means any worded or numbered expression that can be read, reproduced, and later communicated, and includes electronically transmitted and stored information. proposal modification is a change made to a proposal before the solicitation’s closing date and time, or made in response to an amendment, or made to correct a mistake at any time before award. proposal revision is a change to a proposal made after the solicitation closing date, at the request of or as allowed by a contracting officer as the result of negotiations. time, if stated as a number of days, is calculated using calendar days, unless otherwise specified, and will include saturdays, sundays, and legal holidays. however, if the last day falls on a saturday, sunday, or legal holiday, then the period shall include the next working day. (b) amendments to solicitations. if this solicitation is amended, all terms and conditions that are not amended remain unchanged. offerors shall acknowledge receipt of any amendment to this solicitation by the date and time specified in the amendment(s). (c) submission, modification, revision, and withdrawal of proposals. (1) unless other methods (e.g., electronic commerce or facsimile) are permitted in the solicitation, proposals and modifications to proposals shall be submitted in paper media in sealed envelopes or packages (i) addressed to the office specified in the solicitation, and (ii) showing the time and date specified for receipt, the solicitation number, and the name and address of the offeror. offerors using commercial carriers should ensure that the proposal is marked on the outermost wrapper with the information in paragraphs (c)(1)(i) and (c)(1)(ii) of this provision. (2) the first page of the proposal must show  (i) the solicitation number; (ii) the name, address, and telephone and facsimile numbers of the offeror (and electronic address if available); (iii) a statement specifying the extent of agreement with all terms, conditions, and provisions included in the solicitation and agreement to furnish any or all items upon which prices are offered at the price set opposite each item; (iv) names, titles, and telephone and facsimile numbers (and electronic addresses if available) of persons authorized to negotiate on the offeror’s behalf with the government in connection with this solicitation; and (v) name, title, and signature of person authorized to sign the proposal. proposals signed by an agent shall be accompanied by evidence of that agent’s authority, unless that evidence has been previously furnished to the issuing office. (3) submission, modification, revision, and withdrawal of proposals. (i) offerors are responsible for submitting proposals, and any modifications or revisions, so as to reach the government office designated in the solicitation by the time specified in the solicitation. if no time is specified in the solicitation, the time for receipt is 4:30 p.m., local time, for the designated government office on the date that proposal or revision is due. (ii) (a) any proposal, modification, or revision received at the government office designated in the solicitation after the exact time specified for receipt of offers is "late" and will not be considered unless it is received before award is made, the contracting officer determines that accepting the late offer would not unduly delay the acquisition; and  (1) if it was transmitted through an electronic commerce method authorized by the solicitation, it was received at the initial point of entry to the government infrastructure not later than 5:00 p.m. one working day prior to the date specified for receipt of proposals; or (2) there is acceptable evidence to establish that it was received at the government installation designated for receipt of offers and was under the government’s control prior to the time set for receipt of offers; or (3) it is the only proposal received. (b) however, a late modification of an otherwise successful proposal that makes its terms more favorable to the government, will be considered at any time it is received and may be accepted. (iii) acceptable evidence to establish the time of receipt at the government installation includes the time/date stamp of that installation on the proposal wrapper, other documentary evidence of receipt maintained by the installation, or oral testimony or statements of government personnel. (iv) if an emergency or unanticipated event interrupts normal government processes so that proposals cannot be received at the office designated for receipt of proposals by the exact time specified in the solicitation, and urgent government requirements preclude amendment of the solicitation, the time specified for receipt of proposals will be deemed to be extended to the same time of day specified in the solicitation on the first work day on which normal government processes resume. (v) proposals may be withdrawn by written notice received at any time before award. oral proposals in response to oral solicitations may be withdrawn orally. if the solicitation authorizes facsimile proposals, proposals may be withdrawn via facsimile received at any time before award, subject to the conditions specified in the provision at 52.215 5, facsimile proposals. proposals may be withdrawn in person by an offeror or an authorized representative, if the identity of the person requesting withdrawal is established and the person signs a receipt for the proposal before award. (4) unless otherwise specified in the solicitation, the offeror may propose to provide any item or combination of items. (5) offerors shall submit proposals in response to this solicitation in english, unless otherwise permitted by the solicitation, and in u.s. dollars, unless the provision at far 52.225 17, evaluation of foreign currency offers, is included in the solicitation. (6) offerors may submit modifications to their proposals at any time before the solicitation closing date and time, and may submit modifications in response to an amendment, or to correct a mistake at any time before award. (7) offerors may submit revised proposals only if requested or allowed by the contracting officer. (8) proposals may be withdrawn at any time before award. withdrawals are effective upon receipt of notice by the contracting officer. (d) offer expiration date. proposals in response to this solicitation will be valid for the number of days specified on the solicitation cover sheet (unless a different period is proposed by the offeror). (e) restriction on disclosure and use of data. offerors that include in their proposals data that they do not want disclosed to the public for any purpose, or used by the government except for evaluation purposes, shall  (1) mark the title page with the following legend: this proposal includes data that shall not be disclosed outside the government and shall not be duplicated, used, or disclosed in whole or in part for any purpose other than to evaluate this proposal. if, however, a contract is awarded to this offeror as a result of or in connection with the submission of this data, the government shall have the right to duplicate, use, or disclose the data to the extent provided in the resulting contract. this restriction does not limit the government's right to use information contained in this data if it is obtained from another source without restriction. the data subject to this restriction are contained in sheets [insert numbers or other identification of sheets]; and (2) mark each sheet of data it wishes to restrict with the following legend: use or disclosure of data contained on this sheet is subject to the restriction on the title page of this proposal. (f) contract award. (1) the government intends to award a contract or contracts resulting from this solicitation to the responsible offeror(s) whose proposal(s) represents the best value after evaluation in accordance with the factors and subfactors in the solicitation. (2) the government may reject any or all proposals if such action is in the government’s interest. (3) the government may waive informalities and minor irregularities in proposals received. (4) the government intends to evaluate proposals and award a contract without discussions with offerors (except clarifications as described in far 15.306(a)). therefore, the offeror’s initial proposal should contain the offeror’s best terms from a cost or price and technical standpoint. the government reserves the right to conduct discussions if the contracting officer later determines them to be necessary. if the contracting officer determines that the number of proposals that would otherwise be in the competitive range exceeds the number at which an efficient competition can be conducted, the contracting officer may limit the number of proposals in the competitive range to the greatest number that will permit an efficient competition among the most highly rated proposals. (5) the government reserves the right to make an award on any item for a quantity less than the quantity offered, at the unit cost or prices offered, unless the offeror specifies otherwise in the proposal. (6) the government reserves the right to make multiple awards if, after considering the additional administrative costs, it is in the government’s best interest to do so. (7) exchanges with offerors after receipt of a proposal do not constitute a rejection or counteroffer by the government. (8) the government may determine that a proposal is unacceptable if the prices proposed are materially unbalanced between line items or subline items. unbalanced pricing exists when, despite an acceptable total evaluated price, the price of one or more line items is significantly overstated or understated as indicated by the application of cost or price analysis techniques. a proposal may be rejected if the contracting officer determines that the lack of balance poses an unacceptable risk to the government. (9) if a cost realism analysis is performed, cost realism may be considered by the source selection authority in evaluating performance or schedule risk. (10) a written award or acceptance of proposal mailed or otherwise furnished to the successful offeror within the time specified in the proposal shall result in a binding contract without further action by either party. (11) if a post award debriefing is given to requesting offerors, the government shall disclose the following information, if applicable: (i) the agency’s evaluation of the significant weak or deficient factors in the debriefed offeror’s offer. (ii) the overall evaluated cost or price and technical rating of the successful and the debriefed offeror and past performance information on the debriefed offeror. (iii) the overall ranking of all offerors, when any ranking was developed by the agency during source selection. (iv) a summary of the rationale for award. (v) for acquisitions of commercial products, the make and model of the product to be delivered by the successful offeror. (vi) reasonable responses to relevant questions posed by the debriefed offeror as to whether sourceselection procedures set forth in the solicitation, applicable regulations, and other applicable authorities were followed by the agency. (end of provision) alternate i (oct1997). as prescribed in 15.209 (a)(1), substitute the following paragraph (f)(4) for paragraph (f)(4) of the basic provision: (f)(4) the government intends to evaluate proposals and award a contract after conducting discussions with offerors whose proposals have been determined to be within the competitive range. if the contracting officer determines that the number of proposals that would otherwise be in the competitive range exceeds the number at which an efficient competition can be conducted, the contracting officer may limit the number of proposals in the competitive range to the greatest number that will permit an efficient competition among the most highly rated proposals. therefore, the offeror's initial proposal should contain the offeror's best terms from a price and technical standpoint. alternate ii (oct1997). as prescribed in 15.209 (a)(2), add a paragraph (c)(9) substantially the same as the following to the basic clause: (c)(9) offerors may submit proposals that depart from stated requirements. such proposals shall clearly identify why the acceptance of the proposal would be advantageous to the government. any deviations from the terms and conditions of the solicitation, as well as the comparative advantage to the government, shall be clearly identified and explicitly defined. the government reserves the right to amend the solicitation to allow all offerors an opportunity to submit revised proposals based on the revised requirements. as prescribed in 15.209(b), insert the following clause: audit and records negotiation (jun 2020) (a) as used in this clause, "records" includes books, documents, accounting procedures and practices, and other data, regardless of type and regardless of whether such items are in written form, in the form of computer data, or in any other form. (b) examination of costs. if this is a cost reimbursement, incentive, time and materials, labor hour, or price redeterminable contract, or any combination of these, the contractor shall maintain and the contracting officer, or an authorized representative of the contracting officer, shall have the right to examine and audit all records and other evidence sufficient to reflect properly all costs claimed to have been incurred or anticipated to be incurred directly or indirectly in performance of this contract. this right of examination shall include inspection at all reasonable times of the contractor’s plants, or parts of them, engaged in performing the contract. (c) certified cost or pricing data. if the contractor has been required to submit certified cost or pricing data in connection with any pricing action relating to this contract, the contracting officer, or an authorized representative of the contracting officer, in order to evaluate the accuracy, completeness, and currency of the certified cost or pricing data, shall have the right to examine and audit all of the contractor’s records, including computations and projections, related to  (1) the proposal for the contract, subcontract, or modification; (2) the discussions conducted on the proposal(s), including those related to negotiating; (3) pricing of the contract, subcontract, or modification; or (4) performance of the contract, subcontract or modification. (d) comptroller general.  (1) the comptroller general of the united states, or an authorized representative, shall have access to and the right to examine any of the contractor’s directly pertinent records involving transactions related to this contract or a subcontract hereunder and to interview any current employee regarding such transactions. (2) this paragraph may not be construed to require the contractor or subcontractor to create or maintain any record that the contractor or subcontractor does not maintain in the ordinary course of business or pursuant to a provision of law. (e) reports. if the contractor is required to furnish cost, funding, or performance reports, the contracting officer or an authorized representative of the contracting officer shall have the right to examine and audit the supporting records and materials, for the purpose of evaluating  (1) the effectiveness of the contractor’s policies and procedures to produce data compatible with the objectives of these reports; and (2) the data reported. (f) availability. the contractor shall make available at its office at all reasonable times the records, materials, and other evidence described in paragraphs (a), (b), (c), (d), and (e) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in subpart 4.7, contractor records retention, of the federal acquisition regulation (far), or for any longer period required by statute or by other clauses of this contract. in addition  (1) if this contract is completely or partially terminated, the contractor shall make available the records relating to the work terminated until 3 years after any resulting final termination settlement; and (2) the contractor shall make available records relating to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to this contract until such appeals, litigation, or claims are finally resolved. (g) the contractor shall insert a clause containing all the terms of this clause, including this paragraph (g), in all subcontracts under this contract that exceed the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, and  (1) that are cost reimbursement, incentive, time and materials, labor hour, or price redeterminable type or any combination of these; (2) for which certified cost or pricing data are required; or (3) that require the subcontractor to furnish reports as discussed in paragraph (e) of this clause. the clause may be altered only as necessary to identify properly the contracting parties and the contracting officer under the government prime contract. (end of clause) alternate i (mar 2009). as prescribed in 15.209 (b)(2), substitute the following paragraphs (d)(1) and (g) for paragraphs (d)(1) and (g) of the basic clause: (d) comptroller general or inspector general. (1) the comptroller general of the united states, an appropriate inspector general appointed under section 3 or 8g of the inspector general act of 1978 ( 5 u.s.c. app.), or an authorized representative of either of the foregoing officials, shall have access to and the right to  (i) examine any of the contractor’s or any subcontractor’s records that pertain to and involve transactions relating to this contract or a subcontract hereunder; and (ii) interview any officer or employee regarding such transactions. (g)(1) except as provided in paragraph (g)(2) of this clause, the contractor shall insert a clause containing all the terms of this clause, including this paragraph (g), in all subcontracts under this contract. the clause may be altered only as necessary to identify properly the contracting parties and the contracting officer under the government prime contract. (2) the authority of the inspector general under paragraph (d)(1)(ii) of this clause does not flow down to subcontracts. alternate ii (aug 2016). as prescribed in 15.209 (b)(3), add the following paragraph (h) to the basic clause: (h) the provisions of the omb uniform guidance at 2 cfr part 200, subpart f apply to this contract. alternate iii (june1999). as prescribed in 15.209 (b)(4), delete paragraph (d) of the basic clause and redesignate the remaining paragraphs accordingly, and substitute the following paragraph (e) for the redesignated paragraph (e) of the basic clause: (e) availability. the contractor shall make available at its office at all reasonable times the records, materials, and other evidence described in paragraphs (a), (b), (c), and (d) of this clause, for examination, audit, or reproduction, until 3 years after final payment under this contract or for any shorter period specified in subpart 4.7, contractor records retention, of the federal acquisition regulation (far), or for any longer period required by statute or by other clauses of this contract. in addition  (1) if this contract is completely or partially terminated, the contractor shall make available the records relating to the work terminated until 3 years after any resulting final termination settlement; and (2) the contractor shall make available records relating to appeals under the disputes clause or to litigation or the settlement of claims arising under or relating to this contract until such appeals, litigation, or claims are finally resolved. as prescribed in 15.209(c), insert the following provision: request for information or solicitation for planning purposes (oct 1997) (a) the government does not intend to award a contract on the basis of this solicitation or to otherwise pay for the information solicited except as an allowable cost under other contracts as provided in subsection 31.205 18, bid and proposal costs, of the federal acquisition regulation. (b) although "proposal" and "offeror" are used in this request for information, your response will be treated as information only. it shall not be used as a proposal. (c) this solicitation is issued for the purpose of: ___________________________ [state purpose]. (end of provision) as prescribed in 15.209(e), insert the following provision: facsimile proposals (oct 1997) (a) definition. "facsimile proposal," as used in this provision, means a proposal, revision or modification of a proposal, or withdrawal of a proposal that is transmitted to and received by the government via facsimile machine. (b) offerors may submit facsimile proposals as responses to this solicitation. facsimile proposals are subject to the same rules as paper proposals. (c) the telephone number of receiving facsimile equipment is:_____________ [insert telephone number]. (d) if any portion of a facsimile proposal received by the contracting officer is unreadable to the degree that conformance to the essential requirements of the solicitation cannot be ascertained from the document  (1) the contracting officer immediately shall notify the offeror and permit the offeror to resubmit the proposal; (2) the method and time for resubmission shall be prescribed by the contracting officer after consultation with the offeror; and (3) the resubmission shall be considered as if it were received at the date and time of the original unreadable submission for the purpose of determining timeliness, provided the offeror complies with the time and format requirements for resubmission prescribed by the contracting officer. (e) the government reserves the right to make award solely on the facsimile proposal. however, if requested to do so by the contracting officer, the apparently successful offeror promptly shall submit the complete original signed proposal. (end of provision) as prescribed in 15.209(f), insert the following provision: place of performance (oct 1997) (a) the offeror or respondent, in the performance of any contract resulting from this solicitation, □ intends, □ does not intend [check applicable block] to use one or more plants or facilities located at a different address from the address of the offeror or respondent as indicated in this proposal or response to request for information. (b) if the offeror or respondent checks "intends" in paragraph (a) of this provision, it shall insert in the following spaces the required information: ____________________ _______________________ ____________________ _______________________ (end of provision) as prescribed in 15.209(h), insert the following clause: order of precedence uniform contract format (oct 1997) any inconsistency in this solicitation or contract shall be resolved by giving precedence in the following order: (a) the schedule (excluding the specifications). (b) representations and other instructions. (c) contract clauses. (d) other documents, exhibits, and attachments. (e) the specifications. (end of clause) as prescribed in 15.408(a), insert the following clause: changes or additions to make or buy program (oct 1997) (a) the contractor shall perform in accordance with the make or buy program incorporated in this contract. if the contractor proposes to change the program, the contractor shall, reasonably in advance of the proposed change, (1) notify the contracting officer in writing, and (2) submit justification in sufficient detail to permit evaluation. changes in the place of performance of any "make" items in the program are subject to this requirement. (b) for items deferred at the time of negotiation of this contract for later addition to the program, the contractor shall, at the earliest possible time  (1) notify the contracting officer of each proposed addition; and (2) provide justification in sufficient detail to permit evaluation. (c) modification of the make or buy program to incorporate proposed changes or additions shall be effective upon the contractor’s receipt of the contracting officer’s written approval. (end of clause) alternate i (oct 2010). as prescribed in 15.408 (a)(1) add the following paragraph (d) to the basic clause: (d) if the contractor desires to reverse the categorization of "make" or "buy" for any item or items designated in the contract as subject to this paragraph, it shall  (1) support its proposal with certified cost or pricing data in accordance with far 15.408, table 15 1 when required by far 15.403, and data other than certified cost or pricing data, to permit evaluation; and (2) after approval is granted, promptly negotiate with the contracting officer an equitable reduction in the contract price in accordance with paragraph (k) of the incentive price revision firm target clause or paragraph (m) of the incentive price revision successive targets clause of this contract. alternate ii (oct 2010). as prescribed in 15.408 (a)(2), add the following paragraph (d) to the basic clause: (d) if the contractor desires to reverse the categorization of "make" or "buy" for any item or items designated in the contract as subject to this paragraph, it shall  (1) support its proposal with certified cost or pricing data in accordance with far 15.408, table 15 1, when required by far 15.403, and data other than certified cost or pricing data, to permit evaluation; and (2) after approval is granted, promptly negotiate with the contracting officer an equitable reduction in the contract's total estimated cost and fee in accordance with paragraph (e) of the incentive fee clause of this contract. as prescribed in 15.408(b), insert the following clause: price reduction for defective certified cost or pricing data (aug 2011) (a) if any price, including profit or fee, negotiated in connection with this contract, or any cost reimbursable under this contract, was increased by any significant amount because  (1) the contractor or a subcontractor furnished certified cost or pricing data that were not complete, accurate, and current as certified in its certificate of current cost or pricing data; (2) a subcontractor or prospective subcontractor furnished the contractor certified cost or pricing data that were not complete, accurate, and current as certified in the contractor’s certificate of current cost or pricing data; or (3) any of these parties furnished data of any description that were not accurate, the price or cost shall be reduced accordingly and the contract shall be modified to reflect the reduction. (b) any reduction in the contract price under paragraph (a) of this clause due to defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which (1) the actual subcontract or (2) the actual cost to the contractor, if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the contractor; provided, that the actual subcontract price was not itself affected by defective certified cost or pricing data. (c) (1) if the contracting officer determines under paragraph (a) of this clause that a price or cost reduction should be made, the contractor agrees not to raise the following matters as a defense: (i) the contractor or subcontractor was a sole source supplier or otherwise was in a superior bargaining position and thus the price of the contract would not have been modified even if accurate, complete, and current certified cost or pricing data had been submitted. (ii) the contracting officer should have known that the certified cost or pricing data in issue were defective even though the contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the contracting officer. (iii) the contract was based on an agreement about the total cost of the contract and there was no agreement about the cost of each item procured under the contract. (iv) the contractor or subcontractor did not submit a certificate of current cost or pricing data. (2) (i) except as prohibited by subdivision (c)(2)(ii) of this clause, an offset in an amount determined appropriate by the contracting officer based upon the facts shall be allowed against the amount of a contract price reduction if  (a) the contractor certifies to the contracting officer that, to the best of the contractor’s knowledge and belief, the contractor is entitled to the offset in the amount requested; and (b) the contractor proves that the certified cost or pricing data were available before the "as of" date specified on its certificate of current cost or pricing data, and that the data were not submitted before such date. (ii) an offset shall not be allowed if  (a) the understated data were known by the contractor to be understated before the "as of" date specified on its certificate of current cost or pricing data; or (b) the government proves that the facts demonstrate that the contract price would not have increased in the amount to be offset even if the available data had been submitted before the "as of" date specified on its certificate of current cost or pricing data. (d) if any reduction in the contract price under this clause reduces the price of items for which payment was made prior to the date of the modification reflecting the price reduction, the contractor shall be liable to and shall pay the united states at the time such overpayment is repaid  (1) interest compounded daily, as required by 26 u.s.c.6622, on the amount of such overpayment to be computed from the date(s) of overpayment to the contractor to the date the government is repaid by the contractor at the applicable underpayment rate effective for each quarter prescribed by the secretary of the treasury under 26 u.s.c. 6621(a)(2); and (2) a penalty equal to the amount of the overpayment, if the contractor or subcontractor knowingly submitted certified cost or pricing data that were incomplete, inaccurate, or noncurrent. (end of clause) as prescribed in 15.408(c), insert the following clause: price reduction for defective certified cost or pricing data modifications (jun 2020) (a) this clause shall become operative only for any modification to this contract involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data in federal acquisition regulation (far) 15.403 4(a)(1) on the date of execution of the modification, except that this clause does not apply to any modification if an exception under far 15.403 1(b) applies. (b) if any price, including profit or fee, negotiated in connection with any modification under this clause, or any cost reimbursable under this contract, was increased by any significant amount because (1) the contractor or a subcontractor furnished certified cost or pricing data that were not complete, accurate, and current as certified in its certificate of current cost or pricing data, (2)a subcontractor or prospective subcontractor furnished the contractor certified cost or pricing data that were not complete, accurate, and current as certified in the contractor’s certificate of current cost or pricing data, or (3) any of these parties furnished data of any description that were not accurate, the price or cost shall be reduced accordingly and the contract shall be modified to reflect the reduction. this right to a price reduction is limited to that resulting from defects in data relating to modifications for which this clause becomes operative under paragraph (a) of this clause. (c) any reduction in the contract price under paragraph (b) of this clause due to defective data from a prospective subcontractor that was not subsequently awarded the subcontract shall be limited to the amount, plus applicable overhead and profit markup, by which (1) the actual subcontract or (2) the actual cost to the contractor, if there was no subcontract, was less than the prospective subcontract cost estimate submitted by the contractor; provided, that the actual subcontract price was not itself affected by defective certified cost or pricing data. (d) (1) if the contracting officer determines under paragraph (b) of this clause that a price or cost reduction should be made, the contractor agrees not to raise the following matters as a defense: (i) the contractor or subcontractor was a sole source supplier or otherwise was in a superior bargaining position and thus the price of the contract would not have been modified even if accurate, complete, and current certified cost or pricing data had been submitted. (ii) the contracting officer should have known that the certified cost or pricing data in issue were defective even though the contractor or subcontractor took no affirmative action to bring the character of the data to the attention of the contracting officer. (iii) the contract was based on an agreement about the total cost of the contract and there was no agreement about the cost of each item procured under the contract. (iv) the contractor or subcontractor did not submit a certificate of current cost or pricing data. (2) (i) except as prohibited by paragraph (d)(2)(ii) of this clause, an offset in an amount determined appropriate by the contracting officer based upon the facts shall be allowed against the amount of a contract price reduction if  (a) the contractor certifies to the contracting officer that, to the best of the contractor’s knowledge and belief, the contractor is entitled to the offset in the amount requested; and (b) the contractor proves that the certified cost or pricing data were available before the "as of" date specified on its certificate of current cost or pricing data, and that the data were not submitted before such date. (ii) an offset shall not be allowed if  (a) the understated data were known by the contractor to be understated before the "as of" date specified on its certificate of current cost or pricing data; or (b) the government proves that the facts demonstrate that the contract price would not have increased in the amount to be offset even if the available data had been submitted before the "as of" date specified on its certificate of current cost or pricing data. (e) if any reduction in the contract price under this clause reduces the price of items for which payment was made prior to the date of the modification reflecting the price reduction, the contractor shall be liable to and shall pay the united states at the time such overpayment is repaid  (1) interest compounded daily, as required by 26u.s.c.6622, on the amount of such overpayment to be computed from the date(s) of overpayment to the contractor to the date the government is repaid by the contractor at the applicable underpayment rate effective for each quarter prescribed by the secretary of the treasury under 26 u.s.c. 6621(a)(2); and (2) a penalty equal to the amount of the overpayment, if the contractor or subcontractor knowingly submitted certified cost or pricing data that were incomplete, inaccurate, or noncurrent. (end of clause) as prescribed in 15.408(d)(1), insert the following clause: subcontractor certified cost or pricing data (jun 2020) (a) before awarding any subcontract expected to exceed the threshold for submission of certified cost or pricing data in federal acquisition regulation (far) 15.403 4(a)(1), on the date of agreement on price or the date of award, whichever is later; or before pricing any subcontract modification involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1), the contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), in accordance with far 15.408, table 15 2(to include any information reasonably required to explain the subcontractor's estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price), unless an exception under 15.403 1(b) applies. if the threshold for submission of certified cost or pricing data specified in far 15.403 4(a)(1) is adjusted for inflation as set forth in far 1.109(a), then pursuant to far 1.109(d) the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. (b) the contractor shall require the subcontractor to certify in substantially the form prescribed in far 15.406 2 that, to the best of its knowledge and belief, the data submitted under paragraph (a) of this clause were accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or subcontract modification. (c) in each subcontract that, when entered into, exceeds the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1), the contractor shall insert either  (1) the substance of this clause, including this paragraph (c), if paragraph (a) of this clause requires submission of certified cost or pricing data for the subcontract; or (2) the substance of the clause at far 52.215 13, subcontractor certified cost or pricing data modifications. (end of clause) alternate i (aug 2020). as prescribed in 15.408 (d)(2), substitute the following paragraph (a) in place of paragraph (a) of the basic clause: (a) unless an exception under far 15.403 1 applies, the contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), in accordance with far 15.408, table 15 2 (to include any information reasonably required to explain the subcontractor's estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price)  (1) before modifying any subcontract that was awarded prior to july 1, 2018, involving a pricing adjustment expected to exceed $750,000; or (2) before awarding any subcontract expected to exceed $2 million on or after july 1, 2018, or modifying any subcontract that was awarded on or after july 1, 2018, involving a pricing adjustment expected to exceed $2 million. as prescribed in 15.408(e)(1), insert the following clause: subcontractor certified cost or pricing data modifications (jun 2020) (a) the requirements of paragraphs (b) and (c) of this clause shall  (1) become operative only for any modification to this contract involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data in federal acquisition regulation (far) 15.403 4(a)(1) on the date of execution of the modification; and (2) be limited to such modifications. (b) before awarding any subcontract expected to exceed the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1), on the date of agreement on price or the date of award, whichever is later; or before pricing any subcontract modification involving a pricing adjustment expected to exceed the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1), the contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), in accordance with far 15.408, table 15 2 (to include any information reasonably required to explain the subcontractor's estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price), unless an exception under far 15.403 1(b) applies. if the threshold for submission of certified cost or pricing data specified in far 15.403 4(a)(1) is adjusted for inflation as set forth in far 1.109(a), then pursuant to far 1.109(d) the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. (c) the contractor shall require the subcontractor to certify in substantially the form prescribed in far 15.406 2 that, to the best of its knowledge and belief, the data submitted under paragraph (b) of this clause were accurate, complete, and current as of the date of agreement on the negotiated price of the subcontract or subcontract modification. (d) the contractor shall insert the substance of this clause, including this paragraph (d), in each subcontract that exceeds the threshold for submission of certified cost or pricing data in far 15.403 4(a)(1) on the date of agreement on price or the date of award, whichever is later. (end of clause) alternate i (aug 2020). as prescribed in 15.408 (e)(2), substitute the following paragraphs (a), (b), and (d) for paragraphs (a), (b), and (d) of the basic clause: (a) the requirements of paragraphs (b) and (c) of this clause shall  (1) become operative only for any modification to this contract involving aggregate increases and/or decreases in costs, plus applicable profits, expected to exceed the threshold for submission of certified cost or pricing data at far 15.403 4(a)(1); and (2) be limited to such modifications. (b) unless an exception under far 15.403 1 applies, the contractor shall require the subcontractor to submit certified cost or pricing data (actually or by specific identification in writing), in accordance with far 15.408, table 15 2 (to include any information reasonably required to explain the subcontractor's estimating process such as the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data, and the nature and amount of any contingencies included in the price)  (1) before modifying any subcontract that was awarded prior to july 1, 2018, involving a pricing adjustment expected to exceed $750,000; or (2) before modifying any subcontract that was awarded on or after july 1, 2018, involving a pricing adjustment expected to exceed $2 million. (d) the contractor shall insert the substance of this clause, including this paragraph (d), in each subcontract that exceeds $2 million. as prescribed in 15.408(f)(1), insert the following clause: integrity of unit prices (nov 2021) (a) any proposal submitted for the negotiation of prices for items of supplies shall distribute costs within contracts on a basis that ensures that unit prices are in proportion to the items’ base cost (e.g., manufacturing or acquisition costs). any method of distributing costs to line items that distorts unit prices shall not be used. for example, distributing costs equally among line items is not acceptable except when there is little or no variation in base cost. nothing in this paragraph requires submission of certified cost or pricing data not otherwise required by law or regulation. (b) when requested by the contracting officer, the offeror/contractor shall also identify those supplies that it will not manufacture or to which it will not contribute significant value. (c) the contractor shall insert the substance of this clause, less paragraph (b) of this clause, in all subcontracts for other than: acquisitions at or below the simplified acquisition threshold, as defined in federal acquisition regulation (far) 2.101 on the date of subcontract award; construction or architect engineer services under far part 36; utility services under far part 41; services where supplies are not required; commercial products and commercial services; and petroleum products. (end of clause) alternate i (oct 1997). as prescribed in 15.408 (f)(2), substitute the following paragraph (b) for paragraph (b) of the basic clause: (b) the offeror/contractor shall also identify those supplies that it will not manufacture or to which it will not contribute significant value. as prescribed in 15.408(g), insert the following clause: pension adjustments and asset reversions (oct 2010) (a) the contractor shall promptly notify the contracting officer in writing when it determines that it will terminate a defined benefit pension plan or otherwise recapture such pension fund assets. (b) for segment closings, pension plan terminations, or curtailment of benefits, the amount of the adjustment shall be  (1) for contracts and subcontracts that are subject to full coverage under the cost accounting standards (cas) board rules and regulations (48 cfr chapter 99), the amount measured, assigned, and allocated in accordance with 48 cfr 9904.413 50(c)(12) ; and (2) for contracts and subcontracts that are not subject to full coverage under the cas, the amount measured, assigned, and allocated in accordance with 48 cfr 9904.413 50(c)(12) , except the numerator of the fraction at 48 cfr 9904.413 50(c)(12) (vi) shall be the sum of the pension plan costs allocated to all non cas covered contracts and subcontracts that are subject to federal acquisition regulation (far) subpart 31.2 or for which certified cost or pricing data were submitted. (c) for all other situations where assets revert to the contractor, or such assets are constructively received by it for any reason, the contractor shall, at the government’s option, make a refund or give a credit to the government for its equitable share of the gross amount withdrawn. the government’s equitable share shall reflect the government’s participation in pension costs through those contracts for which certified cost or pricing data were submitted or that are subject to far subpart 31.2. (d) the contractor shall include the substance of this clause in all subcontracts under this contract that meet the applicability requirement of far 15.408(g). (end of clause) as prescribed in 15.408(h), insert the following provision: facilities capital cost of money (june 2003) (a) facilities capital cost of money will be an allowable cost under the contemplated contract, if the criteria for allowability in far 31.205 10(b) are met. one of the allowability criteria requires the prospective contractor to propose facilities capital cost of money in its offer. (b) if the prospective contractor does not propose this cost, the resulting contract will include the clause waiver of facilities capital cost of money. (end of provision) as prescribed in 15.408(i), insert the following clause: waiver of facilities capital cost of money (oct 1997) the contractor did not include facilities capital cost of money as a proposed cost of this contract. therefore, it is an unallowable cost under this contract. (end of clause) as prescribed in 15.408(j), insert the following clause: reversion or adjustment of plans for postretirement benefits (prb) other than pensions (july 2005) (a) the contractor shall promptly notify the contracting officer in writing when the contractor determines that it will terminate or reduce the benefits of a prb plan. (b) if prb fund assets revert or inure to the contractor, or are constructively received by it under a plan termination or otherwise, the contractor shall make a refund or give a credit to the government for its equitable share as required by 31.205 6(o)(5) of the federal acquisition regulation (far). when determining or agreeing on the method for recovery of the government’s equitable share, the contracting parties should consider the following methods: cost reduction, amortizing the credit over a number of years (with appropriate interest), cash refund, or some other agreed upon method. should the parties be unable to agree on the method for recovery of the government’s equitable share, through good faith negotiations, the contracting officer shall designate the method of recovery. (c) the contractor shall insert the substance of this clause in all subcontracts that meet the applicability requirements of far 15.408(j). (end of clause) as prescribed in 15.408(k), insert the following clause: notification of ownership changes (oct 1997) (a) the contractor shall make the following notifications in writing: (1) when the contractor becomes aware that a change in its ownership has occurred, or is certain to occur, that could result in changes in the valuation of its capitalized assets in the accounting records, the contractor shall notify the administrative contracting officer (aco) within 30 days. (2) the contractor shall also notify the aco within 30 days whenever changes to asset valuations or any other cost changes have occurred or are certain to occur as a result of a change in ownership. (b) the contractor shall  (1) maintain current, accurate, and complete inventory records of assets and their costs; (2) provide the aco or designated representative ready access to the records upon request; (3) ensure that all individual and grouped assets, their capitalized values, accumulated depreciation or amortization, and remaining useful lives are identified accurately before and after each of the contractor’s ownership changes; and (4) retain and continue to maintain depreciation and amortization schedules based on the asset records maintained before each contractor ownership change. (c) the contractor shall include the substance of this clause in all subcontracts under this contract that meet the applicability requirement of far 15.408(k). (end of clause) as prescribed in 15.408(l), insert the following provision: requirements for certified cost or pricing data and data other than certified cost or pricing data (nov 2021) (a) exceptions from certified cost or pricing data. (1) in lieu of submitting certified cost or pricing data, offerors may submit a written request for exception by submitting the information described in the following paragraphs.the contracting officer may require additional supporting information, but only to the extent necessary to determine whether an exception should be granted, and whether the price is fair and reasonable. (i) identification of the law or regulation establishing the price offered. if the price is controlled under law by periodic rulings, reviews, or similar actions of a governmental body, attach a copy of the controlling document, unless it was previously submitted to the contracting office. (ii) commercial product and commercial service exception. for a commercial product and commercial service exception, the offeror shall submit, at a minimum, information on prices at which the same item or similar items have previously been sold in the commercial market that is adequate for evaluating the reasonableness of the price for this acquisition. such information may include  (a) for catalog items, a copy of or identification of the catalog and its date, or the appropriate pages for the offered items, or a statement that the catalog is on file in the buying office to which the proposal is being submitted. provide a copy or describe current discount policies and price lists (published or unpublished), e.g., wholesale, original equipment manufacturer, or reseller. also explain the basis of each offered price and its relationship to the established catalog price, including how the proposed price relates to the price of recent sales in quantities similar to the proposed quantities; (b) for market priced items, the source and date or period of the market quotation or other basis for market price, the base amount, and applicable discounts. in addition, describe the nature of the market; (c) for items included on an active federal supply service multiple award schedule contract, proof that an exception has been granted for the schedule item. (2) the offeror grants the contracting officer or an authorized representative the right to examine, at any time before award, books, records, documents, or other directly pertinent records to verify any request for an exception under this provision, and the reasonableness of price. for items priced using catalog or market prices, or law or regulation, access does not extend to cost or profit information or other data relevant solely to the offeror’s determination of the prices to be offered in the catalog or marketplace. (b) requirements for certified cost or pricing data. if the offeror is not granted an exception from the requirement to submit certified cost or pricing data, the following applies: (1) the offeror shall prepare and submit certified cost or pricing data, data other than certified cost or pricing data, and supporting attachments in accordance with the instructions contained in 15.408 solicitation provisions and contract clauses. of far 15.408, which is incorporated by reference with the same force and effect as though it were inserted here in full text. the instructions in 15.408 solicitation provisions and contract clauses. are incorporated as a mandatory format to be used in this contract, unless the contracting officer and the contractor agree to a different format and change this clause to use alternate i. (2) as soon as practicable after agreement on price, but before contract award (except for unpriced actions such as letter contracts), the offeror shall submit a certificate of current cost or pricing data, as prescribed by far 15.406 2. (end of provision) alternate i (oct 2010). as prescribed in 15.408 (l) (and see 15.403 5(b)(1)), substitute the following paragraph (b)(1) for paragraph (b)(1) of the basic provision: (b)(1) the offeror shall submit certified cost or pricing data, data other than certified cost or pricing data, and supporting attachments in the following format: [insert description of the data and format that are required, and include access to records necessary to permit an adequate evaluation of the proposed price in accordance with 15.408, 15.408 solicitation provisions and contract clauses., note 2. the description may be inserted at the time of issuing the solicitation, or the contracting officer may specify that the offeror’s format will be acceptable, or the description may be inserted as the result of negotiations.] alternate ii (oct 1997). as prescribed in 15.408 (l), add the following paragraph (c) to the basic provision: (c) when the proposal is submitted, also submit one copy each to: (1) the administrative contracting officer, and (2) the contract auditor. alternate iii (oct 1997). as prescribed in 15.408 (l), add the following paragraph (c) to the basic provision (if alternate ii is also used, redesignate the following paragraph as paragraph (d)). (c) submit the cost portion of the proposal via the following electronic media: __________________________ [insert media format, e.g.,electronic spreadsheet format, electronic mail, etc.] alternate iv (oct 2010). as prescribed in 15.408 (l), replace the text of the basic provision with the following: (a) submission of certified cost or pricing data is not required. (b) provide data described below: _____________________________ [insert description of the data and the format that are required, including the access to records necessary to permit an adequate evaluation of the proposed price in accordance with 15.403 3 .] as prescribed in 15.408(m), insert the following clause: requirements for certified cost or pricing data and data other than certified cost or pricing data modifications (nov 2021) (a) exceptions from certified cost or pricing data. (1) in lieu of submitting certified cost or pricing data for modifications under this contract, for price adjustments expected to exceed the threshold set forth in federal acquisition regulation (far) 15.403 4(a)(1) on the date of the agreement on price or the date of the award, whichever is later, the contractor may submit a written request for exception by submitting the information described in paragraphs (a)(1)(i) and (ii) of this clause. if the threshold for submission of certified cost or pricing data specified in far 15.403 4(a)(1) is adjusted for inflation as set forth in far 1.109(a), then pursuant to far 1.109(d) the changed threshold applies throughout the remaining term of the contract, unless there is a subsequent threshold adjustment. the contracting officer may require additional supporting information, but only to the extent necessary to determine whether an exception should be granted, and whether the price is fair and reasonable  (i) identification of the law or regulation establishing the price offered. if the price is controlled under law by periodic rulings, reviews, or similar actions of a governmental body, attach a copy of the controlling document, unless it was previously submitted to the contracting office. (ii) information on modifications of contracts or subcontracts for commercial products or commercial services. (a) if  (1) the original contract or subcontract was granted an exception from certified cost or pricing data requirements because the price agreed upon was based on adequate price competition or prices set by law or regulation, or was a contract or subcontract for the acquisition of a commercial product or commercial service; and (2) the modification (to the contract or subcontract) is not exempted based on one of these exceptions, then the contractor may provide information to establish that the modification would not change the contract or subcontract from a contract or subcontract for the acquisition of a commercial product or commercial service, to a contract or subcontract for the acquisition of other than a commercial product or commercial service. (b) for a commercial product and commercial service exception, the contractor shall provide, at a minimum, information on prices at which the same item or similar items have previously been sold that is adequate for evaluating the reasonableness of the price of the modification. such information may include  (1) for catalog items, a copy of or identification of the catalog and its date, or the appropriate pages for the offered items, or a statement that the catalog is on file in the buying office to which the proposal is being submitted. provide a copy or describe current discount policies and price lists (published or unpublished), e.g., wholesale, original equipment manufacturer, or reseller. also explain the basis of each offered price and its relationship to the established catalog price, including how the proposed price relates to the price of recent sales in quantities similar to the proposed quantities. (2) for market priced items, the source and date or period of the market quotation or other basis for market price, the base amount, and applicable discounts. in addition, describe the nature of the market. (3) for items included on an active federal supply service multiple award schedule contract, proof that an exception has been granted for the schedule item. (2) the contractor grants the contracting officer or an authorized representative the right to examine, at any time before award, books, records, documents, or other directly pertinent records to verify any request for an exception under this clause, and the reasonableness of price. for items priced using catalog or market prices, or law or regulation, access does not extend to cost or profit information or other data relevant solely to the contractor’s determination of the prices to be offered in the catalog or marketplace. (b) requirements for certified cost or pricing data. if the contractor is not granted an exception from the requirement to submit certified cost or pricing data, the following applies: (1) the contractor shall submit certified cost or pricing data, data other than certified cost or pricing data, and supporting attachments in accordance with the instructions contained in 15.408 solicitation provisions and contract clauses. of far 15.408, which is incorporated by reference with the same force and effect as though it were inserted here in full text. the instructions in 15.408 solicitation provisions and contract clauses. are incorporated as a mandatory format to be used in this contract, unless the contracting officer and the contractor agree to a different format and change this clause to use alternate i. (2) as soon as practicable after agreement on price, but before award (except for unpriced actions), the contractor shall submit a certificate of current cost or pricing data, as prescribed by far 15.406 2. (end of clause) alternate i (oct 2010). as prescribed in 15.408 (m) and 15.403 5(b)(1), substitute the following paragraph (b)(1) for paragraph (b)(1) of the basic clause. (b)(1) the contractor shall submit certified cost or pricing data, data other than certified cost or pricing data, and supporting attachments prepared in the following format: _________________________________ [insert description of the data and format that are required and include access to records necessary to permit an adequate evaluation of the proposed price in accordance with 15.408, 15.408 solicitation provisions and contract clauses., note 2. the description may be inserted at the time of issuing the solicitation, or the contracting officer may specify that the offeror's format will be acceptable, or the description may be inserted as the result of negotiations.]: alternate ii (oct 1997). as prescribed in 15.408 (m), add the following paragraph (c) to the basic clause: (c) when the proposal is submitted, also submit one copy each to: (1) the administrative contracting officer, and (2) the contract auditor. alternate iii (oct 1997). as prescribed in 15.408 (m), add the following paragraph (c) to the basic clause (if alternate ii is also used, redesignate the following paragraph as paragraph (d)): (c) submit the cost portion of the proposal via the following electronic media: ________________ [insert media format] alternate iv (oct 2010). as prescribed in 15.408 (m), replace the text of the basic clause with the following: (a) submission of certified cost or pricing data is not required. (b) provide data described below:____________________________ [insert description of the data and the format that are required, including the access to records necessary to permit an adequate evaluation of the proposed price in accordance with 15.403 3 .] as prescribed in 15.408(n)(1), use the following provision: limitations on pass through charges identification of subcontract effort (oct 2009) (a) definitions. added value, excessive pass through charge, subcontract, and subcontractor, as used in this provision, are defined in the clause of this solicitation entitled "limitations on pass through charges" (far 52.215 23). (b) general. the offeror’s proposal shall exclude excessive pass through charges. (c) performance of work by the contractor or a subcontractor. (1) the offeror shall identify in its proposal the total cost of the work to be performed by the offeror, and the total cost of the work to be performed by each subcontractor, under the contract, task order, or delivery order. (2) if the offeror intends to subcontract more than 70 percent of the total cost of work to be performed under the contract, task order, or delivery order, the offeror shall identify in its proposal  (i) the amount of the offeror’s indirect costs and profit/fee applicable to the work to be performed by the subcontractor(s); and (ii) a description of the added value provided by the offeror as related to the work to be performed by the subcontractor(s). (3) if any subcontractor proposed under the contract, task order, or delivery order intends to subcontract to a lower tier subcontractor more than 70 percent of the total cost of work to be performed under its subcontract, the offeror shall identify in its proposal  (i) the amount of the subcontractor’s indirect costs and profit/fee applicable to the work to be performed by the lower tier subcontractor(s); and (ii) a description of the added value provided by the subcontractor as related to the work to be performed by the lower tier subcontractor(s). (end of provision) as prescribed in 15.408(n)(2), use the following clause: limitations on pass through charges (jun 2020) (a) definitions. as used in this clause  added value means that the contractor performs subcontract management functions that the contracting officer determines are a benefit to the government (e.g., processing orders of parts or services, maintaining inventory, reducing delivery lead times, managing multiple sources for contract requirements, coordinating deliveries, performing quality assurance functions). excessive pass through charge, with respect to a contractor or subcontractor that adds no or negligible value to a contract or subcontract, means a charge to the government by the contractor or subcontractor that is for indirect costs or profit/fee on work performed by a subcontractor (other than charges for the costs of managing subcontracts and any applicable indirect costs and associated profit/fee based on such costs). no or negligible value means the contractor or subcontractor cannot demonstrate to the contracting officer that its effort added value to the contract or subcontract in accomplishing the work performed under the contract (including task or delivery orders). subcontract means any contract, as defined in federal acquisition regulation (far) 2.101, entered into by a subcontractor to furnish supplies or services for performance of the contract or a subcontract. it includes but is not limited to purchase orders, and changes and modifications to purchase orders. subcontractor, as defined in far 44.101, means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. (b) general. the government will not pay excessive pass through charges. the contracting officer shall determine if excessive pass through charges exist. (c) reporting. required reporting of performance of work by the contractor or a subcontractor. the contractor shall notify the contracting officer in writing if  (1) the contractor changes the amount of subcontract effort after award such that it exceeds 70 percent of the total cost of work to be performed under the contract, task order, or delivery order. the notification shall identify the revised cost of the subcontract effort and shall include verification that the contractor will provide added value; or (2) any subcontractor changes the amount of lower tier subcontractor effort after award such that it exceeds 70 percent of the total cost of the work to be performed under its subcontract. the notification shall identify the revised cost of the subcontract effort and shall include verification that the subcontractor will provide added value as related to the work to be performed by the lower tier subcontractor(s). (d) recovery of excessive pass through charges. if the contracting officer determines that excessive pass through charges exist; (1) for other than fixed price contracts, the excessive pass through charges are unallowable in accordance with the provisions in far subpart 31.2; and (2) for applicable dod fixed price contracts, as identified in 15.408(n)(2)(i)(b), the government shall be entitled to a price reduction for the amount of excessive pass through charges included in the contract price. (e) access to records. (1) the contracting officer, or authorized representative, shall have the right to examine and audit all the contractor’s records (as defined at far 52.215 2(a)) necessary to determine whether the contractor proposed, billed, or claimed excessive pass through charges. (2) for those subcontracts to which paragraph (f) of this clause applies, the contracting officer, or authorized representative, shall have the right to examine and audit all the subcontractor’s records (as defined at far 52.215 2(a)) necessary to determine whether the subcontractor proposed, billed, or claimed excessive pass through charges. (f) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (f), in all cost reimbursement subcontracts under this contract that exceed the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, except if the contract is with dod, then insert in all cost reimbursement subcontracts and fixed price subcontracts, except those identified in far 15.408(n)(2)(i)(b)(2), that exceed the threshold for obtaining cost or pricing data in far 15.403 4 on the date of subcontract award. (end of clause) alternate i (oct 2009). as prescribed in 15.408 (n)(2)(iii), substitute the following paragraph (b) for paragraph (b) of the basic clause: (b) general. the government will not pay excessive pass through charges. the contracting officer has determined that there will be no excessive pass through charges, provided the contractor performs the disclosed value added functions. as prescribed in 16.105 , complete and insert the following provision: type of contract (apr 1984) the government contemplates award of a ______________ [contracting officer insert specific type of contract] contract resulting from this solicitation. (end of provision) as prescribed in 16.203 4(a), insert the following clause: economic price adjustment standard supplies (nov 2021) (a) the contractor warrants that the unit price stated in the schedule for ____________ [offeror insert schedule line item number] is not in excess of the contractor’s applicable established price in effect on the contract date for like quantities of the same item. the term "unit price" excludes any part of the price directly resulting from requirements for preservation, packaging, or packing beyond standard commercial practice. the term "established price" means a price that  (1) is an established catalog or market price for a commercial product sold in substantial quantities to the general public; and (2) is the net price after applying any standard trade discounts offered by the contractor. (b) the contractor shall promptly notify the contracting officer of the amount and effective date of each decrease in any applicable established price. each corresponding contract unit price shall be decreased by the same percentage that the established price is decreased. the decrease shall apply to those items delivered on and after the effective date of the decrease in the contractor’s established price, and this contract shall be modified accordingly. (c) if the contractor’s applicable established price is increased after the contract date, the corresponding contract unit price shall be increased, upon the contractor’s written request to the contracting officer, by the same percentage that the established price is increased, and the contract shall be modified accordingly, subject to the following limitations: (1) the aggregate of the increases in any contract unit price under this clause shall not exceed 10 percent of the original contract unit price. (2) the increased contract unit price shall be effective  (i) on the effective date of the increase in the applicable established price if the contracting officer receives the contractor’s written request within 10 days thereafter; or (ii) if the written request is received later, on the date the contracting officer receives the request. (3) the increased contract unit price shall not apply to quantities scheduled under the contract for delivery before the effective date of the increased contract unit price, unless failure to deliver before that date results from causes beyond the control and without the fault or negligence of the contractor, within the meaning of the default clause. (4) no modification increasing a contract unit price shall be executed under this paragraph (c) until the contracting officer verifies the increase in the applicable established price. (5) within 30 days after receipt of the contractor’s written request, the contracting officer may cancel, without liability to either party, any undelivered portion of the contract items affected by the requested increase. (d) during the time allowed for the cancellation provided for in paragraph (c)(5) of this clause, and thereafter if there is no cancellation, the contractor shall continue deliveries according to the contract delivery schedule, and the government shall pay for such deliveries at the contract unit price, increased to the extent provided by paragraph (c) of this clause. (end of clause) as prescribed in 16.203 4(b), insert the following clause: economic price adjustment semistandard supplies (nov 2021) (a) the contractor warrants that the supplies identified as line items ____________ [offeror insert schedule line item number] in the schedule are, except for modifications required by the contract specifications, supplies for which it has an established price. the term "established price" means a price that (1)is an established catalog or market price for a commercial product sold in substantial quantities to the general public, and (2)is the net price after applying any standard trade discounts offered by the contractor. the contractor further warrants that, as of the date of this contract, any difference between the unit prices stated in the contract for these line items and the contractor’s established prices for like quantities of the nearest commercial equivalents are due to compliance with contract specifications and with any contract requirements for preservation, packaging, and packing beyond standard commercial practice. (b) the contractor shall promptly notify the contracting officer of the amount and effective date of each decrease in any applicable established price. each corresponding contract unit price (exclusive of any part of the unit price that reflects modifications resulting from compliance with specifications or with requirements for preservation, packaging, and packing beyond standard commercial practice) shall be decreased by the same percentage that the established price is decreased. the decrease shall apply to those items delivered on and after the effective date of the decrease in the contractor’s established price, and this contract shall be modified accordingly. (c) if the contractor’s applicable established price is increased after the contract date, the corresponding contract unit price (exclusive of any part of the unit price resulting from compliance with specifications or with requirements for preservation, packaging, and packing beyond standard commercial practice) shall be increased, upon the contractor’s written request to the contracting officer, by the same percentage that the established price is increased, and the contract shall be modified accordingly, subject to the following limitations: (1) the aggregate of the increases in any contract unit price under this clause shall not exceed 10 percent of the original contract unit price. (2) the increased contract unit price shall be effective  (i) on the effective date of the increase in the applicable established price if the contracting officer receives the contractor’s written request within 10 days thereafter; or (ii) if the written request is received later, on the date the contracting officer receives the request. (3) the increased contract unit price shall not apply to quantities scheduled under the contract for delivery before the effective date of the increased contract unit price, unless failure to deliver before that date results from causes beyond the control and without the fault or negligence of the contractor, within the meaning of the default clause. (4) no modification increasing a contract unit price shall be executed under this paragraph (c) until the contracting officer verifies the increase in the applicable established price. (5) within 30 days after receipt of the contractor’s written request, the contracting officer may cancel, without liability to either party, any undelivered portion of the contract items affected by the requested increase. (d) during the time allowed for the cancellation provided for in paragraph (c)(5) of this clause, and thereafter if there is no cancellation, the contractor shall continue deliveries according to the contract delivery schedule, and the government shall pay for such deliveries at the contract unit price, increased to the extent provided by paragraph (c) of this clause. (end of clause) as prescribed in 16.203 4(c), insert the following clause: economic price adjustment labor and material (jan 2017) (a) the contractor shall notify the contracting officer if, at any time during contract performance, the rate of pay for labor (including fringe benefits) or the unit prices for material shown in the schedule either increase or decrease. the contractor shall furnish this notice within 60 days after the increase or decrease, or within any additional period that the contracting officer may approve in writing, but not later than the date of final payment under this contract. the notice shall include the contractor’s proposal for an adjustment in the contract unit prices to be negotiated under paragraph (b) of this clause, and shall include, in the form required by the contracting officer, supporting data explaining the cause, effective date, and amount of the increase or decrease and the amount of the contractor’s adjustment proposal. (b) promptly after the contracting officer receives the notice and data under paragraph (a) of this clause, the contracting officer and the contractor shall negotiate a price adjustment in the contract unit prices and its effective date. however, the contracting officer may postpone the negotiations until an accumulation of increases and decreases in the labor rates (including fringe benefits) and unit prices of material shown in the schedule results in an adjustment allowable under paragraph (c)(3) of this clause. the contracting officer shall modify this contract (1)to include the price adjustment and its effective date and (2)to revise the labor rates (including fringe benefits) or unit prices of material as shown in the schedule to reflect the increases or decreases resulting from the adjustment. the contractor shall continue performance pending agreement on, or determination of, any adjustment and its effective date. (c) any price adjustment under this clause is subject to the following limitations: (1) any adjustment shall be limited to the effect on unit prices of the increases or decreases in the rates of pay for labor (including fringe benefits) or unit prices for material shown in the schedule. there shall be no adjustment for  (i) supplies or services for which the production cost is not affected by such changes; (ii) changes in rates or unit prices other than those shown in the schedule; or (iii) changes in the quantities of labor or material used from those shown in the schedule for each item. (2) no upward adjustment shall apply to supplies or services that are required to be delivered or performed before the effective date of the adjustment, unless the contractor’s failure to deliver or perform according to the delivery schedule results from causes beyond the contractor’s control and without its fault or negligence, within the meaning of the default clause. (3) there shall be no adjustment for any change in rates of pay for labor (including fringe benefits) or unit prices for material which would not result in a net change of at least 3 percent of the then current total contract price. this limitation shall not apply, however, if, after final delivery of all line items, either party requests an adjustment under paragraph (b) of this clause. (4) the aggregate of the increases in any contract unit price made under this clause shall not exceed 10 percent of the original unit price. there is no percentage limitation on the amount of decreases that may be made under this clause. (d) the contracting officer may examine the contractor’s books, records, and other supporting data relevant to the cost of labor (including fringe benefits) and material during all reasonable times until the end of 3 years after the date of final payment under this contract or the time periods specified in subpart 4.7 of the federal acquisition regulation (far), whichever is earlier. (end of clause) as prescribed in 16.205 4 , insert the following clause: price redetermination prospective (jan 2022) (a) general. the unit prices and the total price stated in this contract shall be periodically redetermined in accordance with this clause, except that  (1) the prices for supplies delivered and services performed before the first effective date of price redetermination (see paragraph (c) of this clause) shall remain fixed; and (2) in no event shall the total amount paid under this contract exceed any ceiling price included in the contract. (b) definition. "costs," as used in this clause, means allowable costs in accordance with part 31 of the federal acquisition regulation (far) in effect on the date of this contract. (c) price redetermination periods. for the purpose of price redetermination, performance of this contract is divided into successive periods. the first period shall extend from the date of the contract to ________, (see note(1)) and the second and each succeeding period shall extend for ________ [insert appropriate number] months from the end of the last preceding period, except that the parties may agree to vary the length of the final period. the first day of the second and each succeeding period shall be the effective date of price redetermination for that period. (d) data submission. (1) not more than _______ nor less than ______ (see note (2)) days before the end of each redetermination period, except the last, the contractor shall submit  (i) proposed prices for supplies that may be delivered or services that may be performed in the next succeeding period, and  (a) an estimate and breakdown of the costs of these supplies or services in the format of table 15 1, far 15.408, or in any other form on which the parties may agree; (b) sufficient data to support the accuracy and reliability of this estimate; and (c) an explanation of the differences between this estimate and the original (or last preceding) estimate for the same supplies or services; and (ii) a statement of all costs incurred in performing this contract through the end of the _______________ month (see note (3)) before the submission of proposed prices in the format of table 15 1, far 15.408 (or in any other form on which the parties may agree), with sufficient supporting data to disclose unit costs and cost trends for  (a) supplies delivered and services performed; and (b) inventories of work in process and undelivered contract supplies on hand (estimated to the extent necessary). (2) the contractor shall also submit, to the extent that it becomes available before negotiations on redetermined prices are concluded  (i) supplemental statements of costs incurred after the date stated in subdivision (d)(1)(ii) of this section for  (a) supplies delivered and services performed; and (b) inventories of work in process and undelivered contract supplies on hand (estimated to the extent necessary); and (ii) any other relevant data that the contracting officer may reasonably require. (3) if the contractor fails to submit the data required by paragraphs (d)(1) and (2) of this section, within the time specified, the contracting officer may suspend payments under this contract until the data are furnished. if it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the data submittal period, the amount of the excess shall bear interest, computed from the date the data were due to the date of repayment, at the rate established in accordance with the interest clause. (e) price redetermination. upon the contracting officer’s receipt of the data required by paragraph (d) of this section, the contracting officer and the contractor shall promptly negotiate to redetermine fair and reasonable prices for supplies that may be delivered or services that may be performed in the period following the effective date of price redetermination. (f) contract modifications. each negotiated redetermination of prices shall be evidenced by a modification to this contract, signed by the contractor and the contracting officer, stating the redetermined prices that apply during the redetermination period. (g) adjusting billing prices. pending execution of the contract modification (see paragraph (f) of this section), the contractor shall submit invoices or vouchers in accordance with the billing prices stated in this contract. if at any time it appears that the then current billing prices will be substantially greater than the estimated final prices, or if the contractor submits data showing that the redetermined price will be substantially greater than the current billing prices, the parties shall negotiate an appropriate decrease or increase in billing prices. any billing price adjustment shall be reflected in a contract modification and shall not affect the redetermination of prices under this clause. after the contract modification for price redetermination is executed, the total amount paid or to be paid on all invoices or vouchers shall be adjusted to reflect the agreed upon prices, and any requested additional payments, refunds, or credits shall be made promptly. (h) quarterly limitation on payments statement. this paragraph (h) applies only during periods for which firm prices have not been established. (1) within 45 days after the end of the quarter of the contractor’s fiscal year in which a delivery is first made (or services are first performed) and accepted by the government under this contract, and for each quarter thereafter, the contractor shall submit to the contract administration office (with a copy to the contracting office and the cognizant contract auditor) a statement, cumulative from the beginning of the contract, showing  (i) the total contract price of all supplies delivered (or services performed) and accepted by the government and for which final prices have been established; (ii) the total costs (estimated to the extent necessary) reasonably incurred for, and properly allocable solely to, the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established; (iii) the portion of the total interim profit (used in establishing the initial contract price or agreed to for the purpose of this paragraph (h)) that is in direct proportion to the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established; and (iv) the total amount of all invoices or vouchers for supplies delivered (or services performed) and accepted by the government (including amounts applied or to be applied to liquidate progress payments). (2) the statement required by paragraph (h)(1) of this section need not be submitted for any quarter for which either no costs are to be reported under subdivision (h)(1)(ii) of this section, or revised billing prices have been established in accordance with paragraph (g) of this section, and do not exceed the existing contract price, the contractor’s price redetermination proposal, or a price based on the most recent quarterly statement, whichever is least. (3) notwithstanding any provision of this contract authorizing greater payments, if on any quarterly statement the amount under subdivision (h)(1)(iv) of this section exceeds the sum due the contractor, as computed in accordance with subdivisions (h)(1)(i), (ii), and (iii) of this section, the contractor shall immediately refund or credit to the government the amount of this excess. the contractor may, when appropriate, reduce this refund or credit by the amount of previous refunds or credits affected under this clause. if any portion of the excess has been applied to the liquidation of progress payments, then that portion may, instead of being refunded, be added to the unliquidated progress payment account, consistent with the progress payments clause. the contractor shall provide complete details to support any claimed reductions in refunds. (4) if the contractor fails to submit the quarterly statement within 45 days after the end of each quarter and it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the statement submittal period, the amount of the excess shall bear interest, computed from the date the quarterly statement was due to the date of repayment, at the rate established in accordance with the interest clause. (i) subcontracts. no subcontract placed under this contract may provide for payment on a cost plus a percentage of cost  basis. (j) disagreements. if the contractor and the contracting officer fail to agree upon redetermined prices for any price redetermination period within 60 days (or within such other period as the parties agree) after the date on which the data required by paragraph (d) of this section are to be submitted, the contracting officer shall promptly issue a decision in accordance with the disputes clause. for the purpose of paragraphs (f), (g), and (h) of this section, and pending final settlement of the disagreement on appeal, by failure to appeal, or by agreement, this decision shall be treated as an executed contract modification. pending final settlement, price redetermination for subsequent periods, if any, shall continue to be negotiated as provided in this clause. (k) termination. if this contract is terminated, prices shall continue to be established in accordance with this clause for (1) completed supplies and services accepted by the government and (2) those supplies and services not terminated under a partial termination. all other elements of the termination shall be resolved in accordance with other applicable clauses of this contract. notes: (1) express in terms of units delivered, or as a date; but in either case the period should end on the last day of a month. (2) insert the number of days chosen so that the contractor’s submission will be late enough to reflect recent cost experience (taking into account the contractor’s accounting system), but early enough to permit review, audit (if necessary), and negotiation before the start of the prospective period. (3) insert "first," except that "second" may be inserted if necessary to achieve compatibility with the contractor’s accounting system. (end of clause) as prescribed in 16.206 4 , insert the following clause: price redetermination retroactive (jan 2022) (a) general. the unit price and the total price stated in this contract shall be redetermined in accordance with this clause, but in no event shall the total amount paid under this contract exceed __________ [insert dollar amount of ceiling price]. (b) definition. "costs," as used in this clause, means allowable costs in accordance with part 31 of the federal acquisition regulation (far) in effect on the date of this contract. (c) data submission. (1) within______ [contracting officer insert number of days] days after delivery of all supplies to be delivered and completion of all services to be performed under this contract, the contractor shall submit  (i) proposed prices; (ii) a statement in the format of table 15 1, far 15.408, or in any other form on which the parties may agree, of all costs incurred in performing the contract; and (iii) any other relevant data that the contracting officer may reasonably require. (2) if the contractor fails to submit the data required by paragraph (c)(1) of this section within the time specified, the contracting officer may suspend payments under this contract until the data are furnished. if it is later determined that the government has overpaid the contractor, the excess shall be repaid to the government immediately. unless repaid within 30 days after the end of the data submittal period, the amount of the excess shall bear interest, computed from the date the data were due to the date of repayment, at the rate established in accordance with the interest clause. (d) price determination. upon the contracting officer’s receipt of the data required by paragraph (c) of this section, the contracting officer and the contractor shall promptly negotiate to redetermine fair and reasonable prices for supplies delivered and services performed by the contractor under this contract. (e) contract modification. the negotiated redetermination of price shall be evidenced by a modification to this contract, signed by the contractor and the contracting officer. (f) adjusting billing prices. pending execution of the contract modification (see paragraph (e) of this section), the contractor shall submit invoices or vouchers in accordance with billing prices stated in this contract. if at any time it appears that the then current billing prices will be substantially greater than the estimated final prices, or if the contractor submits data showing that the redetermined prices will be substantially greater than the current billing prices, the parties shall negotiate an appropriate decrease or increase in billing prices. any billing price adjustment shall be reflected in a contract modification and shall not affect the redetermination of prices under this clause. after the contract modification for price redetermination is executed, the total amount paid or to be paid on all invoices or vouchers shall be adjusted to reflect the agreed upon prices, and any resulting additional payments, refunds, or credits shall be made promptly. (g) quarterly limitation on payments statement. this paragraph (g) shall apply until final price redetermination under this contract has been completed. (1) within 45 days after the end of the quarter of the contractor’s fiscal year in which a delivery is first made (or services are first performed) and accepted by the government under this contract, and for each quarter thereafter, the contractor shall submit to the contract administration office (with a copy to the contracting office and the cognizant contract auditor), a statement, cumulative from the beginning of the contract, showing  (i) the total contract price of all supplies delivered (or services performed) and accepted by the government and for which final prices have been established; (ii) the total costs (estimated to the extent necessary) reasonably incurred for, and properly allocable solely to, the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established; (iii) the portion of the total interim profit (used in establishing the initial contract price or agreed to for the purpose of this paragraph (g)) that is in direct proportion to the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established; and (iv) the total amount of all invoices or vouchers for supplies delivered (or services performed) and accepted by the government (including amounts applied or to be applied to liquidate progress payments). (2) notwithstanding any provision of this contract authorizing greater payments, if on any quarterly statement the amount under subdivision (g)(1)(iv) of this section exceeds the sum due the contractor, as computed in accordance with subdivisions (g)(1)(i), (ii), and (iii) of this section, the contractor shall immediately refund or credit to the government the amount of this excess. the contractor may, when appropriate, reduce this refund or credit by the amount of previous refunds or credits effected under this clause. if any portion of the excess has been applied to the liquidation of progress payments, then that portion may, instead of being refunded, be added to the unliquidated progress payment account, consistent with the progress payments clause. the contractor shall provide complete details to support any claimed reduction in refunds. (3) if the contractor fails to submit the quarterly statement within 45 days after the end of each quarter and it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the statement submittal period, the amount of the excess shall bear interest, computed from the date the quarterly statement was due to the date of repayment, at the rate established in accordance with the interest clause. (h) subcontracts. no subcontract placed under this contract may provide for payment on a cost plus a percentage of cost basis. (i) disagreements. if the contractor and the contracting officer fail to agree upon redetermined prices within 60 days (or within such other period as the parties agree) after the date on which the data required by paragraph (c) of this section are to be submitted, the contracting officer shall promptly issue a decision in accordance with the disputes clause. for the purpose of paragraphs (e), (f), and (g) of this section, and pending final settlement of the disagreement on appeal, by failure to appeal, or by agreement, this decision shall be treated as an executed contract modification. (j) termination. if this contract is terminated before price redetermination, prices shall be established in accordance with this clause for completed supplies and services not terminated. all other elements of the termination shall be resolved in accordance with other applicable clauses of this contract. (end of clause) as prescribed in 16.307(a), insert the following clause: allowable cost and payment (aug 2018) (a) invoicing. (1) the government will 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 contracting officer in accordance with federal acquisition regulation (far) subpart 31.2 in effect on the date of this contract and the terms of this contract. the contractor may submit to an authorized representative of the contracting officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract. (2) contract financing payments are not subject to the interest penalty provisions of the prompt payment act. interim payments made prior to the final payment under the contract are contract financing payments, except interim payments if this contract contains alternate i to the clause at 52.232 25. (3) the designated payment office will make interim payments for contract financing on the _________ [contracting officer insert day as prescribed by agency head; if not prescribed, insert "30th"] day after the designated billing office receives a proper payment request. in the event that the government requires an audit or other review of a specific payment request to ensure compliance with the terms and conditions of the contract, the designated payment office is not compelled to make payment by the specified due date. (b) reimbursing costs. (1) for the purpose of reimbursing allowable costs (except as provided in paragraph (b)(2) of this clause, 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 contract; (ii) when the contractor is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid, for  (a) supplies and services purchased directly for the contract and associated financing payments to subcontractors, provided payments determined due will be made  (1) in accordance with the terms and conditions of a subcontract or invoice; and (2) ordinarily within 30 days of the submission of the contractor’s payment request to the government; (b) materials issued from the contractor’s inventory and placed in the production process for use on the contract; (c) direct labor; (d) direct travel; (e) other direct in house costs; and (f) properly allocable and allowable indirect costs, as shown in the records maintained by the contractor for purposes of obtaining reimbursement under government contracts; and (iii) the amount of financing payments that have been paid by cash, check, or other forms of payment to subcontractors. (2) accrued costs of contractor contributions under employee pension plans shall be excluded until actually paid unless  (i) the contractor’s practice is to make contributions to the retirement fund quarterly or more frequently; and (ii) the contribution does not remain unpaid 30 days after the end of the applicable quarter or shorter payment period (any contribution remaining unpaid shall be excluded from the contractor’s indirect costs for payment purposes). (3) notwithstanding the audit and adjustment of invoices or vouchers under paragraph (g) of this clause, allowable indirect costs under this contract shall be obtained by applying indirect cost rates established in accordance with paragraph (d) of this clause. (4) any statements in specifications or other documents incorporated in this contract by reference designating performance of services or furnishing of materials at the contractor’s expense or at no cost to the government shall be disregarded for purposes of cost reimbursement under this clause. (c) small business concerns. a small business concern may receive more frequent payments than every 2 weeks. (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) (i) the contractor shall submit an adequate final indirect cost rate proposal to the contracting officer (or cognizant federal agency official) and auditor within the 6 month period following the expiration of each of its fiscal years. reasonable extensions, for exceptional circumstances only, may be requested in writing by the contractor and granted in writing by the contracting officer. the contractor shall support its proposal with adequate supporting data. (ii) the proposed rates shall be based on the contractor’s actual cost experience for that period. the appropriate government representative and the contractor shall establish the final indirect cost rates as promptly as practical after receipt of the contractor’s proposal. (iii) an adequate indirect cost rate proposal shall include the following data unless otherwise specified by the cognizant federal agency official: (a) summary of all claimed indirect expense rates, including pool, base, and calculated indirect rate. (b) general and administrative expenses (final indirect cost pool). schedule of claimed expenses by element of cost as identified in accounting records (chart of accounts). (c) overhead expenses (final indirect cost pool). schedule of claimed expenses by element of cost as identified in accounting records (chart of accounts) for each final indirect cost pool. (d) occupancy expenses (intermediate indirect cost pool). schedule of claimed expenses by element of cost as identified in accounting records (chart of accounts) and expense reallocation to final indirect cost pools. (e) claimed allocation bases, by element of cost, used to distribute indirect costs. (f) facilities capital cost of money factors computation. (g) reconciliation of books of account (i.e., general ledger) and claimed direct costs by major cost element. (h) schedule of direct costs by contract and subcontract and indirect expense applied at claimed rates, as well as a subsidiary schedule of government participation percentages in each of the allocation base amounts. (i) schedule of cumulative direct and indirect costs claimed and billed by contract and subcontract. (j) subcontract information. listing of subcontracts awarded to companies for which the contractor is the prime or upper tier contractor (include prime and subcontract numbers; subcontract value and award type; amount claimed during the fiscal year; and the subcontractor name, address, and point of contact information). (k) summary of each time and materials and labor hour contract information, including labor categories, labor rates, hours, and amounts; direct materials; other direct costs; and, indirect expense applied at claimed rates. (l) reconciliation of total payroll per irs form 941 to total labor costs distribution. (m) listing of decisions/agreements/approvals and description of accounting/organizational changes. (n) certificate of final indirect costs (see 52.242 4, certification of final indirect costs). (o) contract closing information for contracts physically completed in this fiscal year (include contract number, period of performance, contract ceiling amounts, contract fee computations, level of effort, and indicate if the contract is ready to close). (iv) the following supplemental information is not required to determine if a proposal is adequate, but may be required during the audit process: (a) comparative analysis of indirect expense pools detailed by account to prior fiscal year and budgetary data. (b) general organizational information and limitation on allowability of compensation for certain contractor personnel. see 31.205 6(p). additional salary reference information is available at https://www.whitehouse.gov/wp content/uploads/2017/11/contractorcompensationcapcontractsawardedbeforejune24.pdf and https://www.whitehouse.gov/wp content/uploads/2017/11/contractorcompensationcapcontractsawardedafterjune24.pdf. (c) identification of prime contracts under which the contractor performs as a subcontractor. (d) description of accounting system (excludes contractors required to submit a cas disclosure statement or contractors where the description of the accounting system has not changed from the previous year’s submission). (e) procedures for identifying and excluding unallowable costs from the costs claimed and billed (excludes contractors where the procedures have not changed from the previous year’s submission). (f) certified financial statements and other financial data (e.g., trial balance, compilation, review, etc.). (g) management letter from outside cpas concerning any internal control weaknesses. (h) actions that have been and/or will be implemented to correct the weaknesses described in the management letter from subparagraph (g) of this section. (i) list of all internal audit reports issued since the last disclosure of internal audit reports to the government. (j) annual internal audit plan of scheduled audits to be performed in the fiscal year when the final indirect cost rate submission is made. (k) federal and state income tax returns. (l) securities and exchange commission 10 k annual report. (m) minutes from board of directors meetings. (n) listing of delay claims and termination claims submitted which contain costs relating to the subject fiscal year. (o) contract briefings, which generally include a synopsis of all pertinent contract provisions, such as: contract type, contract amount, product or service(s) to be provided, contract performance period, rate ceilings, advance approval requirements, pre contract cost allowability limitations, and billing limitations. (v) the contractor shall update the billings on all contracts to reflect the final settled rates and update the schedule of cumulative direct and indirect costs claimed and billed, as required in paragraph (d)(2)(iii)(i) of this section, within 60 days after settlement of final indirect cost rates. (3) the contractor 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 contract and/or subcontract, 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 contract. the understanding is incorporated into this contract upon execution. (4) failure by the parties to agree on a final annual indirect cost rate shall be a dispute within the meaning of the disputes clause. (5) within 120 days (or longer period if approved in writing by the contracting officer) after settlement of the final annual indirect cost rates for all years of a physically complete contract, the contractor shall submit a completion invoice or voucher to reflect the settled amounts and rates. the completion invoice or voucher shall include settled subcontract amounts and rates. the prime contractor is responsible for settling subcontractor amounts and rates included in the completion invoice or voucher and providing status of subcontractor audits to the contracting officer upon request. (6) (i) if the contractor fails to submit a completion invoice or voucher within the time specified in paragraph (d)(5) of this clause, the contracting officer may  (a) determine the amounts due to the contractor under the contract; and (b) record this determination in a unilateral modification to the contract. (ii) this determination constitutes the final decision of the contracting officer in accordance with the disputes clause. (e) billing rates. until final annual indirect cost rates are established for any period, the government shall reimburse the contractor at billing rates established by the contracting officer or by an authorized 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. quick closeout procedures are applicable when the conditions in far 42.708(a) are satisfied. (g) audit. at any time or times before final payment, the contracting officer may have the contractor’s invoices or vouchers and statements of cost audited. any payment may be  (1) reduced by amounts found by the contracting officer not to constitute allowable costs; or (2) adjusted for prior overpayments or underpayments. (h) final payment. (1) upon approval of a completion invoice or voucher submitted by the contractor in accordance with paragraph (d)(5) of this clause, and upon the contractor’s compliance with all terms of this contract, the government shall promptly pay any balance of allowable costs and that part of the fee (if any) not previously paid. (2) the contractor shall pay to the government any refunds, rebates, credits, or other amounts (including interest, if any) accruing to or received by the contractor or any assignee under this contract, to the extent that those amounts are properly allocable to costs for which the contractor has been reimbursed by the government. reasonable expenses incurred by the contractor for securing refunds, rebates, credits, or other amounts shall be allowable costs if approved by the contracting officer. before final payment under this contract, the contractor 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 contracting officer, of refunds, rebates, credits, or other amounts (including interest, if any) properly allocable to costs for which the contractor has been reimbursed by the government under this contract; and (ii) a release discharging the government, its officers, agents, and employees from all liabilities, obligations, and claims arising out of or under this contract, 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 contractor to third parties arising out of the performance of this contract; provided, that the claims are not known to the contractor on the date of the execution of the release, and that the contractor gives notice of the claims in writing to the contracting officer 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 contractor under the patent clauses of this contract, excluding, however, any expenses arising from the contractor’s indemnification of the government against patent liability. (end of clause) alternate i (feb 1997). as prescribed in 16.307 (a)(2), substitute the following paragraph (b)(1)(iii) for paragraph (b)(1)(iii) of the basic clause: (iii) the amount of progress and other payments to the contractor’s subcontractors that either have been paid, or that the contractor is required to pay pursuant to the clause of this contract entitled "prompt payment for construction contracts." payments shall be made by cash, check, or other form of payment to the contractor’s subcontractors under similar cost standards. alternate ii (aug 2012). as prescribed in 16.307 (a)(3), substitute the following paragraph (a)(1) for paragraph (a)(1) of the basic clause: (a)(1) the government will make payments to the contractor when requested as work progresses, but not more often than once every two weeks, in amounts determined to be allowable by the contracting officer in accordance with subpart 31.3 in effect on the date of this contract and the terms of this contract. the contractor may submit to an authorized representative of the contracting officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract. alternate iii (aug 2012). as prescribed in 16.307 (a)(4), substitute the following paragraph (a)(1) for paragraph (a)(1) of the basic clause: (a)(1) the government will make payments to the contractor when requested as work progresses, but not more often than once every two weeks, in amounts determined to be allowable by the contracting officer in accordance with subpart 31.6 in effect on the date of this contract and the terms of this contract. the contractor may submit to an authorized representative of the contracting officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract. alternate iv (aug 2012). as prescribed in 16.307 (a)(5), substitute the following paragraph (a)(1) for paragraph (a)(1) of the basic clause: (a)(1) the government will make payments to the contractor when requested as work progresses, but not more often than once every two weeks, in amounts determined to be allowable by the contracting officer in accordance with subpart 31.7 in effect on the date of this contract and the terms of this contract. the contractor may submit to an authorized representative of the contracting officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract. as prescribed in 16.307(b), insert the following clause: fixed fee (jun 2011) (a) the government shall pay the contractor for performing this contract the fixed fee specified in the schedule. (b) payment of the fixed fee shall be made as specified in the schedule; provided that the contracting officer withholds a reserve not to exceed 15 percent of the total fixed fee or $100,000, whichever is less, to protect the government’s interest. the contracting officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. the contracting officer may release up to 90 percent of the fee withholds under this contract based on the contractor’s past performance related to the submission and settlement of final indirect cost rate proposals. (end of clause) as prescribed in 16.307(c), insert the following clause: fixed fee construction (jun 2011) (a) the government shall pay to the contractor for performing this contract the fixed fee specified in the schedule. (b) payment of the fixed fee shall be made in installments based upon the percentage of completion of the work as determined from estimates submitted to and approved by the contracting officer, but subject to the withholding provisions of paragraph (c) of this section. (c) the contracting officer shall withhold a reserve not to exceed 15 percent of the total fixed fee or $100,000, whichever is less, to protect the government’s interest. the contracting officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. the contracting officer may release up to 90 percent of the fee withholds under this contract based on the contractor’s past performance related to the submission and settlement of final indirect cost rate proposals. (end of clause) as prescribed in 16.307(d), insert the following clause: incentive fee (jun 2011) (a) general. the government shall pay the contractor for performing this contract a fee determined as provided in this contract. (b) target cost and target fee. the target cost and target fee specified in the schedule are subject to adjustment if the contract is modified in accordance with paragraph (d) of this clause. (1) "target cost," as used in this contract, means the estimated cost of this contract as initially negotiated, adjusted in accordance with paragraph (d) of this clause. (2) "target fee," as used in this contract, means the fee initially negotiated on the assumption that this contract would be performed for a cost equal to the estimated cost initially negotiated, adjusted in accordance with paragraph (d) of this clause. (c) withholding of payment. (1) normally, the government shall pay the fee to the contractor as specified in the schedule. however, when the contracting officer considers that performance or cost indicates that the contractor will not achieve target, the government shall pay on the basis of an appropriate lesser fee. when the contractor demonstrates that performance or cost clearly indicates that the contractor will earn a fee significantly above the target fee, the government may, at the sole discretion of the contracting officer, pay on the basis of an appropriate higher fee. (2) payment of the incentive fee shall be made as specified in the schedule; provided that the contracting officer withholds a reserve not to exceed 15 percent of the total incentive fee or $100,000, whichever is less, to protect the government’s interest. the contracting officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. the contracting officer may release up to 90 percent of the fee withholds under this contract based on the contractor’s past performance related to the submission and settlement of final indirect cost rate proposals. (d) equitable adjustments. when the work under this contract is increased or decreased by a modification to this contract or when any equitable adjustment in the target cost is authorized under any other clause, equitable adjustments in the target cost, target fee, minimum fee, and maximum fee, as appropriate, shall be stated in a supplemental agreement to this contract. (e) fee payable. (1) the fee payable under this contract shall be the target fee increased by _____ [contracting officer insert contractor’s participation] cents for every dollar that the total allowable cost is less than the target cost or decreased by ______ [contracting officer insert contractor’s participation] cents for every dollar that the total allowable cost exceeds the target cost. in no event shall the fee be greater than ____________ [contracting officer insert percentage] percent or less than _________________ [contracting officer insert percentage] percent of the target cost. (2) the fee shall be subject to adjustment, to the extent provided in paragraph (d) of this clause, and within the minimum and maximum fee limitations in paragraph (e)(1) of this clause, when the total allowable cost is increased or decreased as a consequence of  (i) payments made under assignments; or (ii) claims excepted from the release as required by paragraph (h)(2) of the allowable cost and payment clause. (3) if this contract is terminated in its entirety, the portion of the target fee payable shall not be subject to an increase or decrease as provided in this paragraph. the termination shall be accomplished in accordance with other applicable clauses of this contract. (4) for the purpose of fee adjustment, "total allowable cost" shall not include allowable costs arising out of  (i) any of the causes covered by the excusable delays clause to the extent that they are beyond the control and without the fault or negligence of the contractor or any subcontractor; (ii) the taking effect, after negotiating the target cost, of a statute, court decision, written ruling, or regulation that results in the contractor’s being required to pay or bear the burden of any tax or duty or rate increase in a tax or duty; (iii) any direct cost attributed to the contractor’s involvement in litigation as required by the contracting officer pursuant to a clause of this contract, including furnishing evidence and information requested pursuant to the notice and assistance regarding patent and copyright infringement clause; (iv) the purchase and maintenance of additional insurance not in the target cost and required by the contracting officer, or claims for reimbursement for liabilities to third persons pursuant to the insurance liability to third persons clause; (v) any claim, loss, or damage resulting from a risk for which the contractor has been relieved of liability by the government property clause; or (vi) any claim, loss, or damage resulting from a risk defined in the contract as unusually hazardous or as a nuclear risk and against which the government has expressly agreed to indemnify the contractor. (5) all other allowable costs are included in "total allowable cost" for fee adjustment in accordance with this paragraph (e), unless otherwise specifically provided in this contract. (f) contract modification. the total allowable cost and the adjusted fee determined as provided in this clause shall be evidenced by a modification to this contract signed by the contractor and contracting officer. (g) inconsistencies. in the event of any language inconsistencies between this clause and provisioning documents or government options under this contract, compensation for spare parts or other supplies and services ordered under such documents shall be determined in accordance with this clause. (end of clause) as prescribed in 16.307(e), insert the clause in solicitations and contracts when a cost reimbursement contract is contemplated that provides no fee and is not a cost sharing contract. this clause may be modified by substituting "$10,000" in lieu of "$100,000" as the maximum reserve in paragraph (b) if the contractor is a nonprofit organization. cost contract no fee (apr 1984) (a) the government shall not pay the contractor a fee for performing this contract. (b) after payment of 80 percent of the total estimated cost shown in the schedule, the contracting officer may withhold further payment of allowable cost until a reserve is set aside in an amount that the contracting officer considers necessary to protect the government’s interest. this reserve shall not exceed onepercent of the total estimated cost shown in the schedule or $100,000, whichever is less. (end of clause) alternate i (apr 1984). in a contract for research and development with an educational institution or a nonprofit organization, for which the contracting officer has determined that withholding of a portion of allowable costs is not required, delete paragraph (b) of the basic clause. as prescribed in 16.307(f), insert the following clause in solicitations and contracts when a cost sharing contract is contemplated. this clause may be modified by substituting "$10,000" in lieu of "$100,000" as the maximum reserve in paragraph (b) if the contract is with a nonprofit organization. cost sharing contract no fee (apr 1984) (a) the government shall not pay to the contractor a fee for performing this contract. (b) after paying 80 percent of the government’s share of the total estimated cost of performance shown in the schedule, the contracting officer may withhold further payment of allowable cost until a reserve is set aside in an amount that the contracting officer considers necessary to protect the government’s interest. this reserve shall not exceed onepercent of the government’s share of the total estimated cost shown in the schedule or $100,000, whichever is less. (end of clause) alternate i (apr 1984). in a contract for research and development with an educational institution, for which the contracting officer has determined that withholding of a portion of allowable cost is not required, delete paragraph (b) of the basic clause. as prescribed in 16.307(g), insert the following clause: predetermined indirect cost rates (apr 1998) (a) notwithstanding the allowable cost and payment clause of this contract, the allowable indirect costs under this contract shall be obtained by applying predetermined indirect cost rates to bases agreed upon by the parties, as specified below. (b) (1) the contractor shall submit an adequate final indirect cost rate proposal to the contracting officer (or cognizant federal agency official) and auditor within the 6 month period following the expiration of each of its fiscal years. reasonable extensions, for exceptional circumstances only, may be requested in writing by the contractor and granted in writing by the contracting officer. the contractor shall support its proposal with adequate supporting data. (2) the proposed rates shall be based on the contractor’s actual cost experience for that period. the appropriate government representative and the contractor shall establish the final indirect cost rates as promptly as practical after receipt of the contractor’s proposal. (c) allowability of costs and acceptability of cost allocation methods shall be determined in accordance with far subpart 31.3 in effect on the date of this contract. (d) predetermined rate agreements in effect on the date of this contract shall be incorporated into the contract schedule. the contracting officer (or cognizant federal agency official) and contractor shall negotiate rates for subsequent periods and execute a written indirect cost rate agreement setting forth the results. the agreement shall specify (1) the agreed upon predetermined indirect cost rates, (2) the bases to which the rates apply, (3) the period for which the rates apply, and (4) the specific items treated as direct costs or any changes in the items previously agreed to be direct costs. the indirect cost rate agreement shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this contract. the agreement is incorporated into this contract upon execution. (e) pending establishment of predetermined indirect cost rates for any fiscal year (or other period agreed to by the parties), the contractor shall be reimbursed either at the rates fixed for the previous fiscal year (or other period) or at billing rates acceptable to the contracting officer (or cognizant federal agency official), subject to appropriate adjustment when the final rates for that period are established. (f) any failure by the parties to agree on any predetermined indirect cost rates under this clause shall not be considered a dispute within the meaning of the disputes clause. if for any fiscal year (or other period specified in the schedule) the parties fail to agree to predetermined indirect cost rates, the allowable indirect costs shall be obtained by applying final indirect cost rates established in accordance with the allowable cost and payment clause. (g) allowable indirect costs for the period from the beginning of performance until the end of the contractor’s fiscal year (or other period specified in the schedule) shall be obtained using the predetermined indirect cost rates and the bases shown in the schedule. (end of clause) as prescribed in 16.406(a), insert the following clause: incentive price revision firm target (jan 2022) (a) general. the supplies or services identified in the schedule as items _______ [contracting officer insert schedule line item numbers] are subject to price revision in accordance with this clause; provided, that in no event shall the total final price of these items exceed the ceiling price of ________ dollars ($_____). any supplies or services that are to be (1) ordered separately under, or otherwise added to, this contract and (2) subject to price revision in accordance with the terms of this clause shall be identified as such in a modification to this contract. (b) definition. "costs," as used in this clause, means allowable costs in accordance with part 31 of the federal acquisition regulation (far) in effect on the date of this contract. (c) data submission. (1) within __________________ [contracting officer insert number of days] days after the end of the month in which the contractor has delivered the last unit of supplies and completed the services specified by item number in paragraph (a) of this clause, the contractor shall submit in the format of table 15 1, far 15.408, or in any other form on which the parties agree  (i) a detailed statement of all costs incurred up to the end of that month in performing all work under the items; (ii) an estimate of costs of further performance, if any, that may be necessary to complete performance of all work under the items; (iii) a list of all residual inventory and an estimate of its value; and (iv) any other relevant data that the contracting officer may reasonably require. (2) if the contractor fails to submit the data required by paragraph (c)(1) of this clause within the time specified and it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the data submittal period, the amount of the excess shall bear interest, computed from the date the data were due to the date of repayment, at the rate established in accordance with the interest clause. (d) price revision. upon the contracting officer’s receipt of the data required by paragraph (c) of this clause, the contracting officer and the contractor shall promptly establish the total final price of the items specified in (a) of this clause by applying to final negotiated cost an adjustment for profit or loss, as follows: (1) on the basis of the information required by paragraph (c) of this clause, together with any other pertinent information, the parties shall negotiate the total final cost incurred or to be incurred for supplies delivered (or services performed) and accepted by the government and which are subject to price revision under this clause. (2) the total final price shall be established by applying to the total final negotiated cost an adjustment for profit or loss, as follows: (i) if the total final negotiated cost is equal to the total target cost, the adjustment is the total target profit. (ii) if the total final negotiated cost is greater than the total target cost, the adjustment is the total target profit, less ______ [contracting officer insert percent] percent of the amount by which the total final negotiated cost exceeds the total target cost. (iii) if the final negotiated cost is less than the total target cost, the adjustment is the total target profit plus _____ [contracting officer insert percent] percent of the amount by which the total final negotiated cost is less than the total target cost. (e) contract modification. the total final price of the items specified in paragraph (a) of this clause shall be evidenced by a modification to this contract, signed by the contractor and the contracting officer. this price shall not be subject to revision, notwithstanding any changes in the cost of performing the contract, except to the extent that  (1) the parties may agree in writing, before the determination of total final price, to exclude specific elements of cost from this price and to a procedure for subsequent disposition of those elements; and (2) adjustments or credits are explicitly permitted or required by this or any other clause in this contract. (f) adjusting billing prices. (1) pending execution of the contract modification (see paragraph (e) of this clause), the contractor shall submit invoices or vouchers in accordance with billing prices as provided in this paragraph. the billing prices shall be the target prices shown in this contract. (2) if at any time it appears from information provided by the contractor under paragraph (g)(2) of this clause that the then current billing prices will be substantially greater than the estimated final prices, the parties shall negotiate a reduction in the billing prices. similarly, the parties may negotiate an increase in billing prices by any or all of the difference between the target prices and the ceiling price, upon the contractor’s submission of factual data showing that final cost under this contract will be substantially greater than the target cost. (3) any billing price adjustment shall be reflected in a contract modification and shall not affect the determination of the total final price under paragraph (d) of this clause. after the contract modification establishing the total final price is executed, the total amount paid or to be paid on all invoices or vouchers shall be adjusted to reflect the total final price, and any resulting additional payments, refunds, or credits shall be made promptly. (g) quarterly limitation on payments statement. this paragraph (g) shall apply until final price revision under this contract has been completed. (1) within 45 days after the end of each quarter of the contractor’s fiscal year in which a delivery is first made (or services are first performed) and accepted by the government under this contract, and for each quarter thereafter, the contractor shall submit to the contract administration office (with a copy to the contracting office and the cognizant contract auditor) a statement, cumulative from the beginning of the contract, showing  (i) the total contract price of all supplies delivered (or services performed) and accepted by the government and for which final prices have been established; (ii) the total costs (estimated to the extent necessary) reasonably incurred for, and properly allocable solely to, the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established; (iii) the portion of the total target profit (used in establishing the initial contract price or agreed to for the purpose of this paragraph (g)) that is in direct proportion to the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established increased or decreased in accordance with paragraph (d)(2) of this clause, when the amount stated under subdivision (g)(1)(ii) of this clause differs from the aggregate target costs of the supplies or services; and (iv) the total amount of all invoices or vouchers for supplies delivered (or services performed) and accepted by the government (including amounts applied or to be applied to liquidate progress payments). (2) notwithstanding any provision of this contract authorizing greater payments, if on any quarterly statement the amount under subdivision (g)(1)(iv) of this clause exceeds the sum due the contractor, as computed in accordance with subdivisions (g)(1)(i), (ii), and (iii) of this clause, the contractor shall immediately refund or credit to the government the amount of this excess. the contractor may, when appropriate, reduce this refund or credit by the amount of previous refunds or credits effected under this clause. if any portion of the excess has been applied to the liquidation of progress payments, then that portion may, instead of being refunded, be added to the unliquidated progress payment account consistent with the progress payments clause. the contractor shall provide complete details to support any claimed reductions in refunds. (3) if the contractor fails to submit the quarterly statement within 45 days after the end of each quarter and it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the statement submittal period, the amount of the excess shall bear interest, computed from the date the quarterly statement was due to the date of repayment, at the rate established in accordance with the interest clause. (h) subcontracts. no subcontract placed under this contract may provide for payment on a cost plus a percentage of cost basis. (i) disagreements. if the contractor and the contracting officer fail to agree upon the total final price within 60 days (or within such other period as the contracting officer may specify) after the date on which the data required by paragraph (c) of this clause are to be submitted, the contracting officer shall promptly issue a decision in accordance with the disputes clause. (j) termination. if this contract is terminated before the total final price is established, prices of supplies or services subject to price revision shall be established in accordance with this clause for (1) completed supplies and services accepted by the government and (2) those supplies and services not terminated under a partial termination. all other elements of the termination shall be resolved in accordance with other applicable clauses of this contract. (k) equitable adjustment under other clauses. if an equitable adjustment in the contract price is made under any other clause of this contract before the total final price is established, the adjustment shall be made in the total target cost and may be made in the maximum dollar limit on the total final price, the total target profit, or both. if the adjustment is made after the total final price is established, only the total final price shall be adjusted. (l) exclusion from target price and total final price. if any clause of this contract provides that the contract price does not or will not include an amount for a specific purpose, then neither any target price nor the total final price includes or will include any amount for that purpose. (m) separate reimbursement. if any clause of this contract expressly provides that the cost of performance of an obligation shall be at government expense, that expense shall not be included in any target price or in the total final price, but shall be reimbursed separately. (n) taxes. as used in the federal, state, and local taxes clause or in any other clause that provides for certain taxes or duties to be included in, or excluded from, the contract price, the term "contract price" includes the total target price or, if it has been established, the total final price. when any of these clauses requires that the contract price be increased or decreased as a result of changes in the obligation of the contractor to pay or bear the burden of certain taxes or duties, the increase or decrease shall be made in the total target price or, if it has been established, in the total final price, so that it will not affect the contractor’s profit or loss on this contract. (end of clause) alternate i (apr 1984). as prescribed in 16.406 (a), add the following paragraph (o) to the basic clause: (o) provisioning and options. parts, other supplies, or services that are to be furnished under this contract on the basis of a provisioning document or government option shall be subject to price revision in accordance with this clause. any prices established for these parts, other supplies, or services under a provisioning document or government option shall be treated as target prices. target cost and profit covering these parts, other supplies, or services may be established separately, in the aggregate, or in any combination, as the parties may agree. as prescribed in 16.406(b), insert the following clause: incentive price revision successive targets (jan 2022) (a) general. the supplies or services identified in the schedule as items _________ [contracting officer insert line item numbers] are subject to price revision in accordance with this clause; provided, that in no event shall the total final price of these items exceed the ceiling price of dollars ($__________________). the prices of these items shown in the schedule are the initial target prices, which include an initial target profit of ___________ [contracting officer insert percent] percent of the initial target cost. any supplies or services that are to be  (1) ordered separately under, or otherwise added to, this contract; and (2) subject to price revision in accordance with this clause shall be identified as such in a modification to this contract. (b) definition. "costs," as used in this clause, means allowable costs in accordance with part 31 of the federal acquisition regulation (far) in effect on the date of this contract. (c) submitting data for establishing the firm fixed price or a final profit adjustment formula. (1) within ___________ [contracting officer insert number of days] days after the end of the month in which the contractor has completed ___________ (see note 1), the contractor shall submit the following data: (i) a proposed firm fixed price or total firm target price for supplies delivered and to be delivered and services performed and to be performed. (ii) a detailed statement of all costs incurred in the performance of this contract through the end of the month specified above, in the format of table 15 1, far 15.408 (or in any other form on which the parties may agree), with sufficient supporting data to disclose unit costs and cost trends for  (a) supplies delivered and services performed; and (b) inventories of work in process and undelivered contract supplies on hand (estimated to the extent necessary). (iii) an estimate of costs of all supplies delivered and to be delivered and all services performed and to be performed under this contract, using the statement of costs incurred plus an estimate of costs to complete performance, in the format of table 15 1, far 15.408 (or in any other form on which the parties may agree), together with  (a) sufficient data to support the accuracy and reliability of the estimate; and (b) an explanation of the differences between this estimate and the original estimate used to establish the initial target prices. (2) the contractor shall also submit, to the extent that it becomes available before negotiations establishing the total firm price are concluded  (i) supplemental statements of costs incurred after the end of the month specified in paragraph (1) of this section for  (a) supplies delivered and services performed; and (b) inventories of work in process and undelivered contract supplies on hand (estimated to the extent necessary); and (ii) any other relevant data that the contracting officer may reasonably require. (3) if the contractor fails to submit the data required by paragraphs (c)(1) and (2) of this section within the time specified and it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the data submittal period, the amount of the excess shall bear interest, computed from the date the data were due to the date of repayment, at the rate established in accordance with the interest clause. (d) establishing firm fixed price or final profit adjustment formula. upon the contracting officer’s receipt of the data required by paragraph (c) of this section, the contracting officer and the contractor shall promptly establish either a firm fixed price or a profit adjustment formula for determining final profit, as follows: (1) the parties shall negotiate a total firm target cost, based upon the data submitted under paragraph (c) of this section. (2) if the total firm target cost is more than the total initial target cost, the total initial target profit shall be decreased. if the total firm target cost is less than the total initial target cost, the total initial target profit shall be increased. the initial target profit shall be increased or decreased by _____ percent (see note 2) of the difference between the total initial target cost and the total firm target cost. the resulting amount shall be the total firm target profit; provided, that in no event shall the total firm target profit be less than ___________ percent or more than ___________ percent [contracting officer insert percents] of the total initial cost. (3) if the total firm target cost plus the total firm target profit represent a reasonable price for performing that part of the contract subject to price revision under this clause, the parties may agree on a firm fixed price, which shall be evidenced by a contract modification signed by the contractor and the contracting officer. (4) failure of the parties to agree to a firm fixed price shall not constitute a dispute under the disputes clause. if agreement is not reached, or if establishment of a firm fixed price is inappropriate, the contractor and the contracting officer shall establish a profit adjustment formula under which the total final price shall be established by applying to the total final negotiated cost an adjustment for profit or loss, determined as follows: (i) if the total final negotiated cost is equal to the total firm target cost, the adjustment is the total firm target profit. (ii) if the total final negotiated cost is greater than the total firm target cost, the adjustment is the total firm target profit, less ___________ percent of the amount by which the total final negotiated cost exceeds the total firm target cost. (iii) if the total final negotiated cost is less than the total firm target cost, the adjustment is the total firm target profit, plus ___________ percent of the amount by which the total final negotiated cost is less than the total firm target cost. (iv) the total firm target cost, total firm target profit, and the profit adjustment formula for determining final profit shall be evidenced by a modification to this contract signed by the contractor and the contracting officer. (e) submitting data for final price revision. unless a firm fixed price has been established in accordance with paragraph (d) of this section within _____________ [contracting officer insert number of days] days after the end of the month in which the contractor has delivered the last unit of supplies and completed the services specified by item number in paragraph (a) of this section, the contractor shall submit in the format of table 15 1, far 15.408 (or in any other form on which the parties agree)  (1) a detailed statement of all costs incurred up to the end of that month in performing all work under the items; (2) an estimate of costs of further performance, if any, that may be necessary to complete performance of all work under the items; (3) a list of all residual inventory and an estimate of its value; and (4) any other relevant data that the contracting officer may reasonably require. (f) final price revision. unless a firm fixed price has been agreed to in accordance with paragraph (d) of this section, the contractor and the contracting officer shall, promptly after submission of the data required by paragraph (e) of this section, establish the total final price, as follows: (1) on the basis of the information required by paragraph (e) of this section, together with any other pertinent information, the parties shall negotiate the total final cost incurred or to be incurred for the supplies delivered (or services performed) and accepted by the government and which are subject to price revision under this clause. (2) the total final price shall be established by applying to the total final negotiated cost an adjustment for final profit or loss determined as agreed upon under paragraph (d)(4) of this section. (g) contract modification. the total final price of the items specified in paragraph (a) of this section shall be evidenced by a modification to this contract, signed by the contractor and the contracting officer. this price shall not be subject to revision, notwithstanding any changes in the cost of performing the contract, except to the extent that  (1) the parties may agree in writing, before the determination of total final price, to exclude specific elements of cost from this price and to a procedure for subsequent disposition of these elements; and (2) adjustments or credits are explicitly permitted or required by this or any other clause in this contract. (h) adjustment of billing prices. (1) pending execution of the contract modification (see paragraph (e) of this section), the contractor shall submit invoices or vouchers in accordance with billing prices as provided in this paragraph. the billing prices shall be the initial target prices shown in this contract until firm target prices are established under paragraph (d) of this section. when established, the firm target prices shall be used as the billing prices. (2) if at any time it appears from information provided by the contractor under paragraph (i)(1) of this section that the then current billing prices will be substantially greater than the estimated final prices, the parties shall negotiate a reduction in the billing prices. similarly, the parties may negotiate an increase in billing prices by any or all of the difference between the target prices and the ceiling price, upon the contractor’s submission of factual data showing that the final cost under this contract will be substantially greater than the target cost. (3) any adjustment of billing prices shall be reflected in a contract modification and shall not affect the determination of any price under paragraph (d) or (f) of this section. after the contract modification establishing the total final price is executed, the total amount paid or to be paid on all invoices or vouchers shall be adjusted to reflect the total final price, and any resulting additional payments, refunds, or credits shall be made promptly. (i) quarterly limitation on payments statement. this paragraph (i) shall apply until a firm fixed price or a total final price is established under paragraph (d)(3) or (f)(2). (1) within 45 days after the end of each quarter of the contractor’s fiscal year in which a delivery is first made (or services are first performed) and accepted by the government under this contract, and for each quarter thereafter, the contractor shall submit to the contract administration office (with a copy to the contracting office and the cognizant contract auditor) a statement, cumulative from the beginning of the contract, showing  (i) the total contract price of all supplies delivered (or services performed) and accepted by the government and for which final prices have been established; (ii) the total cost (estimated to the extent necessary) reasonably incurred for, and properly allocable solely to, the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established; (iii) the portion of the total interim profit (used in establishing the initial contract price or agreed to for the purpose of this paragraph (i)) that is in direct proportion to the supplies delivered (or services performed) and accepted by the government and for which final prices have not been established increased or decreased in accordance with paragraph (d)(4) of this section when the amount stated under subdivision (ii) of this section, differs from the aggregate firm target costs of the supplies or services; and (iv) the total amount of all invoices or vouchers for supplies delivered (or services performed) and accepted by the government (including amounts applied or to be applied to liquidate progress payments). (2) notwithstanding any provision of this contract authorizing greater payments, if on any quarterly statement the amount under subdivision (i)(1)(iv) of this section exceeds the sum due the contractor, as computed in accordance with subdivisions (i)(1)(i), (ii), and (iii) of this section, the contractor shall immediately refund or credit to the government the amount of this excess. the contractor may, when appropriate, reduce this refund or credit by the amount of previous refunds or credits effected under this clause. if any portion of the excess has been applied to the liquidation of progress payments, then that portion may, instead of being refunded, be added to the unliquidated progress payment account consistent with the progress payments clause. the contractor shall provide complete details to support any claimed reductions in refunds. (3) if the contractor fails to submit the quarterly statement within 45 days after the end of each quarter and it is later determined that the government has overpaid the contractor, the contractor shall repay the excess to the government immediately. unless repaid within 30 days after the end of the statement submittal period, the amount of the excess shall bear interest, computed from the date the quarterly statement was due to the date of repayment, at the rate established in accordance with the interest clause. (j) subcontracts. no subcontract placed under this contract may provide for payment on a cost plus a percentage of cost basis. (k) disagreements. if the contractor and the contracting officer fail to agree upon (1)a total firm target cost and a final profit adjustment formula or (2)a total final price, within 60 days (or within such other period as the contracting officer may specify) after the date on which the data required in paragraphs (c) and (e) of this section are to be submitted, the contracting officer shall promptly issue a decision in accordance with the disputes clause. (l) termination. if this contract is terminated before the total final price is established, prices of supplies or services subject to price revision shall be established in accordance with this clause for (1) completed supplies and services accepted by the government and (2) those supplies or services not terminated under a partial termination. all other elements of the termination shall be resolved in accordance with other applicable clauses of this contract. (m) equitable adjustments under other clauses. if an equitable adjustment in the contract price is made under any other clause of this contract before the total final price is established, the adjustment shall be made in the total target cost and may be made in the maximum dollar limit on the total final price, the total target profit, or both. if the adjustment is made after the total final price is established, only the total final price shall be adjusted. (n) exclusion from target price and total final price. if any clause of this contract provides that the contract price does not or will not include an amount for a specific purpose, then neither any target price nor the total final price includes or will include any amount for that purpose. (o) separate reimbursement. if any clause of this contract expressly provides that the cost of performance of an obligation shall be at government expense, that expense shall not be included in any target price or in the total final price, but shall be reimbursed separately. (p) taxes. as used in the federal, state, and local taxes clause or in any other clause that provides for certain taxes or duties to be included in, or excluded from, the contract price, the term "contract price" includes the total target price or, if it has been established, the total final price. when any of these clauses requires that the contract price be increased or decreased as a result of changes in the obligation of the contractor to pay or bear the burden of certain taxes or duties, the increase or decrease shall be made in the total target price or, if it has been established, in the total final price, so that it will not affect the contractor’s profit or loss on this contract. notes: (1) the degree of completion may be based on a percentage of contract performance or any other reasonable basis. (2) the language may be changed to describe a negotiated adjustment pattern under which the extent of adjustment is not the same for all levels of cost variation. (end of clause) alternate i (apr 1984). as prescribed in 16.406 (b), add the following paragraph (q) to the basic clause: (q) provisioning and options. parts, other supplies, or services that are to be furnished under this contract on the basis of a provisioning document or government option shall be subject to price revision in accordance with this clause. any prices established for these parts, other supplies, or services under a provisioning document or government option shall be treated as initial target prices, or target prices as agreed upon and stipulated in the pricing document supporting the provisioning or added items. initial or firm target costs and profits and final prices covering these parts, other supplies, or services may be established separately, in the aggregate, or in any combination, as the parties may agree. as prescribed in 16.506(a), insert the following clause: ordering (aug 2020) (a) any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the schedule. such orders may be issued from __________ through ____________ [insert dates]. (b) all delivery orders or task orders are subject to the terms and conditions of this contract. in the event of conflict between a delivery order or task order and this contract, the contract shall control. (c) a delivery order or task order is considered "issued" when  (1) if sent by mail (includes transmittal by u.s. mail or private delivery service), the government deposits the order in the mail; (2) if sent by fax, the government transmits the order to the contractor's fax number; or (3) if sent electronically, the government either  (i) posts a copy of the delivery order or task order to a government document access system, and notice is sent to the contractor; or (ii) distributes the delivery order or task order via email to the contractor's email address. (d) orders may be issued by methods other than those enumerated in this clause only if authorized in the contract. (end of clause) as prescribed in 16.506(b), insert a clause substantially the same as follows: order limitations (oct 1995) (a) minimum order. when the government requires supplies or services covered by this contract in an amount of less than _____________ [insert dollar figure or quantity], the government is not obligated to purchase, nor is the contractor obligated to furnish, those supplies or services under the contract. (b) maximum order. the contractor is not obligated to honor  (1) any order for a single item in excess of _____________ [insert dollar figure or quantity]; (2) any order for a combination of items in excess of ______________ [insert dollar figure or quantity]; or (3) a series of orders from the same ordering office within _____________ days that together call for quantities exceeding the limitation in paragraph (b)(1) or (2) of this section. (c) if this is a requirements contract (i.e., includes the requirements clause at subsection 52.216 21 of the federal acquisition regulation (far)), the government is not required to order a part of any one requirement from the contractor if that requirement exceeds the maximum order limitations in paragraph (b) of this section. (d) notwithstanding paragraphs (b) and (c) of this section, the contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within _____ days after issuance, with written notice stating the contractor’s intent not to ship the item (or items) called for and the reasons. upon receiving this notice, the government may acquire the supplies or services from another source. (end of clause) as prescribed in 16.506(c), insert the following clause: definite quantity (oct 1995) (a) this is a definite quantity, indefinite delivery contract for the supplies or services specified, and effective for the period stated, in the schedule. (b) the government shall order the quantity of supplies or services specified in the schedule, and the contractor shall furnish them when ordered. delivery or performance shall be at locations designated in orders issued in accordance with the ordering clause and the schedule. (c) except for any limitations on quantities in the order limitations clause or in the schedule, there is no limit on the number of orders that may be issued. the government may issue orders requiring delivery to multiple destinations or performance at multiple locations. (d) any order issued during the effective period of this contract and not completed within that time shall be completed by the contractor within the time specified in the order. the contract shall govern the contractor’s and government’s rights and obligations with respect to that order to the same extent as if the order were completed during the contract’s effective period; provided, that the contractor shall not be required to make any deliveries under this contract after ________________ [insert date]. (end of clause) as prescribed in 16.506(d), insert the following clause: requirements (oct 1995) (a) this is a requirements contract for the supplies or services specified, and effective for the period stated, in the schedule. the quantities of supplies or services specified in the schedule are estimates only and are not purchased by this contract. except as this contract may otherwise provide, if the government’s requirements do not result in orders in the quantities described as "estimated" or "maximum" in the schedule, that fact shall not constitute the basis for an equitable price adjustment. (b) delivery or performance shall be made only as authorized by orders issued in accordance with the ordering clause. subject to any limitations in the order limitations clause or elsewhere in this contract, the contractor shall furnish to the government all supplies or services specified in the schedule and called for by orders issued in accordance with the ordering clause. the government may issue orders requiring delivery to multiple destinations or performance at multiple locations. (c) except as this contract otherwise provides, the government shall order from the contractor all the supplies or services specified in the schedule that are required to be purchased by the government activity or activities specified in the schedule. (d) the government is not required to purchase from the contractor requirements in excess of any limit on total orders under this contract. (e) if the government urgently requires delivery of any quantity of an item before the earliest date that delivery may be specified under this contract, and if the contractor will not accept an order providing for the accelerated delivery, the government may acquire the urgently required goods or services from another source. (f) any order issued during the effective period of this contract and not completed within that period shall be completed by the contractor within the time specified in the order. the contract shall govern the contractor’s and government’s rights and obligations with respect to that order to the same extent as if the order were completed during the contract’s effective period; provided, that the contractor shall not be required to make any deliveries under this contract after _________________ [insert date]. alternate i (apr1984). if the requirements contract is for nonpersonal services and related supplies and covers estimated requirements that exceed a specific government activity’s internal capability to produce or perform, substitute the following paragraph (c) for paragraph (c) of the basic clause: (c) the estimated quantities are not the total requirements of the government activity specified in the schedule, but are estimates of requirements in excess of the quantities that the activity may itself furnish within its own capabilities. except as this contract otherwise provides, the government shall order from the contractor all of that activity's requirements for supplies and services specified in the schedule that exceed the quantities that the activity may itself furnish within its own capabilities. alternate ii (apr 1984). if the requirements contract includes subsistence for both government use and resale in the same schedule, and similar products may be acquired on a brand name basis, add the following paragraph (g) to the basic clause: (g) the requirements referred to in this contract are for items to be manufactured according to government specifications. notwithstanding anything to the contrary stated in the contract, the government may acquire similar products by brand name from other sources for resale. alternate iii (oct 1995). if the requirements contract involves a partial small business set aside, substitute the following paragraph (c) for paragraph (c) of the basic clause: (c) the government’s requirements for each item or subitem of supplies or services described in the schedule are being purchased through one non set aside contract and one set aside contract. therefore, the government shall order from each contractor approximately one half of the total supplies or services specified in the schedule that are required to be purchased by the specified government activity or activities. the government may choose between the set aside contractor and the non set aside contractor in placing any particular order. however, the government shall allocate successive orders, in accordance with its delivery requirements, to maintain as close a ratio as is reasonably practicable between the total quantities ordered from the two contractors. alternate iv (oct 1995). if the contract includes subsistence for both government use and resale in the same schedule and similar products may be acquired on a brand name basis and the contract also involves a partial small business set aside, substitute the following paragraph (c) for paragraph (c) of the basic clause and add the following paragraph (g) to the basic clause: (c) the government’s requirements for each item or subitem of supplies or services described in the schedule are being purchased through one non set aside contract and one set aside contract. therefore, the government shall order from each contractor approximately one half of the total supplies or services specified in the schedule that are required to be purchased by the specified government activity or activities. the government may choose between the set aside contractor and the non set aside contractor in placing any particular order. however, the government shall allocate successive orders, in accordance with its delivery requirements, to maintain as close a ratio as is reasonably practicable between the total quantities ordered from the two contractors. (g) the requirements referred to in this contract are for items to be manufactured according to the government specifications. notwithstanding anything to the contrary stated in the contract, the government may acquire similar products by brand name from other sources for resale. as prescribed in 16.506(e), insert the following clause: indefinite quantity (oct 1995) (a) this is an indefinite quantity contract for the supplies or services specified, and effective for the period stated, in the schedule. the quantities of supplies and services specified in the schedule are estimates only and are not purchased by this contract. (b) delivery or performance shall be made only as authorized by orders issued in accordance with the ordering clause. the contractor shall furnish to the government, when and if ordered, the supplies or services specified in the schedule up to and including the quantity designated in the schedule as the "maximum." the government shall order at least the quantity of supplies or services designated in the schedule as the "minimum." (c) except for any limitations on quantities in the order limitations clause or in the schedule, there is no limit on the number of orders that may be issued. the government may issue orders requiring delivery to multiple destinations or performance at multiple locations. (d) any order issued during the effective period of this contract and not completed within that period shall be completed by the contractor within the time specified in the order. the contract shall govern the contractor’s and government’s rights and obligations with respect to that order to the same extent as if the order were completed during the contract’s effective period; provided, that the contractor shall not be required to make any deliveries under this contract after _______________ [insert date]. (end of clause) as prescribed in 16.603 4(b)(1), insert the following clause in solicitations and contracts when a letter contract is contemplated, except that it may be omitted from letter contracts awarded on sf 26 : execution and commencement of work (apr 1984) the contractor shall indicate acceptance of this letter contract by signing three copies of the contract and returning them to the contracting officer not later than _______________ [insert date]. upon acceptance by both parties, the contractor shall proceed with performance of the work, including purchase of necessary materials. (end of clause) as prescribed in 16.603 4(b)(2), insert the following clause in solicitations and contracts when a letter contract is contemplated: limitation of government liability (apr 1984) (a) in performing this contract, the contractor is not authorized to make expenditures or incur obligations exceeding __________ dollars. (b) the maximum amount for which the government shall be liable if this contract is terminated is ___________ dollars. (end of clause) as prescribed in 16.603 4(b)(3), insert the following clause: contract definitization (oct 2010) (a) a ______________ [insert specific type of contract] definitive contract is contemplated. the contractor agrees to begin promptly negotiating with the contracting officer the terms of a definitive contract that will include (1) all clauses required by the federal acquisition regulation (far) on the date of execution of the letter contract, (2) all clauses required by law on the date of execution of the definitive contract, and (3) any other mutually agreeable clauses, terms, and conditions. the contractor agrees to submit a ______ [insert specific type of proposal (e.g., fixed price or cost and fee)] proposal, including data other than certified cost or pricing data, and certified cost or pricing data, in accordance with far 15.408, table 15 1, supporting its proposal. (b) the schedule for definitizing this contract is [insert target date for definitization of the contract and dates for submission of proposal, beginning of negotiations, and, if appropriate, submission of make or buy and subcontracting plans and certified cost or pricing data]: ___________________________________________________________________________________________ ___________________________________________________________________________________________ (c) if agreement on a definitive contract to supersede this letter contract is not reached by the target date in paragraph (b) of this section, or within any extension of it granted by the contracting officer, the contracting officer may, with the approval of the head of the contracting activity, determine a reasonable price or fee in accordance with subpart 15.4 and part 31 of the far, subject to contractor appeal as provided in the disputes clause. in any event, the contractor shall proceed with completion of the contract, subject only to the limitation of government liability clause. (1) after the contracting officer’s determination of price or fee, the contract shall be governed by  (i) all clauses required by the far on the date of execution of this letter contract for either fixed price or cost reimbursement contracts, as determined by the contracting officer under this paragraph (c); (ii) all clauses required by law as of the date of the contracting officer’s determination; and (iii) any other clauses, terms, and conditions mutually agreed upon. (2) to the extent consistent with paragraph (c)(1) of this section, all clauses, terms, and conditions included in this letter contract shall continue in effect, except those that by their nature apply only to a letter contract. (end of clause) alternate i (apr 1984). in letter contracts awarded on the basis of price competition, add the following paragraph (d) to the basic clause: (d) the definitive contract resulting from this letter contract will include a negotiated _____________ [insert "price ceiling" or "firm fixed price"] in no event to exceed ___________________ [insert the proposed price upon which the award was based]. as prescribed in 16.603 4(c), insert the following clause: payments of allowable costs before definitization (dec 2002) (a) reimbursement rate. pending the placing of the definitive contract referred to in this letter contract, the government will promptly reimburse the contractor for all allowable costs under this contract at the following rates: (1) one hundredpercent of approved costs representing financing payments to subcontractors under fixed price subcontracts, provided that the government’s payments to the contractor will not exceed 80 percent of the allowable costs of those subcontractors. (2) one hundredpercent of approved costs representing cost reimbursement subcontracts; provided, that the government’s payments to the contractor shall not exceed 85 percent of the allowable costs of those subcontractors. (3) eighty fivepercent of all other approved costs. (b) limitation of reimbursement. to determine the amounts payable to the contractor under this letter contract, the contracting officer shall determine allowable costs in accordance with the applicable cost principles in part 31 of the federal acquisition regulation (far). the total reimbursement made under this paragraph shall not exceed 85 percent of the maximum amount of the government’s liability, as stated in this contract. (c) invoicing. payments shall be made promptly to the contractor when requested as work progresses, but (except for small business concerns) not more often than every 2 weeks, in amounts approved by the contracting officer. the contractor may submit to an authorized representative of the contracting officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost incurred by the contractor in the performance of this contract. (d) allowable costs. for the purpose of determining allowable costs, the term "costs" includes  (1) those recorded costs that result, at the time of the request for reimbursement, from payment by cash, check, or other form of actual payment for items or services purchased directly for the contract; (2) when the contractor is not delinquent in payment of costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid, for  (i) supplies and services purchased directly for the contract and associated financing payments to subcontractors, provided payments determined due will be made  (a) in accordance with the terms and conditions of a subcontract or invoice; and (b) ordinarily within 30 days of the submission of the contractor’s payment request to the government; (ii) materials issued from the contractor’s stores inventory and placed in the production process for use on the contract; (iii) direct labor; (iv) direct travel; (v) other direct in house costs; and (vi) properly allocable and allowable indirect costs as shown on the records maintained by the contractor for purposes of obtaining reimbursement under government contracts; and (3) the amount of financing payments that the contractor has paid by cash, check, or other forms of payment to subcontractors. (e) small business concerns. a small business concern may receive more frequent payments than every 2 weeks. (f) audit. at any time before final payment, the contracting officer may have the contractor’s invoices or vouchers and statements of costs audited. any payment may be  (1) reduced by any amounts found by the contracting officer not to constitute allowable costs; or (2) adjusted for overpayments or underpayments made on preceding invoices or vouchers. (end of clause) as prescribed in 16.506(f), insert the following provision: single or multiple awards (oct 1995) the government may elect to award a single delivery order contract or task order contract or to award multiple delivery order contracts or task order contracts for the same or similar supplies or services to two or more sources under this solicitation. (end of provision) as prescribed in 16.506(g), insert the following provision: multiple awards for advisory and assistance services (oct 1995) the government intends to award multiple contracts for the same or similar advisory and assistance services to two or more sources under this solicitation unless the government determines, after evaluation of offers, that only one offeror is capable of providing the services at the level of quality required. (end of provision) as prescribed in 16.601(f)(1), insert the following provision: time and materials/labor hour proposal requirements other than commercial acquisition with adequate price competition (nov 2021) (a) the government contemplates award of a time and materials or labor hour type of contract resulting from this solicitation. (b) the offeror must specify fixed hourly rates in its offer that include wages, overhead, general and administrative expenses, and profit. the offeror must specify whether the fixed hourly rate for each labor category applies to labor performed by  (1) the offeror; (2) subcontractors; and/or (3) divisions, subsidiaries, or affiliates of the offeror under a common control; (c) the offeror must establish fixed hourly rates using  (1) separate rates for each category of labor to be performed by each subcontractor and for each category of labor to be performed by the offeror, and for each category of labor to be transferred between divisions, subsidiaries, or affiliates of the offeror under a common control; (2) blended rates for each category of labor to be performed by the offeror, including labor transferred between divisions, subsidiaries, or affiliates of the offeror under a common control, and all subcontractors; or (3) any combination of separate and blended rates for each category of labor to be performed by the offeror, affiliates of the offeror under a common control, and subcontractors. (end of provision) as prescribed in 16.601(f)(2), insert the following provision: time and materials/labor hour proposal requirements other than commercial acquisition without adequate price competition (nov 2021) (a) the government contemplates award of a time and materials or labor hour type of contract resulting from this solicitation. (b) the offeror must specify separate fixed hourly rates in its offer that include wages, overhead, general and administrative expenses, and profit for each category of labor to be performed by  (1) the offeror; (2) each subcontractor; and (3) each division, subsidiary, or affiliate of the offeror under a common control. (c) unless exempt under paragraph (d) of this provision, the fixed hourly rates for services transferred between divisions, subsidiaries, or affiliates of the offeror under a common control  (1) shall not include profit for the transferring organization; but (2) may include profit for the prime contractor. (d) the fixed hourly rates for services that meet the definition of “commercial service” at federal acquisition regulation 2.101 that are transferred between divisions, subsidiaries, or affiliates of the offeror under a common control may be the established catalog or market rate when it is the established practice of the transferring organization to price interorganizational transfers at other than cost for commercial work of the offeror or any division, subsidiary or affiliate of the offeror under a common control. (end of provision) as prescribed in 16.601(f)(3), insert the following provision: time and materials/labor hour proposal requirements commercial acquisition (nov 2021) (a) the government contemplates award of a time and materials or labor hour type of contract resulting from this solicitation. (b) the offeror must specify fixed hourly rates in its offer that include wages, overhead, general and administrative expenses, and profit. the offeror must specify whether the fixed hourly rate for each labor category applies to labor performed by  (1) the offeror; (2) subcontractors; and/or (3) divisions, subsidiaries, or affiliates of the offeror under a common control. (end of provision) as prescribed in 16.506(j), insert the following clause: task order and delivery order ombudsman (sept 2019) (a) in accordance with 41 u.s.c. 4106(g), the agency has designated the following task order and delivery order ombudsman for this contract. the ombudsman must review complaints from the contractor concerning all task order and delivery order actions for this contract and ensure the contractor is afforded a fair opportunity for consideration in the award of orders, consistent with the procedures in the contract. _____________ [contracting officer to insert name, address, telephone number, and email address for the agency ombudsman or provide the url address where this information may be found.] (b) consulting an ombudsman does not alter or postpone the timeline for any other process (e.g., protests). (c) before consulting with the ombudsman, the contractor is encouraged to first address complaints with the contracting officer for resolution. when requested by the contractor, the ombudsman may keep the identity of the concerned party or entity confidential, unless prohibited by law or agency procedure. (end of clause) alternate i (sept 2019). as prescribed in 16.506 (j), add the following paragraph (d) to the basic clause. (d) contracts used by multiple agencies. (1) this is a contract that is used by multiple agencies. complaints from contractors concerning orders placed under contracts used by multiple agencies are primarily reviewed by the task order and delivery order ombudsman for the ordering activity. (2) the ordering activity has designated the following task order and delivery order ombudsman for this order: ____________ [the ordering activity's contracting officer to insert the name, address, telephone number, and email address for the ordering activity's ombudsman or provide the url address where this information may be found.] (3) before consulting with the task order and delivery order ombudsman for the ordering activity, the contractor is encouraged to first address complaints with the ordering activity's contracting officer for resolution. when requested by the contractor, the task order and delivery order ombudsman for the ordering activity may keep the identity of the concerned party or entity confidential, unless prohibited by law or agency procedure. as prescribed in 17.109(a), insert the following clause: cancellation under multi year contracts (oct 1997) (a) "cancellation," as used in this clause, means that the government is canceling its requirements for all supplies or services in program years subsequent to that in which notice of cancellation is provided. cancellation shall occur by the date or within the time period specified in the schedule, unless a later date is agreed to, if the contracting officer  (1) notifies the contractor that funds are not available for contract performance for any subsequent program year; or (2) fails to notify the contractor that funds are available for performance of the succeeding program year requirement. (b) except for cancellation under this clause or termination under the default clause, any reduction by the contracting officer in the requirements of this contract shall be considered a termination under the termination for convenience of the government clause. (c) if cancellation under this clause occurs, the contractor will be paid a cancellation charge not over the cancellation ceiling specified in the schedule as applicable at the time of cancellation. (d) the cancellation charge will cover only  (1) costs  (i) incurred by the contractor and/or subcontractor; (ii) reasonably necessary for performance of the contract; and (iii) that would have been equitably amortized over the entire multi year contract period but, because of the cancellation, are not so amortized; and (2) a reasonable profit or fee on the costs. (e) the cancellation charge shall be computed and the claim made for it as if the claim were being made under the termination for convenience of the government clause of this contract. the contractor shall submit the claim promptly but no later than 1 year from the date  (1) of notification of the nonavailability of funds; or (2) specified in the schedule by which notification of the availability of additional funds for the next succeeding program year is required to be issued, whichever is earlier, unless extensions in writing are granted by the contracting officer. (f) the contractor’s claim may include  (1) reasonable nonrecurring costs (see subpart 15.4 of the federal acquisition regulation) which are applicable to and normally would have been amortized in all supplies or services which are multi year requirements; (2) allocable portions of the costs of facilities acquired or established for the conduct of the work, to the extent that it is impracticable for the contractor to use the facilities in its commercial work, and if the costs are not charged to the contract through overhead or otherwise depreciated; (3) costs incurred for the assembly, training, and transportation to and from the job site of a specialized work force; and (4) costs not amortized solely because the cancellation had precluded anticipated benefits of contractor or subcontractor learning. (g) the claim shall not include  (1) labor, material, or other expenses incurred by the contractor or subcontractors for performance of the canceled work; (2) any cost already paid to the contractor; (3) anticipated profit or unearned fee on the canceled work; or (4) for service contracts, the remaining useful commercial life of facilities. "useful commercial life" means the commercial utility of the facilities rather than their physical life with due consideration given to such factors as location of facilities, their specialized nature, and obsolescence. (h) this contract may include an option clause with the period for exercising the option limited to the date in the contract for notification that funds are available for the next succeeding program year. if so, the contractor agrees not to include in option quantities any costs of a startup or nonrecurring nature that have been fully set forth in the contract. the contractor further agrees that the option quantities will reflect only those recurring costs and a reasonable profit or fee necessary to furnish the additional option quantities. (i) quantities added to the original contract through the option clause of this contract shall be included in the quantity canceled for the purpose of computing allowable cancellation charges. (end of clause) as prescribed in 17.208(a), insert a provision substantially the same as in the following in solicitations when the solicitation includes an option clause and does not include one of the provisions prescribed in 17.208 (b) or (c): evaluation exclusive of options (apr 1984) the government will evaluate offers for award purposes by including only the price for the basic requirement; i.e., options will not be included in the evaluation for award purposes. (end of provision) as prescribed in 17.208(b), insert a provision substantially the same as the following: evaluation of options exercised at time of contract award (june 1988) except when it is determined in accordance with far 17.206(b) not to be in the government’s best interests, the government will evaluate the total price for the basic requirement together with any option(s) exercised at the time of award. (end of provision) as prescribed in 17.208(c), insert a provision substantially the same as the following: evaluation of options (july 1990) except when it is determined in accordance with far 17.206(b) not to be in the government’s best interests, the government will evaluate offers for award purposes by adding the total price for all options to the total price for the basic requirement. evaluation of options will not obligate the government to exercise the option(s). (end of provision) as prescribed in 17.208(d), insert a clause substantially the same as the following: option for increased quantity (mar 1989) the government may increase the quantity of supplies called for in the schedule at the unit price specified. the contracting officer may exercise the option by written notice to the contractor within ______________________ [insert in the clause the period of time in which the contracting officer has to exercise the option]. delivery of the added items shall continue at the same rate as the like items called for under the contract, unless the parties otherwise agree. (end of clause) as prescribed in 17.208(e), insert a clause substantially the same as the following: option for increased quantity separately priced line item (mar 1989) the government may require the delivery of the numbered line item, identified in the schedule as an option item, in the quantity and at the price stated in the schedule. the contracting officer may exercise the option by written notice to the contractor within ______________________ [insert in the clause the period of time in which the contracting officer has to exercise the option]. delivery of added items shall continue at the same rate that like items are called for under the contract, unless the parties otherwise agree. (end of clause) as prescribed in 17.208(f), insert a clause substantially the same as the following: option to extend services (nov 1999) the government may require continued performance of any services within the limits and at the rates specified in the contract. these rates may be adjusted only as a result of revisions to prevailing labor rates provided by the secretary of labor. the option provision may be exercised more than once, but the total extension of performance hereunder shall not exceed 6 months. the contracting officer may exercise the option by written notice to the contractor within _____ [insert the period of time within which the contracting officer may exercise the option]. (end of clause) as prescribed in 17.208(g), insert a clause substantially the same as the following: option to extend the term of the contract (mar 2000) (a) the government may extend the term of this contract by written notice to the contractor within _____ [insert the period of time within which the contracting officer may exercise the option]; provided that the government gives the contractor a preliminary written notice of its intent to extend at least _____ days[60days unless a different number of days is inserted] before the contract expires. the preliminary notice does not commit the government to an extension. (b) if the government exercises this option, the extended contract shall be considered to include this option clause. (c) the total duration of this contract, including the exercise of any options under this clause, shall not exceed ___________ (months) (years). (end of clause) as prescribed in 17.805(a), insert the following provision: reverse auction (aug 2024) (a) definitions. as used in this provision  reverse auction means the process for obtaining pricing, usually supported by an electronic tool, in which offerors see competing offerors' price(s), without disclosure of the competing offerors' identity, and have the opportunity to submit lower priced offers until the close of the auction. reverse auction service provider means a commercial or government entity that provides a means for conducting reverse auctions when acquiring supplies or services to be used by the government. (b) reverse auction. the government intends to conduct a reverse auction under this solicitation to award a contract or blanket purchase agreement. (c) offeror agreement. by submission of a quote or proposal in response to the solicitation, the offeror agrees to participate in the reverse auction and agrees that the government may reveal to all offerors the offered price(s) in the auction, without revealing any offeror's identity, except for the awardee's identity subsequent to an award resulting from the auction. the offeror may withdraw its agreement to further participate in the process by withdrawing its offer before the close of the auction by notifying the contracting officer via the contact method identified in the solicitation. (d) only one offer. if the reverse auction produces only one offer, the government reserves the right to cancel the auction. (e) release of information. the government may use a reverse auction service provider to conduct the reverse auction. any price or proposal information or source selection information received by the reverse auction service provider in relation to the reverse auction shall not be released, outside of the government, unless otherwise required by law. however, this does not prevent the government from revealing to all offerors the offered price(s) in the auction, without revealing any offeror's identity. price or proposal information includes, but is not limited to  (1) contractor bid or proposal information, as defined at federal acquisition regulation 3.104 1; and (2) information identified by the offeror as restricted from duplication, use, or disclosure in whole or in part for any purpose other than to evaluate the offeror's price or proposal. (end of provision) as prescribed in 17.805(b), insert the following clause: reverse auction orders (aug 2024) (a) definitions. as used in this clause  reverse auction means the process for obtaining pricing, usually supported by an electronic tool, in which offerors see competing offerors' price(s), without disclosure of the competing offerors' identity, and have the opportunity to submit lower priced offers until the close of the auction. reverse auction service provider means a commercial or government entity that provides a means for conducting reverse auctions when acquiring supplies or services to be used by the government. (b) reverse auction. the contracting officer may conduct a reverse auction to award an order under this contract or blanket purchase agreement. (c) contractor agreement. when a reverse auction is conducted under this contract or blanket purchase agreement, the following applies: (1) the contractor's or blanket purchase agreement holder's submission of a quote or proposal in response to the solicitation for an order constitutes agreement to participate in the auction. (2) the contractor agrees that the government may reveal to all offerors the offered price(s) in the auction, without revealing any offerors' identity, except for the awardee's identity subsequent to an award resulting from the auction. (3) the contractor or blanket purchase agreement holder may withdraw its agreement to further participate in the reverse auction by withdrawing its offer. to withdraw an offer made in response to a reverse auction solicitation issued under this contract or blanket purchase agreement, the contractor or blanket purchase agreement holder shall notify the contracting officer of the request before the close of the auction via the contact method identified in the solicitation. (4) if the reverse auction produces only one offer, the government reserves the right to cancel the auction. (d) release of information. the government may use a reverse auction service provider to conduct the reverse auction. any price or proposal information or source selection information received by the reverse auction service provider in relation to the reverse auction shall not be released, outside of the government, unless otherwise required by law. however, this does not prevent the government from revealing to all contractors or blanket purchase agreement holders the offered price(s) in the auction, without revealing any contractor or blanket purchase agreement holder's identity. price or proposal information includes, but is not limited to  (1) contractor bid or proposal information, as defined at federal acquisition regulation 3.104 1; (2) price or proposal information similarly generated for a task order or delivery order or an order under a blanket purchase agreement; and (3) information identified by the contractor or blanket purchase agreement holder as restricted from duplication, use, or disclosure in whole or in part for any purpose other than to evaluate the contractor or blanket purchase agreement holder's price or proposal. (end of clause) as prescribed in 17.805(c), insert the following clause: reverse auction services (aug 2024) (a) definitions. government data means any information, document, media, or machine readable material regardless of physical form or characteristics, that is created or obtained by the government, in the course of official government business. government related data means any information, document, media, or machine readable material regardless of physical form or characteristics that is created or obtained by a contractor through the storage, processing, or communication of government data. this does not include a contractor's business records ( e.g., financial records, legal records, etc.) or data such as operating procedures, software coding, or algorithms that are not uniquely applied to the government data. reverse auction means the process for obtaining pricing, usually supported by an electronic tool, in which offerors see competing offerors' price(s), without disclosure of the competing offeror's identity, and have the opportunity to submit lower priced offers until the close of the auction. (b) duties of the reverse auction service provider. when providing reverse auction services to the government, the contractor shall  (1) not assert or imply that it can or will obtain a government contract for the participants of a reverse auction; (2) allow entities to register, at no cost, as potential offerors for any reverse auction conducted on behalf of the government on the provider's reverse auction platform. as part of the registration process, the contractor shall allow each entity the opportunity to execute a proprietary data protection agreement with the contractor; however, the contractor shall not negotiate terms in the agreement that affect the terms and conditions of a government solicitation or contract; (3) limit access to, use of, and disclosure of government data and government related data. (i) the contractor shall not access, use, or disclose government data unless specifically authorized by the terms of this contract or a task order or delivery order issued hereunder. (ii) if authorized by the terms of this contract or a task order or delivery order issued hereunder, any access to, or use or disclosure of, government data shall only be for purposes specified in this contract or task order or delivery order. (iii) the contractor shall ensure that its employees are subject to all such access, use, and disclosure prohibitions and obligations. (iv) these access, use, and disclosure prohibitions and obligations shall survive the expiration or termination of this contract. (v) the contractor shall notify the contracting officer promptly of any requests from a third party for access to government data or government related data, including any warrants, seizures, or subpoenas it receives, including those from another federal, state, or local agency. the contractor shall cooperate with the contracting officer to take all measures to protect government data and government related data from any unauthorized disclosure. (4) assert no right or license in the data gathered or generated during a reverse auction. use government related data only to manage the operational environment that supports the government data and for no other purpose unless otherwise permitted with the prior written approval of the contracting officer. (5) protect from unauthorized use or disclosure and not release outside of the government any price or proposal information or any source selection information (see federal acquisition regulation (far) 2.101) received by the contractor in relation to a reverse auction. price or proposal information shall include, but is not limited to  (i) contractor bid or proposal information, as defined at far 3.104 1; (ii) price or proposal information similarly generated for a task order or delivery order or an order under a blanket purchase agreement; and (iii) information identified by the reverse auction participant as restricted from duplication, use, or disclosure in whole or in part for any purpose other than to evaluate the reverse auction participant's price or proposal; (6) allow offerors to see the successive lowest price(s) offered in the auction without revealing an offeror's identity; (7) not participate as an offeror in any reverse auction, which the contractor is hosting on behalf of the government. this prohibition includes participation in a reverse auction by any entity with which the contractor has a relationship that raises an actual or potential conflict of interest; (8) at the close of each auction  (i) provide the contracting officer with the successful offer, along with information that separately identifies the offeror's price and the price for each provider fee or charge included in the total price; and (ii) provide the contracting officer with all information and documentation received from reverse auction participants in response to the reverse auction. (end of clause) as prescribed in 19.309(a)(1), insert the following provision: small business program representations (feb 2024) (a) definitions. as used in this provision  economically disadvantaged women owned small business (edwosb) concern means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the united states and who are economically disadvantaged in accordance with 13 cfr part 127, and the concern is certified by sba or an approved third party certifier in accordance with 13 cfr 127.300. it automatically qualifies as a women owned small business concern eligible under the wosb program. service disabled veteran owned small business (sdvosb) concern means a small business concern  (1) (i) not less than 51 percent of which is owned and controlled by one or more service disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service disabled veterans; and (ii) the management and daily business operations of which are controlled by one or more service disabled veterans or, in the case of a service disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran or; (2) a small business concern eligible under the sdvosb program in accordance with 13 cfr part 128 (see subpart 19.14). (3) service disabled veteran, as used in this definition, means a veteran as defined in 38 u.s.c. 101(2), with a disability that is service connected, as defined in 38 u.s.c. 101(16), with a disability that is service connected, as defined in 38 u.s.c. 101(16), and who is registered in the beneficiary identification and records locator subsystem, or successor system that is maintained by the department of veterans affairs’ veterans benefits administration, as a service disabled veteran. service disabled veteran owned small business (sdvosb) concern eligible under the sdvosb program means an sdvosb concern that  (1) effective january 1, 2024, is designated in the system for award management (sam) as certified by the small business administration (sba) in accordance with 13 cfr 128.300; or (2) has represented that it is an sdvosb concern in sam and submitted a complete application for certification to sba on or before december 31, 2023. service disabled veteran owned small business (sdvosb) program means a program that authorizes contracting officers to limit competition, including award on a sole source basis, to sdvosb concerns eligible under the sdvosb program. small business concern  (1) means a concern, including its affiliates, that is independently owned and operated, not dominant in its field of operation, and qualified as a small business under the criteria in 13 cfr part 121 and the size standard in paragraph (b) of this provision. (2) affiliates, as used in this definition, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. in determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. sba determines affiliation based on the factors set forth at 13 cfr 121.103. small disadvantaged business concern, consistent with 13 cfr 124.1001, means a small business concern under the size standard applicable to the acquisition, that  (1) is at least 51 percent unconditionally and directly owned (as defined at 13 cfr 124.105) by  (i) one or more socially disadvantaged (as defined at 13 cfr 124.103) and economically disadvantaged (as defined at 13 cfr 124.104) individuals who are citizens of the united states, and (ii) each individual claiming economic disadvantage has a net worth not exceeding the threshold at 13 cfr 124.104(c)(2) after taking into account the applicable exclusions set forth at 13 cfr 124.104(c)(2); and (2) the management and daily business operations of which are controlled (as defined at 13 cfr 124.106) by individuals who meet the criteria in paragraphs (1)(i) and (ii) of this definition. veteran owned small business concern means a small business concern  (1) not less than 51 percent of which is owned by one or more veterans (as defined at 38 u.s.c.101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and (2) the management and daily business operations of which are controlled by one or more veterans. women owned small business concern means a small business concern  (1) that is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and (2) whose management and daily business operations are controlled by one or more women. women owned small business (wosb) concern eligible under the wosb program (in accordance with 13 cfr part 127) means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the united states, and the concern is certified by sba or an approved third party certifier in accordance with 13 cfr 127.300. (b) (1) the north american industry classification system (naics) code for this acquisition is ________ [insert naics code]. (2) the small business size standard is _______ [insert size standard]. (3) the small business size standard for a concern that submits an offer, other than on a construction or service acquisition, but proposes to furnish an end item that it did not itself manufacture, process, or produce (i.e., nonmanufacturer), is 500 employees, or 150 employees for information technology value added resellers under naics code 541519, if the acquisition  (i) is set aside for small business and has a value above the simplified acquisition threshold; (ii) uses the hubzone price evaluation preference regardless of dollar value, unless the offeror waives the price evaluation preference; or (iii) is an 8(a), hubzone, service disabled veteran owned, economically disadvantaged women owned, or women owned small business set aside or sole source award regardless of dollar value. (c) representations. (1) the offeror represents as part of its offer that  (i) it □ is, □ is not a small business concern; or (ii) it □ is, □ is not a small business joint venture that complies with the requirements of 13 cfr 121.103(h) and 13 cfr 125.8(a) and (b). [ the offeror shall enter the name and unique entity identifier of each party to the joint venture: __.] (2) [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents that it □ is, □ is not, a small disadvantaged business concern as defined in 13 cfr 124.1001. (3) [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents as part of its offer that it □ is, □ is not a women owned small business concern. (4) women owned small business (wosb) joint venture eligible under the wosb program. the offeror represents as part of its offer that it □ is, □ is not a joint venture that complies with the requirements of 13 cfr 127.506(a) through (c). [ the offeror shall enter the name and unique entity identifier of each party to the joint venture: __.] (5) economically disadvantaged women owned small business (edwosb) joint venture. the offeror represents as part of its offer that it □ is, □ is not a joint venture that complies with the requirements of 13 cfr 127.506(a) through (c). [ the offeror shall enter the name and unique entity identifier of each party to the joint venture: __.] (6) veteran owned small business concern. [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents as part of its offer that it □ is, □ is not a veteran owned small business concern. (7) sdvosb concern. [complete only if the offeror represented itself as a veteran owned small business concern in paragraph (c)(6) of this provision.] the offeror represents as part of its offer that it □ is, □ is not an sdvosb concern. (8) sdvosb joint venture eligible under the sdvosb program. [complete only if the offeror represented itself as a sdvosb concern in paragraph (c)(7) of this provision]. the offeror represents as part of its offer that it □ is, □ is not a sdvosb joint venture eligible under the sdvosb program that complies with the requirements of 13 cfr 128.402. [ the offeror shall enter the name and unique entity identifier of each party to the joint venture:__.] (9) hubzone small business concern. [complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] the offeror represents, as part of its offer, that  (i) it □ is, □ is not a hubzone small business concern listed, on the date of this representation, as having been certified by sba as a hubzone small business concern in the dynamic small business search and sam, and will attempt to maintain an employment rate of hubzone residents of 35 percent of its employees during performance of a hubzone contract (see 13 cfr 126.200(e)(1)); and (ii) it □ is, □ is not a hubzone joint venture that complies with the requirements of 13 cfr 126.616(a) through (c). [ the offeror shall enter the name and unique entity identifier of each party to the joint venture: __.] each hubzone small business concern participating in the hubzone joint venture shall provide representation of its hubzone status. (d) notice. under 15 u.s.c. 645(d), any person who misrepresents a firm’s status as a business concern that is small, hubzone small, small disadvantaged, service disabled veteran owned small, economically disadvantaged women owned small, or women owned small eligible under the wosb program in order to obtain a contract to be awarded under the preference programs established pursuant to section 8, 9, 15, 31, and 36 of the small business act or any other provision of federal law that specifically references section 8(d) for a definition of program eligibility, shall  (1) be punished by imposition of fine, imprisonment, or both; (2) be subject to administrative remedies, including suspension and debarment; and (3) be ineligible for participation in programs conducted under the authority of the act. (end of provision) alternate i (feb 2024). as prescribed in 19.309 (a)(2) add the following paragraph (c)(10) to the basic provision: (10) [complete if offeror represented itself as disadvantaged in paragraph (c)(2) of this provision.] the offeror shall check the category in which its ownership falls: □ black american. □ hispanic american. □ native american (american indians, eskimos, aleuts, or native hawaiians). □ asian pacific american (persons with origins from burma, thailand, malaysia, indonesia, singapore, brunei, japan, china, taiwan, laos, cambodia (kampuchea), vietnam, korea, the philippines, republic of palau, republic of the marshall islands, federated states of micronesia, the commonwealth of the northern mariana islands, guam, samoa, macao, hong kong, fiji, tonga, kiribati, tuvalu, or nauru). □ subcontinent asian (asian indian) american (persons with origins from india, pakistan, bangladesh, sri lanka, bhutan, the maldives islands, or nepal). □ individual/concern, other than one of the preceding. alternate ii (mar 2023). as prescribed in 19.309 (a)(3), substitute the following paragraphs (b) and (c)(1) for paragraphs (b) and (c)(1) of the basic provision: (b)(1) the north american industry classification system (naics) codes and corresponding size standards for this acquisition are as follows; the categories or portions these naics codes are assigned to are specified elsewhere in the solicitation: naics code size standard ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ [contracting officer to insert naics codes and size standards]. (2) the small business size standard for a concern that submits an offer, other than on a construction or service acquisition, but proposes to furnish an end item that it did not itself manufacture, process, or produce (i.e., nonmanufacturer), is 500 employees, or 150 employees for information technology value added resellers under naics code 541519, if the acquisition  (i) is set aside for small business and has a value above the simplified acquisition threshold; (ii) uses the hubzone price evaluation preference regardless of dollar value, unless the offeror waives the price evaluation preference; or (iii) is an 8(a), hubzone, service disabled veteran owned, economically disadvantaged women owned, or women owned small business set aside or sole source award regardless of dollar value. (c) representations. (1) the offeror shall represent its small business size status for each one of the naics codes assigned to this acquisition under which it is submitting an offer. naics code small business concern (yes/no) ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ [contracting officer to insert naics codes.] as prescribed in 19.309(b), insert the following provision: equal low bids (oct 1995) (a) this provision applies to small business concerns only. (b) the bidder’s status as a labor surplus area (lsa) concern may affect entitlement to award in case of tie bids. if the bidder wishes to be considered for this priority, the bidder must identify, in the following space, the lsa in which the costs to be incurred on account of manufacturing or production (by the bidder or the first tier subcontractors) amount to more than 50 percent of the contract price. ________________________________________________ ________________________________________________ (c) failure to identify the labor surplus areas as specified in paragraph (b) of this provision will preclude the bidder from receiving priority consideration. if the bidder is awarded a contract as a result of receiving priority consideration under this provision and would not have otherwise received award, the bidder shall perform the contract or cause the contract to be performed in accordance with the obligations of an lsa concern. (end of provision) as prescribed in 19.1309(a), insert the following clause: notice of hubzone set aside or sole source award (oct 2022) (a) definitions. hubzone small business concern, as used in this clause, means a small business concern, certified by the small business administration (sba), that appears on the list of qualified hubzone small business concerns maintained by the sba ( 13 cfr 126.103). (b) applicability. this clause applies only to  (1) contracts that have been set aside or awarded on a sole source basis to, hubzone small business concerns; (2) part or parts of a multiple award contract that have been set aside for hubzone small business concerns; (3) orders set aside for hubzone small business concerns under multiple award contracts as described in 8.405 5 and 16.505(b)(2)(i)(f); and (4) orders issued directly to hubzone small business concerns under multiple award contracts as described in 19.504(c)(1)(ii). (c) general. (1) offers are solicited only from hubzone small business concerns. offers received from concerns that are not hubzone small business concerns will not be considered. (2) any award resulting from this solicitation will be made to a hubzone small business concern. (d) joint venture. a joint venture may be considered a hubzone concern if  (1) at least one party to the joint venture is a hubzone small business concern and complies with 13 cfr 126.616(c); and (2) each party to the joint venture qualifies as small under the size standard for the solicitation, or the protégé is small under the size standard for the solicitation in a joint venture comprised of a mentor and protégé with an approved mentor protégé agreement under the sba mentor protégé program. (e) a hubzone joint venture agrees that, in the performance of the contract, at least 40 percent of the aggregate work performed by the joint venture shall be completed by the hubzone small business parties to the joint venture. work performed by the hubzone small business party or parties to the joint venture must be more than administrative functions. (end of clause) as prescribed in 19.1309(b), insert the following clause: notice of price evaluation preference for hubzone small business concerns (oct 2022) (a) evaluation preference. (1) offers will be evaluated by adding a factor of 10 percent to the price of all offers, except  (i) offers from hubzone small business concerns that have not waived the evaluation preference; and (ii) otherwise successful offers from small business concerns. (2) the factor of 10 percent shall be applied on a line item basis or to any group of items on which award may be made. other evaluation factors described in the solicitation shall be applied before application of the factor. (3) when the two highest rated offerors are a hubzone small business concern and a large business, and the evaluated offer of the hubzone small business concern is equal to the evaluated offer of the large business after considering the price evaluation preference, award will be made to the hubzone small business concern. (b) waiver of evaluation preference. a hubzone small business concern may elect to waive the evaluation preference, in which case the factor will be added to its offer for evaluation purposes. □ offeror elects to waive the evaluation preference. (c) joint venture. a hubzone joint venture agrees that, in the performance of the contract, at least 40 percent of the aggregate work performed by the joint venture shall be completed by the hubzone small business parties to the joint venture. work performed by the hubzone small business parties to the joint venture must be more than administrative functions. (end of clause) as prescribed in 19.507(c), insert the following clause: notice of total small business set aside (nov 2020) (a) definition. small business concern, as used in this clause  (1) means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on government contracts, and qualified as a small business under the size standards in this solicitation. (2) affiliates, as used in paragraph (a)(1) of this clause, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. in determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. sba determines affiliation based on the factors set forth at 13 cfr 121.103. (b) applicability. this clause applies only to  (1) contracts that have been totally set aside for small business concerns; and (2) orders set aside for small business concerns under multiple award contracts as described in 8.405 5 and 16.505(b)(2)(i)(f). (c) general. (1) offers are solicited only from small business concerns. offers received from concerns that are not small business concerns shall be considered nonresponsive and will be rejected. (2) any award resulting from this solicitation will be made to a small business concern. (end of clause) alternate i (mar 2020) . as prescribed in 19.507 (c), substitute the following paragraph (c) for paragraph (c) of the basic clause: (c) general.(1) offers are solicited only from small business concerns and federal prison industries, inc. (fpi). offers received from concerns that are not small business concerns or fpi shall be considered nonresponsive and will be rejected. (2) any award resulting from this solicitation will be made to either a small business concern or fpi. as prescribed in 19.507(d), insert the following clause: notice of partial small business set aside (nov 2020) (a) definition. small business concern, as used in this clause  (1) means a concern, including its affiliates, that is independently owned and operated, not dominant in the field of operation in which it is bidding on government contracts, and qualified as a small business under the size standards in this solicitation. (2) affiliates, as used in paragraph (a)(1) of this clause, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. in determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. sba determines affiliation based on the factors set forth at 13 cfr 121.103. (b) applicability. this clause applies only to contracts that have been partially set aside for small business concerns. (c) general. (1) a portion of this requirement, identified elsewhere in this solicitation, has been set aside for award to one or more small business concerns identified in 19.000(a)(3). offers received from concerns that do not qualify as small business concerns shall be considered nonresponsive and shall be rejected on the set aside portion of the requirement. (2) small business concerns may submit offers and compete for the non set aside portion and the set aside portion. (d) the offeror shall  [contracting officer check as appropriate.] □ submit a separate offer for each portion of the solicitation for which it wants to compete (i.e. set aside portion, non set aside portion, or both); or □ submit one offer to include all portions for which it wants to compete. (e) partial set asides of multiple award contracts. (1) small business concerns will not compete against other than small business concerns for any order issued under the part or parts of the multiple award contract that are set aside. (2) small business concerns may compete for orders issued under the part or parts of the multiple award contract that are not set aside, if the small business concern received a contract award for the non set aside portion. (end of clause) alternate i (mar 2020) . as prescribed in 19.507 (d), add the following paragraph (f) to the basic clause: (f) notwithstanding paragraph (c) of this clause, offers from federal prison industries, inc., will be solicited and considered for both the set aside and non set aside portion of this requirement. as prescribed in 19.708(a), insert the following clause: utilization of small business concerns (jan 2025) (a) definitions. as used in this contract  hubzone small business concern means a small business concern that meets the requirements described in 13 cfr 126.200, certified by the small business administration (sba) and designated by sba as a hubzone small business concern in the dynamic small business search (dsbs) and sam. service disabled veteran owned small business (sdvosb) concern means a small business concern  (1) (i) not less than 51 percent of which is owned and controlled by one or more service disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service disabled veterans; and (ii) the management and daily business operations of which are controlled by one or more service disabled veterans or, in the case of a service disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran; or (2) a small business concern eligible under the sdvosb program in accordance with 13 cfr part 128 (see subpart 19.14). (3) service disabled veteran, as used in this definition, means a veteran, as defined in 38 u.s.c.101(2), with a disability that is service connected, as defined in 38 u.s.c.101(16), and who is registered in the beneficiary identification and records locator subsystem, or successor system that is maintained by the department of veterans affairs’ veterans benefits administration, as a service disabled veteran. service disabled veteran owned small business (sdvosb) concern eligible under the sdvosb program means an sdvosb concern that  (1) effective january 1, 2024, is designated in the system for award management (sam) as certified by the small business administration (sba) in accordance with 13 cfr 128.300; or (2) has represented that it is an sdvosb concern in sam and submitted a complete application for certification to sba on or before december 31, 2023. service disabled veteran owned small business (sdvosb) program means a program that authorizes contracting officers to limit competition, including award on a sole source basis, to sdvosb concerns eligible under the sdvosb program. small business concern means a concern, including its affiliates, that is independently owned and operated, not dominant in its field of operation and qualified as a small business under the criteria and size standards in 13 cfr part 121, including the size standard that corresponds to the naics code assigned to the contrac t or subcontract. small disadvantaged business concern, consistent with 13 cfr 124.1001, means a small business concern under the size standard applicable to the acquisition, that  (1) is at least 51 percent of which is owned and controlled (as defined at 13 cfr 124.105) by  (i) one or more socially disadvantaged (as defined at 13 cfr 124.103) and economically disadvantaged (as defined at 13 cfr 124.104) individuals who are citizens of the united states; and (ii) each individual claiming economic disadvantage has a net worth not exceeding the threshold at 13 cfr 124.104(c)(2) after taking into account the applicable exclusions set forth at 13 cfr 124.104(c)(2); and (2) the management and daily business operations of which are controlled (as defined at 13.cfr 124.106) by individuals, who meet the criteria in paragraphs (1)(i) and (ii) of this definition. veteran owned small business concern means a small business concern  (1) not less than 51 percent of which is owned by one or more veterans (as defined at 38 u.s.c.101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and (2) the management and daily business operations of which are controlled by one or more veterans. women owned small business concern means a small business concern  (1) that is at least 51 percent owned by one or more women, or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and (2) whose management and daily business operations are controlled by one or more women. (b) it is the policy of the united states that small business concerns, veteran owned small business concerns, service disabled veteran owned small business concerns, hubzone small business concerns, small disadvantaged business concerns, and women owned small business concerns shall have the maximum practicable opportunity to participate in performing contracts let by any federal agency, including contracts and subcontracts for subsystems, assemblies, components, and related services for major systems. it is further the policy of the united states that its prime contractors establish procedures to ensure the timely payment of amounts due pursuant to the terms of their subcontracts with small business concerns, veteran owned small business concerns, service disabled veteran owned small business concerns, hubzone small business concerns, small disadvantaged business concerns, and women owned small business concerns. (c) (1) a joint venture qualifies as a small business concern if  (i) each party to the joint venture qualifies as small under the size standard for the solicitation; or (ii) the protégé is small under the size standard for the solicitation in a joint venture comprised of a mentor and protégé with an approved mentor protégé agreement under a sba mentor protégé program. (see 13 cfr 125.9(d).)”; and (2) a joint venture qualifies as a hubzone small business concern if it complies with the requirements in 13 cfr 126.616(a) through (c). (d) the contractor hereby agrees to carry out this policy in the awarding of subcontracts to the fullest extent consistent with efficient contract performance. the contractor further agrees to cooperate in any studies or surveys as may be conducted by the united states small business administration or the awarding agency of the united states as may be necessary to determine the extent of the contractor's compliance with this clause. (e) (1) unless the contractor has reason to question the representation, it may accept a subcontractor's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran owned small business, service disabled veteran owned small business, or a women owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract. (2) unless the contractor has reason to question the representation, it may accept a subcontractor's representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran owned small business, service disabled veteran owned small business, or a women owned small business in the system for award management (sam) if  (i) the subcontractor is registered in sam; and (ii) the subcontractor represents that the size and socioeconomic status representations made in sam are current, accurate and complete as of the date of the offer for the subcontract. (3) the contractor may not require the use of sam for the purposes of representing size or socioeconomic status in connection with a subcontract. (4) in accordance with 13 cfr 121.411, 126.900, 127.700, and 128.600, a contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor's size or socioeconomic status. (5) the contractor shall confirm that a subcontractor representing itself as a hubzone small business concern is certified by sba as a hubzone small business concern by accessing sam or by accessing dsbs at https://web.sba.gov/​pro net/​search/​dsp_​dsbs.cfm. if the subcontractor is a joint venture, the contractor shall confirm that at least one party to the joint venture is certified by sba as a hubzone small business concern. the contractor may confirm the representation by accessing sam. (end of clause) as prescribed in 19.708(b), insert the following clause: small business subcontracting plan (jan 2025) (a) this clause does not apply to small business concerns. (b) definitions. as used in this clause  alaska native corporation (anc) means any regional corporation, village corporation, urban corporation, or group corporation organized under the laws of the state of alaska in accordance with the alaska native claims settlement act, as amended ( 43 u.s.c. 1601, et seq.) and which is considered a minority and economically disadvantaged concern under the criteria at 43 u.s.c. 1626(e)(1). this definition also includes anc direct and indirect subsidiary corporations, joint ventures, and partnerships that meet the requirements of 43 u.s.c. 1626(e)(2). commercial plan means a subcontracting plan (including goals) that covers the offeror’s fiscal year and that applies to the entire production of commercial products and commercial services sold by either the entire company or a portion thereof (e.g., division, plant, or product line). commercial product means a product that satisfies the definition of “commercial product” in federal acquisition regulation (far) 2.101. commercial service means a service that satisfies the definition of “commercial service” in far 2.101. electronic subcontracting reporting system (esrs) means the governmentwide, electronic, web based system for small business subcontracting program reporting. the esrs is located at http://www.esrs.gov. indian tribe means any indian tribe, band, group, pueblo, or community, including native villages and native groups (including corporations organized by kenai, juneau, sitka, and kodiak) as defined in the alaska native claims settlement act ( 43 u.s.c. 1601 et seq.), that is recognized by the federal government as eligible for services from the bureau of indian affairs in accordance with 25 u.s.c. 1452(c). this definition also includes indian owned economic enterprises that meet the requirements of 25 u.s.c. 1452(e). individual subcontracting plan means a subcontracting plan that covers the entire contract period (including option periods), applies to a specific contract, and has goals that are based on the offeror's planned subcontracting in support of the specific contract, except that indirect costs incurred for common or joint purposes may be allocated on a prorated basis to the contract. master subcontracting plan means a subcontracting plan that contains all the required elements of an individual subcontracting plan, except goals, and may be incorporated into individual subcontracting plans, provided the master subcontracting plan has been approved. reduced payment means a payment that is for less than the amount agreed upon in a subcontract in accordance with its terms and conditions, for supplies and services for which the government has paid the prime contractor. subcontract means any agreement (other than one involving an employer employee relationship) entered into by a federal government prime contractor or subcontractor calling for supplies or services required for performance of the contract or subcontract. total contract dollars means the final anticipated dollar value, including the dollar value of all options. untimely payment means a payment to a subcontractor that is more than 90 days past due under the terms and conditions of a subcontract for supplies and services for which the government has paid the prime contractor. (c) (1) the offeror, upon request by the contracting officer, shall submit and negotiate a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns. if the offeror is submitting an individual subcontracting plan, the plan must separately address subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). the subcontracting plan shall be included in and made a part of the resultant contract. the subcontracting plan shall be negotiated within the time specified by the contracting officer. failure to submit and negotiate the subcontracting plan shall make the offeror ineligible for award of a contract. (2) (i) unless the contractor has reason to question the representations, it may accept a subcontractor's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran owned small business, service disabled veteran owned small business, or a women owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract. (ii) unless the contractor has reason to question the representations, it may accept a subcontractor's representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran owned small business, service disabled veteran owned small business, or a women owned small business in the system for award management (sam) if  (a) the subcontractor is registered in sam; and (b) the subcontractor represents that the size and socioeconomic status representations made in sam are current, accurate and complete as of the date of the offer for the subcontract. (iii) the contractor may not require the use of sam for the purposes of representing size or socioeconomic status in connection with a subcontract. (iv) in accordance with 13 cfr 121.411, 126.900, 127.700, and 128.600, a contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor's size or socioeconomic status. (d) the offeror’s subcontracting plan shall include the following: (1) separate goals, expressed in terms of total dollars subcontracted, and as a percentage of total planned subcontracting dollars, for the use of small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns as subcontractors. for individual subcontracting plans, and if required by the contracting officer, goals shall also be expressed in terms of percentage of total contract dollars, in addition to the goals expressed as a percentage of total subcontract dollars. the offeror shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs. in accordance with 15 u.s.c. 657r(a), an offeror that is a mentor with an sba approved mentor protégé agreement (see 13 cfr 125.9) that provides a subcontract to its protégé may apply the costs incurred for training it provides to its protégé toward its subcontracting plan goals, provided that protégé is a covered territory business or that protégé has its principal office located in the commonwealth of puerto rico. in accordance with 43 u.s.c. 1626  (i) subcontracts awarded to an anc or indian tribe shall be counted towards the subcontracting goals for small business and small disadvantaged business concerns, regardless of the size or small business administration certification status of the anc or indian tribe; and (ii) where one or more subcontractors are in the subcontract tier between the prime contractor and the anc or indian tribe, the anc or indian tribe shall designate the appropriate contractor(s) to count the subcontract towards its small business and small disadvantaged business subcontracting goals. (a) in most cases, the appropriate contractor is the contractor that awarded the subcontract to the anc or indian tribe. (b) if the anc or indian tribe designates more than one contractor to count the subcontract toward its goals, the anc or indian tribe shall designate only a portion of the total subcontract award to each contractor. the sum of the amounts designated to various contractors cannot exceed the total value of the subcontract. (c) the anc or indian tribe shall give a copy of the written designation to the contracting officer, the prime contractor, and the subcontractors in between the prime contractor and the anc or indian tribe within 30 days of the date of the subcontract award. (d) if the contracting officer does not receive a copy of the anc’s or the indian tribe’s written designation within 30 days of the subcontract award, the contractor that awarded the subcontract to the anc or indian tribe will be considered the designated contractor. (2) a statement of  (i) total dollars planned to be subcontracted for an individual subcontracting plan; or the offeror's total projected sales, expressed in dollars, and the total value of projected subcontracts, including all indirect costs except as described in paragraph (g) of this clause, to support the sales for a commercial plan; (ii) total dollars planned to be subcontracted to small business concerns (including anc and indian tribes); (iii) total dollars planned to be subcontracted to veteran owned small business concerns; (iv) total dollars planned to be subcontracted to service disabled veteran owned small business; (v) total dollars planned to be subcontracted to hubzone small business concerns; (vi) total dollars planned to be subcontracted to small disadvantaged business concerns (including ancs and indian tribes); and (vii) total dollars planned to be subcontracted to women owned small business concerns. (3) a description of the principal types of supplies and services to be subcontracted, and an identification of the types planned for subcontracting to  (i) small business concerns; (ii) veteran owned small business concerns; (iii) service disabled veteran owned small business concerns; (iv) hubzone small business concerns; (v) small disadvantaged business concerns; and (vi) women owned small business concerns. (4) a description of the method used to develop the subcontracting goals in paragraph (d)(1) of this clause. (5) a description of the method used to identify potential sources for solicitation purposes (e.g., existing company source lists, sam, veterans service organizations, the national minority purchasing council vendor information service, the research and information division of the minority business development agency in the department of commerce, or small, hubzone, small disadvantaged, and women owned small business trade associations). a firm may rely on the information contained in sam as an accurate representation of a concern's size and ownership characteristics for the purposes of maintaining a small, veteran owned small, service disabled veteran owned small, hubzone small, small disadvantaged, and women owned small business source list. use of sam as its source list does not relieve a firm of its responsibilities (e.g., outreach, assistance, counseling, or publicizing subcontracting opportunities) in this clause. (6) a statement as to whether or not the offeror included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with  (i) small business concerns (including anc and indian tribes); (ii) veteran owned small business concerns; (iii) service disabled veteran owned small business concerns; (iv) hubzone small business concerns; (v) small disadvantaged business concerns (including anc and indian tribes); and (vi) women owned small business concerns. (7) the name of the individual employed by the offeror who will administer the offeror's subcontracting program, and a description of the duties of the individual. (8) a description of the efforts the offeror will make to assure that small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns have an equitable opportunity to compete for subcontracts. (9) assurances that the offeror will include the clause of this contract entitled “utilization of small business concerns” in all subcontracts that offer further subcontracting opportunities, and that the offeror will require all subcontractors (except small business concerns, including entities that are treated as small business concerns by statute for certain purposes ( e.g., ancs, see 13 cfr 125.3(b)(2))) that receive subcontracts in excess of the applicable threshold specified in far 19.702(a) on the date of subcontract award, with further subcontracting possibilities to adopt a subcontracting plan that complies with the requirements of this clause. (10) assurances that the offeror will  (i) cooperate in any studies or surveys as may be required; (ii) submit periodic reports so that the government can determine the extent of compliance by the contractor with the subcontracting plan; (iii) after november 30, 2017, include subcontracting data for each order when reporting subcontracting achievements for indefinite delivery, indefinite quantity contracts with individual subcontracting plans where the contract is intended for use by multiple agencies; (iv) submit the individual subcontract report (isr) and/or the summary subcontract report (ssr), in accordance with paragraph (l) of this clause using the electronic subcontracting reporting system (esrs) at http://www.esrs.gov. the reports shall provide information on subcontract awards to small business concerns (including ancs and indian tribes that are not small businesses), veteran owned small business concerns, service disabled veteran owned small business concerns, hubzone small business concerns, small disadvantaged business concerns (including ancs and indian tribes that have not been certified by the small business administration as small disadvantaged businesses), women owned small business concerns, and for nasa only, historically black colleges and universities and minority institutions. reporting shall be in accordance with this clause, or as provided in agency regulations; (v) ensure that its subcontractors with subcontracting plans agree to submit the isr and/or the ssr using esrs; (vi) provide its prime contract number, its unique entity identifier, and the e mail address of the offeror’s official responsible for acknowledging receipt of or rejecting the isrs, to all first tier subcontractors with subcontracting plans so they can enter this information into the esrs when submitting their isrs; and (vii) require that each subcontractor with a subcontracting plan provide the prime contract number, its own unique entity identifier, and the e mail address of the subcontractor’s official responsible for acknowledging receipt of or rejecting the isrs, to its subcontractors with subcontracting plans. (11) a description of the types of records that will be maintained concerning procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of the offeror’s efforts to locate small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns and award subcontracts to them. the records shall include at least the following (on a plant wide or company wide basis, unless otherwise indicated): (i) source lists (e.g., sam), guides, and other data that identify small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns. (ii) organizations contacted in an attempt to locate sources that are small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, or women owned small business concerns. (iii) records on each subcontract solicitation resulting in an award of more than the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, indicating  (a) whether small business concerns were solicited and, if not, why not; (b) whether veteran owned small business concerns were solicited and, if not, why not; (c) whether service disabled veteran owned small business concerns were solicited and, if not, why not; (d) whether hubzone small business concerns were solicited and, if not, why not; (e) whether small disadvantaged business concerns were solicited and, if not, why not; (f) whether women owned small business concerns were solicited and, if not, why not; and (g) if applicable, the reason award was not made to a small business concern. (iv) records of any outreach efforts to contact  (a) trade associations; (b) business development organizations; (c) conferences and trade fairs to locate small, hubzone small, small disadvantaged, service disabled veteran owned, and women owned small business sources; and (d) veterans service organizations. (v) records of internal guidance and encouragement provided to buyers through  (a) workshops, seminars, training, etc.; and (b) monitoring performance to evaluate compliance with the program’s requirements. (vi) on a contract by contract basis, records to support award data submitted by the offeror to the government, including the name, address, and business size of each subcontractor. contractors having commercial plans need not comply with this requirement. (12) assurances that the offeror will make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns that it used in preparing the bid or proposal, in the same or greater scope, amount, and quality used in preparing and submitting the bid or proposal. responding to a request for a quote does not constitute use in preparing a bid or proposal. the offeror used a small business concern in preparing the bid or proposal if  (i) the offeror identifies the small business concern as a subcontractor in the bid or proposal or associated small business subcontracting plan, to furnish certain supplies or perform a portion of the subcontract; or (ii) the offeror used the small business concern's pricing or cost information or technical expertise in preparing the bid or proposal, where there is written evidence of an intent or understanding that the small business concern will be awarded a subcontract for the related work if the offeror is awarded the contract. (13) assurances that the contractor will provide the contracting officer with a written explanation if the contractor fails to acquire articles, equipment, supplies, services or materials or obtain the performance of construction work as described in (d)(12) of this clause. this written explanation must be submitted to the contracting officer within 30 days of contract completion. (14) assurances that the contractor will not prohibit a subcontractor from discussing with the contracting officer any material matter pertaining to payment to or utilization of a subcontractor. (15) assurances that the contractor will pay its small business subcontractors on time and in accordance with the terms and conditions of the underlying subcontract, and notify the contracting officer when the prime contractor makes either a reduced or an untimely payment to a small business subcontractor (see 52.242 5). (e) in order to effectively implement this plan to the extent consistent with efficient contract performance, the contractor shall perform the following functions: (1) assist small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns by arranging solicitations, time for the preparation of bids, quantities, specifications, and delivery schedules so as to facilitate the participation by such concerns. where the contractor’s lists of potential small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business subcontractors are excessively long, reasonable effort shall be made to give all such small business concerns an opportunity to compete over a period of time. (2) provide adequate and timely consideration of the potentialities of small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns in all "make or buy" decisions. (3) counsel and discuss subcontracting opportunities with representatives of small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business firms. (4) confirm that a subcontractor representing itself as a hubzone small business concern is certified by sba as a hubzone small business concern by accessing sam or by accessing the dynamic small business search (dsbs) at https://web.sba.gov/​pro net/​search/​dsp_​dsbs.cfm. (5) provide notice to subcontractors concerning penalties and remedies for misrepresentations of business status as small, veteran owned small business, hubzone small, small disadvantaged, or women owned small business for the purpose of obtaining a subcontract that is to be included as part or all of a goal contained in the contractor’s subcontracting plan. (6) for all competitive subcontracts over the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, in which a small business concern received a small business preference, upon determination of the successful subcontract offeror, prior to award of the subcontract the contractor must inform each unsuccessful small business subcontract offeror in writing of the name and location of the apparent successful offeror and if the successful subcontract offeror is a small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, or women owned small business concern. (7) assign each subcontract the naics code and corresponding size standard that best describes the principal purpose of the subcontract. (f) a master subcontracting plan on a plant or division wide basis that contains all the elements required by paragraph (d) of this clause, except goals, may be incorporated by reference as a part of the subcontracting plan required of the offeror by this clause; provided  (1) the master subcontracting plan has been approved; (2) the offeror ensures that the master subcontracting plan is updated as necessary and provides copies of the approved master subcontracting plan, including evidence of its approval, to the contracting officer; and (3) goals and any deviations from the master subcontracting plan deemed necessary by the contracting officer to satisfy the requirements of this contract are set forth in the individual subcontracting plan. (g) a commercial plan is the preferred type of subcontracting plan for contractors furnishing commercial products and commercial services. the commercial plan shall relate to the offeror’s planned subcontracting generally, for both commercial and government business, rather than solely to the government contract. once the contractor’s commercial plan has been approved, the government will not require another subcontracting plan from the same contractor while the plan remains in effect, as long as the product or service being provided by the contractor continues to meet the definition of a commercial product or commercial service. a contractor with a commercial plan shall comply with the reporting requirements stated in paragraph (d)(10) of this clause by submitting one ssr in esrs for all contracts covered by its commercial plan. a contractor authorized to use a commercial subcontracting plan shall include in its subcontracting goals and in its ssr all indirect costs, with the exception of those such as the following: employee salaries and benefits; payments for petty cash; depreciation; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions. this report shall be acknowledged or rejected in esrs by the contracting officer who approved the plan. this report shall be submitted within 30 days after the end of the government’s fiscal year. (h) prior compliance of the offeror with other such subcontracting plans under previous contracts will be considered by the contracting officer in determining the responsibility of the offeror for award of the contract. (i) a contract may have no more than one subcontracting plan. when a contract modification exceeds the subcontracting plan threshold in far 19.702(a), or an option is exercised, the goals of the existing subcontracting plan shall be amended to reflect any new subcontracting opportunities. when the goals in a subcontracting plan are amended, these goal changes do not apply retroactively. (j) subcontracting plans are not required from subcontractors when the prime contract contains the clause at far 52.212 5, contract terms and conditions required to implement statutes or executive orders commercial products and commercial services, or when the subcontractor provides a commercial product or commercial service subject to the clause at far 52.244 6, subcontracts for commercial products and commercial services, under a prime contract. (k) the failure of the contractor or subcontractor to comply in good faith with (1) the clause of this contract entitled "utilization of small business concerns;" or (2) an approved plan required by this clause, shall be a material breach of the contract and may be considered in any past performance evaluation of the contractor. (l) the contractor shall submit isrs and ssrs using the web based esrs at http://www.esrs.gov. purchases from a corporation, company, or subdivision that is an affiliate of the contractor or subcontractor are not included in these reports. subcontract awards by affiliates shall be treated as subcontract awards by the contractor. subcontract award data reported by the contractor and subcontractors shall be limited to awards made to their immediate next tier subcontractors. credit cannot be taken for awards made to lower tier subcontractors, unless the contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from an anc or indian tribe. only subcontracts involving performance in the united states or its outlying areas should be included in these reports with the exception of subcontracts under a contract awarded by the state department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the united states and its outlying areas. (1) isr. this report is not required for commercial plans. the report is required for each contract containing an individual subcontracting plan. (i) the report shall be submitted semi annually during contract performance for the periods ending march 31 and september 30. a report is also required for each contract within 30 days of contract completion. reports are due 30 days after the close of each reporting period, unless otherwise directed by the contracting officer. reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or the previous reporting period. when the contracting officer rejects an isr, the contractor shall submit a corrected report within 30 days of receiving the notice of isr rejection. (ii) (a) when a subcontracting plan contains separate goals for the basic contract and each option, as prescribed by far 19.704(c), the dollar goal inserted on this report shall be the sum of the base period through the current option; for example, for a report submitted after the second option is exercised, the dollar goal would be the sum of the goals for the basic contract, the first option, and the second option. (b) if a subcontracting plan has been added to the contract pursuant to 19.702 a)(1)(iii) or 19.301 2(e), the contractor's achievements must be reported in the isr on a cumulative basis from the date of incorporation of the subcontracting plan into the contract. (iii) when a subcontracting plan includes indirect costs in the goals, these costs must be included in this report. (iv) the authority to acknowledge receipt or reject the isr resides  (a) in the case of the prime contractor, with the contracting officer; and (b) in the case of a subcontract with a subcontracting plan, with the entity that awarded the subcontract. (2) ssr. (i) reports submitted under individual contract plans  (a) this report encompasses all subcontracting under prime contracts and subcontracts with an executive agency, regardless of the dollar value of the subcontracts. this report also includes indirect costs on a prorated basis when the indirect costs are excluded from the subcontracting goals. (b) the report may be submitted on a corporate, company or subdivision (e.g. plant or division operating as a separate profit center) basis, unless otherwise directed by the agency. (c) if the contractor or a subcontractor is performing work for more than one executive agency, a separate report shall be submitted to each executive agency covering only that agency's contracts, provided at least one of that agency's contracts is over the applicable threshold specified in far 19.702(a), and the contractand contains a subcontracting plan. for dod, a consolidated report shall be submitted for all contracts awarded by military departments/agencies and/or subcontracts awarded by dod prime contractors. (d) the report shall be submitted annually by october 30 for the twelve month period ending september 30. when a contracting officer rejects an ssr, the contractor shall submit a revised report within 30 days of receiving the notice of ssr rejection. (e) subcontract awards that are related to work for more than one executive agency shall be appropriately allocated. (f) the authority to acknowledge or reject ssrs in esrs, including ssrs submitted by subcontractors with subcontracting plans, resides with the government agency awarding the prime contracts unless stated otherwise in the contract. (ii) reports submitted under a commercial plan  (a) the report shall include all subcontract awards under the commercial plan in effect during the government's fiscal year and all indirect costs. (b) the report shall be submitted annually, within thirty days after the end of the government's fiscal year. (c) if a contractor has a commercial plan and is performing work for more than one executive agency, the contractor shall specify the percentage of dollars attributable to each agency. (d) the authority to acknowledge or reject ssrs for commercial plans resides with the contracting officer who approved the commercial plan. (end of clause) alternate i (nov 2016). as prescribed in 19.708 (b)(1)(i), substitute the following paragraph (c)(1) for paragraph (c)(1) of the basic clause: (c)(1) the apparent low bidder, upon request by the contracting officer, shall submit a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns. if the bidder is submitting an individual subcontracting plan, the plan must separately address subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). the plan shall be included in and made a part of the resultant contract. the subcontracting plan shall be submitted within the time specified by the contracting officer. failure to submit the subcontracting plan shall make the bidder ineligible for the award of a contract alternate ii (nov 2016). as prescribed in 19.708 (b)(1)(ii), substitute the following paragraph (c)(1) for paragraph (c)(1) of the basic clause: (c)(1) proposals submitted in response to this solicitation shall include a subcontracting plan that separately addresses subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns. if the offeror is submitting an individual subcontracting plan, the plan must separately address subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). the plan shall be included in and made a part of the resultant contract. the subcontracting plan shall be negotiated within the time specified by the contracting officer. failure to submit and negotiate a subcontracting plan shall make the offeror ineligible for award of a contract. alternate iii (jan 2025). as prescribed in 19.708 (b)(1)(iii), substitute the following paragraphs (d)(10) and (l) for paragraphs (d)(10) and (l) in the basic clause: (d)(10) assurances that the offeror will  (i) cooperate in any studies or surveys as may be required; (ii) submit periodic reports so that the government can determine the extent of compliance by the contractor with the subcontracting plan; (iii) submit standard form (sf) 294 subcontracting report for individual contract in accordance with paragraph (l) of this clause. submit the summary subcontract report (ssr), in accordance with paragraph (l) of this clause using the electronic subcontracting reporting system (esrs) at http://www.esrs.gov. the reports shall provide information on subcontract awards to small business concerns (including ancs and indian tribes that are not small businesses), veteran owned small business concerns, service disabled veteran owned small business concerns, hubzone small business concerns, small disadvantaged business concerns (including ancs and indian tribes that have not been certified by the small business administration as small disadvantaged businesses), women owned small business concerns, and for nasa only, historically black colleges and universities and minority institutions. reporting shall be in accordance with this clause, or as provided in agency regulations; and (iv) ensure that its subcontractors with subcontracting plans agree to submit the sf 294 in accordance with paragraph (l) of this clause. ensure that its subcontractors with subcontracting plans agree to submit the ssr in accordance with paragraph (l) of this clause using the esrs. (l) the contractor shall submit a sf 294. the contractor shall submit ssrs using the web based esrs at http://www.esrs.gov. purchases from a corporation, company, or subdivision that is an affiliate of the contractor or subcontractor are not included in these reports. subcontract awards by affiliates shall be treated as subcontract awards by the contractor. subcontract award data reported by the contractor and subcontractors shall be limited to awards made to their immediate next tier subcontractors. credit cannot be taken for awards made to lower tier subcontractors, unless the contractor or subcontractor has been designated to receive a small business or small disadvantaged business credit from an anc or indian tribe. only subcontracts involving performance in the u.s. or its outlying areas should be included in these reports with the exception of subcontracts under a contract awarded by the state department or any other agency that has statutory or regulatory authority to require subcontracting plans for subcontracts performed outside the united states and its outlying areas. (1) sf 294. this report is not required for commercial plans. the report is required for each contract containing an individual subcontracting plan. for contractors the report shall be submitted to the contracting officer, or as specified elsewhere in this contract. in the case of a subcontract with a subcontracting plan, the report shall be submitted to the entity that awarded the subcontract. (i) the report shall be submitted semi annually during contract performance for the periods ending march 31 and september 30. a report is also required for each contract within 30 days of contract completion. reports are due 30 days after the close of each reporting period, unless otherwise directed by the contracting officer. reports are required when due, regardless of whether there has been any subcontracting activity since the inception of the contract or the previous reporting period. when a contracting officer rejects a report, the contractor shall submit a revised report within 30 days of receiving the notice of report rejection. (ii)(a) when a subcontracting plan contains separate goals for the basic contract and each option, as prescribed by far 19.704(c), the dollar goal inserted on this report shall be the sum of the base period through the current option; for example, for a report submitted after the second option is exercised, the dollar goal would be the sum of the goals for the basic contract, the first option, and the second option. (b) if a subcontracting plan has been added to the contract pursuant to 19.702(a)(1)(iii) or 19.301 2(e), the contractor's achievements must be reported in the report on a cumulative basis from the date of incorporation of the subcontracting plan into the contract. (iii) when a subcontracting plan includes indirect costs in the goals, these costs must be included in this report. (2)ssr. (i)reports submitted under individual contract plans  (a) this report encompasses all subcontracting under prime contracts and subcontracts with an executive agency, regardless of the dollar value of the subcontracts. this report also includes indirect costs on a prorated basis when the indirect costs are excluded from the subcontracting goals. (b) the report may be submitted on a corporate, company or subdivision (e.g., plant or division operating as a separate profit center) basis, unless otherwise directed by the agency. (c) if the contractor and/or a subcontractor is performing work for more than one executive agency, a separate report shall be submitted to each executive agency covering only that agency's contracts, provided at least one of that agency's contracts is over the applicable threshold specified in far 19.702(a), and the contract contains a subcontracting plan. for dod, a consolidated report shall be submitted for all contracts awarded by military departments/agencies and/or subcontracts awarded by dod prime contractors. (d) the report shall be submitted annually by october 30, for the twelve month period ending september 30. when a contracting officer rejects an ssr, the contractor is required to submit a revised ssr within 30 days of receiving the notice of report rejection. (e) subcontract awards that are related to work for more than one executive agency shall be appropriately allocated. (f) the authority to acknowledge or reject ssrs in the esrs, including ssrs submitted by subcontractors with subcontracting plans, resides with the government agency awarding the prime contracts unless stated otherwise in the contract. (ii) reports submitted under a commercial plan  (a) the report shall include all subcontract awards under the commercial plan in effect during the government's fiscal year and all indirect costs. (b) the report shall be submitted annually, within 30 days after the end of the government's fiscal year. (c) if a contractor has a commercial plan and is performing work for more than one executive agency, the contractor shall specify the percentage of dollars attributable to each agency. (d) the authority to acknowledge or reject ssrs for commercial plans resides with the contracting officer who approved the commercial plan. alternate iv (jan 2025). as prescribed in 19.708 (b)(1)(iv), substitute the following paragraphs (c) and (d) for paragraphs (c) and (d) of the basic clause: (c)(1) the contractor, upon request by the contracting officer, shall submit and negotiate a subcontracting plan, where applicable, that separately addresses subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns. if the contractor is submitting an individual subcontracting plan, the plan shall separately address subcontracting with small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns, with a separate part for the basic contract and separate parts for each option (if any). the subcontracting plan shall be incorporated into the contract. the subcontracting plan shall be negotiated within the time specified by the contracting officer. the subcontracting plan does not apply retroactively. (2)(i) unless the contractor has reason to question the representations, it may accept a subcontractor's written representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran owned small business, service disabled veteran owned small business, or a women owned small business if the subcontractor represents that the size and socioeconomic status representations with its offer are current, accurate, and complete as of the date of the offer for the subcontract. (ii) unless the contractor has reason to question the representations, it may accept a subcontractor's representations of its size and socioeconomic status as a small business, small disadvantaged business, veteran owned small business, service disabled veteran owned small business, or a women owned small business in the system for award management (sam) if  (a) the subcontractor is registered in sam; and (b) the subcontractor represents that the size and socioeconomic status representations made in sam are current, accurate and complete as of the date of the offer for the subcontract. (iii) the contractor may not require the use of sam for the purposes of representing size or socioeconomic status in connection with a subcontract. (iv) in accordance with 13 cfr 121.411, 126.900, 127.700, and 128.600, a contractor acting in good faith is not liable for misrepresentations made by its subcontractors regarding the subcontractor's size or socioeconomic status. (d) the contractor's subcontracting plan shall include the following: (1) separate goals, expressed in terms of total dollars subcontracted and as a percentage of total planned subcontracting dollars, for the use of small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns as subcontractors. for individual subcontracting plans, and if required by the contracting officer, goals shall also be expressed in terms of percentage of total contract dollars, in addition to the goals expressed as a percentage of total subcontract dollars. the contractor shall include all subcontracts that contribute to contract performance, and may include a proportionate share of products and services that are normally allocated as indirect costs. in accordance with 15 u.s.c. 657r(a), a contractor that is a mentor with an sba approved mentor protégé agreement (see 13 cfr 125.9) that provides a subcontract to its protégé may apply the costs incurred for training it provides to its protégé toward its subcontracting plan goals, provided that protégé is a covered territory business or that protégé has its principal office located in the commonwealth of puerto rico. in accordance with 43 u.s.c. 1626  (i) subcontracts awarded to an anc or indian tribe shall be counted towards the subcontracting goals for small business and small disadvantaged business concerns, regardless of the size or small business administration certification status of the anc or indian tribe; and (ii) where one or more subcontractors are in the subcontract tier between the prime contractor and the anc or indian tribe, the anc or indian tribe shall designate the appropriate contractor(s) to count the subcontract towards its small business and small disadvantaged business subcontracting goals. (a) in most cases, the appropriate contractor is the contractor that awarded the subcontract to the anc or indian tribe. (b) if the anc or indian tribe designates more than one contractor to count the subcontract toward its goals, the anc or indian tribe shall designate only a portion of the total subcontract award to each contractor. the sum of the amounts designated to various contractors cannot exceed the total value of the subcontract. (c) the anc or indian tribe shall give a copy of the written designation to the contracting officer, the contractor, and the subcontractors in between the prime contractor and the anc or indian tribe within 30 days of the date of the subcontract award. (d) if the contracting officer does not receive a copy of the anc's or the indian tribe's written designation within 30 days of the subcontract award, the contractor that awarded the subcontract to the anc or indian tribe will be considered the designated contractor. (2) a statement of  (i) total dollars planned to be subcontracted for an individual subcontracting plan; or the contractor's total projected sales, expressed in dollars, and the total value of projected subcontracts to support the sales for a commercial plan, including all indirect costs, with the exception of those such as the following: employee salaries and benefits; payments for petty cash; depreciation; interest; income taxes; property taxes; lease payments; bank fees; fines, claims, and dues; original equipment manufacturer relationships during warranty periods (negotiated up front with the product); utilities and other services purchased from a municipality or an entity solely authorized by the municipality to provide those services in a particular geographical region; and philanthropic contributions; (iii) total dollars planned to be subcontracted to veteran owned small business concerns; (iv) total dollars planned to be subcontracted to service disabled veteran owned small business; (v) total dollars planned to be subcontracted to hubzone small business concerns; (vi) total dollars planned to be subcontracted to small disadvantaged business concerns (including ancs and indian tribes); and (vii) total dollars planned to be subcontracted to women owned small business concerns. (3) a description of the principal types of supplies and services to be subcontracted, and an identification of the types planned for subcontracting to (i) small business concerns; (ii) veteran owned small business concerns; (iii) service disabled veteran owned small business concerns; (iv) hubzone small business concerns; (v) small disadvantaged business concerns; and (vi) women owned small business concerns. (4) a description of the method used to develop the subcontracting goals in paragraph (d)(1) of this clause. (5) a description of the method used to identify potential sources for solicitation purposes (e.g., existing company source lists, sam, veterans service organizations, the national minority purchasing council vendor information service, the research and information division of the minority business development agency in the department of commerce, or small, hubzone, small disadvantaged, and women owned small business trade associations). the contractor may rely on the information contained in sam as an accurate representation of a concern's size and ownership characteristics for the purposes of maintaining a small, veteran owned small, service disabled veteran owned small, hubzone small, small disadvantaged, and women owned small business source list. use of sam as its source list does not relieve a firm of its responsibilities (e.g., outreach, assistance, counseling, or publicizing subcontracting opportunities) in this clause. (6) a statement as to whether or not the contractor included indirect costs in establishing subcontracting goals, and a description of the method used to determine the proportionate share of indirect costs to be incurred with  (i) small business concerns (including anc and indian tribes); (ii) veteran owned small business concerns; (iii) service disabled veteran owned small business concerns; (iv) hubzone small business concerns; (v) small disadvantaged business concerns (including anc and indian tribes); and (vi) women owned small business concerns. (7) the name of the individual employed by the contractor who will administer the contractor's subcontracting program, and a description of the duties of the individual. (8) a description of the efforts the contractor will make to assure that small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns have an equitable opportunity to compete for subcontracts. (9) assurances that the contractor will include the clause of this contract entitled “utilization of small business concerns” in all subcontracts that offer further subcontracting opportunities, and that the contractor will require all subcontractors (except small business concerns, including entities that are treated as small business concerns by statute for certain purposes ( e.g., ancs, see 13 cfr 125.3(b)(2))) that receive subcontracts in excess of the applicable threshold specified in far 19.702(a) on the date of subcontract award, with further subcontracting possibilities to adopt a subcontracting plan that complies with the requirements of this clause. (10) assurances that the contractor will  (i) cooperate in any studies or surveys as may be required; (ii) submit periodic reports so that the government can determine the extent of compliance by the contractor with the subcontracting plan; (iii) after november 30, 2017, include subcontracting data for each order when reporting subcontracting achievements for an indefinite delivery, indefinite quantity contracts with individual subcontracting plans where the contract is intended for use by multiple agencies; (iv) submit the individual subcontract report (isr) and/or the summary subcontract report (ssr), in accordance with paragraph (l) of this clause using the electronic subcontracting reporting system (esrs) at http://www.esrs.gov. the reports shall provide information on subcontract awards to small business concerns (including ancs and indian tribes that are not small businesses), veteran owned small business concerns, service disabled veteran owned small business concerns, hubzone small business concerns, small disadvantaged business concerns (including ancs and indian tribes that have not been certified by sba as small disadvantaged businesses), women owned small business concerns, and for nasa only, historically black colleges and universities and minority institutions. reporting shall be in accordance with this clause, or as provided in agency regulations; (v) ensure that its subcontractors with subcontracting plans agree to submit the isr and/or the ssr using esrs; (vi) provide its prime contract number, its unique entity identifier, and the e mail address of the contractor's official responsible for acknowledging receipt of or rejecting the isrs, to all first tier subcontractors with subcontracting plans so they can enter this information into the esrs when submitting their isrs; and (vii) require that each subcontractor with a subcontracting plan provide the prime contract number, its own unique entity identifier, and the e mail address of the subcontractor's official responsible for acknowledging receipt of or rejecting the isrs, to its subcontractors with subcontracting plans. (11) a description of the types of records that will be maintained concerning procedures that have been adopted to comply with the requirements and goals in the plan, including establishing source lists; and a description of the contractor's efforts to locate small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns and award subcontracts to them. the records shall include at least the following (on a plant wide or company wide basis, unless otherwise indicated): (i) source lists (e.g., sam), guides, and other data that identify small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns. (ii) organizations contacted in an attempt to locate sources that are small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, or women owned small business concerns. (iii) records on each subcontract solicitation resulting in an award of more than the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, indicating  (a) whether small business concerns were solicited and, if not, why not; (b) whether veteran owned small business concerns were solicited and, if not, why not; (c) whether service disabled veteran owned small business concerns were solicited and, if not, why not; (d) whether hubzone small business concerns were solicited and, if not, why not; (e) whether small disadvantaged business concerns were solicited and, if not, why not; (f) whether women owned small business concerns were solicited and, if not, why not; and (g) if applicable, the reason award was not made to a small business concern. (iv) records of any outreach efforts to contact  (a) trade associations; (b) business development organizations; (c) conferences and trade fairs to locate small, hubzone small, small disadvantaged, service disabled veteran owned, and women owned small business sources; and (d) veterans service organizations. (v) records of internal guidance and encouragement provided to buyers through  (a) workshops, seminars, training, etc.; and (b) monitoring performance to evaluate compliance with the program's requirements. (vi) on a contract by contract basis, records to support award data submitted by the contractor to the government, including the name, address, and business size of each subcontractor. contractors having commercial plans need not comply with this requirement. (12) assurances that the contractor will make a good faith effort to acquire articles, equipment, supplies, services, or materials, or obtain the performance of construction work from the small business concerns that it used in preparing the proposal for the modification, in the same or greater scope, amount, and quality used in preparing and submitting the modification proposal. responding to a request for a quote does not constitute use in preparing a proposal. the contractor used a small business concern in preparing the proposal for a modification if  (i) the contractor identifies the small business concern as a subcontractor in the proposal or associated small business subcontracting plan, to furnish certain supplies or perform a portion of the subcontract; or(ii) the contractor used the small business concern's pricing or cost information or technical expertise in preparing the proposal, where there is written evidence of an intent or understanding that the small business concern will be awarded a subcontract for the related work when the modification is executed. (13) assurances that the contractor will provide the contracting officer with a written explanation if the contractor fails to acquire articles, equipment, supplies, services or materials or obtain the performance of construction work as described in (d)(12) of this clause. this written explanation must be submitted to the contracting officer within 30 days of contract completion. (14) assurances that the contractor will not prohibit a subcontractor from discussing with the contracting officer any material matter pertaining to the payment to or utilization of a subcontractor. (15) assurances that the contractor will pay its small business subcontractors on time and in accordance with the terms and conditions of the underlying subcontract, and notify the contracting officer when the prime contractor makes either a reduced or an untimely payment to a small business subcontractor (see 52.242 5). as prescribed in 19.708(c)(1), insert the following clause: incentive subcontracting program (oct 2014) (a) of the total dollars it plans to spend under subcontracts, the contractor has committed itself in its subcontracting plan to try to award certain percentages to small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns, respectively. (b) if the contractor exceeds its subcontracting goals for small business, veteran owned small business, service disabled veteran owned small business, hubzone small business, small disadvantaged business, and women owned small business concerns in performing this contract, it will receive ______ [contracting officer to insert the appropriate number between 0 and 10] percent of the dollars in excess of each goal in the plan, unless the contracting officer determines that the excess was not due to the contractor’s efforts (e.g.,a subcontractor cost overrun caused the actual subcontract amount to exceed that estimated in the subcontracting plan, or the award of subcontracts that had been planned but had not been disclosed in the subcontracting plan during contract negotiations). determinations made under this paragraph are unilateral decisions made solely at the discretion of the government. (c) if this is a cost plus fixed fee contract, the sum of the fixed fee and the incentive fee earned under this contract may not exceed the limitations in 15.404 4 of the federal acquisition regulation. (end of clause) as prescribed in 19.811 3(a), insert the following clause: special 8(a) contract conditions (jan 2017) the small business administration (sba) agrees to the following: (a) to furnish the supplies or services set forth in this contract according to the specifications and the terms and conditions hereof by subcontracting with an eligible concern pursuant to the provisions of section 8(a) of the small business act, as amended ( 15 u.s.c. 637(a)). (b) that in the event sba does not award a subcontract for all or a part of the work hereunder, this contract may be terminated either in whole or in part without cost to either party. (c) except for novation agreements, delegate to the _________ [insert name of contracting agency] the responsibility for administering the subcontract to be awarded hereunder with complete authority to take any action on behalf of the government under the terms and conditions of the subcontract; provided, however, that the _________ [insert name of contracting agency] shall give advance notice to the sba before it issues a final notice terminating the right of a subcontractor to proceed with further performance, either in whole or in part, under the subcontract for default or for the convenience of the government. (d) that payments to be made under any subcontract awarded under this contract will be made directly to the subcontractor by the ___________ [insert name of contracting agency]. (e) that the subcontractor awarded a subcontract hereunder shall have the right of appeal from decisions of the contracting officer cognizable under the "disputes" clause of said subcontract. (f) to notify the _________ [insert name of contracting agency] contracting officer immediately upon notification by the subcontractor that the owner or owners upon whom 8(a) eligibility was based plan to relinquish ownership or control of the concern. (end of clause) as prescribed in 19.811 3(b), insert the following clause: special 8(a) subcontract conditions (oct 2019) (a) the small business administration (sba) has entered into contract no.________ [insert number of contract] with the _________ [insert name of contracting agency] to furnish the supplies or services as described therein. a copy of the contract is attached hereto and made a part hereof. (b) the ___________ [insert name of subcontractor], hereafter referred to as the subcontractor, agrees and acknowledges as follows: (1) that it will, for and on behalf of the sba, fulfill and perform all of the requirements of contract no. ______ [insert number of contract] for the consideration stated therein and that it has read and is familiar with each and every part of the contract. (2) that the sba has delegated responsibility, except for novation agreements, for the administration of this subcontract to the _______ [insert name of contracting agency] with complete authority to take any action on behalf of the government under the terms and conditions of this subcontract. (3) that it will notify the __________ [insert name of contracting agency] contracting officer in writing immediately upon entering an agreement (either oral or written) to transfer all or part of its stock or other ownership interest to any other party. (c) payments, including any progress payments under this subcontract, will be made directly to the subcontractor by the ______ [insert name of contracting agency]. (end of clause) as prescribed in 19.507(f)(1), insert the following clause: notice of set aside of orders (mar 2020) (a) the contracting officer may set aside orders for the small business concerns identified in 19.000(a)(3). (b) the contracting officer will give notice of the order or orders, if any, to be set aside for small business concerns identified in 19.000(a)(3) and the applicable small business program. this notice, and its restrictions, will apply only to the specific orders that have been set aside for any of the small business concerns identified in 19.000(a)(3). (end of clause) alternate i (mar 2020) . as prescribed in 19.507(f)(2), substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the contracting officer will set aside orders for the small business concerns identified in 19.000(a)(3) when the conditions of far 19.502 2 and the specific program eligibility requirements are met, as applicable. as prescribed in 19.507(e), insert the following clause: limitations on subcontracting (oct 2022) (a) this clause does not apply to the unrestricted portion of a partial set aside. (b) definition. similarly situated entity, as used in this clause, means a first tier subcontractor, including an independent contractor, that  (1) has the same small business program status as that which qualified the prime contractor for the award (e.g., for a small business set aside contract, any small business concern, without regard to its socioeconomic status); and (2) is considered small for the size standard under the north american industry classification system (naics) code the prime contractor assigned to the subcontract. (c) applicability. this clause applies only to  (1) contracts that have been set aside for any of the small business concerns identified in 19.000(a)(3); (2) part or parts of a multiple award contract that have been set aside for any of the small business concerns identified in 19.000(a)(3); (3) contracts that have been awarded on a sole source basis in accordance with subparts 19.8, 19.13, 19.14, and 19.15; (4) orders expected to exceed the simplified acquisition threshold and that are  (i) set aside for small business concerns under multiple award contracts, as described in 8.405 5 and 16.505(b)(2)(i)(f); or (ii) issued directly to small business concerns under multiple award contracts as described in 19.504(c)(1)(ii); (5) orders, regardless of dollar value, that are  (i) set aside in accordance with subparts 19.8, 19.13, 19.14, or 19.15 under multiple award contracts, as described in 8.405 5 and 16.505(b)(2)(i)(f); or (ii) issued directly to concerns that qualify for the programs described in subparts 19.8, 19.13, 19.14, or 19.15 under multiple award contracts, as described in 19.504(c)(1)(ii); and (6) contracts using the hubzone price evaluation preference to award to a hubzone small business concern unless the concern waived the evaluation preference. (d) independent contractors. an independent contractor shall be considered a subcontractor. (e) limitations on subcontracting. by submission of an offer and execution of a contract, the contractor agrees that in performance of a contract assigned a north american industry classification system (naics) code for  (1) services (except construction), it will not pay more than 50 percent of the amount paid by the government for contract performance to subcontractors that are not similarly situated entities. any work that a similarly situated entity further subcontracts will count towards the prime contractor's 50 percent subcontract amount that cannot be exceeded. when a contract includes both services and supplies, the 50 percent limitation shall apply only to the service portion of the contract; (2) supplies (other than procurement from a nonmanufacturer of such supplies), it will not pay more than 50 percent of the amount paid by the government for contract performance, excluding the cost of materials, to subcontractors that are not similarly situated entities. any work that a similarly situated entity further subcontracts will count towards the prime contractor's 50 percent subcontract amount that cannot be exceeded. when a contract includes both supplies and services, the 50 percent limitation shall apply only to the supply portion of the contract; (3) general construction, it will not pay more than 85 percent of the amount paid by the government for contract performance, excluding the cost of materials, to subcontractors that are not similarly situated entities. any work that a similarly situated entity further subcontracts will count towards the prime contractor's 85 percent subcontract amount that cannot be exceeded; or (4) construction by special trade contractors, it will not pay more than 75 percent of the amount paid by the government for contract performance, excluding the cost of materials, to subcontractors that are not similarly situated entities. any work that a similarly situated entity further subcontracts will count towards the prime contractor's 75 percent subcontract amount that cannot be exceeded. (f) the contractor shall comply with the limitations on subcontracting as follows: (1) for contracts, in accordance with paragraphs (c)(1), (2), (3) and (6) of this clause  [contracting officer check as appropriate.] □ by the end of the base term of the contract and then by the end of each subsequent option period; or □ by the end of the performance period for each order issued under the contract. (2) for orders, in accordance with paragraphs (c)(4) and (5) of this clause, by the end of the performance period for the order. (g) a joint venture agrees that, in the performance of the contract, the applicable percentage specified in paragraph (e) of this clause will be performed by the aggregate of the joint venture participants. (1) in a joint venture comprised of a small business protégé and its mentor approved by the small business administration, the small business protégé shall perform at least 40 percent of the work performed by the joint venture. work performed by the small business protégé in the joint venture must be more than administrative functions. (2) in an 8(a) joint venture, the 8(a) participant(s) shall perform at least 40 percent of the work performed by the joint venture. work performed by the 8(a) participants in the joint venture must be more than administrative functions. (end of clause) as prescribed in 19.708(b)(2), insert the following clause: liquidated damages subcontracting plan (sep 2021) (a) "failure to make a good faith effort to comply with the subcontracting plan," as used in this clause, means a willful or intentional failure to perform in accordance with the requirements of the subcontracting plan approved under the clause in this contract entitled "small business subcontracting plan," or willful or intentional action to frustrate the plan. (b) performance shall be measured by applying the percentage goals to the total actual subcontracting dollars or, if a commercial plan is involved, to the pro rata share of actual subcontracting dollars attributable to government contracts covered by the commercial plan. if, at contract completion or, in the case of a commercial plan, at the close of the fiscal year for which the plan is applicable, the contractor has failed to meet its subcontracting goals and the contracting officer decides in accordance with paragraph (c) of this clause that the contractor failed to make a good faith effort to comply with its subcontracting plan (see 19.705 7), established in accordance with the clause in this contract entitled "small business subcontracting plan," the contractor shall pay the government liquidated damages in an amount stated. the amount of probable damages attributable to the contractor’s failure to comply shall be an amount equal to the actual dollar amount by which the contractor failed to achieve each subcontract goal. (c) before the contracting officer makes a final decision that the contractor has failed to make such good faith effort, the contracting officer shall give the contractor written notice specifying the failure and permitting the contractor to demonstrate what good faith efforts have been made and to discuss the matter. failure to respond to the notice may be taken as an admission that no valid explanation exists. if, after consideration of all the pertinent data, the contracting officer finds that the contractor failed to make a good faith effort to comply with the subcontracting plan, the contracting officer shall issue a final decision to that effect and require that the contractor pay the government liquidated damages as provided in paragraph (b) of this clause. (d) with respect to commercial plans, the contracting officer who approved the plan will perform the functions of the contracting officer under this clause on behalf of all agencies with contracts covered by the commercial plan. (e) the contractor shall have the right of appeal, under the clause in this contract entitled, disputes, from any final decision of the contracting officer. (f) liquidated damages shall be in addition to any other remedies that the government may have. (end of clause) as prescribed in 19.811 3(c), insert the following clause: section8(a) award (oct 2019) (a) by execution of a contract, the small business administration (sba) agrees to the following: (1) to furnish the supplies or services set forth in the contract according to the specifications and the terms and conditions by subcontracting with the offeror who has been determined an eligible concern pursuant to the provisions of section8(a) of the small business act, as amended ( 15 u.s.c. 637(a)). (2) except for novation agreements, delegates to the ______ [insert name of contracting activity]the responsibility for administering the contract with complete authority to take any action on behalf of the government under the terms and conditions of the contract; provided, however that the contracting agency shall give advance notice to the sba before it issues a final notice terminating the right of the subcontractor to proceed with further performance, either in whole or in part, under the contract. (3) that payments to be made under the contract will be made directly to the subcontractor by the contracting activity. (4) to notify the ___________ [insert name of contracting agency] contracting officer immediately upon notification by the subcontractor that the owner or owners upon whom 8(a) eligibility was based plan to relinquish ownership or control of the concern. (5) that the subcontractor awarded a subcontract hereunder shall have the right of appeal from decisions of the cognizant contracting officer under the "disputes" clause of the subcontract. (b) the offeror/subcontractor agrees and acknowledges that it will, for and on behalf of the sba, fulfill and perform all of the requirements of the contract. (end of clause) as prescribed in 19.811 3(d), insert the following clause: notification of competition limited to eligible 8(a) participants (oct 2022) (a) offers are solicited only from  (1) small business concerns expressly certified by the small business administration (sba) for participation in sba's 8(a) program and which meet the following criteria at the time of submission of offer  (i) the offeror is in conformance with the 8(a) support limitation set forth in its approved business plan; and (ii) the offeror is in conformance with the business activity targets set forth in its approved business plan or any remedial action directed by sba; (2) a joint venture, in which at least one of the 8(a) program participants that is a party to the joint venture complies with the criteria set forth in paragraph (a)(1) of this clause, that complies with 13 cfr 124.513(c); or (3) a joint venture  (i) that is comprised of a mentor and an 8(a) protégé with an approved mentor protégé agreement under the 8(a) program; (ii) in which at least one of the 8(a) program participants that is a party to the joint venture complies with the criteria set forth in paragraph (a)(1) of this clause; and (iii) that complies with 13 cfr 124.513(c). (b) by submission of its offer, the offeror represents that it meets the applicable criteria set forth in paragraph (a) of this clause. (c) any award resulting from this solicitation will be made to the small business administration, which will subcontract performance to the successful 8(a) offeror selected through the evaluation criteria set forth in this solicitation. a contracting officer may consider a joint venture for contract award. sba does not approve joint ventures for competitive awards, but see 13 cfr 124.501(g) for sba's determination of participant eligibility. (d) the ____________ [insert name of sba's contractor]will notify the____________ [insert name of contracting agency]contracting officer in writing immediately upon entering an agreement (either oral or written) to transfer all or part of its stock. (end of clause) alternate i (mar 2023). if the competition is to be limited to 8(a) participants within one or more specific sba regions or districts, add the following paragraph (a)(1)(iii) to paragraph (a) of the clause: (iii) the offeror's approved business plan is on the file and serviced by __ [ contracting officer completes by inserting the appropriate sba district and/or area office(s) as identified by the sba]. as prescribed in 19.1408 , insert the following clause: notice of set aside for, or sole source award to, service disabled veteran owned small business (sdvosb) concerns eligible under the sdvosb program. (feb 2024) (a) definition. service disabled veteran owned small business (sdvosb) concern means a small business concern  (1) (i) not less than 51 percent of which is owned and controlled by one or more service disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service disabled veterans; and (ii) the management and daily business operations of which are controlled by one or more service disabled veterans or, in the case of a service disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran; or (2) a small business concern eligible under the sdvosb program in accordance with 13 cfr part 128 (see subpart 19.14). (3) service disabled veteran, as used in this definition, means a veteran as defined in 38 u.s.c. 101(2), with a disability that is service connected, as defined in 38 u.s.c. 101(16) and who is registered in the beneficiary identification and records locator subsystem, or successor system that is maintained by the department of veterans affairs’ veterans benefits administration, as a service disabled veteran. service disabled veteran owned small business (sdvosb) concern eligible under the sdvosb program means an sdvosb concern that  (1) effective january 1, 2024, is designated in the system for award management (sam) as certified by the small business administration (sba) in accordance with 13 cfr 128.300; or (2) has represented that it is an sdvosb concern in sam and submitted a complete application for certification to sba on or before december 31, 2023. service disabled veteran owned small business (sdvosb) program means a program that authorizes contracting officers to limit competition, including award on a sole source basis, to sdvosb concerns eligible under the sdvosb program. (b) applicability. this clause applies only to  (1) contracts that have been set aside for, or awarded on a sole source basis to, sdvosb concerns eligible under the sdvosb program; (2) part or parts of a multiple award contract that have been set aside for sdvosb concerns eligible under the sdvosb program; (3) orders set aside for sdvosb concerns eligible under the sdvosb program, under multiple award contracts as described in 8.405 5 and 16.505(b)(2)(i)(f); and (4) orders issued directly to sdvosb concerns eligible under the sdvosb program, under multiple award contracts as described in 19.504(c)(1)(ii). (c) general. (1) effective january 1, 2024, for sdvosb set aside or sole source procurements, offers are solicited only from, and awards resulting from this solicitation will be made only to, concerns  (i) designated in sam as an sdvosb concern certified by sba; or (ii) that have represented their status as an sdvosb in sam and submitted a complete application for certification to sba on or before december 31, 2023. (2) offers received from concerns that do not meet the criteria of paragraph (c)(1)(i) or (ii) of this clause, shall not be considered. (d) a joint venture may be considered an sdvosb concern if the managing partner of the joint venture complies with the criteria defined in paragraph (a) of this clause and 13 cfr 128.402. (e) in a joint venture that complies with paragraph (d) of this clause, the sdvosb party or parties to the joint venture shall perform at least 40 percent of the work performed by the joint venture. work performed by the sdvosb party or parties to the joint venture must be more than administrative functions. (end of clause) as prescribed in 19.309(c)(1), insert the following clause: postaward small business program rerepresentation (jan 2025) (a) definitions. as used in this clause  long term contract means a contract of more than five years in duration, including options. however, the term does not include contracts that exceed five years in duration because the period of performance has been extended for a cumulative period not to exceed six months under the clause at 52.217 8, option to extend services, or other appropriate authority. small business concern  (1) means a concern, including its affiliates, that is independently owned and operated, not dominant in its field of operation, and qualified as a small business under the criteria in 13 cfr part 121 and the size standard in paragraph (d) of this clause. (2) affiliates, as used in this definition, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. in determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. sba determines affiliation based on the factors set forth at 13 cfr 121.103. (b) if the contractor represented that it was any of the small business concerns identified in 19.000(a)(3) prior to award of this contract, the contractor shall rerepresent its size and socioeconomic status according to paragraph (f) of this clause or, if applicable, paragraph (h) of this clause, upon occurrence of any of the following: (1) within 30 days after execution of a novation agreement or within 30 days after modification of the contract to include this clause, if the novation agreement was executed prior to inclusion of this clause in the contract. (2) within 30 days after a merger or acquisition that does not require a novation or within 30 days after modification of the contract to include this clause, if the merger or acquisition occurred prior to inclusion of this clause in the contract. (3) for long term contracts  (i) within 60 to 120 days prior to the end of the fifth year of the contract; and (ii) within 60 to 120 days prior to the date specified in the contract for exercising any option thereafter. (c) if the contractor represented its status as any of the small business concerns identified at 19.000(a)(3) prior to award of this contract, the contractor shall rerepresent its size and socioeconomic status according to paragraph (f) of this clause or, if applicable, paragraph (h) of this clause, for the naics code assigned to an order (except that paragraphs (c)(1) through (3) of this clause do not apply to an order issued under a federal supply schedule contract at subpart 8.4)  (1) set aside exclusively for a small business concern identified at 19.000(a)(3) that is issued under an unrestricted multiple award contract, unless the order is issued under the reserved portion of an unrestricted multiple award contract ( e.g., an order set aside for a woman owned small business under a multiple award contract that is not set aside, unless the order is issued under the reserved portion of the multiple award contract); (2) issued under a multiple award contract set aside for small businesses that is further set aside for a specific socioeconomic category that differs from the underlying multiple award contract ( e.g., an order set aside for a hubzone small business concern under a multiple award contract that is set aside for small businesses); (3) issued under the part of the multiple award contract that is set aside for small businesses that is further set aside for a specific socioeconomic category that differs from the underlying set aside part of the multiple award contract ( e.g., an order set aside for a wosb concern under the part of the multiple award contract that is partially set aside for small businesses); and (4) when the contracting officer explicitly requires it for an order issued under a multiple award contract, including for an order issued under a federal supply schedule contract (see 8.405 5(b) and 19.301 2(b)(2)). (d) the contractor shall rerepresent its size status in accordance with the size standard in effect at the time of this rerepresentation that corresponds to the north american industry classification system (naics) code(s) assigned to this contract. the small business size standard corresponding to this naics code(s) can be found at https://www.sba.gov/document/support  table size standards. (e) the small business size standard for a contractor providing an end item that it does not manufacture, process, or produce itself, for a contract other than a construction or service contract, is 500 employees, or 150 employees for information technology value added resellers under naics code 541519, if the acquisition  (1) was set aside for small business and has a value above the simplified acquisition threshold; (2) used the hubzone price evaluation preference regardless of dollar value, unless the contractor waived the price evaluation preference; or (3) was an 8(a), hubzone, service disabled veteran owned, economically disadvantaged women owned, or women owned small business set aside or sole source award regardless of dollar value. (f) except as provided in paragraph (h) of this clause, the contractor shall make the representation(s) required by paragraphs (b) and (c) of this clause by validating or updating all its representations in the representations and certifications section of the system for award management (sam) and its other data in sam, as necessary, to ensure that they reflect the contractor's current status. the contractor shall notify the contracting officer in writing within the timeframes specified in paragraph (b) of this clause, or with its offer for an order (see paragraph (c) of this clause), that the data have been validated or updated, and provide the date of the validation or update. (g) if the contractor represented that it was other than a small business concern prior to award of this contract, the contractor may, but is not required to, take the actions required by paragraphs (f) or (h) of this clause. (h) if the contractor does not have representations and certifications in sam, or does not have a representation in sam for the naics code applicable to this contract, the contractor is required to complete the following rerepresentation and submit it to the contracting office, along with the contract number and the date on which the rerepresentation was completed: (1) the contractor represents that it □ is, □ is not a small business concern under naics code _____ assigned to contract number _____. (2) [complete only if the contractor represented itself as a small business concern in paragraph (h)(1) of this clause.] the contractor represents that it □ is, □ is not, a small disadvantaged business concern as defined in 13 cfr 124.1001. (3) [complete only if the contractor represented itself as a small business concern in paragraph (h)(1) of this clause.] the contractor represents that it □ is, □ is not a women owned small business concern. (4) women owned small business (wosb) joint venture eligible under the wosb program. the contractor represents that it □ is, □ is not a joint venture that complies with the requirements of 13 cfr 127.506(a) through (c). [ the contractor shall enter the name and unique entity identifier of each party to the joint venture: __.] (5) economically disadvantaged women owned small business (edwosb) joint venture. the contractor represents that it □ is, □ is not a joint venture that complies with the requirements of 13 cfr 127.506(a) through (c). [ the contractor shall enter the name and unique entity identifier of each party to the joint venture: __ .] (6) [complete only if the contractor represented itself as a small business concern in paragraph (h)(1) of this clause. ] the contractor represents that it □ is, □ is not a veteran owned small business concern. (7) [complete only if the contractor represented itself as a veteran owned small business concern in paragraph (h)(6) of this clause.] the contractor represents that it □ is, □ is not a service disabled veteran owned small business concern. (8) service disabled veteran owned small business (sdvosb) joint venture eligible under the sdvosb program. the contractor represents that it □ is, □ is not an sdvosb joint venture eligible under the sdvosb program that complies with the requirements of 13 cfr 128.402. [ the contractor shall enter the name and unique entity identifier of each party to the joint venture: __.] (9) [ complete only if the contractor represented itself as a small business concern in paragraph (h)(1) of this clause. ] the contractor represents that  (i) it □ is, □ is not a hubzone small business concern listed, on the date of this representation, on the list of qualified hubzone small business concerns maintained by the small business administration, and no material changes in ownership and control, principal office, or hubzone employee percentage have occurred since it was certified in accordance with 13 cfr part 126; and (ii) it □ is, □ is not a hubzone joint venture that complies with the requirements of 13 cfr part 126, and the representation in paragraph (h)(8)(i) of this clause is accurate for each hubzone small business concern participating in the hubzone joint venture. [ the contractor shall enter the names of each of the hubzone small business concerns participating in the hubzone joint venture: _____. ] each hubzone small business concern participating in the hubzone joint venture shall submit a separate signed copy of the hubzone representation. [ contractor to sign and date and insert authorized signer's name and title.____________________________ ] (end of clause) alternate i (mar 2020). as prescribed in 19.309 (c)(2), substitute the following paragraph (h)(1) for paragraph (h)(1) of the basic clause: (h)(1) the contractor represents its small business size status for each one of the naics codes assigned to this contract. naics code small business concern (yes/no) ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ ________________________________ [contracting officer to insert naics codes.] as prescribed in 19.1508 , insert the following clause: notice of set aside for, or sole source award to, economically disadvantaged women owned small business concerns (oct 2022) (a) definitions. economically disadvantaged women owned small business (edwosb) concern as used in this clause, means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the united states and who are economically disadvantaged in accordance with 13 cfr part 127, and is certified pursuant to 13 cfr 127.300 as an edwosb. it automatically qualifies as a women owned small business (wosb) concern eligible under the wosb program. wosb program repository means a secure, web based application that collects, stores, and disseminates documents to the contracting community and sba, which verify the eligibility of a business concern for a contract to be awarded under the wosb program. (b) applicability. this clause applies only to  (1) contracts that have been set aside for, or awarded on a sole source basis to, edwosb concerns; (2) part or parts of a multiple award contract that have been set aside for edwosb concerns; (3) orders set aside for edwosb concerns under multiple award contracts as described in 8.405 5 and 16.505(b)(2)(i)(f); and (4) orders issued directly to edwosb concerns under multiple award contracts as described in 19.504(c)(1)(ii). (c) general. (1) for edwosb set aside procurements, offers are solicited only from certified edwosb concerns or edwosb concerns with a pending application for certification in the dynamic small business search (dsbs). (2) for edwosb sole source awards, offers are solicited only from certified edwosb concerns. (3) offers received from other concerns will not be considered. (4) any award resulting from this solicitation will be made to a certified edwosb concern. (d) joint venture. a joint venture may be considered an edwosb concern if  (1) at least one party to the joint venture complies with the criteria defined in paragraph (a) and paragraph (c)(3) of this clause, and 13 cfr 127.506(c); and (2) each party to the joint venture qualifies as small under the size standard for the solicitation, or the protégé is small under the size standard for the solicitation in a joint venture comprised of a mentor and protégé with an approved mentor protégé agreement under the sba mentor protégé program. (e) in a joint venture that complies with paragraph (d) of this clause, the edwosb party or parties to the joint venture shall perform at least 40 percent of the work performed by the joint venture. work performed by the edwosb party or parties to the joint venture must be more than administrative functions. (end of clause) as prescribed in 19.1508 (b), insert the following clause: notice of set aside for, or sole source award to, women owned small business concerns eligible under the women owned small business program (oct 2022) (a) definitions. as used in this clause  women owned small business (wosb) concern eligible under the wosb program (in accordance with 13 cfr part 127), as used in this clause, means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the united states, and the concern is certified by sba or an approved third party certifier in accordance with 13 cfr 127.300 as a wosb. a certified edwosb is automatically eligible as a certified wosb. wosb program repository means a secure, web based application that collects, stores, and disseminates documents to the contracting community and sba, which verify the eligibility of a business concern for a contract to be awarded under the wosb program. (b) applicability. this clause applies only to  (1) contracts that have been set aside for, or awarded on a sole source basis to, wosb concerns eligible under the wosb program; (2) part or parts of a multiple award contract that have been set aside for wosb concerns eligible under the wosb program; (3) orders set aside for wosb concerns eligible under the wosb program, under multiple award contracts as described in 8.405 5 and 16.505(b)(2)(i)(f); and (4) orders issued directly to wosb concerns eligible under the wosb program under multiple award contracts as described in 19.504(c)(1)(ii). (c) general. (1) for wosb set aside procurements, offers are solicited only from certified wosb concerns eligible under the wosb program or wosb concerns with a pending application for certification status in the dynamic small business search (dsbs). (2) for wosb sole source awards, offers are solicited only from certified wosb concerns. (3) offers received from other concerns shall not be considered. (4) any award resulting from this solicitation will be made to a certified wosb concern eligible under the wosb program. (d) joint venture. a joint venture may be considered a wosb concern eligible under the wosb program if  (1) at least one party to the joint venture complies with the criteria defined in paragraph (a) and (c)(3) of this clause, and 13 cfr 127.506(c); and (2) each party to the joint venture qualifies as small under the size standard for the solicitation, or the protégé is small under the size standard for the solicitation in a joint venture comprised of a mentor and protégé with an approved mentor protégé agreement under the sba mentor protégé program. (e) in a joint venture that complies with paragraph (d) of this clause, the wosb party or parties to the joint venture shall perform at least 40 percent of the work performed by the joint venture. work performed by the wosb party or parties to the joint venture must be more than administrative functions. (end of clause) as prescribed in 19.507(g)(1), insert the following provision: notice of small business reserve (mar 2020) (a) this solicitation contains a reserve for one or more small business concerns identified at 19.000(a)(3). the small business program eligibility requirements apply. (b) the small business concern(s) eligible for participation in the reserve shall submit one offer that addresses each portion of the solicitation for which it wants to compete. award of the contract will be based on criteria identified elsewhere in the solicitation. (end of provision) as prescribed in 19.507(g)(2), insert the following clause: orders issued directly under small business reserves (mar 2020) (a) applicability. this clause applies only to contracts that were reserved for any of the small business concerns identified at 19.000(a)(3). (b) if there is only one contract award to any one type of small business concern identified in 19.000(a)(3) as a result of the reserve, the contracting officer may issue an order or orders directly to the concern. (end of clause) as prescribed in 19.507(h), insert the following clause: nonmanufacturer rule (sep 2021) (a) definitions. as used in this clause  manufacturer means the concern that transforms raw materials, miscellaneous parts, or components into the end item. concerns that only minimally alter the item being procured do not qualify as manufacturers of the end item. concerns that add substances, parts, or components to an existing end item to modify its performance will not be considered the end item manufacturer, where those identical modifications can be performed by and are available from the manufacturer of the existing end item. nonmanufacturer means a concern, including a supplier, that provides an end item it did not manufacture, process, or produce. (b) applicability. (1) this clause does not apply to contracts awarded pursuant to the unrestricted portion of a partial set aside or to a contractor that is the manufacturer of the product or end item. (2) this clause applies to  (i)contracts that have been awarded pursuant to a set aside, in total or in part, for any of the small business concerns identified in 19.000(a)(3); (ii)contracts that have been awarded on a sole source basis in accordance with subparts 19.8, 19.13, 19.14, and 19.15; (iii)orders expected to exceed the simplified acquisition threshold and that are  (a)set aside for small business under multiple award contracts, as described in 8.405 5 and 16.505(b)(2)(i)(f); or (b)issued directly to a small business concern under multiple award contracts as described in 19.504(c)(1)(ii); (iv)orders, regardless of dollar value, that are  (a)set aside in accordance with subparts 19.8, 19.13, 19.14, and 19.15 under multiple award contracts as described in 8.405 5 and 16.505(b)(2)(i)(f); or (b)issued directly to concerns that qualify for the programs described in subparts 19.8, 19.13, 19.14, and 19.15 under multiple award contracts as described in 19.504(c)(1)(ii); and (v)contracts using the hubzone price evaluation preference to award to a hubzone concern unless the contractor waived the evaluation preference. (c) requirements. (1)the contractor shall  (i)provide an end item that a small business has manufactured, processed, or produced in the united states or its outlying areas; for kit assemblers who are nonmanufacturers, see paragraph (c)(2) of this clause instead; (ii)be primarily engaged in the retail or wholesale trade and normally sell the type of item being supplied; and (iii)take ownership or possession of the item(s) with its personnel, equipment, or facilities in a manner consistent with industry practice; for example, providing storage, transportation, or delivery. (2)when the end item being acquired is a kit of supplies, at least 50 percent of the total cost of the components of the kit shall be manufactured, processed, or produced in the united states or its outlying areas by small business concerns. (end of clause) as prescribed in 22.103 5(a), insert the following clause: notice to the government of labor disputes (feb 1997) if the contractor has knowledge that any actual or potential labor dispute is delaying or threatens to delay the timely performance of this contract, the contractor shall immediately give notice, including all relevant information, to the contracting officer. (end of clause) as prescribed in 22.103 5(b), insert the following clause: payment for overtime premiums (july 1990) (a) the use of overtime is authorized under this contract if the overtime premium does not exceed *______________ or the overtime premium is paid for work  (1) necessary to cope with emergencies such as those resulting from accidents, natural disasters, breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature; (2) by indirect labor employees such as those performing duties in connection with administration, protection, transportation, maintenance, standby plant protection, operation of utilities, or accounting; (3) to perform tests, industrial processes, laboratory procedures, loading or unloading of transportation conveyances, and operations in flight or afloat that are continuous in nature and cannot reasonably be interrupted or completed otherwise; or (4) that will result in lower overall costs to the government. (b) any request for estimated overtime premiums that exceeds the amount specified above shall include all estimated overtime for contract completion and shall  (1) identify the work unit; e.g., department or section in which the requested overtime will be used, together with present workload, staffing, and other data of the affected unit sufficient to permit the contracting officer to evaluate the necessity for the overtime; (2) demonstrate the effect that denial of the request will have on the contract delivery or performance schedule; (3) identify the extent to which approval of overtime would affect the performance or payments in connection with other government contracts, together with identification of each affected contract; and (4) provide reasons why the required work cannot be performed by using multishift operations or by employing additional personnel. * insert either "zero" or the dollar amount agreed to during negotiations. the inserted figure does not apply to the exceptions in paragraph (a)(1) through (a)(4) of the clause. (end of clause) as prescribed in 22.202 , insert the following clause: convict labor (june 2003) (a) except as provided in paragraph (b) of this clause, the contractor shall not employ in the performance of this contract any person undergoing a sentence of imprisonment imposed by any court of a state, the district of columbia, puerto rico, the northern mariana islands, american samoa, guam, or the u.s. virgin islands. (b) the contractor is not prohibited from employing persons  (1) on parole or probation to work at paid employment during the term of their sentence; (2) who have been pardoned or who have served their terms; or (3) confined for violation of the laws of any of the states, the district of columbia, puerto rico, the northern mariana islands, american samoa, guam, or the u.s. virgin islands who are authorized to work at paid employment in the community under the laws of such jurisdiction, if  (i) the worker is paid or is in an approved work training program on a voluntary basis; (ii) representatives of local union central bodies or similar labor union organizations have been consulted; (iii) such paid employment will not result in the displacement of employed workers, or be applied in skills, crafts, or trades in which there is a surplus of available gainful labor in the locality, or impair existing contracts for services; (iv) the rates of pay and other conditions of employment will not be less than those paid or provided for work of a similar nature in the locality in which the work is being performed; and (v) the attorney general of the united states has certified that the work release laws or regulations of the jurisdiction involved are in conformity with the requirements of executive order11755, as amended by executive orders 12608 and 12943. (end of clause) as prescribed in 22.305 , insert the following clause: contract work hours and safety standards overtime compensation (may 2018) (a) overtime requirements. no contractor or subcontractor employing laborers or mechanics (see federal acquisition regulation 22.300) shall require or permit them to work over 40 hours in any workweek unless they are paid at least 1 and 1/2 times the basic rate of pay for each hour worked over 40 hours. (b) violation; liability for unpaid wages; liquidated damages. the responsible contractor and subcontractor are liable for unpaid wages if they violate the terms in paragraph (a) of this clause. in addition, the contractor and subcontractor are liable for liquidated damages payable to the government. the contracting officer will assess liquidated damages at the rate specified at 29 cfr 5.5(b)(2) per affected employee for each calendar day on which the employer required or permitted the employee to work in excess of the standard workweek of 40 hours without paying overtime wages required by the contract work hours and safety standards statute (found at 40 u.s.c. chapter 37). in accordance with the federal civil penalties inflation adjustment act of 1990 ( 28 u.s.c. 2461 note), the department of labor adjusts this civil monetary penalty for inflation no later than january 15 each year. (c) withholding for unpaid wages and liquidated damages. the contracting officer will withhold from payments due under the contract sufficient funds required to satisfy any contractor or subcontractor liabilities for unpaid wages and liquidated damages. if amounts withheld under the contract are insufficient to satisfy contractor or subcontractor liabilities, the contracting officer will withhold payments from other federal or federally assisted contracts held by the same contractor that are subject to the contract work hours and safety standards statute (d) payrolls and basic records. (1) the contractor and its subcontractors shall maintain payrolls and basic payroll records for all laborers and mechanics working on the contract during the contract and shall make them available to the government until 3 years after contract completion. the records shall contain the name and address of each employee, social security number, labor classifications, hourly rates of wages paid, daily and weekly number of hours worked, deductions made, and actual wages paid. the records need not duplicate those required for construction work by department of labor regulations at 29 cfr 5.5(a)(3) implementing the construction wage rate requirements statute. (2) the contractor and its subcontractors shall allow authorized representatives of the contracting officer or the department of labor to inspect, copy, or transcribe records maintained under paragraph (d)(1) of this clause. the contractor or subcontractor also shall allow authorized representatives of the contracting officer or department of labor to interview employees in the workplace during working hours. (e) subcontracts. the contractor shall insert the provisions set forth in paragraphs (a) through (d) of this clause in subcontracts that may require or involve the employment of laborers and mechanics and require subcontractors to include these provisions in any such lower tier subcontracts. the contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor with the provisions set forth in paragraphs (a) through (d) of this clause. (end of clause) as prescribed in 22.407(h), insert the following provision: construction wage rate requirements secondary site of the work (may 2014) (a) (1) the offeror shall notify the government if the offeror intends to perform work at any secondary site of the work, as defined in paragraph (a)(1)(ii) of the far clause at 52.222 6, construction wage rate requirements, of this solicitation. (2) if the offeror is unsure if a planned work site satisfies the criteria for a secondary site of the work, the offeror shall request a determination from the contracting officer. (b) (1) if the wage determination provided by the government for work at the primary site of the work is not applicable to the secondary site of the work, the offeror shall request a wage determination from the contracting officer. (2) the due date for receipt of offers will not be extended as a result of an offeror’s request for a wage determination for a secondary site of the work. (end of provision) as prescribed in 22.407(a), insert the following clause: construction wage rate requirements (aug 2018) (a) definition. "site of the work"  (1) means  (i) the primary site of the work. the physical place or places where the construction called for in the contract will remain when work on it is completed; and (ii) the secondary site of the work, if any. any other site where a significant portion of the building or work is constructed, provided that such site is  (a) located in the united states; and (b) established specifically for the performance of the contract or project; (2) except as provided in paragraph (3) of this definition, includes any fabrication plants, mobile factories, batch plants, borrow pits, job headquarters, tool yards, etc., provided  (i) they are dedicated exclusively, or nearly so, to performance of the contract or project; and (ii) they are adjacent or virtually adjacent to the "primary site of the work" as defined in paragraph (a)(1)(i), or the "secondary site of the work" as defined in paragraph (a)(1)(ii) of this definition; (3) does not include permanent home offices, branch plant establishments, fabrication plants, or tool yards of a contractor or subcontractor whose locations and continuance in operation are determined wholly without regard to a particular federal contract or project. in addition, fabrication plants, batch plants, borrow pits, job headquarters, yards, etc., of a commercial or material supplier which are established by a supplier of materials for the project before opening of bids and not on the project site, are not included in the "site of the work." such permanent, previously established facilities are not a part of the "site of the work" even if the operations for a period of time may be dedicated exclusively or nearly so, to the performance of a contract. (b) (1) all laborers and mechanics employed or working upon the site of the work will be paid unconditionally and not less often than once a week, and without subsequent deduction or rebate on any account (except such payroll deductions as are permitted by regulations issued by the secretary of labor under the copeland act (29 cfr part 3)), the full amount of wages and bona fide fringe benefits (or cash equivalents thereof) due at time of payment computed at rates not less than those contained in the wage determination of the secretary of labor which is attached hereto and made a part hereof, or as may be incorporated for a secondary site of the work, regardless of any contractual relationship which may be alleged to exist between the contractor and such laborers and mechanics. any wage determination incorporated for a secondary site of the work shall be effective from the first day on which work under the contract was performed at that site and shall be incorporated without any adjustment in contract price or estimated cost. laborers employed by the construction contractor or construction subcontractor that are transporting portions of the building or work between the secondary site of the work and the primary site of the work shall be paid in accordance with the wage determination applicable to the primary site of the work. (2) contributions made or costs reasonably anticipated for bona fide fringe benefits under section 1(b)(2) of the construction wage rate requirements statute on behalf of laborers or mechanics are considered wages paid to such laborers or mechanics, subject to the provisions of paragraph (e) of this clause; also, regular contributions made or costs incurred for more than a weekly period (but not less often than quarterly) under plans, funds, or programs which cover the particular weekly period, are deemed to be constructively made or incurred during such period. (3) such laborers and mechanics shall be paid not less than the appropriate wage rate and fringe benefits in the wage determination for the classification of work actually performed, without regard to skill, except as provided in the clause entitled apprentices and trainees. laborers or mechanics performing work in more than one classification may be compensated at the rate specified for each classification for the time actually worked therein; provided that the employer’s payroll records accurately set forth the time spent in each classification in which work is performed. (4) the wage determination (including any additional classifications and wage rates conformed under paragraph (c) of this clause) and the construction wage rate requirements (davis bacon act) poster (wh 1321) shall be posted at all times by the contractor and its subcontractors at the primary site of the work and the secondary site of the work, if any, in a prominent and accessible place where it can be easily seen by the workers. (c) (1) the contracting officer shall require that any class of laborers or mechanics which is not listed in the wage determination and which is to be employed under the contract shall be classified in conformance with the wage determination. the contracting officer shall approve an additional classification and wage rate and fringe benefits therefor only when all the following criteria have been met: (i) the work to be performed by the classification requested is not performed by a classification in the wage determination. (ii) the classification is utilized in the area by the construction industry. (iii) the proposed wage rate, including any bona fide fringe benefits, bears a reasonable relationship to the wage rates contained in the wage determination. (2) if the contractor and the laborers and mechanics to be employed in the classification (if known), or their representatives, and the contracting officer agree on the classification and wage rate (including the amount designated for fringe benefits, where appropriate), a report of the action taken shall be sent by the contracting officer to the administrator of the: wage and hour division u.s. department of labor washington, dc 20210 the administrator or an authorized representative will approve, modify, or disapprove every additional classification action within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30 day period that additional time is necessary. (3) in the event the contractor, the laborers or mechanics to be employed in the classification, or their representatives, and the contracting officer do not agree on the proposed classification and wage rate (including the amount designated for fringe benefits, where appropriate), the contracting officer shall refer the questions, including the views of all interested parties and the recommendation of the contracting officer, to the administrator of the wage and hour division for determination. the administrator, or an authorized representative, will issue a determination within 30 days of receipt and so advise the contracting officer or will notify the contracting officer within the 30 day period that additional time is necessary. (4) the wage rate (including fringe benefits, where appropriate) determined pursuant to paragraphs (c)(2) and (c)(3) of this clause shall be paid to all workers performing work in the classification under this contract from the firstday on which work is performed in the classification. (d) whenever the minimum wage rate prescribed in the contract for a class of laborers or mechanics includes a fringe benefit which is not expressed as an hourly rate, the contractor shall either pay the benefit as stated in the wage determination or shall pay another bona fide fringe benefit or an hourly cash equivalent thereof. (e) if the contractor does not make payments to a trustee or other third person, the contractor may consider as part of the wages of any laborer or mechanic the amount of any costs reasonably anticipated in providing bona fide fringe benefits under a plan or program; provided, that the secretary of labor has found, upon the written request of the contractor, that the applicable standards of the construction wage rate requirements statute have been met. the secretary of labor may require the contractor to set aside in a separate account assets for the meeting of obligations under the plan or program. (end of clause) as prescribed in 22.407(a), insert the following clause: withholding of funds (may 2014) the contracting officer shall, upon his or her own action or upon written request of an authorized representative of the department of labor, withhold or cause to be withheld from the contractor under this contract or any other federal contract with the same prime contractor, or any other federally assisted contract subject to prevailing wage requirements, which is held by the same prime contractor, so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics, including apprentices, trainees, and helpers, employed by the contractor or any subcontractor the full amount of wages required by the contract. in the event of failure to pay any laborer or mechanic, including any apprentice, trainee, or helper, employed or working on the site of the work, all or part of the wages required by the contract, the contracting officer may, after written notice to the contractor, take such action as may be necessary to cause the suspension of any further payment, advance, or guarantee of funds until such violations have ceased. (end of clause) as prescribed in 22.407(a), insert the following clause: payrolls and basic records (jul 2021) (a) payrolls and basic records relating thereto shall be maintained by the contractor during the course of the work and preserved for a period of 3 years thereafter for all laborers and mechanics working at the site of the work. such records shall contain the name, address, and social security number of each such worker, his or her correct classification, hourly rates of wages paid (including rates of contributions or costs anticipated for bona fide fringe benefits or cash equivalents thereof of the types described in 40 u.s.c. 3141(2)(b) (construction wage rate requirement statute)), daily and weekly number of hours worked, deductions made, and actual wages paid. whenever the secretary of labor has found, under paragraph (d) of the clause entitled construction wage rate requirements, that the wages of any laborer or mechanic include the amount of any costs reasonably anticipated in providing benefits under a plan or program described in 40 u.s.c. 3141(2)(b), the contractor shall maintain records which show that the commitment to provide such benefits is enforceable, that the plan or program is financially responsible, and that the plan or program has been communicated in writing to the laborers or mechanics affected, and records which show the costs anticipated or the actual cost incurred in providing such benefits. contractors employing apprentices or trainees under approved programs shall maintain written evidence of the registration of apprenticeship programs and certification of trainee programs, the registration of the apprentices and trainees, and the ratios and wage rates prescribed in the applicable programs. (b) (1) the contractor shall submit weekly for each week in which any contract work is performed a copy of all payrolls to the contracting officer. the payrolls submitted shall set out accurately and completely all of the information required to be maintained under paragraph (a) of this clause, except that full social security numbers and home addresses shall not be included on weekly transmittals. instead the payrolls shall only need to include an individually identifying number for each employee (e.g., the last four digits of the employee’s social security number). the required weekly payroll information may be submitted in any form desired. optional form wh 347 is available for this purpose and may be obtained from the u.s. department of labor wage and hour division website at https://www.dol.gov/agencies/whd/forms. the prime contractor is responsible for the submission of copies of payrolls by all subcontractors. contractors and subcontractors shall maintain the full social security number and current address of each covered worker, and shall provide them upon request to the contracting officer, the contractor, or the wage and hour division of the department of labor for purposes of an investigation or audit of compliance with prevailing wage requirements. it is not a violation of this section for a prime contractor to require a subcontractor to provide addresses and social security numbers to the prime contractor for its own records, without weekly submission to the contracting officer. (2) each payroll submitted shall be accompanied by a "statement of compliance," signed by the contractor or subcontractor or his or her agent who pays or supervises the payment of the persons employed under the contract and shall certify  (i) that the payroll for the payroll period contains the information required to be maintained under paragraph (a) of this clause and that such information is correct and complete; (ii) that each laborer or mechanic (including each helper, apprentice, and trainee) employed on the contract during the payroll period has been paid the full weekly wages earned, without rebate, either directly or indirectly, and that no deductions have been made either directly or indirectly from the full wages earned, other than permissible deductions as set forth in the regulations, 29 cfr part 3; and (iii) that each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the contract. (3) the weekly submission of a properly executed certification set forth on the reverse side of optional form wh 347 shall satisfy the requirement for submission of the "statement of compliance" required by paragraph (b)(2) of this clause. (4) the falsification of any of the certifications in this clause may subject the contractor or subcontractor to civil or criminal prosecution under section 1001 of title 18 and section 3729 of title 31 of the united states code. (c) the contractor or subcontractor shall make the records required under paragraph (a) of this clause available for inspection, copying, or transcription by the contracting officer or authorized representatives of the contracting officer or the department of labor. the contractor or subcontractor shall permit the contracting officer or representatives of the contracting officer or the department of labor to interview employees during working hours on the job. if the contractor or subcontractor fails to submit required records or to make them available, the contracting officer may, after written notice to the contractor, take such action as may be necessary to cause the suspension of any further payment. furthermore, failure to submit the required records upon request or to make such records available may be grounds for debarment action pursuant to 29 cfr 5.12. (end of clause) as prescribed in 22.407(a), insert the following clause: apprentices and trainees (july 2005) (a) apprentices. (1) an apprentice will be permitted to work at less than the predetermined rate for the work performed when employed  (i) pursuant to and individually registered in a bona fide apprenticeship program registered with the u.s. department of labor, employment and training administration, office of apprenticeship training, employer, and labor services (oatels) or with a state apprenticeship agency recognized by the oatels; or (ii) in the first 90 days of probationary employment as an apprentice in such an apprenticeship program, even though not individually registered in the program, if certified by the oatels or a state apprenticeship agency (where appropriate) to be eligible for probationary employment as an apprentice. (2) the allowable ratio of apprentices to journeymen on the job site in any craft classification shall not be greater than the ratio permitted to the contractor as to the entire work force under the registered program. (3) any worker listed on a payroll at an apprentice wage rate, who is not registered or otherwise employed as stated in paragraph (a)(1) of this clause, shall be paid not less than the applicable wage determination for the classification of work actually performed. in addition, any apprentice performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate on the wage determination for the work actually performed. (4) where a contractor is performing construction on a project in a locality other than that in which its program is registered, the ratios and wage rates (expressed in percentages of the journeyman’s hourly rate) specified in the contractor’s or subcontractor’s registered program shall be observed. every apprentice must be paid at not less than the rate specified in the registered program for the apprentice’s level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. (5) apprentices shall be paid fringe benefits in accordance with the provisions of the apprenticeship program. if the apprenticeship program does not specify fringe benefits, apprentices must be paid the full amount of fringe benefits listed on the wage determination for the applicable classification. if the administrator determines that a different practice prevails for the applicable apprentice classification, fringes shall be paid in accordance with that determination. (6) in the event oatels, or a state apprenticeship agency recognized by oatels, withdraws approval of an apprenticeship program, the contractor will no longer be permitted to utilize apprentices at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (b) trainees. (1) except as provided in 29 cfr 5.16, trainees will not be permitted to work at less than the predetermined rate for the work performed unless they are employed pursuant to and individually registered in a program which has received prior approval, evidenced by formal certification by the u.s. department of labor, employment and training administration, office of apprenticeship training, employer, and labor services (oatels). the ratio of trainees to journeymen on the job site shall not be greater than permitted under the plan approved by oatels. (2) every trainee must be paid at not less than the rate specified in the approved program for the trainee’s level of progress, expressed as a percentage of the journeyman hourly rate specified in the applicable wage determination. trainees shall be paid fringe benefits in accordance with the provisions of the trainee program. if the trainee program does not mention fringe benefits, trainees shall be paid the full amount of fringe benefits listed in the wage determination unless the administrator of the wage and hour division determines that there is an apprenticeship program associated with the corresponding journeyman wage rate in the wage determination which provides for less than full fringe benefits for apprentices. any employee listed on the payroll at a trainee rate who is not registered and participating in a training plan approved by the oatels shall be paid not less than the applicable wage rate in the wage determination for the classification of work actually performed. in addition, any trainee performing work on the job site in excess of the ratio permitted under the registered program shall be paid not less than the applicable wage rate in the wage determination for the work actually performed. (3) in the event oatels withdraws approval of a training program, the contractor will no longer be permitted to utilize trainees at less than the applicable predetermined rate for the work performed until an acceptable program is approved. (c) equal employment opportunity. the utilization of apprentices, trainees, and journeymen under this clause shall be in conformity with the equal employment opportunity requirements of executive order11246, as amended, and 29 cfr part 30. (end of clause) as prescribed in 22.407(a), insert the following clause: compliance with copeland act requirements (feb 1988) the contractor shall comply with the requirements of 29 cfr part 3, which are hereby incorporated by reference in this contract. (end of clause) as prescribed in 22.407(a), insert the following clause: subcontracts (labor standards) (may 2014) (a) definition. "construction, alteration or repair," as used in this clause, means all types of work done by laborers and mechanics employed by the construction contractor or construction subcontractor on a particular building or work at the site thereof, including without limitation  (1) altering, remodeling, installation (if appropriate) on the site of the work of items fabricated off site; (2) painting and decorating; (3) manufacturing or furnishing of materials, articles, supplies, or equipment on the site of the building or work; (4) transportation of materials and supplies between the site of the work within the meaning of paragraphs (a)(1)(i) and (ii) of the "site of the work" as defined in the far clause at 52.222 6, construction wage rate requirements of this contract, and a facility which is dedicated to the construction of the building or work and is deemed part of the site of the work within the meaning of paragraph (2) of the "site of the work" definition; and (5) transportation of portions of the building or work between a secondary site where a significant portion of the building or work is constructed, which is part of the "site of the work" definition in paragraph (a)(1)(ii) of the far clause at 52.222 6, construction wage rate requirements, and the physical place or places where the building or work will remain (paragraph (a)(1)(i) of the far clause at 52.222 6, in the "site of the work" definition). (b) the contractor shall insert in any subcontracts for construction, alterations and repairs within the united states the clauses entitled  (1) construction wage rate requirements; (2) contract work hours and safety standards overtime compensation (if the clause is included in this contract); (3) apprentices and trainees; (4) payrolls and basic records; (5) compliance with copeland act requirements; (6) withholding of funds; (7) subcontracts (labor standards); (8) contract termination debarment; (9) disputes concerning labor standards; (10) compliance with construction wage rate requirements and related regulations; and (11) certification of eligibility. (c) the prime contractor shall be responsible for compliance by any subcontractor or lower tier subcontractor performing construction within the united states with all the contract clauses cited in paragraph (b). (d) (1) within 14 days after award of the contract, the contractor shall deliver to the contracting officer a completed standard form (sf) 1413, statement and acknowledgment, for each subcontract for construction within the united states, including the subcontractor’s signed and dated acknowledgment that the clauses set forth in paragraph (b) of this clause have been included in the subcontract. (2) within 14 days after the award of any subsequently awarded subcontract the contractor shall deliver to the contracting officer an updated completed sf 1413 for such additional subcontract. (e) the contractor shall insert the substance of this clause, including this paragraph (e) in all subcontracts for construction within the united states. (end of clause) as prescribed in 22.407(a), insert the following clause: contract termination debarment (may 2014) a breach of the contract clauses entitled construction wage rate requirements, contract work hours and safety standards overtime compensation, apprentices and trainees, payrolls and basic records, compliance with copeland act requirements, subcontracts (labor standards), compliance with construction wage rate requirements and related regulations, or certification of eligibility may be grounds for termination of the contract, and for debarment as a contractor and subcontractor as provided in 29 cfr 5.12. (end of clause) as prescribed in 22.407(a), insert the following clause: compliance with construction wage rate requirements and related regulations (may 2014) all rulings and interpretations of the construction wage rate requirements and related statutes contained in 29 cfr parts 1, 3, and 5 are hereby incorporated by reference in this contract. (end of clause) as prescribed in 22.407(a), insert the following clause: disputes concerning labor standards (feb 1988) the united states department of labor has set forth in 29 cfr parts 5, 6, and 7 procedures for resolving disputes concerning labor standards requirements. such disputes shall be resolved in accordance with those procedures and not the disputes clause of this contract. disputes within the meaning of this clause include disputes between the contractor (or any of its subcontractors) and the contracting agency, the u.s. department of labor, or the employees or their representatives. (end of clause) as prescribed in 22.407(a), insert the following clause: certification of eligibility (may 2014) (a) by entering into this contract, the contractor certifies that neither it nor any person or firm who has an interest in the contractor's firm is a person or firm ineligible to be awarded government contracts by virtue of 40 u.s.c. 3144(b)(2) or 29 cfr 5.12(a)(1). (b) no part of this contract shall be subcontracted to any person or firm ineligible for award of a government contract by virtue of 40 u.s.c. 3144(b)(2) or 29 cfr 5.12(a)(1). (c) the penalty for making false statements is prescribed in the u.s. criminal code, 18 u.s.c. 1001. (end of clause) as prescribed in 22.407(b), insert the following clause: approval of wage rates (may 2014) all straight time wage rates, and overtime rates based thereon, for laborers and mechanics engaged in work under this contract must be submitted for approval in writing by the head of the contracting activity or a representative expressly designated for this purpose, if the straight time wages exceed the rates for corresponding classifications contained in the applicable construction wage rate requirements minimum wage determination included in the contract. any amount paid by the contractor to any laborer or mechanic in excess of the agency approved wage rate shall be at the expense of the contractor and shall not be reimbursed by the government. if the government refuses to authorize the use of the overtime, the contractor is not released from the obligation to pay employees at the required overtime rates for any overtime actually worked. (end of clause) as prescribed in 22.1505(a), insert the following provision: certification regarding knowledge of child labor for listed end products (feb 2021) (a) definition. forced or indentured child labor means all work or service  (1) exacted from any person under the age of 18 under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily; or (2) performed by any person under the age of 18 pursuant to a contract the enforcement of which can be accomplished by process or penalties. (b) listed end products. the following end product(s) being acquired under this solicitation is (are) included in the list of products requiring contractor certification as to forced or indentured child labor, identified by their country of origin. there is a reasonable basis to believe that listed end products from the listed countries of origin may have been mined, produced, or manufactured by forced or indentured child labor. _________________ _________________ _________________ _________________ (c) certification. the government will not make award to an offeror unless the offeror, by checking the appropriate block, certifies to either paragraph (c)(1) or paragraph (c)(2) of this provision. (1) □ the offeror will not supply any end product listed in paragraph (b) of this provision that was mined, produced, or manufactured in a corresponding country as listed for that end product. (2) □ the offeror may supply an end product listed in paragraph (b) of this provision that was mined, produced, or manufactured in the corresponding country as listed for that product. the offeror certifies that it has made a good faith effort to determine whether forced or indentured child labor was used to mine, produce, or manufacture such end product. on the basis of those efforts, the offeror certifies that it is not aware of any such use of child labor. (end of provision) as prescribed in 22.1505(b), insert the following clause: child labor cooperation with authorities and remedies (jan 2025) (a) applicability. this clause does not apply to the extent that the contractor is supplying end products mined, produced, or manufactured in  (1) israel, and the anticipated value of the acquisition is $50,000 or more; (2) mexico, and the anticipated value of the acquisition is $102,280 or more; or (3) armenia, aruba, australia, austria, belgium, bulgaria, canada, croatia, cyprus, czech republic, denmark, estonia, finland, france, germany, greece, hong kong, hungary, iceland, ireland, italy, japan, korea, latvia, liechtenstein, lithuania, luxembourg, malta, moldova, montenegro, netherlands, new zealand, north macedonia, norway, poland, portugal, romania, singapore, slovak republic, slovenia, spain, sweden, switzerland, taiwan, ukraine, or the united kingdom and the anticipated value of the acquisition is $174,000 or more. (b) cooperation with authorities. to enforce the laws prohibiting the manufacture or importation of products mined, produced, or manufactured by forced or indentured child labor, authorized officials may need to conduct investigations to determine whether forced or indentured child labor was used to mine, produce, or manufacture any product furnished under this contract. if the solicitation includes the provision 52.222 18, certification regarding knowledge of child labor for listed end products, or the equivalent at 52.212 3(i), the contractor agrees to cooperate fully with authorized officials of the contracting agency, the department of the treasury, or the department of justice by providing reasonable access to records, documents, persons, or premises upon reasonable request by the authorized officials. (c) violations. the government may impose remedies set forth in paragraph (d) for the following violations: (1) the contractor has submitted a false certification regarding knowledge of the use of forced or indentured child labor for listed end products. (2) the contractor has failed to cooperate, if required, in accordance with paragraph (b) of this clause, with an investigation of the use of forced or indentured child labor by an inspector general, attorney general, or the secretary of the treasury. (3) the contractor uses forced or indentured child labor in its mining, production, or manufacturing processes. (4) the contractor has furnished under the contract end products or components that have been mined, produced, or manufactured wholly or in part by forced or indentured child labor. (the government will not pursue remedies at paragraph (d)(2) or paragraph (d)(3) of this clause unless sufficient evidence indicates that the contractor knew of the violation.) (d) remedies. (1) the contracting officer may terminate the contract. (2) the suspending and debarring official may suspend the contractor in accordance with procedures in far subpart 9.4. (3) the suspending and debarring may debar the contractor for a period not to exceed 3 years in accordance with the procedures in far subpart 9.4. (end of clause) as prescribed in 22.610 , insert the following clause in solicitations and contracts: contracts for materials, supplies, articles, and equipment (jun 2020) if this contract is for the manufacture or furnishing of materials, supplies, articles or equipment in an amount that exceeds or may exceed the threshold specified in federal acquisition regulation 22.602 on the date of award of this contract, and is subject to 41 u.s.c. chapter 65, the following terms and conditions apply: (a) all stipulations required by 41 u.s.c. chapter 65 and regulations issued by the secretary of labor (41 cfr chapter 50) are incorporated by reference. these stipulations are subject to all applicable rulings and interpretations of the secretary of labor that are now, or may hereafter, be in effect. (b) all employees whose work relates to this contract shall be paid not less than the minimum wage prescribed by regulations issued by the secretary of labor (41 cfr 50 202.2). learners, student learners, apprentices, and workers with disabilities may be employed at less than the prescribed minimum wage (see 41 cfr 50 202.3) to the same extent that such employment is permitted under section 14 of the fair labor standards act ( 41 u.s.c. 6508). (end of clause) as prescribed in 22.810(a)(1), insert the following clause: prohibition of segregated facilities (apr 2015) (a) definitions. as used in this clause gender identity has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. segregated facilities, means any waiting rooms, work areas, rest rooms and wash rooms, restaurants and other eating areas, time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees, that are segregated by explicit directive or are in fact segregated on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin because of written or oral policies or employee custom. the term does not include separate or single user rest rooms or necessary dressing or sleeping areas provided to assure privacy between the sexes. sexual orientation has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. (b) the contractor agrees that it does not and will not maintain or provide for its employees any segregated facilities at any of its establishments, and that it does not and will not permit its employees to perform their services at any location under its control where segregated facilities are maintained. the contractor agrees that a breach of this clause is a violation of the equal opportunity clause in this contract. (c) the contractor shall include this clause in every subcontract and purchase order that is subject to the equal opportunity clause of this contract. (end of clause) as prescribed in 22.810(a)(2), insert the following provision: previous contracts and compliance reports (feb 1999) the offeror represents that  it □ has, □ has not participated in a previous contract or subcontract subject to the equal opportunity clause of this solicitation; it □ has, □ has not filed all required compliance reports; and representations indicating submission of required compliance reports, signed by proposed subcontractors, will be obtained before subcontract awards. (end of provision) as prescribed in 22.810(b), insert the following provision: notice of requirement for affirmative action to ensure equal employment opportunity for construction (feb 1999) (a) the offeror’s attention is called to the equal opportunity clause and the affirmative action compliance requirements for construction clause of this solicitation. (b) the goals for minority and female participation, expressed in percentage terms for the contractor’s aggregate workforce in each trade on all construction work in the covered area, are as follows: ________________ ________________ these goals are applicable to all the contractor’s construction work performed in the covered area. if the contractor performs construction work in a geographical area located outside of the covered area, the contractor shall apply the goals established for the geographical area where the work is actually performed. goals are published periodically in the federal register in notice form, and these notices may be obtained from any office of federal contract compliance programs office. (c) the contractor’s compliance with executive order11246, as amended, and the regulations in 41 cfr 60 4 shall be based on (1) its implementation of the equal opportunity clause, (2) specific affirmative action obligations required by the clause entitled "affirmative action compliance requirements for construction," and (3) its efforts to meet the goals. the hours of minority and female employment and training must be substantially uniform throughout the length of the contract, and in each trade. the contractor shall make a good faith effort to employ minorities and women evenly on each of its projects. the transfer of minority or female employees or trainees from contractor to contractor, or from project to project, for the sole purpose of meeting the contractor’s goals shall be a violation of the contract, executive order11246, as amended, and the regulations in 41 cfr 60 4. compliance with the goals will be measured against the total work hours performed. (d) the contractor shall provide written notification to the deputy assistant secretary for federal contract compliance, u.s. department of labor, within 10 working days following award of any construction subcontract in excess of $10,000 at any tier for construction work under the contract resulting from this solicitation. the notification shall list the  (1) name, address, and telephone number of the subcontractor; (2) employer’s identification number of the subcontractor; (3) estimated dollar amount of the subcontract; (4) estimated starting and completion dates of the subcontract; and (5) geographical area in which the subcontract is to be performed. (e) as used in this notice, and in any contract resulting from this solicitation, the "covered area" is ___________ [contracting officer shall insert description of the geographical areas where the contract is to be performed, giving the state, county, and city]. (end of provision) as prescribed in 22.810(c), insert the following provision: preaward on site equal opportunity compliance evaluation (feb 1999) if a contract in the amount of $10 million or more will result from this solicitation, the prospective contractor and its known first tier subcontractors with anticipated subcontracts of $10 million or more shall be subject to a preaward compliance evaluation by the office of federal contract compliance programs (ofccp), unless, within the preceding 24 months, ofccp has conducted an evaluation and found the prospective contractor and subcontractors to be in compliance with executive order11246. (end of provision) as prescribed in 22.810(d), insert the following provision: affirmative action compliance (apr 1984) the offeror represents that  (a) it □ has developed and has on file, □ has not developed and does not have on file, at each establishment, affirmative action programs required by the rules and regulations of the secretary of labor (41 cfr 60 1 and 60 2); or (b) it □ has not previously had contracts subject to the written affirmative action programs requirement of the rules and regulations of the secretary of labor. (end of provision) as prescribed in 22.810(e), insert the following clause: equal opportunity (sept 2016) (a) definition. as used in this clause. compensation means any payments made to, or on behalf of, an employee or offered to an applicant as remuneration for employment, including but not limited to salary, wages, overtime pay, shift differentials, bonuses, commissions, vacation and holiday pay, allowances, insurance and other benefits, stock options and awards, profit sharing, and retirement. compensation information means the amount and type of compensation provided to employees or offered to applicants, including, but not limited to, the desire of the contractor to attract and retain a particular employee for the value the employee is perceived to add to the contractor's profit or productivity; the availability of employees with like skills in the marketplace; market research about the worth of similar jobs in the relevant marketplace; job analysis, descriptions, and evaluations; salary and pay structures; salary surveys; labor union agreements; and contractor decisions, statements and policies related to setting or altering employee compensation. essential job functions means the fundamental job duties of the employment position an individual holds. a job function may be considered essential if  (1) the access to compensation information is necessary in order to perform that function or another routinely assigned business task; or (2) the function or duties of the position include protecting and maintaining the privacy of employee personnel records, including compensation information. gender identity has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. sexual orientation has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. united states, means the 50 states, the district of columbia, puerto rico, the northern mariana islands, american samoa, guam, the u.s. virgin islands, and wake island. (b) (1) if, during any 12 month period (including the 12 months preceding the award of this contract), the contractor has been or is awarded nonexempt federal contracts and/or subcontracts that have an aggregate value in excess of $10,000, the contractor shall comply with this clause, except for work performed outside the united states by employees who were not recruited within the united states. upon request, the contractor shall provide information necessary to determine the applicability of this clause. (2) if the contractor is a religious corporation, association, educational institution, or society, the requirements of this clause do not apply with respect to the employment of individuals of a particular religion to perform work connected with the carrying on of the contractor’s activities (41 cfr 60 1.5). (c) (1) the contractor shall not discriminate against any employee or applicant for employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin. however, it shall not be a violation of this clause for the contractor to extend a publicly announced preference in employment to indians living on or near an indian reservation, in connection with employment opportunities on or near an indian reservation, as permitted by 41 cfr 60 1.5. (2) the contractor shall take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, sexual orientation, gender identity, or national origin. this shall include, but not be limited to  (i) employment; (ii) upgrading; (iii) demotion; (iv) transfer; (v) recruitment or recruitment advertising; (vi) layoff or termination; (vii) rates of pay or other forms of compensation; and (viii) selection for training, including apprenticeship. (3) the contractor shall post in conspicuous places available to employees and applicants for employment the notices to be provided by the contracting officer that explain this clause. (4) the contractor shall, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin. (5) (i) the contractor shall not discharge or in any other manner discriminate against any employee or applicant for employment because such employee or applicant has inquired about, discussed, or disclosed the compensation of the employee or applicant or another employee or applicant. this prohibition against discrimination does not apply to instances in which an employee who has access to the compensation information of other employees or applicants as a part of such employee's essential job functions discloses the compensation of such other employees or applicants to individuals who do not otherwise have access to such information, unless such disclosure is in response to a formal complaint or charge, in furtherance of an investigation, proceeding, hearing, or action, including an investigation conducted by the employer, or is consistent with the contractor's legal duty to furnish information. (ii) the contractor shall disseminate the prohibition on discrimination in paragraph (c)(5)(i) of this clause, using language prescribed by the director of the office of federal contract compliance programs (ofccp), to employees and applicants by  (a) incorporation into existing employee manuals or handbooks; and (b) electronic posting or by posting a copy of the provision in conspicuous places available to employees and applicants for employment. (6) the contractor shall send, to each labor union or representative of workers with which it has a collective bargaining agreement or other contract or understanding, the notice to be provided by the contracting officer advising the labor union or workers’ representative of the contractor’s commitments under this clause, and post copies of the notice in conspicuous places available to employees and applicants for employment. (7) the contractor shall comply with executive order11246, as amended, and the rules, regulations, and orders of the secretary of labor. (8) the contractor shall furnish to the contracting agency all information required by executive order11246, as amended, and by the rules, regulations, and orders of the secretary of labor. the contractor shall also file standard form100 (eeo 1), or any successor form, as prescribed in 41 cfr part 60 1. unless the contractor has filed within the 12 months preceding the date of contract award, the contractor shall, within 30 days after contract award, apply to either the regional office of federal contract compliance programs (ofccp) or the local office of the equal employment opportunity commission for the necessary forms. (9) the contractor shall permit access to its premises, during normal business hours, by the contracting agency or the ofccp for the purpose of conducting on site compliance evaluations and complaint investigations. the contractor shall permit the government to inspect and copy any books, accounts, records (including computerized records), and other material that may be relevant to the matter under investigation and pertinent to compliance with executive order11246, as amended, and rules and regulations that implement the executive order. (10) if the ofccp determines that the contractor is not in compliance with this clause or any rule, regulation, or order of the secretary of labor, this contract may be canceled, terminated, or suspended in whole or in part and the contractor may be declared ineligible for further government contracts, under the procedures authorized in executive order11246, as amended. in addition, sanctions may be imposed and remedies invoked against the contractor as provided in executive order11246, as amended; in the rules, regulations, and orders of the secretary of labor; or as otherwise provided by law. (11) the contractor shall include the terms and conditions of this clause in every subcontract or purchase order that is not exempted by the rules, regulations, or orders of the secretary of labor issued under executive order11246, as amended, so that these terms and conditions will be binding upon each subcontractor or vendor. (12) the contractor shall take such action with respect to any subcontract or purchase order as the director of ofccp may direct as a means of enforcing these terms and conditions, including sanctions for noncompliance, provided, that if the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of any direction, the contractor may request the united states to enter into the litigation to protect the interests of the united states. (d) notwithstanding any other clause in this contract, disputes relative to this clause will be governed by the procedures in 41 cfr 60 1. (end of clause) alternate i (feb 1999). as prescribed in 22.810 (e), add the following as a preamble to the clause: notice: the following terms of this clause are waived for this contract: __________ [contracting officer shall list terms]. as prescribed in 22.810(f), insert the following clause: affirmative action compliance requirements for construction (apr 2015) (a) definitions. as used in this clause  covered area means the geographical area described in the solicitation for this contract. deputy assistant secretary, means the deputy assistant secretary for the office of federal contract compliance programs, u.s. department of labor, or a designee. employer identification number, means the federal social security number used on the employer’s quarterly federal tax return, u.s. treasury department form 941. gender identity has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. minority, as used in this clause, means  (1) american indian or alaskan native (all persons having origins in any of the original peoples of north america and maintaining identifiable tribal affiliations through membership and participation or community identification). (2) asian and pacific islander (all persons having origins in any of the original peoples of the far east, southeast asia, the indian subcontinent, or the pacific islands); (3) black (all persons having origins in any of the black african racial groups not of hispanic origin); and (4) hispanic (all persons of mexican, puerto rican, cuban, central or south american, or other spanish culture or origin, regardless of race). sexual orientation has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. (b) if the contractor, or a subcontractor at any tier, subcontracts a portion of the work involving any construction trade, each such subcontract in excess of $10,000 shall include this clause and the notice containing the goals for minority and female participation stated in the solicitation for this contract. (c) if the contractor is participating in a hometown plan (41 cfr 60 4) approved by the u.s. department of labor in a covered area, either individually or through an association, its affirmative action obligations on all work in the plan area (including goals) shall comply with the plan for those trades that have unions participating in the plan. contractors must be able to demonstrate participation in, and compliance with, the provisions of the plan. each contractor or subcontractor participating in an approved plan is also required to comply with its obligations under the equal opportunity clause, and to make a good faith effort to achieve each goal under the plan in each trade in which it has employees. the overall good faith performance by other contractors or subcontractors toward a goal in an approved plan does not excuse any contractor’s or subcontractor’s failure to make good faith efforts to achieve the plan’s goals. (d) the contractor shall implement the affirmative action procedures in paragraphs (g)(1) through (16) of this clause. the goals stated in the solicitation for this contract are expressed as percentages of the total hours of employment and training of minority and female utilization that the contractor should reasonably be able to achieve in each construction trade in which it has employees in the covered area. if the contractor performs construction work in a geographical area located outside of the covered area, it shall apply the goals established for the geographical area where that work is actually performed. the contractor is expected to make substantially uniform progress toward its goals in each craft. (e) neither the terms and conditions of any collective bargaining agreement, nor the failure by a union with which the contractor has a collective bargaining agreement, to refer minorities or women shall excuse the contractor’s obligations under this clause, executive order11246, as amended, or the regulations thereunder. (f) in order for the nonworking training hours of apprentices and trainees to be counted in meeting the goals, apprentices and trainees must be employed by the contractor during the training period, and the contractor must have made a commitment to employ the apprentices and trainees at the completion of their training, subject to the availability of employment opportunities. trainees must be trained pursuant to training programs approved by the u.s. department of labor. (g) the contractor shall take affirmative action to ensure equal employment opportunity. the evaluation of the contractor’s compliance with this clause shall be based upon its effort to achieve maximum results from its actions. the contractor shall document these efforts fully and implement affirmative action steps at least as extensive as the following: (1) ensure a working environment free of harassment, intimidation, and coercion at all sites and in all facilities where the contractor’s employees are assigned to work. the contractor, if possible, will assign two or more women to each construction project. the contractor shall ensure that foremen, superintendents, and other onsite supervisory personnel are aware of and carry out the contractor’s obligation to maintain such a working environment, with specific attention to minority or female individuals working at these sites or facilities. (2) establish and maintain a current list of sources for minority and female recruitment. provide written notification to minority and female recruitment sources and community organizations when the contractor or its unions have employment opportunities available, and maintain a record of the organizations’ responses. (3) establish and maintain a current file of the names, addresses, and telephone numbers of each minority and female off the street applicant, referrals of minorities or females from unions, recruitment sources, or community organizations, and the action taken with respect to each individual. if an individual was sent to the union hiring hall for referral and not referred back to the contractor by the union or, if referred back, not employed by the contractor, this shall be documented in the file, along with whatever additional actions the contractor may have taken. (4) immediately notify the deputy assistant secretary when the union or unions with which the contractor has a collective bargaining agreement has not referred back to the contractor a minority or woman sent by the contractor, or when the contractor has other information that the union referral process has impeded the contractor’s efforts to meet its obligations. (5) develop on the job training opportunities and/or participate in training programs for the area that expressly include minorities and women, including upgrading programs and apprenticeship and trainee programs relevant to the contractor’s employment needs, especially those programs funded or approved by the department of labor. the contractor shall provide notice of these programs to the sources compiled under paragraph (g)(2) of this clause. (6) disseminate the contractor’s equal employment policy by  (i) providing notice of the policy to unions and to training, recruitment, and outreach programs, and requesting their cooperation in assisting the contractor in meeting its contract obligations; (ii) including the policy in any policy manual and in collective bargaining agreements; (iii) publicizing the policy in the company newspaper, annual report, etc.; (iv) reviewing the policy with all management personnel and with all minority and female employees at least once a year; and (v) posting the policy on bulletin boards accessible to employees at each location where construction work is performed. (7) review, at least annually, the contractor’s equal employment policy and affirmative action obligations with all employees having responsibility for hiring, assignment, layoff, termination, or other employment decisions. conduct review of this policy with all on site supervisory personnel before initiating construction work at a job site. a written record shall be made and maintained identifying the time and place of these meetings, persons attending, subject matter discussed, and disposition of the subject matter. (8) disseminate the contractor’s equal employment policy externally by including it in any advertising in the news media, specifically including minority and female news media. provide written notification to, and discuss this policy with, other contractors and subcontractors with which the contractor does or anticipates doing business. (9) direct recruitment efforts, both oral and written, to minority, female, and community organizations, to schools with minority and female students, and to minority and female recruitment and training organizations serving the contractor’s recruitment area and employment needs. not later than 1 month before the date for acceptance of applications for apprenticeship or training by any recruitment source, send written notification to organizations such as the above, describing the openings, screening procedures, and tests to be used in the selection process. (10) encourage present minority and female employees to recruit minority persons and women. where reasonable, provide after school, summer, and vacation employment to minority and female youth both on the site and in other areas of the contractor’s workforce. (11) validate all tests and other selection requirements where required under 41 cfr 60 3. (12) conduct, at least annually, an inventory and evaluation at least of all minority and female personnel for promotional opportunities. encourage these employees to seek or to prepare for, through appropriate training, etc., opportunities for promotion. (13) ensure that seniority practices, job classifications, work assignments, and other personnel practices do not have a discriminatory effect by continually monitoring all personnel and employment related activities to ensure that the contractor’s obligations under this contract are being carried out. (14) ensure that all facilities and company activities are nonsegregated except that separate or single user rest rooms and necessary dressing or sleeping areas shall be provided to assure privacy between the sexes. (15) maintain a record of solicitations for subcontracts for minority and female construction contractors and suppliers, including circulation of solicitations to minority and female contractor associations and other business associations. (16) conduct a review, at least annually, of all supervisors’ adherence to and performance under the contractor’s equal employment policy and affirmative action obligations. (h) the contractor is encouraged to participate in voluntary associations that may assist in fulfilling one or more of the affirmative action obligations contained in paragraphs (g)(1) through (16) of this clause. the efforts of a contractor association, joint contractor union, contractor community, or similar group of which the contractor is a member and participant may be asserted as fulfilling one or more of its obligations under paragraphs (g)(1) through (16) of this clause, provided, the contractor  (1) actively participates in the group; (2) makes every effort to ensure that the group has a positive impact on the employment of minorities and women in the industry; (3) ensures that concrete benefits of the program are reflected in the contractor’s minority and female workforce participation; (4) makes a good faith effort to meet its individual goals and timetables; and (5) can provide access to documentation that demonstrates the effectiveness of actions taken on behalf of the contractor. the obligation to comply is the contractor’s, and failure of such a group to fulfill an obligation shall not be a defense for the contractor’s noncompliance. (i) a single goal for minorities and a separate single goal for women shall be established. the contractor is required to provide equal employment opportunity and to take affirmative action for all minority groups, both male and female, and all women, both minority and nonminority. consequently, the contractor may be in violation of executive order11246, as amended, if a particular group is employed in a substantially disparate manner. (j) the contractor shall not use goals or affirmative action standards to discriminate against any person because of race, color, religion, sex, sexual orientation, gender identity, or national origin. (k) the contractor shall not enter into any subcontract with any person or firm debarred from government contracts under executive order11246, as amended. (l) the contractor shall carry out such sanctions and penalties for violation of this clause and of the equal opportunity clause, including suspension, termination, and cancellation of existing subcontracts, as may be imposed or ordered under executive order11246, as amended, and its implementing regulations, by the ofccp. any failure to carry out these sanctions and penalties as ordered shall be a violation of this clause and executive order11246, as amended. (m) the contractor in fulfilling its obligations under this clause shall implement affirmative action procedures at least as extensive as those prescribed in paragraph (g) of this clause, so as to achieve maximum results from its efforts to ensure equal employment opportunity. if the contractor fails to comply with the requirements of executive order11246, as amended, the implementing regulations, or this clause, the deputy assistant secretary shall take action as prescribed in 41 cfr 60 4.8. (n) the contractor shall designate a responsible official to  (1) monitor all employment related activity to ensure that the contractor’s equal employment policy is being carried out; (2) submit reports as may be required by the government; and (3) keep records that shall at least include for each employee the name, address, telephone number, construction trade, union affiliation (if any), employee identification number, social security number, race, sex, status (e.g., mechanic, apprentice, trainee, helper, or laborer), dates of changes in status, hours worked per week in the indicated trade, rate of pay, and locations at which the work was performed. records shall be maintained in an easily understandable and retrievable form; however, to the degree that existing records satisfy this requirement, separate records are not required to be maintained. (o) nothing contained herein shall be construed as a limitation upon the application of other laws that establish different standards of compliance or upon the requirements for the hiring of local or other area residents (e.g., those under the public works employment act of1977 and the community development blockgrant program). (end of clause) as prescribed in 22.810(g), insert the following clause: notification of visa denial (apr 2015) (a) definitions. as used in this clause  gender identity has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. sexual orientation has the meaning given by the department of labor’s office of federal contract compliance programs, and is found at http://www.dol.gov/ofccp/lgbt/lgbt_faqs.html. (b) requirement to notify. (1) it is a violation of executive order 11246 for a contractor to refuse to employ any applicant or not to assign any person hired in the united states, puerto rico, the northern mariana islands, american samoa, guam, the u.s. virgin islands, or wake island, on the basis that the individual's race, color, religion, sex, sexual orientation, gender identity, or national origin is not compatible with the policies of the country where or for whom the work will be performed (41 cfr 60 1.10). (2) the contractor shall notify the u.s. department of state, assistant secretary, bureau of political military affairs (pm), 2201 c street nw, room 6212, washington, dc 20520, and the u.s. department of labor, deputy assistant secretary for federal contract compliance, when it has knowledge of any employee or potential employee being denied an entry visa to a country where this contract will be performed, and it believes the denial is attributable to the race, color, religion, sex, sexual orientation, gender identity, or national origin of the employee or potential employee. (end of clause) as prescribed in 22.407(e), insert the following clause: construction wage rate requirements price adjustment (none or separately specified method) (aug 2018) (a) the wage determination issued under the construction wage rate requirements statute by the administrator, wage and hour division, u.s. department of labor, that is effective for an option to extend the term of the contract, will apply to that option period. (b) the contracting officer will make no adjustment in contract price, other than provided for elsewhere in this contract, to cover any increases or decreases in wages and benefits as a result of  (1) incorporation of the department of labor’s wage determination applicable at the exercise of the option to extend the term of the contract; (2) incorporation of a wage determination otherwise applied to the contract by operation of law; or (3) an increase in wages and benefits resulting from any other requirement applicable to workers subject to the construction wage rate requirements statute. (end of clause) as prescribed in 22.407(f), insert the following clause: construction wage rate requirements price adjustment (percentage method) (aug 2018) (a) the wage determination issued under the construction wage rate requirements statute by the administrator, wage and hour division, u.s. department of labor, that is effective for an option to extend the term of the contract, will apply to that option period. (b) the contracting officer will adjust the portion of the contract price or contract unit price(s) containing the labor costs subject to the construction wage rate requirements statute to provide for an increase in wages and fringe benefits at the exercise of each option to extend the term of the contract in accordance with the following procedures: (1) the contracting officer has determined that the portion of the contract price or contract unit price(s) containing labor costs subject to the construction wage rate requirements statute is __________ [contracting officer insert percentage rate] percent. (2) the contracting officer will increase the portion of the contract price or contract unit price(s) containing the labor costs subject to the construction wage rate requirements statute by the percentage rate published in _____________ [contracting officer insert publication]. (c) the contracting officer will make the price adjustment at the exercise of each option to extend the term of the contract. this adjustment is the only adjustment that the contracting officer will make to cover any increases in wages and benefits as a result of  (1) incorporation of the department of labor’s wage determination applicable at the exercise of the option to extend the term of the contract; (2) incorporation of a wage determination otherwise applied to the contract by operation of law; or (3) an increase in wages and benefits resulting from any other requirement applicable to workers subject to the construction wage rate requirements statute. (end of clause) as prescribed in 22.407(g), insert the following clause: construction wage rate requirements price adjustment (actual method) (aug 2018) (a) the wage determination issued under the construction wage rate requirements statute by the administrator, wage and hour division, u.s. department of labor, that is effective for an option to extend the term of the contract, will apply to that option period. (b) (1) the contractor states that if the prices in this contract contain an allowance for wage or benefit increases, such allowance will not be included in any request for contract price adjustment submitted under this clause. (2) the contractor shall provide with each request for contract price adjustment under this clause a statement that the prices in the contract do not include any allowance for any increased cost for which adjustment is being requested. (c) the contracting officer will adjust the contract price or contract unit price labor rates to reflect the contractor’s actual increase or decrease in wages and fringe benefits to the extent that the increase is made to comply with, or the decrease is voluntarily made by the contractor as a result of  (1) incorporation of the department of labor’s construction wage rate requirements wage determination applicable at the exercise of an option to extend the term of the contract; or (2) incorporation of a construction wage rate requirements wage determination otherwise applied to the contract by operation of law. (d) any adjustment will be limited to increases or decreases in wages and fringe benefits as described in paragraph (c) of this clause, and the accompanying increases or decreases in social security and unemployment taxes and workers’ compensation insurance, but will not otherwise include any amount for general and administrative costs, overhead, or profit. (e) the contractor shall notify the contracting officer of any increase claimed under this clause within 30 days after receiving a revised wage determination unless this notification period is extended in writing by the contracting officer. the contractor shall notify the contracting officer promptly of any decrease under this clause, but nothing in this clause precludes the government from asserting a claim within the period permitted by law. the notice shall contain a statement of the amount claimed and any relevant supporting data, including payroll records that the contracting officer may reasonably require. upon agreement of the parties, the contracting officer will modify the contract price or contract unit price in writing. the contractor shall continue performance pending agreement on or determination of any such adjustment and its effective date. (f) contract price adjustment computations shall be computed as follows: (1) computation for contract unit price per single craft hour for schedule of indefinite quantity work. for each labor classification, the difference between the actual wage and benefit rates (combined) paid and the wage and benefit rates (combined) required by the new wage determination shall be added to the original contract unit price if the difference results in a combined increase. if the difference computed results in a combined decrease, the contract unit price shall be decreased by that amount if the contractor provides notification as provided in paragraph (e) of this clause. (2) computation for contract unit price containing multiple craft hours for schedule of indefinite quantity work. for each labor classification, the difference between the actual wage and benefit rates (combined) paid and the wage and benefit rates (combined) required by the new wage determination shall be multiplied by the actual number of hours expended for each craft involved in accomplishing the unit priced work item. the product of this computation will then be divided by the actual number of units ordered in the preceding contract period. the total of these computations for each craft will be added to the current contract unit price to obtain the new contract unit price. the extended amount for the line item will be obtained by multiplying the new unit price by the estimated quantity. if actual hours are not available from the preceding contract period for computation of the adjustment for a specific contract unit of work, the contractor, in agreement with the contracting officer, shall estimate the total hours per craft per contract unit of work. example: asphalt paving current price $3.38 per square yard * note: adjustment for labor rate increases or decreases may be accompanied by social security and unemployment taxes and workers’ compensation insurance. (end of clause) as prescribed in 22.505(a)(1), insert the following provision: notice of requirement for project labor agreement (jan 2024) (a) definitions. as used in this provision, the following terms are defined in clause 52.222 34, project labor agreement, of this solicitation “construction,” “labor organization,” “large scale construction project,” and “project labor agreement.” (b) offerors shall  (1) negotiate or become a party to a project labor agreement with one or more labor organizations for the term of the resulting construction contract; and (2) require its subcontractors to become a party to the resulting project labor agreement. (c) the project labor agreement reached pursuant to this provision shall  (1) bind the offeror and subcontractors engaged in construction on the construction project to comply with the project labor agreement; (2) allow the offeror and all subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (3) contain guarantees against strikes, lockouts, and similar job disruptions; (4) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement; (5) provide other mechanisms for labor management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and (6) fully conform to all statutes, regulations, executive orders, and agency requirements. (d) any project labor agreement reached pursuant to this provision does not change the terms of the resulting contract or provide for any price adjustment by the government. (e) the offeror shall submit to the contracting officer a copy of the project labor agreement with its offer. (end of provision) alternate i (jan 2024). as prescribed in 22.505 (a)(2), substitute the following paragraphs (b) and (e) for paragraphs (b) and (e) of the basic provision. (b) the apparent successful offeror shall  (1) negotiate or become a party to a project labor agreement with one or more labor organizations for the term of the resulting construction contract; and (2) require its subcontractors to become a party to the resulting project labor agreement. (e) the apparent successful offeror shall submit to the contracting officer a copy of the project labor agreement prior to contract award. alternate ii (jan 2024). as prescribed in 22.505 (a)(3), substitute the following paragraph (b) in lieu of paragraphs (b) through (e) of the basic provision: (b) if awarded the contract, the offeror shall  (1) negotiate or become a party to a project labor agreement with one or more labor organizations for the term of the resulting construction contract; and (2) require its subcontractors to become a party to the resulting project labor agreement. alternate iii (jan 2024). as prescribed in 22.505 (a)(4), substitute the following paragraph (b) in lieu of paragraphs (b) through (e) of the basic provision: (b)(1) if awarded the contract, the offeror may be required by the agency to negotiate or become a party to a project labor agreement with one or more labor organizations for the term of the order. the contracting officer will require that an executed copy of the project labor agreement be submitted to the agency  (i) with the order offer; (ii) prior to award of the order; or (iii) after award of the order. (2) the offeror shall require its subcontractors to become a party to the resulting project labor agreement for the term of the order. as prescribed in 22.505(b)(1), insert the following clause: project labor agreement (jan 2024) (a) definitions. as used in this clause  construction means construction, reconstruction, rehabilitation, modernization, alteration, conversion, extension, repair, or improvement of buildings, structures, highways, or other real property. labor organization means a labor organization as defined in 29 u.s.c. 152(5) of which building and construction employees are members. large scale construction project means a federal construction project within the united states for which the total estimated cost of the construction contract(s) to the federal government is $35 million or more. project labor agreement means a pre hire collective bargaining agreement with one or more labor organizations that establishes the terms and conditions of employment for a specific construction project and is an agreement described in 29 u.s.c. 158(f). (b) the contractor shall maintain in a current status throughout the life of the contract the project labor agreement entered into prior to the award of the contract. (c) subcontracts. the contractor shall include the substance of this clause, including this paragraph (c), in subcontracts with subcontractors engaged in construction on the construction project. (end of clause) alternate i (jan 2024) . as prescribed in 22.505 (b)(2), substitute the following paragraphs (b) through (f) for paragraphs (b) and (c) of the basic clause: (b) the contractor shall  (1) negotiate or become a party to a project labor agreement with one or more labor organizations for the term of this construction contract; and (2) submit an executed copy of the project labor agreement to the contracting officer as required in the solicitation. (c) the project labor agreement reached pursuant to this clause shall  (1) bind the contractor and subcontractors engaged in construction on the construction project to comply with the project labor agreement; (2) allow the contractor and all subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (3) contain guarantees against strikes, lockouts, and similar job disruptions; (4) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement; (5) provide other mechanisms for labor management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and (6) fully conform to all statutes, regulations, executive orders, and agency requirements. (d) any project labor agreement reached pursuant to this clause does not change the terms of this contract or provide for any price adjustment by the government. (e) the contractor shall maintain in a current status throughout the life of the contract the project labor agreement entered into pursuant to this clause. (f) subcontracts. the contractor shall require subcontractors engaged in construction on the construction project to agree to any project labor agreement negotiated by the prime contractor pursuant to this clause, and shall include the substance of paragraphs (d) through (f) of this clause in subcontracts with subcontractors engaged in construction on the construction project. alternate ii (jan 2024). as prescribed in 22.505 (b)(3), substitute the following paragraphs (b) through (f) for paragraphs (b) through (f) of the basic clause: (b) when notified by the agency ( e.g., by the notice of intent to place an order under 16.505(b)(1)) that this order will use a project labor agreement, the contractor shall negotiate or become a party to a project labor agreement with one or more labor organizations for the term of the order. the contracting officer shall require that an executed copy of the project labor agreement be submitted to the agency  (1) with the order offer; (2) prior to award of the order; or (3) after award of the order. (c) the project labor agreement reached pursuant to this clause shall  (1) bind the contractor and subcontractors engaged in construction on the construction project to comply with the project labor agreement; (2) allow all contractors and subcontractors to compete for contracts and subcontracts without regard to whether they are otherwise parties to collective bargaining agreements; (3) contain guarantees against strikes, lockouts, and similar job disruptions; (4) set forth effective, prompt, and mutually binding procedures for resolving labor disputes arising during the term of the project labor agreement; (5) provide other mechanisms for labor management cooperation on matters of mutual interest and concern, including productivity, quality of work, safety, and health; and (6) fully conform to all statutes, regulations, executive orders, and agency requirements. (d) any project labor agreement reached pursuant to this clause does not change the terms of this contract or provide for any price adjustment by the government. (e) the contractor shall maintain in a current status throughout the life of the order any project labor agreement entered into pursuant to this clause. (f) subcontracts. for each order that uses a project labor agreement, the contractor shall  (1) require subcontractors engaged in construction on the construction project to agree to any project labor agreement negotiated by the prime contractor pursuant to this clause; and (2) include the substance of paragraphs (d) through (f) of this clause in subcontracts with subcontractors engaged in construction on the construction project. as prescribed in 22.1310(a)(1), insert the following clause: equal opportunity for veterans (jun 2020) (a) definitions. as used in this clause  "active duty wartime or campaign badge veteran," "armed forces service medal veteran," "disabled veteran," "protected veteran," "qualified disabled veteran," and "recently separated veteran" have the meanings given at federal acquisition regulation (far) 22.1301. (b) equal opportunity clause. the contractor shall abide by the requirements of the equal opportunity clause at 41 cfr 60 300.5(a), as of march 24, 2014. this clause prohibits discrimination against qualified protected veterans, and requires affirmative action by the contractor to employ and advance in employment qualified protected veterans. (c) subcontracts. the contractor shall insert the terms of this clause in subcontracts valued at or above the threshold specified in far 22.1303(a) on the date of subcontract award, unless exempted by rules, regulations, or orders of the secretary of labor. the contractor shall act as specified by the director, office of federal contract compliance programs, to enforce the terms, including action for noncompliance. such necessary changes in language may be made as shall be appropriate to identify properly the parties and their undertakings. (end of clause) alternate i (jul 2014). as prescribed in 22.1310 (a)(2), add the following as a preamble to the clause: notice: the following term(s) of this clause are waived for this contract: ______________________ [list term(s)]. as prescribed in 22.1408(a), insert the following clause: equal opportunity for workers with disabilities (jun 2020) (a) equal opportunity clause. the contractor shall abide by the requirements of the equal opportunity clause at 41 cfr 60 741.5(a), as of march 24, 2014. this clause prohibits discrimination against qualified individuals on the basis of disability, and requires affirmative action by the contractor to employ and advance in employment qualified individuals with disabilities. (b) subcontracts. the contractor shall include the terms of this clause in every subcontract or purchase order in excess of the threshold specified in federal acquisition regulation (far) 22.1408(a) on the date of subcontract award, unless exempted by rules, regulations, or orders of the secretary, so that such provisions will be binding upon each subcontractor or vendor. the contractor shall act as specified by the director, office of federal contract compliance programs of the u.s. department of labor, to enforce the terms, including action for noncompliance. such necessary changes in language may be made as shall be appropriate to identify properly the parties and their undertakings. (end of clause) alternate i (jul 2014). as prescribed in 22.1408 (b), add the following as a preamble to the clause: notice: the following term(s) of this clause are waived for this contract: _______________ [list term(s)]. as prescribed in 22.1310(b), insert the following clause: employment reports on veterans (jun 2020) (a) definitions. as used in this clause, "active duty wartime or campaign badge veteran," "armed forces service medal veteran," "disabled veteran," "protected veteran," and "recently separated veteran," have the meanings given in federal acquisition regulation (far) 22.1301. (b) unless the contractor is a state or local government agency, the contractor shall report at least annually, as required by the secretary of labor, on  (1) the total number of employees in the contractor’s workforce, by job category and hiring location, who are protected veterans (i.e., active duty wartime or campaign badge veterans, armed forces service medal veterans, disabled veterans, and recently separated veterans); (2) the total number of new employees hired during the period covered by the report, and of the total, the number of protected veterans (i.e., active duty wartime or campaign badge veterans, armed forces service medal veterans, disabled veterans, and recently separated veterans); and (3) the maximum number and minimum number of employees of the contractor or subcontractor at each hiring location during the period covered by the report. (c) the contractor shall report the above items by filing the vets 4212 "federal contractor veterans’ employment report" (see "vets 4212 federal contractor reporting" and "filing your vets 4212 report" at http://www.dol.gov/vets/vets4212.htm). (d) the contractor shall submit vets 4212 reports no later than september 30 of each year. (e) the employment activity report required by paragraphs (b)(2) and (b)(3) of this clause shall reflect total new hires, and maximum and minimum number of employees, during the most recent 12 month period preceding the ending date selected for the report. contractors may select an ending date  (1) as of the end of any pay period between july 1 and august 31 of the year the report is due; or (2) as of december 31, if the contractor has prior written approval from the equal employment opportunity commission to do so for purposes of submitting the employer information report eeo 1 (standard form 100). (f) the number of veterans reported must be based on data known to the contractor when completing the vets 4212. the contractor’s knowledge of veterans status may be obtained in a variety of ways, including an invitation to applicants to self identify (in accordance with 41 cfr 60 300.42), voluntary self disclosure by employees, or actual knowledge of veteran status by the contractor. this paragraph does not relieve an employer of liability for discrimination under 38 u.s.c. 4212. (g) the contractor shall insert the terms of this clause in subcontracts valued at or above the threshold specified in far 22.1303(a) on the date of subcontract award, unless exempted by rules, regulations, or orders of the secretary of labor. (end of clause) as prescribed in 22.1310(c), insert the following provision: compliance with veterans’ employment reporting requirements (feb 2016) by submission of its offer, the offeror represents that, if it is subject to the reporting requirements of 38 u.s.c. 4212(d)(i.e., if it has any contract containing federal acquisition regulation clause 52.222 37, employment reports on veterans), it has filed the most recent vets 4212 report required by that clause. (end of provision) as prescribed in 22.1605 , insert the following clause: notification of employee rights under the national labor relations act (dec 2010) (a) during the term of this contract, the contractor shall post an employee notice, of such size and in such form, and containing such content as prescribed by the secretary of labor, in conspicuous places in and about its plants and offices where employees covered by the national labor relations act engage in activities relating to the performance of the contract, including all places where notices to employees are customarily posted both physically and electronically, in the languages employees speak, in accordance with 29 cfr471.2 (d) and (f). (1) physical posting of the employee notice shall be in conspicuous places in and about the contractor’s plants and offices so that the notice is prominent and readily seen by employees who are covered by the national labor relations act and engage in activities related to the performance of the contract. (2) if the contractor customarily posts notices to employees electronically, then the contractor shall also post the required notice electronically by displaying prominently, on any website that is maintained by the contractor and is customarily used for notices to employees about terms and conditions of employment, a link to the department of labor’s website that contains the full text of the poster. the link to the department’s website, as referenced in (b)(3) of this section, must read, "important notice about employee rights to organize and bargain collectively with their employers." (b) this required employee notice, printed by the department of labor, may be  (1) obtained from the division of interpretations and standards, office of labor management standards, u.s. department of labor, 200 constitution avenue, nw., room n 5609, washington, dc 20210, (202) 693 0123, or from any field office of the office of labor management standards or office of federal contract compliance programs; (2) provided by the federal contracting agency if requested; (3) downloaded from the office of labor management standards web site at http://www.dol.gov/olms/regs/compliance/eo13496.htm; or (4) reproduced and used as exact duplicate copies of the department of labor’s official poster. (c) the required text of the employee notice referred to in this clause is located at appendix a, subpart a, 29 cfr part 471. (d) the contractor shall comply with all provisions of the employee notice and related rules, regulations, and orders of the secretary of labor. (e) in the event that the contractor does not comply with the requirements set forth in paragraphs (a) through (d) of this clause, this contract may be terminated or suspended in whole or in part, and the contractor may be suspended or debarred in accordance with 29 cfr 471.14 and subpart 9.4. such other sanctions or remedies may be imposed as are provided by 29 cfr part 471, which implements executive order 13496 or as otherwise provided by law. (f) subcontracts. (1) the contractor shall include the substance of this clause, including this paragraph (f), in every subcontract that exceeds $10,000 and will be performed wholly or partially in the united states, unless exempted by the rules, regulations, or orders of the secretary of labor issued pursuant to section 3 of executive order 13496 of january 30, 2009, so that such provisions will be binding upon each subcontractor. (2) the contractor shall not procure supplies or services in a way designed to avoid the applicability of executive order 13496 or this clause. (3) the contractor shall take such action with respect to any such subcontract as may be directed by the secretary of labor as a means of enforcing such provisions, including the imposition of sanctions for noncompliance. (4) however, if the contractor becomes involved in litigation with a subcontractor, or is threatened with such involvement, as a result of such direction, the contractor may request the united states, through the secretary of labor, to enter into such litigation to protect the interests of the united states. (end of clause) as prescribed in 22.1006(a), insert the following clause: service contract labor standards (aug 2018) (a) definitions. as used in this clause  contractor, when this clause is used in any subcontract, shall be deemed to refer to the subcontractor, except in the term "government prime contractor." service employee means any person engaged in the performance of this contract other than any person employed in a bona fide executive, administrative, or professional capacity, as these terms are defined in part 541 of title 29, code of federal regulations, as revised. it includes all such persons regardless of any contractual relationship that may be alleged to exist between a contractor or subcontractor and such persons. (b) applicability. this contract is subject to the following provisions and to all other applicable provisions of 41 u.s.c. chapter 67, service contract labor standards, and regulations of the secretary of labor (29 cfr part 4). this clause does not apply to contracts or subcontracts administratively exempted by the secretary of labor or exempted by 41 u.s.c. 6702, as interpreted in subpart c of 29 cfr part 4. (c) compensation. (1) each service employee employed in the performance of this contract by the contractor or any subcontractor shall be paid not less than the minimum monetary wages and shall be furnished fringe benefits in accordance with the wages and fringe benefits determined by the secretary of labor, or authorized representative, as specified in any wage determination attached to this contract. (2) (i) if a wage determination is attached to this contract, the contractor shall classify any class of service employee which is not listed therein and which is to be employed under the contract (i.e., the work to be performed is not performed by any classification listed in the wage determination) so as to provide a reasonable relationship (i.e., appropriate level of skill comparison) between such unlisted classifications and the classifications listed in the wage determination. such conformed class of employees shall be paid the monetary wages and furnished the fringe benefits as are determined pursuant to the procedures in this paragraph (c). (ii) this conforming procedure shall be initiated by the contractor prior to the performance of contract work by the unlisted class of employee. the contractor shall submit standard form (sf) 1444, request for authorization of additional classification and rate, to the contracting officer no later than 30 days after the unlisted class of employee performs any contract work. the contracting officer shall review the proposed classification and rate and promptly submit the completed sf 1444 (which must include information regarding the agreement or disagreement of the employees’ authorized representatives or the employees themselves together with the agency recommendation), and all pertinent information to the wage and hour division, u.s. department of labor. the wage and hour division will approve, modify, or disapprove the action or render a final determination in the event of disagreement within 30 days of receipt or will notify the contracting officer within 30 days of receipt that additional time is necessary. (iii) the final determination of the conformance action by the wage and hour division shall be transmitted to the contracting officer who shall promptly notify the contractor of the action taken. each affected employee shall be furnished by the contractor with a written copy of such determination or it shall be posted as a part of the wage determination. (iv) (a) the process of establishing wage and fringe benefit rates that bear a reasonable relationship to those listed in a wage determination cannot be reduced to any single formula. the approach used may vary from wage determination to wage determination depending on the circumstances. standard wage and salary administration practices which rank various job classifications by pay grade pursuant to point schemes or other job factors may, for example, be relied upon. guidance may also be obtained from the way different jobs are rated under federal pay systems (federal wage board pay system and the general schedule) or from other wage determinations issued in the same locality. basic to the establishment of any conformable wage rate(s) is the concept that a pay relationship should be maintained between job classifications based on the skill required and the duties performed. (b) in the case of a contract modification, an exercise of an option, or extension of an existing contract, or in any other case where a contractor succeeds a contract under which the classification in question was previously conformed pursuant to paragraph (c) of this clause, a new conformed wage rate and fringe benefits may be assigned to the conformed classification by indexing (i.e., adjusting) the previous conformed rate and fringe benefits by an amount equal to the average (mean) percentage increase (or decrease, where appropriate) between the wages and fringe benefits specified for all classifications to be used on the contract which are listed in the current wage determination, and those specified for the corresponding classifications in the previously applicable wage determination. where conforming actions are accomplished in accordance with this paragraph prior to the performance of contract work by the unlisted class of employees, the contractor shall advise the contracting officer of the action taken but the other procedures in subdivision (c)(2)(ii) of this clause need not be followed. (c) no employee engaged in performing work on this contract shall in any event be paid less than the currently applicable minimum wage specified under section 6(a)(1) of the fair labor standards act of1938, as amended. (v) the wage rate and fringe benefits finally determined under this paragraph (c)(2) of this clause shall be paid to all employees performing in the classification from the first day on which contract work is performed by them in the classification. failure to pay the unlisted employees the compensation agreed upon by the interested parties and/or finally determined by the wage and hour division retroactive to the date such class of employees commenced contract work shall be a violation of the service contract labor standards statute and this contract. (vi) upon discovery of failure to comply with paragraph (c)(2) of this clause, the wage and hour division shall make a final determination of conformed classification, wage rate, and/or fringe benefits which shall be retroactive to the date such class or classes of employees commenced contract work. (3) adjustment of compensation. if the term of this contract is more than 1 year, the minimum monetary wages and fringe benefits required to be paid or furnished thereunder to service employees under this contract shall be subject to adjustment after 1 year and not less often than once every 2 years, under wage determinations issued by the wage and hour division. (d) obligation to furnish fringe benefits. the contractor or subcontractor may discharge the obligation to furnish fringe benefits specified in the attachment or determined under paragraph (c)(2) of this clause by furnishing equivalent combinations of bona fide fringe benefits, or by making equivalent or differential cash payments, only in accordance with subpart d of 29 cfr part 4. (e) minimum wage. in the absence of a minimum wage attachment for this contract, neither the contractor nor any subcontractor under this contract shall pay any person performing work under this contract (regardless of whether the person is a service employee) less than the minimum wage specified by section 6(a)(1) of the fair labor standards act of1938. nothing in this clause shall relieve the contractor or any subcontractor of any other obligation under law or contract for payment of a higher wage to any employee. (f) successor contracts. if this contract succeeds a contract subject to the service contract labor standards statute under which substantially the same services were furnished in the same locality and service employees were paid wages and fringe benefits provided for in a collective bargaining agreement, in the absence of the minimum wage attachment for this contract setting forth such collectively bargained wage rates and fringe benefits, neither the contractor nor any subcontractor under this contract shall pay any service employee performing any of the contract work (regardless of whether or not such employee was employed under the predecessor contract), less than the wages and fringe benefits provided for in such collective bargaining agreement, to which such employee would have been entitled if employed under the predecessor contract, including accrued wages and fringe benefits and any prospective increases in wages and fringe benefits provided for under such agreement. no contractor or subcontractor under this contract may be relieved of the foregoing obligation unless the limitations of 29 cfr 4.1 b(b) apply or unless the secretary of labor or the secretary’s authorized representative finds, after a hearing as provided in 29 cfr 4.10 that the wages and/or fringe benefits provided for in such agreement are substantially at variance with those which prevail for services of a character similar in the locality, or determines, as provided in 29 cfr 4.11, that the collective bargaining agreement applicable to service employees employed under the predecessor contract was not entered into as a result of arm’s length negotiations. where it is found in accordance with the review procedures provided in 29 cfr 4.10 and/or 4.11 and parts6 and 8 that some or all of the wages and/or fringe benefits contained in a predecessor contractor’s collective bargaining agreement are substantially at variance with those which prevail for services of a character similar in the locality, and/or that the collective bargaining agreement applicable to service employees employed under the predecessor contract was not entered into as a result of arm’s length negotiations, the department will issue a new or revised wage determination setting forth the applicable wage rates and fringe benefits. such determination shall be made part of the contract or subcontract, in accordance with the decision of the administrator, the administrative law judge, or the administrative review board, as the case may be, irrespective of whether such issuance occurs prior to or after the award of a contract or subcontract (53 comp. gen. 401 (1973)). in the case of a wage determination issued solely as a result of a finding of substantial variance, such determination shall be effective as of the date of the final administrative decision. (g) notification to employees. the contractor and any subcontractor under this contract shall notify each service employee commencing work on this contract of the minimum monetary wage and any fringe benefits required to be paid pursuant to this contract, or shall post the wage determination attached to this contract. the poster provided by the department of labor (publication wh 1313) shall be posted in a prominent and accessible place at the work site. failure to comply with this requirement is a violation of 41 u.s.c. 6703 and of this contract. (h) safe and sanitary working conditions. the contractor or subcontractor shall not permit any part of the services called for by this contract to be performed in buildings or surroundings or under working conditions provided by or under the control or supervision of the contractor or subcontractor which are unsanitary, hazardous, or dangerous to the health or safety of the service employees. the contractor or subcontractor shall comply with the safety and health standards applied under 29 cfr part 1925. (i) records. (1) the contractor and each subcontractor performing work subject to the service contract labor standards statute shall make and maintain for 3 years from the completion of the work, and make them available for inspection and transcription by authorized representatives of the wage and hour division, a record of the following: (i) for each employee subject to the service contract labor standards statute  (a) name and address and social security number; (b) correct work classification or classifications, rate or rates of monetary wages paid and fringe benefits provided, rate or rates of payments in lieu of fringe benefits, and total daily and weekly compensation; (c) daily and weekly hours worked by each employee; and (d) any deductions, rebates, or refunds from the total daily or weekly compensation of each employee. (ii) for those classes of service employees not included in any wage determination attached to this contract, wage rates or fringe benefits determined by the interested parties or by the administrator or authorized representative under the terms of paragraph (c) of this clause. a copy of the report required by subdivision (c)(2)(ii) of this clause will fulfill this requirement. (iii) any list of the predecessor contractor’s employees which had been furnished to the contractor as prescribed by paragraph (n) of this clause. (2) the contractor shall also make available a copy of this contract for inspection or transcription by authorized representatives of the wage and hour division. (3) failure to make and maintain or to make available these records for inspection and transcription shall be a violation of the regulations and this contract, and in the case of failure to produce these records, the contracting officer, upon direction of the department of labor and notification to the contractor, shall take action to cause suspension of any further payment or advance of funds until the violation ceases. (4) the contractor shall permit authorized representatives of the wage and hour division to conduct interviews with employees at the work site during normal working hours. (j) pay periods. the contractor shall unconditionally pay to each employee subject to the service contract labor standards statute all wages due free and clear and without subsequent deduction (except as otherwise provided by law or regulations, 29 cfr part 4), rebate, or kickback on any account. these payments shall be made no later than one pay period following the end of the regular pay period in which the wages were earned or accrued. a pay period under this statute may not be of any duration longer than semi monthly. (k) withholding of payments and termination of contract. the contracting officer shall withhold or cause to be withheld from the government prime contractor under this or any other government contract with the prime contractor such sums as an appropriate official of the department of labor requests or such sums as the contracting officer decides may be necessary to pay underpaid employees employed by the contractor or subcontractor. in the event of failure to pay any employees subject to the service contract labor standards statute all or part of the wages or fringe benefits due under the service contract labor standards statute, the contracting officer may, after authorization or by direction of the department of labor and written notification to the contractor, take action to cause suspension of any further payment or advance of funds until such violations have ceased. additionally, any failure to comply with the requirements of this clause may be grounds for termination of the right to proceed with the contract work. in such event, the government may enter into other contracts or arrangements for completion of the work, charging the contractor in default with any additional cost. (l) subcontracts. the contractor agrees to insert this clause in all subcontracts subject to the service contract labor standards statute. (m) collective bargaining agreements applicable to service employees. if wages to be paid or fringe benefits to be furnished any service employees employed by the government prime contractor or any subcontractor under the contract are provided for in a collective bargaining agreement which is or will be effective during any period in which the contract is being performed, the government prime contractor shall report such fact to the contracting officer, together with full information as to the application and accrual of such wages and fringe benefits, including any prospective increases, to service employees engaged in work on the contract, and a copy of the collective bargaining agreement. such report shall be made upon commencing performance of the contract, in the case of collective bargaining agreements effective at such time, and in the case of such agreements or provisions or amendments thereof effective at a later time during the period of contract performance such agreements shall be reported promptly after negotiation thereof. (n) seniority list. not less than 10 days prior to completion of any contract being performed at a federal facility where service employees may be retained in the performance of the succeeding contract and subject to a wage determination which contains vacation or other benefit provisions based upon length of service with a contractor (predecessor) or successor (29 cfr 4.173), the incumbent prime contractor shall furnish the contracting officer a certified list of the names of all service employees on the contractor’s or subcontractor’s payroll during the last month of contract performance. such list shall also contain anniversary dates of employment on the contract either with the current or predecessor contractors of each such service employee. the contracting officer shall turn over such list to the successor contractor at the commencement of the succeeding contract. (o) rulings and interpretations. rulings and interpretations of the service contract labor standards statute are contained in regulations, 29 cfr part 4. (p) contractor’s certification. (1) by entering into this contract, the contractor (and officials thereof) certifies that neither it nor any person or firm who has a substantial interest in the contractor’s firm is a person or firm ineligible to be awarded government contracts by virtue of the sanctions imposed under 41 u.s.c. 6706. (2) no part of this contract shall be subcontracted to any person or firm ineligible for award of a government contract under 41 u.s.c. 6706. (3) the penalty for making false statements is prescribed in the u.s. criminal code, 18 u.s.c. 1001. (q) variations, tolerances, and exemptions involving employment. notwithstanding any of the provisions in paragraphs (b) through (o) of this clause, the following employees may be employed in accordance with the following variations, tolerances, and exemptions, which the secretary of labor, pursuant to 41 u.s.c. 6707 prior to its amendment by pub.l.92 473, found to be necessary and proper in the public interest or to avoid serious impairment of the conduct of government business: (1) apprentices, student learners, and workers whose earning capacity is impaired by age, physical or mental deficiency, or injury may be employed at wages lower than the minimum wages otherwise required by 41 u.s.c. 6703(1) without diminishing any fringe benefits or cash payments in lieu thereof required under 41 u.s.c. 6703(2), in accordance with the conditions and procedures prescribed for the employment of apprentices, student learners, persons with disabilities, and disabled clients of work centers under section 14 of the fair labor standards act of 1938, in the regulations issued by the administrator (29 cfr parts 520, 521, 524, and 525). (2) the administrator will issue certificates under the statute for the employment of apprentices, student learners, persons with disabilities, or disabled clients of work centers not subject to the fair labor standards act of 1938, or subject to different minimum rates of pay under the two statutes, authorizing appropriate rates of minimum wages (but without changing requirements concerning fringe benefits or supplementary cash payments in lieu thereof), applying procedures prescribed by the applicable regulations issued under the fair labor standards act of 1938 (29 cfr parts 520, 521, 524, and 525). (3) the administrator will also withdraw, annul, or cancel such certificates in accordance with the regulations in 29 cfr parts 525 and 528. (r) apprentices. apprentices will be permitted to work at less than the predetermined rate for the work they perform when they are employed and individually registered in a bona fide apprenticeship program registered with a state apprenticeship agency which is recognized by the u.s. department of labor, or if no such recognized agency exists in a state, under a program registered with the office of apprenticeship training, employer, and labor services (oatels), u.s. department of labor. any employee who is not registered as an apprentice in an approved program shall be paid the wage rate and fringe benefits contained in the applicable wage determination for the journeyman classification of work actually performed. the wage rates paid apprentices shall not be less than the wage rate for their level of progress set forth in the registered program, expressed as the appropriate percentage of the journeyman’s rate contained in the applicable wage determination. the allowable ratio of apprentices to journeymen employed on the contract work in any craft classification shall not be greater than the ratio permitted to the contractor as to his entire work force under the registered program. (s) tips. an employee engaged in an occupation in which the employee customarily and regularly receives more than $30 a month in tips may have the amount of these tips credited by the employer against the minimum wage required by 41 u.s.c. 6703(1), in accordance with section 3(m) of the fair labor standards act and regulations, 29 cfr part 531. however, the amount of credit shall not exceed $1.34 per hour beginning january 1,1981. to use this provision  (1) the employer must inform tipped employees about this tip credit allowance before the credit is utilized; (2) the employees must be allowed to retain all tips (individually or through a pooling arrangement and regardless of whether the employer elects to take a credit for tips received); (3) the employer must be able to show by records that the employee receives at least the applicable service contract labor standards minimum wage through the combination of direct wages and tip credit; and (4) the use of such tip credit must have been permitted under any predecessor collective bargaining agreement applicable by virtue of 41 u.s.c. 6707(c). (t) disputes concerning labor standards. the u.s. department of labor has set forth in 29 cfr parts 4, 6, and 8 procedures for resolving disputes concerning labor standards requirements. such disputes shall be resolved in accordance with those procedures and not the disputes clause of this contract. disputes within the meaning of this clause include disputes between the contractor (or any of its subcontractors) and the contracting agency, the u.s. department of labor, or the employees or their representatives. (end of clause) as prescribed in 22.1006(b), insert the following clause: statement of equivalent rates for federal hires (may 2014) in compliance with the service contract labor standards statute and the regulations of the secretary of labor ( 29 cfr part 4), this clause identifies the classes of service employees expected to be employed under the contract and states the wages and fringe benefits payable to each if they were employed by the contracting agency subject to the provisions of 5 u.s.c.5341 or 5 332. this statement is for information only: it is not a wage determination _____________ ____________________________ _____________ ____________________________ _____________ ____________________________ _____________ ____________________________ _____________ ____________________________ _____________ ____________________________ _____________ ____________________________ (end of clause) as prescribed in 22.1006(c)(1), insert the following clause: fair labor standards act and service contract labor standards price adjustment (multiple year and option contracts) (aug 2018) (a) this clause applies to both contracts subject to area prevailing wage determinations and contracts subject to collective bargaining agreements. (b) the contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause. (c) the wage determination, issued under the service contract labor standards statute, ( 41 u.s.c. chapter 67), by the administrator, wage and hour division, u.s. department of labor, current on the anniversary date of a multiple year contract or the beginning of each renewal option period, shall apply to this contract. if no such determination has been made applicable to this contract, then the federal minimum wage as established by section 6(a)(1) of the fair labor standards act of1938, as amended, ( 29 u.s.c. 206) current on the anniversary date of a multiple year contract or the beginning of each renewal option period, shall apply to this contract. (d) the contract price, contract unit price labor rates, or fixed hourly labor rates will be adjusted to reflect the contractor’s actual increase or decrease in applicable wages and fringe benefits to the extent that the increase is made to comply with or the decrease is voluntarily made by the contractor as a result of: (1) the department of labor wage determination applicable on the anniversary date of the multiple year contract, or at the beginning of the renewal option period. for example, the prior year wage determination required a minimum wage rate of $4.00 per hour. the contractor chose to pay $4.10. the new wage determination increases the minimum rate to $4.50 per hour. even if the contractor voluntarily increases the rate to $4.75 per hour, the allowable price adjustment is $.40 per hour; (2) an increased or decreased wage determination otherwise applied to the contract by operation of law; or (3) an amendment to the fair labor standards act of1938 that is enacted after award of this contract, affects the minimum wage, and becomes applicable to this contract under law. (e) any adjustment will be limited to increases or decreases in wages and fringe benefits as described in paragraph (d) of this clause, and the accompanying increases or decreases in social security and unemployment taxes and workers’ compensation insurance, but shall not otherwise include any amount for general and administrative costs, overhead, or profit. (f) the contractor shall notify the contracting officer of any increase claimed under this clause within 30 days after receiving a new wage determination unless this notification period is extended in writing by the contracting officer. the contractor shall promptly notify the contracting officer of any decrease under this clause, but nothing in the clause shall preclude the government from asserting a claim within the period permitted by law. the notice shall contain a statement of the amount claimed and the change in fixed hourly rates (if this is a time and materials or labor hour contract), and any relevant supporting data, including payroll records, that the contracting officer may reasonably require. upon agreement of the parties, the contract price, contract unit price labor rates, or fixed hourly rates shall be modified in writing. the contractor shall continue performance pending agreement on or determination of any such adjustment and its effective date. (g) the contracting officer or an authorized representative shall have access to and the right to examine any directly pertinent books, documents, papers and records of the contractor until the expiration of 3 years after final payment under the contract. (end of clause) as prescribed in 22.1006(c)(2), insert the following clause: fair labor standards act and service contract labor standards price adjustment (may 2014) (a) this clause applies to both contracts subject to area prevailing wage determinations and contracts subject to contractor collective bargaining agreements. (b) the contractor warrants that the prices in this contract do not include any allowance for any contingency to cover increased costs for which adjustment is provided under this clause. (c) the contract price, contract unit price labor rates, or fixed hourly labor rates will be adjusted to reflect increases or decreases by the contractor in wages and fringe benefits to the extent that these increases or decreases are made to comply with  (1) an increased or decreased wage determination applied to this contract by operation of law; or (2) an amendment to the fair labor standards act of1938 that is enacted subsequent to award of this contract, affects the minimum wage, and becomes applicable to this contract under law. (d) any such adjustment will be limited to increases or decreases in wages and fringe benefits as described in paragraph (c) of this clause, and to the accompanying increases or decreases in social security and unemployment taxes and workers’ compensation insurance; it shall not otherwise include any amount for general and administrative costs, overhead, or profit. (e) the contractor shall notify the contracting officer of any increase claimed under this clause within 30 days after the effective date of the wage change, unless this period is extended by the contracting officer in writing. the contractor shall promptly notify the contracting officer of any decrease under this clause, but nothing in the clause shall preclude the government from asserting a claim within the period permitted by law. the notice shall contain a statement of the amount and the change in fixed hourly rates (if this is a time and materials or labor hour contract) claimed and any relevant supporting data that the contracting officer may reasonably require. upon agreement of the parties, the contract price, contract unit price labor rates, or fixed hourly rates shall be modified in writing. the contractor shall continue performance pending agreement on or determination of any such adjustment and its effective date. (f) the contracting officer or an authorized representative shall, until the expiration of 3 years after final payment under the contract, have access to and the right to examine any directly pertinent books, documents, papers, and records of the contractor. (end of clause) as prescribed in 22.1103 , insert the following provision: evaluation of compensation for professional employees (feb 1993) (a) recompetition of service contracts may in some cases result in lowering the compensation (salaries and fringe benefits) paid or furnished professional employees. this lowering can be detrimental in obtaining the quality of professional services needed for adequate contract performance. it is therefore in the government’s best interest that professional employees, as defined in 29 cfr 541, be properly and fairly compensated. as part of their proposals, offerors will submit a total compensation plan setting forth salaries and fringe benefits proposed for the professional employees who will work under the contract. the government will evaluate the plan to assure that it reflects a sound management approach and understanding of the contract requirements. this evaluation will include an assessment of the offeror’s ability to provide uninterrupted high quality work. the professional compensation proposed will be considered in terms of its impact upon recruiting and retention, its realism, and its consistency with a total plan for compensation. supporting information will include data, such as recognized national and regional compensation surveys and studies of professional, public and private organizations, used in establishing the total compensation structure. (b) the compensation levels proposed should reflect a clear understanding of work to be performed and should indicate the capability of the proposed compensation structure to obtain and keep suitably qualified personnel to meet mission objectives. the salary rates or ranges must take into account differences in skills, the complexity of various disciplines, and professional job difficulty. additionally, proposals envisioning compensation levels lower than those of predecessor contractors for the same work will be evaluated on the basis of maintaining program continuity, uninterrupted high quality work, and availability of required competent professional service employees. offerors are cautioned that lowered compensation for essentially the same professional work may indicate lack of sound management judgment and lack of understanding of the requirement. (c) the government is concerned with the quality and stability of the work force to be employed on this contract. professional compensation that is unrealistically low or not in reasonable relationship to the various job categories, since it may impair the contractor’s ability to attract and retain competent professional service employees, may be viewed as evidence of failure to comprehend the complexity of the contract requirements. (d) failure to comply with these provisions may constitute sufficient cause to justify rejection of a proposal. (end of provision) as prescribed in 22.1006(e)(1), insert the following provision: exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment certification (may 2014) (a) the offeror shall check the following certification: certification the offeror □ does □ does not certify that  (1) the items of equipment to be serviced under this contract are used regularly for other than government purposes, and are sold or traded by the offeror (or subcontractor in the case of an exempt subcontractor) in substantial quantities to the general public in the course of normal business operations; (2) the services will be furnished at prices which are, or are based on, established catalog or market prices for the maintenance, calibration, or repair of equipment. (i) an "established catalog price" is a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or the offeror, is either published or otherwise available for inspection by customers, and states prices at which sales currently, or were last, made to a significant number of buyers constituting the general public. (ii) an "established market price" is a current price, established in the usual course of trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or offeror; and (3) the compensation (wage and fringe benefits) plan for all service employees performing work under the contract are the same as that used for these employees and equivalent employees servicing the same equipment of commercial customers. (b) certification by the offeror as to its compliance with respect to the contract also constitutes its certification as to compliance by its subcontractor if it subcontracts out the exempt services. if the offeror certifies to the conditions in paragraph (a) of this provision, and the contracting officer determines in accordance with far 22.1003 4(c)(3) that the service contract labor standards statute  (1) will not apply to this offeror, then the service contract labor standards clause in this solicitation will not be included in any resultant contract to this offeror; or (2) will apply to this offeror, then the clause at 52.222 51, exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements, in this solicitation will not be included in any resultant contract awarded to this offeror, and the offeror may be provided an opportunity to submit a new offer on that basis. (c) if the offeror does not certify to the conditions in paragraph (a) of this provision  (1) the clause in this solicitation at 52.222 51, exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements, will not be included in any resultant contract awarded to this offeror; and (2) the offeror shall notify the contracting officer as soon as possible, if the contracting officer did not attach a service contract labor standards wage determination to the solicitation. (d) the contracting officer may not make an award to the offeror, if the offeror fails to execute the certification in paragraph (a) of this provision or to contact the contracting officer as required in paragraph (c) of this provision. (end of provision) as prescribed in 22.1006(f), insert the following clause: service contract labor standards place of performance unknown (may 2014) (a) this contract is subject to the service contract labor standards statute, and the place of performance was unknown when the solicitation was issued. in addition to places or areas identified in wage determinations, if any, attached to the solicitation, wage determinations have also been requested for the following: ________ [insert places or areas]. the contracting officer will request wage determinations for additional places or areas of performance if asked to do so in writing by _____________ [insert time and date]. (b) offerors who intend to perform in a place or area of performance for which a wage determination has not been attached or requested may nevertheless submit bids or proposals. however, a wage determination shall be requested and incorporated in the resultant contract retroactive to the date of contract award, and there shall be no adjustment in the contract price. (end of clause) as prescribed in 22.1705(a)(1), insert the following clause: combating trafficking in persons (nov 2021) (a) definitions. as used in this clause  agent means any individual, including a director, an officer, an employee, or an independent contractor, authorized to act on behalf of the organization. coercion means  (1) threats of serious harm to or physical restraint against any person; (2) any scheme, plan, or pattern intended to cause a person to believe that failure to perform an act would result in serious harm to or physical restraint against any person; or (3) the abuse or threatened abuse of the legal process. commercial sex act means any sex act on account of which anything of value is given to or received by any person. commercially available off the shelf (cots) item   (1) means any item of supply (including construction material) that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” at federal acquisition regulation (far) 2.101; (ii)sold in substantial quantities in the commercial marketplace; and (iii)offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and (2)does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. debt bondage means the status or condition of a debtor arising from a pledge by the debtor of his or her personal services or of those of a person under his or her control as a security for debt, if the value of those services as reasonably assessed is not applied toward the liquidation of the debt or the length and nature of those services are not respectively limited and defined. employee means an employee of the contractor directly engaged in the performance of work under the contract who has other than a minimal impact or involvement in contract performance. forced labor means knowingly providing or obtaining the labor or services of a person  (1) by threats of serious harm to, or physical restraint against, that person or another person; (2) by means of any scheme, plan, or pattern intended to cause the person to believe that, if the person did not perform such labor or services, that person or another person would suffer serious harm or physical restraint; or (3) by means of the abuse or threatened abuse of law or the legal process. involuntary servitude includes a condition of servitude induced by means of  (1) any scheme, plan, or pattern intended to cause a person to believe that, if the person did not enter into or continue in such conditions, that person or another person would suffer serious harm or physical restraint; or (2) the abuse or threatened abuse of the legal process. recruitment fees means fees of any type, including charges, costs, assessments, or other financial obligations, that are associated with the recruiting process, regardless of the time, manner, or location of imposition or collection of the fee. (1) recruitment fees include, but are not limited to, the following fees (when they are associated with the recruiting process) for  (i) soliciting, identifying, considering, interviewing, referring, retaining, transferring, selecting, training, providing orientation to, skills testing, recommending, or placing employees or potential employees; (ii) advertising (iii) obtaining permanent or temporary labor certification, including any associated fees; (iv) processing applications and petitions; (v) acquiring visas, including any associated fees; (vi) acquiring photographs and identity or immigration documents, such as passports, including any associated fees; (vii) accessing the job opportunity, including required medical examinations and immunizations; background, reference, and security clearance checks and examinations; and additional certifications; (viii) an employer's recruiters, agents or attorneys, or other notary or legal fees; (ix) language interpretation or translation, arranging for or accompanying on travel, or providing other advice to employees or potential employees; (x) government mandated fees, such as border crossing fees, levies, or worker welfare funds; (xi) transportation and subsistence costs  (a) while in transit, including, but not limited to, airfare or costs of other modes of transportation, terminal fees, and travel taxes associated with travel from the country of origin to the country of performance and the return journey upon the end of employment; and (b) from the airport or disembarkation point to the worksite; (xii) security deposits, bonds, and insurance; and (xiii) equipment charges. (2) a recruitment fee, as described in the introductory text of this definition, is a recruitment fee, regardless of whether the payment is  (i) paid in property or money; (ii) deducted from wages; (iii) paid back in wage or benefit concessions; (iv) paid back as a kickback, bribe, in kind payment, free labor, tip, or tribute; or (v) collected by an employer or a third party, whether licensed or unlicensed, including, but not limited to  (a) agents; (b) labor brokers; (c) recruiters; (d) staffing firms (including private employment and placement firms); (e) subsidiaries/affiliates of the employer; (f) any agent or employee of such entities; and (g) subcontractors at all tiers. severe forms of trafficking in persons means  (1) sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age; or (2) the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery. "sex trafficking" means the recruitment, harboring, transportation, provision, or obtaining of a person for the purpose of a commercial sex act. subcontract means any contract entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. united states means the 50 states, the district of columbia, and outlying areas. (b) policy. the united states government has adopted a policy prohibiting trafficking in persons including the trafficking related activities of this clause. contractors, contractor employees, and their agents shall not  (1) engage in severe forms of trafficking in persons during the period of performance of the contract; (2) procure commercial sex acts during the period of performance of the contract; (3) use forced labor in the performance of the contract; (4) destroy, conceal, confiscate, or otherwise deny access by an employee to the employee’s identity or immigration documents, such as passports or drivers' licenses, regardless of issuing authority; (5) (i) use misleading or fraudulent practices during the recruitment of employees or offering of employment, such as failing to disclose, in a format and language understood by the employee or potential employee, basic information or making material misrepresentations during the recruitment of employees regarding the key terms and conditions of employment, including wages and fringe benefits, the location of work, the living conditions, housing and associated costs (if employer or agent provided or arranged), any significant costs to be charged to the employee or potential employee, and, if applicable, the hazardous nature of the work; (ii) use recruiters that do not comply with local labor laws of the country in which the recruiting takes place; (6) charge employees or potential employees recruitment fees; (7) (i) fail to provide return transportation or pay for the cost of return transportation upon the end of employment  (a) for an employee who is not a national of the country in which the work is taking place and who was brought into that country for the purpose of working on a u.s. government contract or subcontract (for portions of contracts performed outside the united states); or (b) for an employee who is not a united states national and who was brought into the united states for the purpose of working on a u.s. government contract or subcontract, if the payment of such costs is required under existing temporary worker programs or pursuant to a written agreement with the employee (for portions of contracts performed inside the united states); except that  (ii) the requirements of paragraphs (b)(7)(i) of this clause shall not apply to an employee who is  (a) legally permitted to remain in the country of employment and who chooses to do so; or (b) exempted by an authorized official of the contracting agency from the requirement to provide return transportation or pay for the cost of return transportation; (iii) the requirements of paragraph (b)(7)(i) of this clause are modified for a victim of trafficking in persons who is seeking victim services or legal redress in the country of employment, or for a witness in an enforcement action related to trafficking in persons. the contractor shall provide the return transportation or pay the cost of return transportation in a way that does not obstruct the victim services, legal redress, or witness activity. for example, the contractor shall not only offer return transportation to a witness at a time when the witness is still needed to testify. this paragraph does not apply when the exemptions at paragraph (b)(7)(ii) of this clause apply. (8) provide or arrange housing that fails to meet the host country housing and safety standards; or (9) if required by law or contract, fail to provide an employment contract, recruitment agreement, or other required work document in writing. such written work document shall be in a language the employee understands. if the employee must relocate to perform the work, the work document shall be provided to the employee at least five days prior to the employee relocating. the employee’s work document shall include, but is not limited to, details about work description, wages, prohibition on charging recruitment fees, work location(s), living accommodations and associated costs, time off, roundtrip transportation arrangements, grievance process, and the content of applicable laws and regulations that prohibit trafficking in persons. (c) contractor requirements. the contractor shall  (1) notify its employees and agents of  (i) the united states government's policy prohibiting trafficking in persons, described in paragraph (b) of this clause; and (ii) the actions that will be taken against employees or agents for violations of this policy. such actions for employees may include, but are not limited to, removal from the contract, reduction in benefits, or termination of employment; and (2) take appropriate action, up to and including termination, against employees, agents, or subcontractors that violate the policy in paragraph (b) of this clause. (d) notification. (1) the contractor shall inform the contracting officer and the agency inspector general immediately of  (i) any credible information it receives from any source (including host country law enforcement) that alleges a contractor employee, subcontractor, subcontractor employee, or their agent has engaged in conduct that violates the policy in paragraph (b) of this clause (see also 18 u.s.c. 1351, fraud in foreign labor contracting, and 52.203 13(b)(3)(i)(a), if that clause is included in the solicitation or contract, which requires disclosure to the agency office of the inspector general when the contractor has credible evidence of fraud); and (ii) any actions taken against a contractor employee, subcontractor, subcontractor employee, or their agent pursuant to this clause. (2) if the allegation may be associated with more than one contract, the contractor shall inform the contracting officer for the contract with the highest dollar value. (e) remedies. in addition to other remedies available to the government, the contractor’s failure to comply with the requirements of paragraphs (c), (d), (g), (h), or (i) of this clause may result in  (1) requiring the contractor to remove a contractor employee or employees from the performance of the contract; (2) requiring the contractor to terminate a subcontract; (3) suspension of contract payments until the contractor has taken appropriate remedial action; (4) loss of award fee, consistent with the award fee plan, for the performance period in which the government determined contractor non compliance; (5) declining to exercise available options under the contract; (6) termination of the contract for default or cause, in accordance with the termination clause of this contract; or (7) suspension or debarment. (f) mitigating and aggravating factors. when determining remedies, the contracting officer may consider the following: (1) mitigating factors. the contractor had a trafficking in persons compliance plan or an awareness program at the time of the violation, was in compliance with the plan, and has taken appropriate remedial actions for the violation, that may include reparation to victims for such violations. (2) aggravating factors. the contractor failed to abate an alleged violation or enforce the requirements of a compliance plan, when directed by the contracting officer to do so. (g) full cooperation. (1) the contractor shall, at a minimum  (i) disclose to the agency inspector general information sufficient to identify the nature and extent of an offense and the individuals responsible for the conduct; (ii) provide timely and complete responses to government auditors' and investigators' requests for documents; (iii) cooperate fully in providing reasonable access to its facilities and staff (both inside and outside the u.s.) to allow contracting agencies and other responsible federal agencies to conduct audits, investigations, or other actions to ascertain compliance with the trafficking victims protection act of 2000 ( 22 u.s.c. chapter 78), e.o. 13627, or any other applicable law or regulation establishing restrictions on trafficking in persons, the procurement of commercial sex acts, or the use of forced labor; and (iv) protect all employees suspected of being victims of or witnesses to prohibited activities, prior to returning to the country from which the employee was recruited, and shall not prevent or hinder the ability of these employees from cooperating fully with government authorities. (2) the requirement for full cooperation does not foreclose any contractor rights arising in law, the far, or the terms of the contract. it does not  (i) require the contractor to waive its attorney client privilege or the protections afforded by the attorney work product doctrine; (ii) require any officer, director, owner, employee, or agent of the contractor, including a sole proprietor, to waive his or her attorney client privilege or fifth amendment rights; or (iii) restrict the contractor from  (a) conducting an internal investigation; or (b) defending a proceeding or dispute arising under the contract or related to a potential or disclosed violation. (h) compliance plan. (1) this paragraph (h) applies to any portion of the contract that  (i) is for supplies, other than commercially available off the shelf items, acquired outside the united states, or services to be performed outside the united states; and (ii) has an estimated value that exceeds $550,000. (2) the contractor shall maintain a compliance plan during the performance of the contract that is appropriate  (i) to the size and complexity of the contract; and (ii) to the nature and scope of the activities to be performed for the government, including the number of non united states citizens expected to be employed and the risk that the contract or subcontract will involve services or supplies susceptible to trafficking in persons. (3) minimum requirements. the compliance plan must include, at a minimum, the following: (i) an awareness program to inform contractor employees about the government’s policy prohibiting trafficking related activities described in paragraph (b) of this clause, the activities prohibited, and the actions that will be taken against the employee for violations. additional information about trafficking in persons and examples of awareness programs can be found at the website for the department of state’s office to monitor and combat trafficking in persons at http://www.state.gov/j/tip/. (ii) a process for employees to report, without fear of retaliation, activity inconsistent with the policy prohibiting trafficking in persons, including a means to make available to all employees the hotline phone number of the global human trafficking hotline at 1 844 888 free and its email address at help@befree.org. (iii) a recruitment and wage plan that only permits the use of recruitment companies with trained employees, prohibits charging recruitment fees to the employees or potential employees and ensures that wages meet applicable host country legal requirements or explains any variance. (iv) a housing plan, if the contractor or subcontractor intends to provide or arrange housing, that ensures that the housing meets host country housing and safety standards. (v) procedures to prevent agents and subcontractors at any tier and at any dollar value from engaging in trafficking in persons (including activities in paragraph (b) of this clause) and to monitor, detect, and terminate any agents, subcontracts, or subcontractor employees that have engaged in such activities. (4) posting. (i) the contractor shall post the relevant contents of the compliance plan, no later than the initiation of contract performance, at the workplace (unless the work is to be performed in the field or not in a fixed location) and on the contractor's web site (if one is maintained). if posting at the workplace or on the web site is impracticable, the contractor shall provide the relevant contents of the compliance plan to each worker in writing. (ii) the contractor shall provide the compliance plan to the contracting officer upon request. (5) certification. annually after receiving an award, the contractor shall submit a certification to the contracting officer that  (i) it has implemented a compliance plan to prevent any prohibited activities identified at paragraph (b) of this clause and to monitor, detect, and terminate any agent, subcontract or subcontractor employee engaging in prohibited activities; and (ii) after having conducted due diligence, either  (a) to the best of the contractor's knowledge and belief, neither it nor any of its agents, subcontractors, or their agents is engaged in any such activities; or (b) if abuses relating to any of the prohibited activities identified in paragraph (b) of this clause have been found, the contractor or subcontractor has taken the appropriate remedial and referral actions. (i) subcontracts. (1) the contractor shall include the substance of this clause, including this paragraph (i), in all subcontracts and in all contracts with agents. the requirements in paragraph (h) of this clause apply only to any portion of the subcontract that  (i) is for supplies, other than commercially available off the shelf items, acquired outside the united states, or services to be performed outside the united states; and (ii) has an estimated value that exceeds $550,000. (2) if any subcontractor is required by this clause to submit a certification, the contractor shall require submission prior to the award of the subcontract and annually thereafter. the certification shall cover the items in paragraph (h)(5) of this clause. (end of clause) alternate i (mar 2015). as prescribed in 22.1705 (a)(2), substitute the following paragraph in place of paragraph (c)(1)(i) of the basic clause: (i)(a) the united states government's policy prohibiting trafficking in persons described in paragraph (b) of this clause; and (b) the following directive(s) or notice(s) applicable to employees performing work at the contract place(s) of performance as indicated below: _____________ _____________ _______________ _____________ _____________ _______________ [contracting officer shall insert title of directive/notice; indicate the document is attached or provide source (such as website link) for obtaining document; and, indicate the contract performance location outside the united states. to which the document applies.] as prescribed in 22.1006(e)(2), insert the following clause: exemption from application of the service contract labor standards to contracts for maintenance, calibration, or repair of certain equipment requirements (may 2014) (a) the items of equipment to be serviced under this contract are used regularly for other than government purposes, and are sold or traded by the contractor in substantial quantities to the general public in the course of normal business operations. (b) the services shall be furnished at prices which are, or are based on, established catalog or market prices for the maintenance, calibration, or repair of equipment. (1) an "established catalog price" is a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or the contractor, is either published or otherwise available for inspection by customers, and states prices at which sales currently, or were last, made to a significant number of buyers constituting the general public. (2) an "established market price" is a current price, established in the usual course of trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or contractor. (c) the compensation (wage and fringe benefits) plan for all service employees performing work under the contract shall be the same as that used for these employees and for equivalent employees servicing the same equipment of commercial customers. (d) the contractor is responsible for compliance with all the conditions of this exemption by its subcontractors. the contractor shall determine the applicability of this exemption to any subcontract on or before subcontract award. in making a judgment that the exemption applies, the contractor shall consider all factors and make an affirmative determination that all of the conditions in paragraphs (a) through (c) of this clause will be met. (e) if the department of labor determines that any conditions for exemption in paragraphs (a) through (c) of this clause have not been met, the exemption shall be deemed inapplicable, and the contract shall become subject to the service contract labor standards statute. in such case, the procedures at 29 cfr 4.123(e)(1)(iv) and 29 cfr 4.5(c) will be followed. (f) the contractor shall include the substance of this clause, including this paragraph (f), in subcontracts for exempt services under this contract. (end of clause) as prescribed in 22.1006(e)(3), insert the following provision: exemption from application of the service contract labor standards to contracts for certain services certification (may 2014) (a) the offeror shall check the following certification: certification the offeror □ does □ does not certify that  (1) the services under the contract are offered and sold regularly to non governmental customers, and are provided by the offeror (or subcontractor in the case of an exempt subcontract) to the general public in substantial quantities in the course of normal business operations; (2) the contract services are furnished at prices that are, or are based on, established catalog or market prices. an "established catalog price" is a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or the offeror, is either published or otherwise available for inspection by customers, and states prices at which sales currently, or were last, made to a significant number of buyers constituting the general public. an "established market price" is a current price, established in the usual course of ordinary and usual trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or offeror; (3) each service employee who will perform the services under the contract will spend only a small portion of his or her time (a monthly average of less than 20 percent of the available hours on an annualized basis, or less than 20 percent of available hours during the contract period if the contract period is less than a month) servicing the government contract; and (4) the offeror uses the same compensation (wage and fringe benefits) plan for all service employees performing work under the contract as the offeror uses for these employees and for equivalent employees servicing commercial customers. (b) certification by the offeror as to its compliance with respect to the contract also constitutes its certification as to compliance by its subcontractor if it subcontracts out the exempt services. if the offeror certifies to the conditions in paragraph (a) of this provision, and the contracting officer determines in accordance with far 22.1003 4(d)(3) that the service contract labor standards statute  (1) will not apply to this offeror, then the service contract labor standards clause in this solicitation will not be included in any resultant contract to this offeror; or (2) will apply to this offeror, then the clause at far 52.222 53, exemption from application of the service contract labor standards to contracts for certain services requirements, in this solicitation will not be included in any resultant contract awarded to this offer, and the offeror may be provided an opportunity to submit a new offer on that basis. (c) if the offeror does not certify to the conditions in paragraph (a) of this provision  (1) the clause of this solicitation at 52.222 53, exemption from application of the service contract labor standards to contracts for certain services requirements, will not be included in any resultant contract to this offeror; and (2) the offeror shall notify the contracting officer as soon as possible if the contracting officer did not attach a service contract labor standards wage determination to the solicitation. (d) the contracting officer may not make an award to the offeror, if the offeror fails to execute the certification in paragraph (a) of this provision or to contact the contracting officer as required in paragraph (c) of this provision. (end of provision) as prescribed in 22.1006(e)(4), insert the following clause: exemption from application of the service contract labor standards to contracts for certain services requirements (may 2014) (a) the services under this contract are offered and sold regularly to non governmental customers, and are provided by the contractor to the general public in substantial quantities in the course of normal business operations. (b) the contract services are furnished at prices that are, or are based on, established catalog or market prices. an "established catalog price" is a price included in a catalog, price list, schedule, or other form that is regularly maintained by the manufacturer or the contractor, is either published or otherwise available for inspection by customers, and states prices at which sales currently, or were last, made to a significant number of buyers constituting the general public. an "established market price" is a current price, established in the usual course of ordinary and usual trade between buyers and sellers free to bargain, which can be substantiated from sources independent of the manufacturer or contractor. (c) each service employee who will perform the services under the contract will spend only a small portion of his or her time (a monthly average of less than 20 percent of the available hours on an annualized basis, or less than 20 percent of available hours during the contract period if the contract period is less than a month) servicing the government contract. (d) the contractor uses the same compensation (wage and fringe benefits) plan for all service employees performing work under the contract as the contractor uses for these employees and for equivalent employees servicing commercial customers. (e) (1) except for services identified in far 22.1003 4(d)(1)(iv), the subcontractor for exempt services shall be selected for award based on other factors in addition to price or cost with the combination of other factors at least as important as price or cost; or (2) a subcontract for exempt services shall be awarded on a sole source basis. (f) the contractor is responsible for compliance with all the conditions of this exemption by its subcontractors. the contractor shall determine in advance, based on the nature of the subcontract requirements and knowledge of the practices of likely subcontractors, that all or nearly all likely subcontractors will meet the conditions in paragraphs (a) through (d) of this clause. if the services are currently being performed under a subcontract, the contractor shall consider the practices of the existing subcontractor in making a determination regarding the conditions in paragraphs (a) through (d) of this clause. if the contractor has reason to doubt the validity of the certification, the requirements of the service contract labor standards statute shall be included in the subcontract. (g) if the department of labor determines that any conditions for exemption at paragraphs (a) through (e) of this clause have not been met, the exemption shall be deemed inapplicable, and the contract shall become subject to the service contract labor standards statute. in such case, the procedures in at 29 cfr 4.123(e)(2)(iii) and 29 cfr 4.5(c) will be followed. (h) the contractor shall include the substance of this clause, including this paragraph (h), in subcontracts for exempt services under this contract. (end of clause) as prescribed in 22.1803 , insert the following clause: employment eligibility verification (jan 2025) (a) definitions. as used in this clause  commercially available off the shelf (cots) item  (1) means any item of supply that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” at federal acquisition regulation (far) 2.101); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, without modification, in the same form in which it is sold in the commercial marketplace; and (2) does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. per 46 cfr 525.1 (c)(2), "bulk cargo" means cargo that is loaded and carried in bulk onboard ship without mark or count, in a loose unpackaged form, having homogenous characteristics. bulk cargo loaded into intermodal equipment, except lash or seabee barges, is subject to mark and count and, therefore, ceases to be bulk cargo. employee assigned to the contract means an employee who was hired after november 6, 1986 (after november 27, 2009 in the commonwealth of the northern mariana islands), who is directly performing work, in the united states, under a contract that is required to include the clause prescribed at 22.1803. an employee is not considered to be directly performing work under a contract if the employee  (1) normally performs support work, such as indirect or overhead functions; and (2) does not perform any substantial duties applicable to the contract. subcontract means any contract, as defined in 2.101, entered into by a subcontractor to furnish supplies or services for performance of a prime contract or a subcontract. it includes but is not limited to purchase orders, and changes and modifications to purchase orders. subcontractor means any supplier, distributor, vendor, or firm that furnishes supplies or services to or for a prime contractor or another subcontractor. united states, as defined in 8 u.s.c. 1101(a)(38), means the 50 states, the district of columbia, puerto rico, guam, the commonwealth of the northern mariana islands, and the u.s. virgin islands. (b) enrollment and verification requirements. (1) if the contractor is not enrolled as a federal contractor in e verify at time of contract award, the contractor shall  (i) enroll. enroll as a federal contractor in the e verify program within 30 calendar days of contract award; (ii) verify all new employees. within 90 calendar days of enrollment in the e verify program, begin to use e verify to initiate verification of employment eligibility of all new hires of the contractor, who are working in the united states, whether or not assigned to the contract, within 3 business days after the date of hire (but see paragraph (b)(3) of this section); and (iii) verify employees assigned to the contract. for each employee assigned to the contract, initiate verification within 90 calendar days after date of enrollment or within 30 calendar days of the employee’s assignment to the contract, whichever date is later (but see paragraph (b)(4) of this section). (2) if the contractor is enrolled as a federal contractor in e verify at time of contract award, the contractor shall use e verify to initiate verification of employment eligibility of  (i) all new employees. (a) enrolled 90 calendar days or more. the contractor shall initiate verification of all new hires of the contractor, who are working in the united states, whether or not assigned to the contract, within 3 business days after the date of hire (but see paragraph (b)(3) of this section); or (b) enrolled less than 90 calendar days. within 90 calendar days after enrollment as a federal contractor in e verify, the contractor shall initiate verification of all new hires of the contractor, who are working in the united states, whether or not assigned to the contract, within 3 business days after the date of hire (but see paragraph (b)(3) of this section); or (ii) employees assigned to the contract. for each employee assigned to the contract, the contractor shall initiate verification within 90 calendar days after date of contract award or within 30 days after assignment to the contract, whichever date is later (but see paragraph (b)(4) of this section). (3) if the contractor is an institution of higher education (as defined at 20 u.s.c. 1001(a)); a state or local government or the government of a federally recognized indian tribe; or a surety performing under a takeover agreement entered into with a federal agency pursuant to a performance bond, the contractor may choose to verify only employees assigned to the contract, whether existing employees or new hires. the contractor shall follow the applicable verification requirements at (b)(1) or (b)(2) respectively, except that any requirement for verification of new employees applies only to new employees assigned to the contract. (4) option to verify employment eligibility of all employees. the contractor may elect to verify all existing employees hired after november 6, 1986 (after november 27, 2009, in the commonwealth of the northern mariana islands), rather than just those employees assigned to the contract. the contractor shall initiate verification for each existing employee working in the united states who was hired after november 6, 1986 (after november 27, 2009, in the commonwealth of the northern mariana islands), within 180 calendar days of  (i) enrollment in the e verify program; or (ii) notification to e verify operations of the contractor’s decision to exercise this option, using the contact information provided in the e verify program memorandum of understanding (mou). (5) the contractor shall comply, for the period of performance of this contract, with the requirements of the e verify program mou. (i) the department of homeland security (dhs) or the social security administration (ssa) may terminate the contractor’s mou and deny access to the e verify system in accordance with the terms of the mou. in such case, the contractor will be referred to a suspending and debarring official. (ii) during the period between termination of the mou and a decision by the suspending and debarring official whether to suspend or debar, the contractor is excused from its obligations under paragraph (b) of this clause. if the contractor is not suspended, debarred, or subject to a voluntary exclusion, then the contractor must reenroll in e verify. (c) web site. information on registration for and use of the e verify program can be obtained via the internet at the department of homeland security web site: https://www.e verify.gov. (d) individuals previously verified. the contractor is not required by this clause to perform additional employment verification using e verify for any employee  (1) whose employment eligibility was previously verified by the contractor through the e verify program; (2) who has been granted and holds an active u.s. government security clearance for access to confidential, secret, or top secret information in accordance with the national industrial security program operating manual; or (3) who has undergone a completed background investigation and been issued credentials pursuant to homeland security presidential directive (hspd) 12, policy for a common identification standard for federal employees and contractors. (e) subcontracts. the contractor shall include the requirements of this clause, including this paragraph (e) (appropriately modified for identification of the parties), in each subcontract that  (1) is for  (i) services (except for commercial services that are part of the purchase of a cots item (or an item that would be a cots item, but for minor modifications), performed by the cots provider, and are normally provided for that cots item); or (ii) construction; (2) has a value of more than $3,500; and (3) includes work performed in the united states. (end of clause) as prescribed in 22.1906 , insert the following clause: minimum wages for contractor workers under executive order 14026 (jan 2022) (a) definitions. as used in this clause  united states means the 50 states, the district of columbia, puerto rico, the northern mariana islands, american samoa, guam, the u.s. virgin islands, johnston island, wake island, and the outer continental shelf as defined in the outer continental shelf lands act ( 43 u.s.c. 1331, et seq.). worker   (1) (i) means any person engaged in performing work on, or in connection with, a contract covered by executive order 14026, and  (a) whose wages under such contract are governed by the fair labor standards act ( 29 u.s.c. chapter 8), the service contract labor standards statute (41 u.s.c. chapter 67), or the wage rate requirements (construction) statute ( 40 u.s.c. chapter 31, subchapter iv); (b) other than individuals employed in a bona fide executive, administrative, or professional capacity, as those terms are defined in 29 cfr part 541; and (c) regardless of the contractual relationship alleged to exist between the individual and the employer. (ii) includes workers performing on, or in connection with, the contract whose wages are calculated pursuant to special certificates issued under 29 u.s.c. 214(c). (iii) also includes any person working on, or in connection with, the contract and individually registered in a bona fide apprenticeship or training program registered with the department of labor’s employment and training administration, office of apprenticeship, or with a state apprenticeship agency recognized by the office of apprenticeship. (2) (i) a worker performs on a contract if the worker directly performs the specific services called for by the contract; and (ii) a worker performs in connection with a contract if the worker's work activities are necessary to the performance of a contract but are not the specific services called for by the contract. (b) executive order minimum wage rate. (1) the contractor shall pay to workers, while performing in the united states, and performing on, or in connection with, this contract, a minimum hourly wage rate of $15.00 per hour beginning january 30, 2022. (2) the contractor shall adjust the minimum wage paid, if necessary, beginning january 1, 2023, and annually thereafter, to meet the applicable annual e.o. minimum wage. the administrator of the department of labor’s wage and hour division (the administrator) will publish annual determinations in the federal register no later than 90 days before the effective date of the new e.o. minimum wage rate. the administrator will also publish the applicable e.o. minimum wage on https://www.sam.gov (or any successor website), and a general notice on all wage determinations issued under the service contract labor standards statute or the wage rate requirements (construction) statute, that will provide information on the e.o. minimum wage and how to obtain annual updates. the applicable published e.o. minimum wage is incorporated by reference into this contract. (3) (i) the contractor may request a price adjustment only after the effective date of the new annual e.o. minimum wage determination. prices will be adjusted only for increased labor costs (including subcontractor labor costs) as a result of an increase in the annual e.o. minimum wage, and for associated labor costs (including those for subcontractors). associated labor costs shall include increases or decreases that result from changes in social security and unemployment taxes and workers’ compensation insurance, but will not otherwise include any amount for general and administrative costs, overhead, or profit. (ii) subcontractors may be entitled to adjustments due to the new minimum wage, pursuant to paragraph (b)(2). contractors shall consider any subcontractor requests for such price adjustment. (iii) the contracting officer will not adjust the contract price under this clause for any costs other than those identified in paragraph (b)(3)(i) of this clause, and will not provide duplicate price adjustments with any price adjustment under clauses implementing the service contract labor standards statute or the wage rate requirements (construction) statute. (4) the contractor warrants that the prices in this contract do not include allowance for any contingency to cover increased costs for which adjustment is provided under this clause. (5) a pay period under this clause may not be longer than semi monthly, but may be shorter to comply with any applicable law or other requirement under this contract establishing a shorter pay period. workers shall be paid no later than one pay period following the end of the regular pay period in which such wages were earned or accrued. (6) the contractor shall pay, unconditionally to each worker, all wages due free and clear without subsequent rebate or kickback. the contractor may make deductions that reduce a worker’s wages below the e.o. minimum wage rate only if done in accordance with 29 cfr 23.230, deductions. (7) the contractor shall not discharge any part of its minimum wage obligation under this clause by furnishing fringe benefits or, with respect to workers whose wages are governed by the service contract labor standards statute, the cash equivalent thereof. (8) nothing in this clause shall excuse the contractor from compliance with any applicable federal or state prevailing wage law or any applicable law or municipal ordinance or any applicable contract establishing a minimum wage higher than the e.o. 14026 minimum wage. however, wage increases under such other laws or municipal ordinances are not subject to price adjustment under this subpart. (9) the contractor shall pay the e.o. minimum wage rate whenever it is higher than any applicable collective bargaining agreement(s) wage rate. (10) the contractor shall follow the policies and procedures in 29 cfr 23.240(b) and 23.280 for treatment of workers engaged in an occupation in which they customarily and regularly receive more than $30 a month in tips. (c) (1) this clause applies to workers as defined in paragraph (a). as provided in that definition  (i) workers are covered regardless of the contractual relationship alleged to exist between the contractor or subcontractor and the worker; (ii) workers with disabilities whose wages are calculated pursuant to special certificates issued under 29 u.s.c. 214(c) are covered; and (iii) workers who are registered in a bona fide apprenticeship program or training program registered with the department of labor’s employment and training administration, office of apprenticeship, or with a state apprenticeship agency recognized by the office of apprenticeship, are covered. (2) this clause does not apply to  (i) fair labor standards act (flsa) covered individuals performing in connection with contracts covered by the e.o., i.e. those individuals who perform duties necessary to the performance of the contract, but who are not directly engaged in performing the specific work called for by the contract, and who spend less than 20 percent of their hours worked in a particular workweek performing in connection with such contracts; (ii) individuals exempted from the minimum wage requirements of the flsa under 29 u.s.c. 213(a) and 214(a) and (b), unless otherwise covered by the service contract labor standards statute, or the wage rate requirements (construction) statute. these individuals include but are not limited to  (a) learners, apprentices, or messengers whose wages are calculated pursuant to special certificates issued under 29 u.s.c. 214(a) ; (b) students whose wages are calculated pursuant to special certificates issued under 29 u.s.c. 214(b) ; and (c) those employed in a bona fide executive, administrative, or professional capacity (29 u.s.c. 213(a)(1) and 29 cfr part 541). (d) notice. the contractor shall notify all workers performing work on, or in connection with, this contract of the applicable e.o. minimum wage rate under this clause. with respect to workers covered by the service contract labor standards statute or the wage rate requirements (construction) statute, the contractor may meet this requirement by posting, in a prominent and accessible place at the worksite, the applicable wage determination under those statutes. with respect to workers whose wages are governed by the flsa, the contractor shall post notice, utilizing the poster provided by the administrator, which can be obtained at www.dol.gov/agencies/whd/government contracts, in a prominent and accessible place at the worksite. contractors that customarily post notices to workers electronically may post the notice electronically provided the electronic posting is displayed prominently on any web site that is maintained by the contractor, whether external or internal, and customarily used for notices to workers about terms and conditions of employment. (e) payroll records. (1) the contractor shall make and maintain records, for three years after completion of the work, containing the following information for each worker: (i) name, address, and social security number; (ii) the worker’s occupation(s) or classification(s); (iii) the rate or rates of wages paid; (iv) the number of daily and weekly hours worked by each worker; (v) any deductions made; and (vi) total wages paid. (2) the contractor shall make records pursuant to paragraph (e)(1) of this clause available for inspection and transcription by authorized representatives of the administrator. the contractor shall also make such records available upon request of the contracting officer. (3) the contractor shall make a copy of the contract available, as applicable, for inspection or transcription by authorized representatives of the administrator. (4) failure to comply with this paragraph (e) shall be a violation of 29 cfr 23.260 and this contract. upon direction of the administrator or upon the contracting officer's own action, payment shall be withheld until such time as the noncompliance is corrected. (5) nothing in this clause limits or otherwise modifies the contractor’s payroll and recordkeeping obligations, if any, under the service contract labor standards statute, the wage rate requirements (construction) statute, the fair labor standards act, or any other applicable law. (f) access. the contractor shall permit authorized representatives of the administrator to conduct investigations, including interviewing workers at the worksite during normal working hours. (g) withholding. the contracting officer, upon his or her own action or upon written request of the administrator, will withhold funds or cause funds to be withheld, from the contractor under this or any other federal contract with the same contractor, sufficient to pay workers the full amount of wages required by this clause. (h) disputes. department of labor has set forth in 29 cfr 23.510, disputes concerning contractor compliance, the procedures for resolving disputes concerning a contractor’s compliance with department of labor regulations at 29 cfr part 23. such disputes shall be resolved in accordance with those procedures and not the disputes clause of this contract. these disputes include disputes between the contractor (or any of its subcontractors) and the contracting agency, the department of labor, or the workers or their representatives. (i) antiretaliation. the contractor shall not discharge or in any other manner discriminate against any worker because such worker has filed any complaint or instituted or caused to be instituted any proceeding under or related to compliance with the e.o. or this clause, or has testified or is about to testify in any such proceeding. (j) subcontractor compliance. the contractor is responsible for subcontractor compliance with the requirements of this clause and may be held liable for unpaid wages due subcontractor workers. (k) subcontracts. the contractor shall include the substance of this clause, including this paragraph (k) in all subcontracts, regardless of dollar value, that are subject to the service contract labor standards statute or the wage rate requirements (construction) statute, and are to be performed in whole or in part in the united states. (end of clause) as prescribed in 22.1705(b), insert the following provision: certification regarding trafficking in persons compliance plan (oct 2020) (a) the term "commercially available off the shelf (cots) item," is defined in the clause of this solicitation entitled "combating trafficking in persons" (far clause 52.222 50). (b) the apparent successful offeror shall submit, prior to award, a certification, as specified in paragraph (c) of this provision, for the portion (if any) of the contract that  (1) is for supplies, other than commercially available off the shelf items, to be acquired outside the united states, or services to be performed outside the united states; and (2) has an estimated value that exceeds $550,000. (c) the certification shall state that  (1) it has implemented a compliance plan to prevent any prohibited activities identified in paragraph (b) of the clause at 52.222 50, combating trafficking in persons, and to monitor, detect, and terminate the contract with a subcontractor engaging in prohibited activities identified at paragraph (b) of the clause at 52.222 50, combating trafficking in persons; and (2) after having conducted due diligence, either  (i) to the best of the offeror’s knowledge and belief, neither it nor any of its proposed agents, subcontractors, or their agents is engaged in any such activities; or (ii) if abuses relating to any of the prohibited activities identified in 52.222 50(b) have been found, the offeror or proposed subcontractor has taken the appropriate remedial and referral actions. (end of provision) as prescribed at 22.2110 , insert the following clause: paid sick leave under executive order 13706 (jan 2022) (a) definitions. as used in this clause (in accordance with 29 cfr 13.2)  child, "domestic partner", and "domestic violence" have the meaning given in 29 cfr 13.2. employee  (1) (i) means any person engaged in performing work on or in connection with a contract covered by executive order (e.o.) 13706; and (a) whose wages under such contract are governed by the service contract labor standards statute ( 41 u.s.c. chapter 67), the wage rate requirements (construction) statute ( 40 u.s.c. chapter 31, subchapter iv), or the fair labor standards act ( 29 u.s.c. chapter 8); (b) including employees who qualify for an exemption from the fair labor standards act's minimum wage and overtime provisions; (c) regardless of the contractual relationship alleged to exist between the individual and the employer; and (ii) includes any person performing work on or in connection with the contract and individually registered in a bona fide apprenticeship or training program registered with the department of labor's employment and training administration, office of apprenticeship, or with a state apprenticeship agency recognized by the office of apprenticeship. (2) (i) an employee performs "on" a contract if the employee directly performs the specific services called for by the contract; and (ii) an employee performs "in connection with" a contract if the employee's work activities are necessary to the performance of a contract but are not the specific services called for by the contract. individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship has the meaning given in 29 cfr 13.2. multiemployer plan means a plan to which more than one employer is required to contribute and which is maintained pursuant to one or more collective bargaining agreements between one or more employee organizations and more than one employer. paid sick leave means compensated absence from employment that is required by e.o. 13706 and 29 cfr part 13. parent, "sexual assault", "spouse", and "stalking" have the meaning given in 29 cfr 13.2. united states means the 50 states and the district of columbia. (b) executive order 13706. (1) this contract is subject to e.o. 13706 and the regulations issued by the secretary of labor in 29 cfr part 13 pursuant to the e.o. (2) if this contract is not performed wholly within the united states, this clause only applies with respect to that part of the contract that is performed within the united states. (c) paid sick leave. the contractor shall  (1) permit each employee engaged in performing work on or in connection with this contract to earn not less than 1 hour of paid sick leave for every 30 hours worked; (2) allow accrual and use of paid sick leave as required by e.o. 13706 and 29 cfr part 13; (3) comply with the accrual, use, and other requirements set forth in 29 cfr 13.5 and 13.6, which are incorporated by reference in this contract; (4) provide paid sick leave to all employees when due free and clear and without subsequent deduction (except as otherwise provided by 29 cfr 13.24), rebate, or kickback on any account; (5) provide pay and benefits for paid sick leave used no later than one pay period following the end of the regular pay period in which the paid sick leave was taken; and (6) be responsible for the compliance by any subcontractor with the requirements of e.o. 13706, 29 cfr part 13, and this clause. (d) contractors may fulfill their obligations under e.o. 13706 and 29 cfr part 13 jointly with other contractors through a multiemployer plan, or may fulfill their obligations through an individual fund, plan, or program (see 29 cfr 13.8). (e) withholding. the contracting officer will, upon his or her own action or upon written request of an authorized representative of the department of labor, withhold or cause to be withheld from the contractor under this or any other federal contract with the same contractor, so much of the accrued payments or advances as may be considered necessary to pay employees the full amount owed to compensate for any violation of the requirements of e.o. 13706, 29 cfr part 13, or this clause, including  (1) any pay and/or benefits denied or lost by reason of the violation; (2) other actual monetary losses sustained as a direct result of the violation; and (3) liquidated damages. (f) payment suspension/contract termination/contractor debarment. (1) in the event of a failure to comply with e.o. 13706, 29 cfr part 13, or this clause, the contracting agency may, on its own action or after authorization or by direction of the department of labor and written notification to the contractor take action to cause suspension of any further payment, advance, or guarantee of funds until such violations have ceased. (2) any failure to comply with the requirements of this clause may be grounds for termination for default or cause. (3) a breach of the contract clause may be grounds for debarment as a contractor and subcontractor as provided in 29 cfr 13.52. (g) the paid sick leave required by e.o. 13706, 29 cfr part 13, and this clause is in addition to the contractor's obligations under the service contract labor standards statute and wage rate requirements (construction) statute, and the contractor may not receive credit toward its prevailing wage or fringe benefit obligations under those acts for any paid sick leave provided in satisfaction of the requirements of e.o. 13706 and 29 cfr part 13. (h) nothing in e.o. 13706 or 29 cfr part 13 shall excuse noncompliance with or supersede any applicable federal or state law, any applicable law or municipal ordinance, or a collective bargaining agreement requiring greater paid sick leave or leave rights than those established under e.o. 13706 and 29 cfr part 13. (i) recordkeeping. (1) the contractor shall make and maintain, for no less than three (3) years from the completion of the work on the contract, records containing the following information for each employee, which the contractor shall make available upon request for inspection, copying, and transcription by authorized representatives of the administrator of the wage and hour division of the department of labor: (i) name, address, and social security number of each employee. (ii) the employee's occupation(s) or classification(s). (iii) the rate or rates of wages paid (including all pay and benefits provided). (iv) the number of daily and weekly hours worked. (v) any deductions made. (vi) the total wages paid (including all pay and benefits provided) each pay period. (vii) a copy of notifications to employees of the amount of paid sick leave the employee has accrued, as required under 29 cfr 13.5(a)(2). (viii) a copy of employees' requests to use paid sick leave, if in writing, or, if not in writing, any other records reflecting such employee requests. (ix) dates and amounts of paid sick leave taken by employees (unless the contractor's paid time off policy satisfies the requirements of e.o. 13706 and 29 cfr part 13 as described in 29 cfr 13.5(f)(5), leave shall be designated in records as paid sick leave pursuant to e.o. 13706). (x) a copy of any written responses to employees' requests to use paid sick leave, including explanations for any denials of such requests, as required under 29 cfr 13.5(d)(3). (xi) any records reflecting the certification and documentation the contractor may require an employee to provide under 29 cfr 13.5(e), including copies of any certification or documentation provided by an employee. (xii) any other records showing any tracking of or calculations related to an employee's accrual or use of paid sick leave. (xiii) the relevant contract. (xiv) the regular pay and benefits provided to an employee for each use of paid sick leave. (xv) any financial payment made for unused paid sick leave upon a separation from employment intended, pursuant to 29 cfr 13.5(b)(5), to relieve the contractor from the obligation to reinstate such paid sick leave as otherwise required by 29 cfr 13.5(b)(4). (2) (i) if the contractor wishes to distinguish between an employee’s covered and noncovered work, the contractor shall keep records or other proof reflecting such distinctions. only if the contractor adequately segregates the employee's time will time spent on noncovered work be excluded from hours worked counted toward the accrual of paid sick leave. similarly, only if the contractor adequately segregates the employee's time may the contractor properly refuse an employee's request to use paid sick leave on the ground that the employee was scheduled to perform noncovered work during the time he or she asked to use paid sick leave. (ii) if the contractor estimates covered hours worked by an employee who performs work in connection with contracts covered by the e.o. pursuant to 29 cfr 13.5(a)(i) or (iii), the contractor shall keep records or other proof of the verifiable information on which such estimates are reasonably based. only if the contractor relies on an estimate that is reasonable and based on verifiable information will an employee's time spent in connection with noncovered work be excluded from hours worked counted toward the accrual of paid sick leave. if the contractor estimates the amount of time an employee spends performing in connection with contracts covered by the e.o., the contractor shall permit the employee to use his or her paid sick leave during any work time for the contractor. (3) in the event the contractor is not obligated by the service contract labor standards statute, the wage rate requirements (construction) statute, or the fair labor standards act to keep records of an employee's hours worked, such as because the employee is exempt from the fair labor standards act's minimum wage and overtime requirements, and the contractor chooses to use the assumption permitted by 29 cfr 13.5(a)(1)(iii), the contractor is excused from the requirement in paragraph (i)(1)(iv) of this clause and 29 cfr 13.25(a)(4) to keep records of the employee's number of daily and weekly hours worked. (4) (i) records relating to medical histories or domestic violence, sexual assault, or stalking, created for purposes of e.o. 13706, whether of an employee or an employee's child, parent, spouse, domestic partner, or other individual related by blood or affinity whose close association with the employee is the equivalent of a family relationship, shall be maintained as confidential records in separate files/records from the usual personnel files. (ii) if the confidentiality requirements of the genetic information nondiscrimination act of 2008 (gina), section 503 of the rehabilitation act of 1973, and/or the americans with disabilities act (ada) apply to records or documents created to comply with the recordkeeping requirements in this contract clause, the records and documents shall also be maintained in compliance with the confidentiality requirements of the gina, section 503 of the rehabilitation act of 1973, and/or ada as described in 29 cfr 1635.9, 41 cfr 60 741.23(d), and 29 cfr 1630.14(c)(1), respectively. (iii) the contractor shall not disclose any documentation used to verify the need to use 3 or more consecutive days of paid sick leave for the purposes listed in 29 cfr 13.5(c)(1)(iv) (as described in 29 cfr 13.5(e)(1)(ii)) and shall maintain confidentiality about any domestic abuse, sexual assault, or stalking, unless the employee consents or when disclosure is required by law. (5) the contractor shall permit authorized representatives of the wage and hour division to conduct interviews with employees at the worksite during normal working hours. (6) nothing in this contract clause limits or otherwise modifies the contractor's recordkeeping obligations, if any, under the service contract labor standards statute, the wage rate requirements (construction) statute, the fair labor standards act, the family and medical leave act, e.o. 14026, their respective implementing regulations, or any other applicable law. (j) interference/discrimination. (1) the contractor shall not in any manner interfere with an employee's accrual or use of paid sick leave as required by e.o. 13706 or 29 cfr part 13. interference includes, but is not limited to  (i) miscalculating the amount of paid sick leave an employee has accrued; (ii) denying or unreasonably delaying a response to a proper request to use paid sick leave; (iii) discouraging an employee from using paid sick leave; (iv) reducing an employee's accrued paid sick leave by more than the amount of such leave used; (v) transferring an employee to work on contracts not covered by the e.o. to prevent the accrual or use of paid sick leave; (vi) disclosing confidential information contained in certification or other documentation provided to verify the need to use paid sick leave; or (vii) making the use of paid sick leave contingent on the employee's finding a replacement worker or the fulfillment of the contractor's operational needs. (2) the contractor shall not discharge or in any other manner discriminate against any employee for  (i) using, or attempting to use, paid sick leave as provided for under e.o. 13706 and 29 cfr part 13; (ii) filing any complaint, initiating any proceeding, or otherwise asserting any right or claim under e.o. 13706 and 29 cfr part 13; (iii) cooperating in any investigation or testifying in any proceeding under e.o. 13706 and 29 cfr part 13; or (iv) informing any other person about his or her rights under e.o. 13706 and 29 cfr part 13. (k) notice. the contractor shall notify all employees performing work on or in connection with a contract covered by the e.o. of the paid sick leave requirements of e.o. 13706, 29 cfr part 13, and this clause by posting a notice provided by the department of labor in a prominent and accessible place at the worksite so it may be readily seen by employees. contractors that customarily post notices to employees electronically may post the notice electronically, provided such electronic posting is displayed prominently on any website that is maintained by the contractor, whether external or internal, and customarily used for notices to employees about terms and conditions of employment. (l) disputes concerning labor standards. disputes related to the application of e.o. 13706 to this contract shall not be subject to the general disputes clause of the contract. such disputes shall be resolved in accordance with the procedures of the department of labor set forth in 29 cfr part 13. disputes within the meaning of this contract clause include disputes between the contractor (or any of its subcontractors) and the contracting agency, the department of labor, or the employees or their representatives. (m) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (m), in all subcontracts, regardless of dollar value, that are subject to the service contract labor standards statute or the wage rate requirements (construction) statute, and are to be performed in whole or in part in the united states. (end of clause) as prescribed in 23.109(c)(1), insert the following provision: biobased product certification (may 2024) as required by the farm security and rural investment act of 2002 ( 7 u.s.c. 8101(4)) and the energy policy act of 2005 ( 7 u.s.c. 8102(a)(2)(f)), the offeror certifies, by signing this offer, that biobased products (within categories of products listed by the united states department of agriculture in 7 cfr part 3201, subpart b) to be used or delivered in the performance of the contract, other than biobased products that are not purchased by the offeror as a direct result of this contract, will comply with the applicable specifications or other contractual requirements. (end of provision) as prescribed in 23.109(c)(2), insert the following clause: reporting of biobased products under service and construction contracts (may 2024) (a) definitions. as used in this clause  biobased product means a product determined by the u.s. department of agriculture (usda) to be a commercial product or industrial product (other than food or feed) that is composed, in whole or in significant part, of biological products, including renewable domestic agricultural materials and forestry materials, or that is an intermediate ingredient or feedstock. the term includes, with respect to forestry materials, forest products that meet biobased content requirements, notwithstanding the market share the product holds, the age of the product, or whether the market for the product is new or emerging. ( 7 u.s.c. 8101) ( 7 cfr 3201.2). usda designated product category means a generic grouping of products that are or can be made with biobased materials  (1) that are listed by usda in a procurement guideline ( 7 cfr part 3201, subpart b); and (2) for which usda has provided purchasing recommendations (available at https://www.biopreferred.gov ). (b) the contractor shall report to https://www.sam.gov, with a copy to the contracting officer, on the product types and dollar value of any biobased products in usda designated product categories purchased by the contractor during the previous government fiscal year, between october 1 and september 30; and (c) submit this report no later than  (1) october 31 of each year during contract performance; and (2) at the end of contract performance. (end of clause) as prescribed in 23.304(a)(1), insert the following clause: hazardous material identification and material safety data (feb 2021) (a) "hazardous material," as used in this clause, includes any material defined as hazardous under the latest version of federal standard no.313 (including revisions adopted during the term of the contract). (b) the offeror must list any hazardous material, as defined in paragraph (a) of this clause, to be delivered under this contract. the hazardous material shall be properly identified and include any applicable identification number, such as national stock number or special item number. this information shall also be included on the material safety data sheet submitted under this contract. material (if none, insert none) identification no. ____________________ ____________________ ____________________ ____________________ ____________________ ____________________ (c) this list must be updated during performance of the contract whenever the contractor determines that any other material to be delivered under this contract is hazardous. (d) the apparently successful offeror agrees to submit, for each item as required prior to award, a material safety data sheet, meeting the requirements of 29 cfr 1910.1200(g) and the latest version of federal standard no.313, for all hazardous material identified in paragraph (b) of this clause. data shall be submitted in accordance with federal standard no.313, whether or not the apparently successful offeror is the actual manufacturer of these items. failure to submit the material safety data sheet prior to award may result in the apparently successful offeror being considered nonresponsible and ineligible for award. (e) if, after award, there is a change in the composition of the item(s) or a revision to federal standard no.313, which renders incomplete or inaccurate the data submitted under paragraph (d) of this clause, the contractor shall promptly notify the contracting officer and resubmit the data. (f) neither the requirements of this clause nor any act or failure to act by the government shall relieve the contractor of any responsibility or liability for the safety of government, contractor, or subcontractor personnel or property. (g) nothing contained in this clause shall relieve the contractor from complying with applicable federal, state, and local laws, codes, ordinances, and regulations (including the obtaining of licenses and permits) in connection with hazardous material. (h) the government’s rights in data furnished under this contract with respect to hazardous material are as follows: (1) to use, duplicate and disclose any data to which this clause is applicable. the purposes of this right are to  (i) apprise personnel of the hazards to which they may be exposed in using, handling, packaging, transporting, or disposing of hazardous materials; (ii) obtain medical treatment for those affected by the material; and (iii) have others use, duplicate, and disclose the data for the government for these purposes. (2) to use, duplicate, and disclose data furnished under this clause, in accordance with paragraph (h)(1) of this clause, in precedence over any other clause of this contract providing for rights in data. (3) the government is not precluded from using similar or identical data acquired from other sources. (end of clause) alternate i (july 1995). as prescribed in 23.304(a)(2), add the following paragraph (i) to the basic clause: (i) except as provided in paragraph (i)(2), the contractor shall prepare and submit a sufficient number of material safety data sheets (msds's), meeting the requirements of 29 cfr 1910.1200(g) and the latest version of federal standard no.313, for all hazardous materials identified in paragraph (b) of this clause. (1) for items shipped to consignees, the contractor shall include a copy of the msds's with the packing list or other suitable shipping document which accompanies each shipment. alternatively, the contractor is permitted to transmit msds's to consignees in advance of receipt of shipments by consignees, if authorized in writing by the contracting officer. (2) for items shipped to consignees identified by mailing address as agency depots, distribution centers or customer supply centers, the contractor shall provide one copy of the msds's in or on each shipping container. if affixed to the outside of each container, the msds's must be placed in a weather resistant envelope. as prescribed in 23.109(b)(1), insert the following provision: recovered material certification (may 2008) as required by the resource conservation and recovery act of 1976 ( 42 u.s.c. 6962(c)(3)(a)(i)), the offeror certifies, by signing this offer, that the percentage of recovered materials content for epa designated items to be delivered or used in the performance of the contract will be at least the amount required by the applicable contract specifications or other contractual requirements. (end of provision) as prescribed in 23.406(a), insert the following clause: pollution prevention and right to know information (may 2024) (a) definitions. as used in this clause  toxic chemical means a chemical or chemical category listed in 40 cfr 372.65. (b) federal facilities are required to comply with the provisions of the emergency planning and community right to know act of 1986 (epcra) ( 42 u.s.c. 11001 11050), and the pollution prevention act of 1990 (ppa) ( 42 u.s.c. 13101 13109). (c) the contractor shall provide all information needed by the federal facility to comply with the following: (1) the emergency planning reporting requirements of section 302 of epcra. (2) the emergency notice requirements of section 304 of epcra. (3) the list of material safety data sheets, required by section 311 of epcra. (4) the emergency and hazardous chemical inventory forms of section 312 of epcra. (5) the toxic chemical release inventory of section 313 of epcra, which includes the reduction and recycling information required by section 6607 of ppa. (end of clause) as prescribed in 23.304(b), insert the following clause: notice of radioactive materials (jan 1997) (a) the contractor shall notify the contracting officer or designee, in writing, ______________*days prior to the delivery of, or prior to completion of any servicing required by this contract of, items containing either (1) radioactive material requiring specific licensing under the regulations issued pursuant to the atomic energy act of1954, as amended, as set forth in title 10 of the code of federal regulations, in effect on the date of this contract, or (2) other radioactive material not requiring specific licensing in which the specific activity is greater than 0.002 microcuries per gram or the activity per item equals or exceeds 0.01 microcuries. such notice shall specify the part or parts of the items which contain radioactive materials, a description of the materials, the name and activity of the isotope, the manufacturer of the materials, and any other information known to the contractor which will put users of the items on notice as to the hazards involved (omb no.9000 0107). * the contracting officer shall insert the number of days required in advance of delivery of the item or completion of the servicing to assure that required licenses are obtained and appropriate personnel are notified to institute any necessary safety and health precautions. (b) if there has been no change affecting the quantity of activity, or the characteristics and composition of the radioactive material from deliveries under this contract or prior contracts, the contractor may request that the contracting officer or designee waive the notice requirement in paragraph (a) of this clause. any such request shall  (1) be submitted in writing; (2) state that the quantity of activity, characteristics, and composition of the radioactive material have not changed; and (3) cite the contract number on which the prior notification was submitted and the contracting office to which it was submitted. (c) all items, parts, or subassemblies which contain radioactive materials in which the specific activity is greater than 0.002 microcuries per gram or activity per item equals or exceeds 0.01 microcuries, and all containers in which such items, parts or subassemblies are delivered to the government shall be clearly marked and labeled as required by the latest revision of mil std 129 in effect on the date of the contract. (d) this clause, including this paragraph (d), shall be inserted in all subcontracts for radioactive materials meeting the criteria in paragraph (a) of this clause. (end of clause) as prescribed in 23.109(b)(2), insert the following clause: estimate of percentage of recovered material content for epa designated items (may 2008) (a) definitions. as used in this clause  postconsumer materialmeans a material or finished product that has served its intended use and has been discarded for disposal or recovery, having completed its life as a consumer item. postconsumer material is a part of the broader category of "recovered material." "recovered material" means waste materials and by products recovered or diverted from solid waste, but the term does not include those materials and by products generated from, and commonly reused within, an original manufacturing process. (b) the contractor, on completion of this contract, shall  (1) estimate the percentage of the total recovered material content for epa designated item(s) delivered and/or used in contract performance, including, if applicable, the percentage of post consumer material content; and (2) submit this estimate to _____________________ [contracting officer complete in accordance with agency procedures]. (end of clause) alternate i (may 2008). as prescribed in 23.109(b)(2), redesignate paragraph (b) of the basic clause as paragraph (c) and add the following paragraph (b) to the basic clause: (b) the contractor shall execute the following certification required by the resource conservation and recovery act of 1976 ( 42 u.s.c. 6962(i)(2)(c)): certification i, _______________ (name of certifier), am an officer or employee responsible for the performance of this contract and hereby certify that the percentage of recovered material content for epa designated items met the applicable contract specifications or other contractual requirements. __________________________________________________ [signature of the officer or employee] __________________________________________________ [typed name of the officer or employee] __________________________________________________ [title] __________________________________________________ [name of company, firm, or organization] __________________________________________________ [date] (end of certification) as prescribed in 23.406(c), insert the following clause: waste reduction program (may 2024) (a) definitions. as used in this clause  recycling means the series of activities, including collection, separation, and processing, by which products or other materials are recovered from the solid waste stream for use in the form of raw materials in the manufacture of products other than fuel for producing heat or power by combustion. waste prevention means any change in the design, manufacturing, purchase, or use of materials or products (including packaging) to reduce their amount or toxicity before they are discarded. waste prevention also refers to the reuse of products or materials. waste reduction means preventing or decreasing the amount of waste being generated through waste prevention, recycling, or purchasing recycled and environmentally preferable products. (b) consistent with the requirements of section 207 of executive order 14057, the contractor shall establish a program to promote cost effective waste reduction in all operations and facilities covered by this contract. the contractor’s programs shall comply with applicable federal, state, and local requirements, specifically including section 6002 of the resource conservation and recovery act ( 42 u.s.c.6962, etseq.) and implementing regulations (40 cfr part 247). (end of clause) as prescribed in 23.109(d)(1), insert the following clause: ozone depleting substances and high global warming potential hydrofluorocarbons (may 2024) (a) definitions. as used in this clause  global warming potential means how much a given mass of a chemical contributes to global warming over a given time period compared to the same mass of carbon dioxide. carbon dioxide’s global warming potential is defined as 1.0. high global warming potential hydrofluorocarbons means any hydrofluorocarbons in a particular end use for which epa’s significant new alternatives policy (snap) program has identified other acceptable alternatives that have lower global warming potential. the snap list of alternatives is found at 40 cfr part 82, subpart g, with supplemental tables of alternatives available at ( https://www.epa.gov/snap/). hydrofluorocarbons means compounds that only contain hydrogen, fluorine, and carbon. ozone depleting substance, means any substance the environmental protection agency designates in 40 cfr part 82 as  (1) class i, including, but not limited to, chlorofluorocarbons, halons, carbon tetrachloride, and methyl chloroform; or (2) class ii, including, but not limited to, hydrochlorofluorocarbons. (b) the contractor shall label products that contain or are manufactured with ozone depleting substances in the manner and to the extent required by 42 u.s.c. 7671j (b), (c), (d), and (e) and 40 cfr part 82, subpart e, as follows: warning: contains (or manufactured with, if applicable) *_______, a substance(s) which harm(s) public health and environment by destroying ozone in the upper atmosphere. * the contractor shall insert the name of the substance(s). (c) the contractor shall refer to epa's snap program to identify alternatives. the snap list of alternatives is found at 40 cfr part 82, subpart g, with supplemental tables available at https://www.epa.gov/​snap/​. (end of clause) as prescribed in 23.109(d)(2), insert the following clause: maintenance, service, repair, or disposal of refrigeration equipment and air conditioners (may 2024) (a) definitions. as used in this clause  global warming potential means how much a given mass of a chemical contributes to global warming over a given time period compared to the same mass of carbon dioxide. carbon dioxide’s global warming potential is defined as 1.0. high global warming potential hydrofluorocarbons means any hydrofluorocarbons in a particular end use for which epa’s significant new alternatives policy (snap) program has identified other acceptable alternatives that have lower global warming potential. the snap list of alternatives is found at 40 cfr part 82 subpart g with supplemental tables of alternatives available at ( https://www.epa.gov/snap/). hydrofluorocarbons means compounds that only contain hydrogen, fluorine, and carbon. (b) the contractor shall comply with the applicable requirements of sections608 and 609 of the clean air act ( 42 u.s.c. 7671g and 7671h) as each or both apply to this contract. (c) unless otherwise specified in the contract, the contractor shall reduce the use, release, or emissions of high global warming potential hydrofluorocarbons under this contract by  (1) transitioning over time to the use of another acceptable alternative in lieu of high global warming potential hydrofluorocarbons in a particular end use for which epa’s snap program has identified other acceptable alternatives that have lower global warming potential; (2) preventing and repairing refrigerant leaks through service and maintenance during contract performance; (3) implementing recovery, recycling, and responsible disposal programs that avoid release or emissions during equipment service and as the equipment reaches the end of its useful life; and (4) using reclaimed hydrofluorocarbons to service and repair refrigeration and air conditioning equipment, where feasible. (d) the contractor shall refer to epa’s snap program to identify alternatives. the snap list of alternatives is found at 40 cfr part 82 subpart g with supplemental tables available at https://www.epa.gov/snap/. (end of clause) as prescribed in 23.406(b), insert the following clause: compliance with environmental management systems (may 2011) the contractor’s work under this contract shall conform with all operational controls identified in the applicable agency or facility environmental management systems and provide monitoring and measurement information necessary for the government to address environmental performance relative to the goals of the environmental management systems. (end of clause) as prescribed in 23.109(d)(3), insert the following clause: aerosols (may 2024) (a) definitions. as used in this clause  global warming potential means how much a given mass of a chemical contributes to global warming over a given time period compared to the same mass of carbon dioxide. carbon dioxide’s global warming potential is defined as 1.0. high global warming potential hydrofluorocarbons means any hydrofluorocarbons in a particular end use for which epa’s significant new alternatives policy (snap) program has identified other acceptable alternatives that have lower global warming potential. the snap list of alternatives is found at 40 cfr part 82 subpart g with supplemental tables of alternatives available at ( https://www.epa.gov/snap/). hydrofluorocarbons means compounds that only contain hydrogen, fluorine, and carbon. (b) unless otherwise specified in the contract, the contractor shall reduce its use, release, or emissions of high global warming potential hydrofluorocarbons, when feasible, from aerosol propellants or solvents under this contract. when determining feasibility of using a particular alternative, the contractor shall consider environmental, technical, and economic factors such as  (1) in use emission rates, energy efficiency; (2) safety, such as flammability or toxicity; (3) ability to meet technical performance requirements; and (4) commercial availability at a reasonable cost. (c) the contractor shall refer to epa's snap program to identify alternatives. the snap list of alternatives is found at 40 cfr part 82 subpart g with supplemental tables available at https://www.epa.gov/snap/. (end of clause) as prescribed in 23.109(d)(4), insert the following clause: foams (may 2024) (a) definitions. as used in this clause  global warming potential means how much a given mass of a chemical contributes to global warming over a given time period compared to the same mass of carbon dioxide. carbon dioxide’s global warming potential is defined as 1.0. high global warming potential hydrofluorocarbons means any hydrofluorocarbons in a particular end use for which epa’s significant new alternatives policy (snap) program has identified other acceptable alternatives that have lower global warming potential. the snap list of alternatives is found at 40 cfr part 82 subpart g with supplemental tables of alternatives available at ( https://www.epa.gov/snap/). hydrofluorocarbons means compounds that only contain hydrogen, fluorine, and carbon. (b) unless otherwise specified in the contract, the contractor shall reduce its use, release, and emissions of high global warming potential hydrofluorocarbons and refrigerant blends containing hydrofluorocarbons, when feasible, from foam blowing agents, under this contract. when determining feasibility of using a particular alternative, the contractor shall consider environmental, technical, and economic factors such as  (1) in use emission rates, energy efficiency, and safety; (2) ability to meet performance requirements; and (3) commercial availability at a reasonable cost. (c) the contractor shall refer to epa’s snap program to identify alternatives. the snap list of alternatives is found at 40 cfr part 82 subpart g with supplemental tables available at https://www.epa.gov/snap/. (end of clause) as prescribed in 23.502 , insert the following provision: public disclosure of greenhouse gas emissions and reduction goals representation (dec 2016) (a) this representation shall be completed if the offeror received $7.5 million or more in federal contract awards in the prior federal fiscal year. the representation is optional if the offeror received less than $7.5 million in federal contract awards in the prior federal fiscal year. (b) representation. [offeror is to check applicable blocks in paragraphs (1) and (2).] (1) the offeror (itself or through its immediate owner or highest level owner) □ does, □ does not publicly disclose greenhouse gas emissions, i.e., make available on a publicly accessible website the results of a greenhouse gas inventory, performed in accordance with an accounting standard with publicly available and consistently applied criteria, such as the greenhouse gas protocol corporate standard. (2) the offeror (itself or through its immediate owner or highest level owner) □ does, □ does not publicly disclose a quantitative greenhouse gas emissions reduction goal, i.e., make available on a publicly available website a target to reduce absolute emissions or emissions intensity by a specific quantity or percentage. (3) a publicly accessible website includes the offeror’s own website or a recognized, third party greenhouse gas emissions reporting program. (c) if the offeror checked "does" in paragraphs (b)(1) or (b)(2) of this provision, respectively, the offeror shall provide the publicly accessible website(s) where greenhouse gas emissions and/or reduction goals are reported:________________. (end of provision) as prescribed in 23.109(a), insert the following clause: sustainable products and services (may 2024) (a) definitions. as used in this clause  biobased product means a product determined by the u.s. department of agriculture (usda) to be a commercial product or industrial product (other than food or feed) that is composed, in whole or in significant part, of biological products, including renewable domestic agricultural materials and forestry materials, or that is an intermediate ingredient or feedstock. the term includes, with respect to forestry materials, forest products that meet biobased content requirements, notwithstanding the market share the product holds, the age of the product, or whether the market for the product is new or emerging. ( 7 u.s.c. 8101) ( 7 cfr 3201.2). recovered material means waste materials and by products recovered or diverted from solid waste, but the term does not include those materials and by products generated from, and commonly reused within, an original manufacturing process. ( 42 u.s.c. 6903). sustainable products and services means products and services that are subject to and meet the following applicable statutory mandates and directives for purchasing: (1) statutory purchasing programs. (i) products containing recovered material designated by the u.s. environmental protection agency (epa) under the comprehensive procurement guidelines ( 42 u.s.c. 6962) ( 40 cfr part 247) ( https://www.epa.gov/​smm/​comprehensive procurement guideline cpg program#products). (ii) energy  and water efficient products that are energy star® certified or federal energy management program (femp) designated products ( 42 u.s.c. 8259b) ( 10 cfr part 436, subpart c) ( https://www.energy.gov/​eere/​femp/​search energy efficient products and https://www.energystar.gov/​products?​s=​mega). (iii) biobased products meeting the content requirement of the usda under the biopreferred® program ( 7 u.s.c. 8102) ( 7 cfr part 3201) ( https://www.biopreferred.gov). (iv) acceptable chemicals, products, and manufacturing processes listed under epa's significant new alternatives policy (snap) program, which ensures a safe and smooth transition away from substances that contribute to the depletion of stratospheric ozone ( 42 u.s.c. 7671l) ( 40 cfr part 82, subpart g) ( https://www.epa.gov/​snap). (2) required epa purchasing programs. (i) watersense® labeled (water efficient) products and services ( https://www.epa.gov/​watersense/​watersense products). (ii) safer choice certified products (products that contain safer chemical ingredients) ( https://www.epa.gov/​saferchoice/​products). (iii) product and services that meet epa recommendations of specifications, standards, and ecolabels in effect as of october 2023 ( https://www.epa.gov/​greenerproducts/​recommendations specifications standards and ecolabels federal purchasing). (b) requirements. (1) the sustainable products and services, including the purchasing program and type of product or service, that are applicable to this contract, and any products or services that are not subject to this clause, will be set forth in the statement of work or elsewhere in the contract. (2) the contractor shall ensure that the sustainable products and services required by this contract are  (i) delivered to the government; (ii) furnished for use by the government; (iii) incorporated into the construction of a public building or public work; and (iv) furnished for use in performing services under this contract, where the cost of the products is a direct cost to this contract (versus costs which are normally applied to the contractor's general and administrative expenses or indirect costs). this includes services performed by contractors performing management and operation of government owned facilities to the same extent that, at the time of award, an agency would be required to comply if an agency operated or supported the facility. (3) (i) except as provided in paragraph (b)(3)(ii) of this clause, sustainable products and services must meet the applicable standards, specifications, or other program requirements at time of quote or offer submission; and (ii) sustainable products and services must meet the epa recommendations of specifications, standards, and ecolabels in effect as of october 2023. (c) resource. the green procurement compilation (gpc) available at https://sftool.gov/​greenprocurement provides a comprehensive list of sustainable products and services and sustainable acquisition guidance. the contractor should review the gpc when determining which purchasing programs apply to a specific product or service. end of clause as prescribed in 24.104 , insert the following clause in solicitations and contracts, when the design, development, or operation of a system of records on individuals is required to accomplish an agency function: privacy act notification (apr 1984) the contractor will be required to design, develop, or operate a system of records on individuals, to accomplish an agency function subject to the privacy act of1974, public law93 579, december 31,1974 ( 5 u.s.c. 552a) and applicable agency regulations. violation of the act may involve the imposition of criminal penalties. (end of clause) as prescribed in 24.104 , insert the following clause in solicitations and contracts, when the design, development, or operation of a system of records on individuals is required to accomplish an agency function: privacy act (apr 1984) (a) the contractor agrees to  (1) comply with the privacy act of1974 (the act) and the agency rules and regulations issued under the act in the design, development, or operation of any system of records on individuals to accomplish an agency function when the contract specifically identifies  (i) the systems of records; and (ii) the design, development, or operation work that the contractor is to perform; (2) include the privacy act notification contained in this contract in every solicitation and resulting subcontract and in every subcontract awarded without a solicitation, when the work statement in the proposed subcontract requires the redesign, development, or operation of a system of records on individuals that is subject to the act; and (3) include this clause, including this paragraph (3), in all subcontracts awarded under this contract which requires the design, development, or operation of such a system of records. (b) in the event of violations of the act, a civil action may be brought against the agency involved when the violation concerns the design, development, or operation of a system of records on individuals to accomplish an agency function, and criminal penalties may be imposed upon the officers or employees of the agency when the violation concerns the operation of a system of records on individuals to accomplish an agency function. for purposes of the act, when the contract is for the operation of a system of records on individuals to accomplish an agency function, the contractor is considered to be an employee of the agency. (c) (1) "operation of a system of records," as used in this clause, means performance of any of the activities associated with maintaining the system of records, including the collection, use, and dissemination of records. (2) "record," as used in this clause, means any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, education, financial transactions, medical history, and criminal or employment history and that contains the person’s name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a fingerprint or voiceprint or a photograph. (3) "system of records on individuals," as used in this clause, means a group of any records under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual. (end of clause) as prescribed in 24.302 , insert the following clause: privacy training (jan 2017) (a) definition. as used in this clause, "personally identifiable information" means information that can be used to distinguish or trace an individual's identity, either alone or when combined with other information that is linked or linkable to a specific individual. (see office of management and budget (omb) circular a 130, managing federal information as a strategic resource). (b) the contractor shall ensure that initial privacy training, and annual privacy training thereafter, is completed by contractor employees who  (1) have access to a system of records; (2) create, collect, use, process, store, maintain, disseminate, disclose, dispose, or otherwise handle personally identifiable information on behalf of an agency; or (3) design, develop, maintain, or operate a system of records (see also far subpart 24.3 and 39.105). (c) (1) "privacy training shall address the key elements necessary for ensuring the safeguarding of personally identifiable information or a system of records. the training shall be role based, provide foundational as well as more advanced levels of training, and have measures in place to test the knowledge level of users. at a minimum, the privacy training shall cover  (i) the provisions of the privacy act of 1974 ( 5 u.s.c. 552a), including penalties for violations of the act; (ii) the appropriate handling and safeguarding of personally identifiable information; (iii) the authorized and official use of a system of records or any other personally identifiable information; (iv) the restriction on the use of unauthorized equipment to create, collect, use, process, store, maintain, disseminate, disclose, dispose or otherwise access personally identifiable information; (v) the prohibition against the unauthorized use of a system of records or unauthorized disclosure, access, handling, or use of personally identifiable information; and (vi) the procedures to be followed in the event of a suspected or confirmed breach of a system of records or the unauthorized disclosure, access, handling, or use of personally identifiable information (see omb guidance for preparing for and responding to a breach of personally identifiable information). (2) completion of an agency developed or agency conducted training course shall be deemed to satisfy these elements. (d) the contractor shall maintain and, upon request, provide documentation of completion of privacy training to the contracting officer. (e) the contractor shall not allow any employee access to a system of records, or permit any employee to create, collect, use, process, store, maintain, disseminate, disclose, dispose or otherwise handle personally identifiable information, or to design, develop, maintain, or operate a system of records unless the employee has completed privacy training, as required by this clause. (f) the substance of this clause, including this paragraph (f), shall be included in all subcontracts under this contract, when subcontractor employees will  (1) have access to a system of records; (2) create, collect, use, process, store, maintain, disseminate, disclose, dispose, or otherwise handle personally identifiable information; or (3) design, develop, maintain, or operate a system of records. (end of clause) alternate i (jan 2017). as prescribed in 24.302 (b), if the agency specifies that only its agency provided training is acceptable, substitute the following paragraph (c) for paragraph (c) of the basic clause: (c) the contracting agency will provide initial privacy training, and annual privacy training thereafter, to contractor employees for the duration of this contract. as prescribed in 25.1101(a)(1), insert the following clause: buy american supplies (oct 2022) (a) definitions. as used in this clause  commercially available off the shelf (cots) item  (1) means any item of supply (including construction material) that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” at federal acquisition regulation (far) 2.101); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and (2) does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. component means an article, material, or supply incorporated directly into an end product. cost of components means  (1) for components purchased by the contractor, the acquisition cost, including transportation costs to the place of incorporation into the end product (whether or not such costs are paid to a domestic firm), and any applicable duty (whether or not a duty free entry certificate is issued); or (2) for components manufactured by the contractor, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1) of this definition, plus allocable overhead costs, but excluding profit. cost of components does not include any costs associated with the manufacture of the end product. critical component means a component that is mined, produced, or manufactured in the united states and deemed critical to the u.s. supply chain. the list of critical components is at far 25.105 . domestic end product means  (1) for an end product that does not consist wholly or predominantly of iron or steel or a combination of both  (i) an unmanufactured end product mined or produced in the united states; (ii) an end product manufactured in the united states, if  (a) the cost of its components mined, produced, or manufactured in the united states exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. components of foreign origin of the same class or kind as those that the agency determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities of a satisfactory quality are treated as domestic. components of unknown origin are treated as foreign. scrap generated, collected, and prepared for processing in the united states is considered domestic; or (b) the end product is a cots item; or (2) for an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the united states, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. the cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding cots fasteners. iron or steel components of unknown origin are treated as foreign. if the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of "cost of components". end product means those articles, materials, and supplies to be acquired under the contract for public use. fastener means a hardware device that mechanically joins or affixes two or more objects together. examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. foreign end product means an end product other than a domestic end product. foreign iron and steel means iron or steel products not produced in the united states. produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. the origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. the cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding cots fasteners. steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. united states means the 50 states, the district of columbia, and outlying areas. (b) 41 u.s.c. chapter 83, buy american, provides a preference for domestic end products for supplies acquired for use in the united states. in accordance with 41 u.s.c. 1907, the domestic content test of the buy american statute is waived for an end product that is a cots item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding cots fasteners. (c) offerors may obtain from the contracting officer a list of foreign articles that the contracting officer will treat as domestic for this contract. (d) the contractor shall deliver only domestic end products except to the extent that it specified delivery of foreign end products in the provision of the solicitation entitled "buy american certificate." (end of clause) alternate i (oct 2022). as prescribed in 25.1101 (a)(1)(ii) substitute the following sentence for the first sentence of paragraph (1)(ii)(a) of the definition of “domestic end product” in paragraph (a): (a) the cost of its components mined, produced, or manufactured in the united states exceeds __ percent of the cost of all its components. [ contracting officer to insert the percentage. ] as prescribed in 25.1101(a)(2), insert the following provision: buy american certificate (oct 2022) (a) (1) the offeror certifies that each end product, except those listed in paragraph (b) of this provision, is a domestic end product and that each domestic end product listed in paragraph (c) of this provision contains a critical component. (2) the offeror shall list as foreign end products those end products manufactured in the united states that do not qualify as domestic end products. for those foreign end products that do not consist wholly or predominantly of iron or steel or a combination of both, the offeror shall also indicate whether these foreign end products exceed 55 percent domestic content, except for those that are cots items. if the percentage of the domestic content is unknown, select “no”. (3) the offeror shall separately list the line item numbers of domestic end products that contain a critical component (see far 25.105). (4) the terms “commercially available off the shelf (cots) item,” “critical component,” "domestic end product," "end product," and "foreign end product" are defined in the clause of this solicitation entitled "buy american supplies." (b)foreign end products: ______________ _________________ _________________ ______________ _________________ _________________ ______________ _________________ _________________ (b)[list as necessary] (c) domestic end products containing a critical component: line item no. ___ [list as necessary] (d) the government will evaluate offers in accordance with the policies and procedures of part 25 of the federal acquisition regulation. (end of provision) as prescribed in 25.1101 (b)(1)(i), insert the following clause: buy american free trade agreements israeli trade act (nov 2023) (a) definitions. as used in this clause  bahraini, moroccan, omani, panamanian, or peruvian end product means an article that  (1) is wholly the growth, product, or manufacture of bahrain, morocco, oman, panama, or peru; or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in bahrain, morocco, oman, panama, or peru into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. the term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. commercially available off the shelf (cots) item  (1) means any item of supply (including construction material) that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” at federal acquisition regulation (far) 2.101); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and (2) does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. component means an article, material, or supply incorporated directly into an end product. cost of components means  (1) for components purchased by the contractor, the acquisition cost, including transportation costs to the place of incorporation into the end product (whether or not such costs are paid to a domestic firm), and any applicable duty (whether or not a duty free entry certificate is issued); or (2) for components manufactured by the contractor, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1) of this definition, plus allocable overhead costs, but excluding profit. cost of components does not include any costs associated with the manufacture of the end product. critical component means a component that is mined, produced, or manufactured in the united states and deemed critical to the u.s. supply chain. the list of critical components is at far 25.105. domestic end product means  (1) for an end product that does not consist wholly or predominantly of iron or steel or a combination of both  (i) an unmanufactured end product mined or produced in the united states; (ii) an end product manufactured in the united states, if  (a) the cost of its components mined, produced, or manufactured in the united states exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. components of foreign origin of the same class or kind as those that the agency determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities of a satisfactory quality are treated as domestic. components of unknown origin are treated as foreign. scrap generated, collected, and prepared for processing in the united states is considered domestic; or (b) the end product is a cots item; or (2) for an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product manufactured in the united states, if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all the components used in the end product. the cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the end product and a good faith estimate of the cost of all foreign iron or steel components excluding cots fasteners. iron or steel components of unknown origin are treated as foreign. if the end product contains multiple components, the cost of all the materials used in such end product is calculated in accordance with the definition of "cost of components". end product means those articles, materials, and supplies to be acquired under the contract for public use. fastener means a hardware device that mechanically joins or affixes two or more objects together. examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. foreign end product means an end product other than a domestic end product. foreign iron and steel means iron or steel products not produced in the united states. produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. the origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. free trade agreement country means australia, bahrain, chile, colombia, costa rica, dominican republic, el salvador, guatemala, honduras, korea (republic of), mexico, morocco, nicaragua, oman, panama, peru, or singapore. free trade agreement country end product means an article that  (1) is wholly the growth, product, or manufacture of a free trade agreement country; or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a free trade agreement country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. the term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. israeli end product means an article that  (1) is wholly the growth, product, or manufacture of israel; or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in israel into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. the cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding cots fasteners. steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. united states means the 50 states, the district of columbia, and outlying areas. (b) components of foreign origin. offerors may obtain from the contracting officer a list of foreign articles that the contracting officer will treat as domestic for this contract. (c) delivery of end products. 41 u.s.c. chapter 83, buy american statute, provides a preference for domestic end products for supplies acquired for use in the united states. in accordance with 41 u.s.c. 1907, the domestic content test of the buy american statute is waived for an end product that is a cots item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding cots fasteners. unless otherwise specified, these trade agreements apply to all items in the schedule. the contractor shall deliver under this contract only domestic end products except to the extent that, in its offer, it specified delivery of foreign end products in the provision entitled "buy american free trade agreements israeli trade act certificate." if the contractor specified in its offer that the contractor would supply a free trade agreement country end product (other than a bahraini, moroccan, omani, panamanian, or peruvian end product) or an israeli end product, then the contractor shall supply a free trade agreement country end product (other than a bahraini, moroccan, omani, panamanian, or peruvian end product), an israeli end product or, at the contractor’s option, a domestic end product. (end of clause) alternate i [reserved] alternate ii (jan 2025). as prescribed in 25.1101 (b)(1)(ii), substitute the following paragraph (c) for paragraph (c) of the basic clause: (c) delivery of end products. 41 u.s.c. chapter 83 provides a preference for domestic end products for supplies acquired for use in the united states. in accordance with 41 u.s.c. 1907, the domestic content test of the buy american statute is waived for an end product that is a cots item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding cots fasteners. in addition, the contracting officer has determined that the israeli trade act applies to this acquisition. unless otherwise specified, this trade agreement applies to all items in the schedule. the contractor shall deliver under this contract only domestic end products except to the extent that, in its offer, it specified delivery of foreign end products in the provision entitled “buy american free trade agreements israeli trade act certificate.” if the contractor specified in its offer that the contractor would supply an israeli end product, then the contractor shall supply an israeli end product or, at the contractor's option, a domestic end product. alternate iii (feb 2024). as prescribed in 25.1101 (b)(1)(iii), delete the definition of "bahraini, moroccan, omani, panamanian, or peruvian end product" and add in its place the following definition of "korean end product" in paragraph (a) of the basic clause; and substitute the following paragraph (c) for paragraph (c) of the basic clause: korean end product means an article that  (1) is wholly the growth, product, or manufacture of korea (republic of); or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in korea (republic of) into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. the term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. (c) delivery of end products. 41 u.s.c. chapter 83 provides a preference for domestic end products for supplies acquired for use in the united states. in accordance with 41 u.s.c.1907, the domestic content test of the buy american statute is waived for an end product that is a cots item (see 12.505(a)(1)), except that for an end product that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the end product, excluding cots fasteners. in addition, the contracting officer has determined that the korea (republic of) fta and the israeli trade act apply to this acquisition. unless otherwise specified, these trade agreements apply to all items in the schedule. the contractor shall deliver under this contract only domestic end products except to the extent that, in its offer, it specified delivery of foreign end products in the provision entitled “buy american free trade agreements israeli trade act certificate.” if the contractor specified in its offer that the contractor would supply a korean end product or an israeli end product, then the contractor shall supply a korean end product, an israeli end product, or at the contractor’s option, a domestic end product. alternate iv (oct 2022). as prescribed in 25.1101 (b)(1)(iv) substitute the following sentence for the first sentence of paragraph (1)(ii)(a) of the definition of domestic end product in paragraph (a): (a) the cost of its components mined, produced, or manufactured in the united states exceeds __ percent of the cost of all its components. [ contracting officer to insert the percentage. ] as prescribed in 25.1101 (b)(2)(i), insert the following provision: buy american free trade agreements israeli trade act certificate (nov 2023) (a) (1) the offeror certifies that each end product, except those listed in paragraph (b) or (c)(1) of this provision, is a domestic end product and that each domestic end product listed in paragraph (c)(2) of this provision contains a critical component. (2) the terms "bahraini, moroccan, omani, panamanian, or peruvian end product," "commercially available off the shelf (cots) item," "critical component," "domestic end product," "end product," "foreign end product," "free trade agreement country," "free trade agreement country end product," "israeli end product," and "united states" are defined in the clause of this solicitation entitled "buy american free trade agreements israeli trade act." (b) the offeror certifies that the following supplies are free trade agreement country end products (other than bahraini, moroccan, omani, panamanian, or peruvian end products) or israeli end products as defined in the clause of this solicitation entitled "buy american free trade agreements israeli trade act": free trade agreement country end products (other than bahraini, moroccan, omani, panamanian, or peruvian end products) or israeli end products: ______________ _________________ ______________ _________________ ______________ _________________ [list as necessary] (c) (1) the offeror shall list those supplies that are foreign end products (other than those listed in paragraph (b) of this provision) as defined in the clause of this solicitation entitled "buy american free trade agreements israeli trade act." the offeror shall list as other foreign end products those end products manufactured in the united states that do not qualify as domestic end products. for those foreign end products that do not consist wholly or predominantly of iron or steel or a combination of both, the offeror shall also indicate whether these foreign end products exceed 55 percent domestic content, except for those that are cots items. if the percentage of the domestic content is unknown, select “no”. other foreign end products: ______________ _________________ _________________ ______________ _________________ _________________ ______________ _________________ _________________ [list as necessary] (2) the offeror shall list the line item numbers of domestic end products that contain a critical component (see far 25.105). line item no. ___ [list as necessary] (d) the government will evaluate offers in accordance with the policies and procedures of part 25 of the federal acquisition regulation. (end of provision) alternate i [reserved] alternate ii (jan 2025). as prescribed in 25.1101 (b)(2)(ii), substitute the following paragraph (b) for paragraph (b) of the basic provision: (b) the offeror certifies that the following supplies are israeli end products as defined in the clause of this solicitation entitled “buy american free trade agreements israeli trade act”. israeli end products: ______________ ______________ ______________ [list as necessary] alternate iii (jan 2025). as prescribed in 25.1101 (b)(2)(iii), substitute the following paragraph (b) for paragraph (b) of the basic provision: (b) the offeror certifies that the following supplies are korean end products or israeli end products as defined in the clause of this solicitation entitled “buy american free trade agreements israeli trade act”. korean end products or israeli end products: ______________ _________________ ______________ _________________ ______________ _________________ [list as necessary] as prescribed in 25.1101(c)(1), insert the following clause: trade agreements (nov 2023) (a) definitions. as used in this clause  caribbean basin country end product  (1) means an article that  (i) (a) is wholly the growth, product, or manufacture of a caribbean basin country; or (b) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a caribbean basin country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed; and (ii) is not excluded from duty free treatment for caribbean countries under 19 u.s.c.2703(b). (a) for this reason, the following articles are not caribbean basin country end products: (1) tuna, prepared or preserved in any manner in airtight containers; (2) petroleum, or any product derived from petroleum; (3) watches and watch parts (including cases, bracelets, and straps) of whatever type including, but not limited to, mechanical, quartz digital, or quartz analog, if such watches or watch parts contain any material that is the product of any country to which the harmonized tariff schedule of the united states (htsus) column2 rates of duty apply (i.e., afghanistan, cuba, laos, north korea, and vietnam); and (4) certain of the following: textiles and apparel articles; footwear, handbags, luggage, flat goods, work gloves, and leather wearing apparel; or handloomed, handmade, and folklore articles; (b) access to the htsus to determine duty free status of articles of these types is available at https://usitc.gov/tata/hts/index.htm. in particular, see the following: (1) general note3(c), products eligible for special tariff treatment. (2) general note17, products of countries designated as beneficiary countries under the united states caribbean basin trade partnership act of 2000. (3) section xxii, chapter 98, subchapter ii, articles exported and returned, advanced or improved abroad, u.s. note7(b). (4) section xxii, chapter 98, subchapter xx, goods eligible for special tariff benefits under the united states caribbean basin trade partnership act; and (2) refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the acquisition, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. designated country means any of the following countries: (1) a world trade organization government procurement agreement (wto gpa) country (armenia, aruba, australia, austria, belgium, bulgaria, canada, croatia, cyprus, czech republic, denmark, estonia, finland, france, germany, greece, hong kong, hungary, iceland, ireland, israel, italy, japan, korea (republic of), latvia, liechtenstein, lithuania, luxembourg, malta, moldova, montenegro, netherlands, new zealand, north macedonia, norway, poland, portugal, romania, singapore, slovak republic, slovenia, spain, sweden, switzerland, taiwan (known in the world trade organization as "the separate customs territory of taiwan, penghu, kinmen and matsu (chinese taipei)"), ukraine, or united kingdom); (2) a free trade agreement (fta) country (australia, bahrain, chile, colombia, costa rica, dominican republic, el salvador, guatemala, honduras, korea (republic of), mexico, morocco, nicaragua, oman, panama, peru, or singapore); (3) a least developed country (afghanistan, angola, bangladesh, benin, bhutan, burkina faso, burundi, cambodia, central african republic, chad, comoros, democratic republic of congo, djibouti, equatorial guinea, eritrea, ethiopia, gambia, guinea, guinea bissau, haiti, kiribati, laos, lesotho, liberia, madagascar, malawi, mali, mauritania, mozambique, nepal, niger, rwanda, samoa, sao tome and principe, senegal, sierra leone, solomon islands, somalia, south sudan, tanzania, timor leste, togo, tuvalu, uganda, vanuatu, yemen, or zambia); or (4) a caribbean basin country (antigua and barbuda, aruba, bahamas, barbados, belize, bonaire, british virgin islands, curacao, dominica, grenada, guyana, haiti, jamaica, montserrat, saba, st. kitts and nevis, st. lucia, st. vincent and the grenadines, sint eustatius, sint maarten, or trinidad and tobago). designated country end product means a wto gpa country end product, an fta country end product, a least developed country end product, or a caribbean basin country end product. end product means those articles, materials, and supplies to be acquired under the contract for public use. free trade agreement country end product means an article that  (1) is wholly the growth, product, or manufacture of a free trade agreement (fta) country; or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in an fta country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. the term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. least developed country end product means an article that  (1) is wholly the growth, product, or manufacture of a least developed country; or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. the term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. united states means the 50 states, the district of columbia, and outlying areas. u.s. made end product means an article that is mined, produced, or manufactured in the united states or that is substantially transformed in the united states into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. wto gpa country end product means an article that  (1) is wholly the growth, product, or manufacture of a wto gpa country; or (2) in the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in a wto gpa country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. the term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product includes services, (except transportation services) incidental to the article, provided that the value of those incidental services does not exceed that of the article itself. (b) delivery of end products. the contracting officer has determined that the wto gpa and ftas apply to this acquisition. unless otherwise specified, these trade agreements apply to all items in the schedule. the contractor shall deliver under this contract only u.s. made or designated country end products except to the extent that, in its offer, it specified delivery of other end products in the provision entitled "trade agreements certificate." (end of clause) as prescribed in 25.1101(c)(2), insert the following provision: trade agreements certificate (feb 2021) (a) the offeror certifies that each end product, except those listed in paragraph (b) of this provision, is a u.s. made or designated country end product, as defined in the clause of this solicitation entitled "trade agreements." (b) the offeror shall list as other end products those supplies that are not u.s. made or designated country end products. other end products: ______________ _________________ ______________ _________________ ______________ _________________ [list as necessary] (c) the government will evaluate offers in accordance with the policies and procedures of part 25 of the federal acquisition regulation. for line items covered by the wto gpa, the government will evaluate offers of u.s. made or designated country end products without regard to the restrictions of the buy american statute. the government will consider for award only offers of u.s. made or designated country end products unless the contracting officer determines that there are no offers for such products or that the offers for those products are insufficient to fulfill the requirements of this solicitation. (end of provision) as prescribed in 25.1101(d), insert the following provision: waiver of buy american statute for civil aircraft and related articles (feb 2016) (a) definition. "civil aircraft and related articles," as used in this provision, means  (1) all aircraft other than aircraft to be purchased for use by the department of defense or the u.s. coast guard; (2) the engines (and parts and components for incorporation into the engines) of these aircraft; (3) any other parts, components, and subassemblies for incorporation into the aircraft; and (4) any ground flight simulators, and parts and components of these simulators, for use with respect to the aircraft, whether to be used as original or replacement equipment in the manufacture, repair, maintenance, rebuilding, modification, or conversion of the aircraft, and without regard to whether the aircraft or articles receive duty free treatment under section 601(a)(2) of the trade agreements act. (b) the u.s. trade representative has waived the buy american statute for acquisitions of civil aircraft and related articles from countries that are parties to the agreement on trade in civil aircraft. those countries are albania, austria, belgium, bulgaria, canada, croatia, cyprus, czech republic, denmark, egypt, estonia, finland, france, georgia, germany, greece, hungary, ireland, italy, japan, latvia, lithuania, luxembourg, macao china, malta, montenegro, the netherlands, norway, poland, portugal, romania, slovakia, slovenia, spain, sweden, switzerland, taiwan (chinese taipei), and the united kingdom. (c) for the purpose of this waiver, an article is a product of a country only if  (1) it is wholly the growth, product, or manufacture of that country; or (2) in the case of an article that consists in whole or in part of materials from another country, it has been substantially transformed into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. (d) the waiver is subject to modification or withdrawal by the u.s. trade representative. (end of provision) as prescribed in 25.1101(e), insert the following clause: duty free entry (oct 2010) (a) definition. "customs territory of the united states" means the states, the district of columbia, and puerto rico. (b) except as otherwise approved by the contracting officer, the contractor shall not include in the contract price any amount for duties on supplies specifically identified in the schedule to be accorded duty free entry. (c) except as provided in paragraph (d) of this clause or elsewhere in this contract, the following procedures apply to supplies not identified in the schedule to be accorded duty free entry: (1) the contractor shall notify the contracting officer in writing of any purchase of foreign supplies (including, without limitation, raw materials, components, and intermediate assemblies) in excess of $15,000 that are to be imported into the customs territory of the united states for delivery to the government under this contract, either as end products or for incorporation into end products. the contractor shall furnish the notice to the contracting officer at least 20 calendar days before the importation. the notice shall identify the  (i) foreign supplies; (ii) estimated amount of duty; and (iii) country of origin. (2) the contracting officer will determine whether any of these supplies should be accorded duty free entry and will notify the contractor within 10 calendar days after receipt of the contractor’s notification. (3) except as otherwise approved by the contracting officer, the contract price shall be reduced by (or the allowable cost shall not include) the amount of duty that would be payable if the supplies were not entered duty free. (d) the contractor is not required to provide the notification under paragraph (c) of this clause for purchases of foreign supplies if  (1) the supplies are identical in nature to items purchased by the contractor or any subcontractor in connection with its commercial business; and (2) segregation of these supplies to ensure use only on government contracts containing duty free entry provisions is not economical or feasible. (e) the contractor shall claim duty free entry only for supplies to be delivered to the government under this contract, either as end products or incorporated into end products, and shall pay duty on supplies, or any portion of them, other than scrap, salvage, or competitive sale authorized by the contracting officer, diverted to nongovernmental use. (f) the government will execute any required duty free entry certificates for supplies to be accorded duty free entry and will assist the contractor in obtaining duty free entry for these supplies. (g) shipping documents for supplies to be accorded duty free entry shall consign the shipments to the contracting agency in care of the contractor and shall include the  (1) delivery address of the contractor (or contracting agency, if appropriate); (2) government prime contract number; (3) identification of carrier; (4) notation "united states government, _____ [agency] _____, duty free entry to be claimed pursuant to item no(s) _____ [from tariff schedules] _____, harmonized tariff schedules of the united states. upon arrival of shipment at port of entry, district director of customs, please release shipment under 19 cfr part 142 and notify [cognizant contract administration office] for execution of customs forms7501 and 7501 a and any required duty free entry certificates."; (5) gross weight in pounds (if freight is based on space tonnage, state cubic feet in addition to gross shipping weight); and (6) estimated value in united states dollars. (h) the contractor shall instruct the foreign supplier to  (1) consign the shipment as specified in paragraph (g) of this clause; (2) mark all packages with the words "united states government" and the title of the contracting agency; and (3) include with the shipment at least two copies of the bill of lading (or other shipping document) for use by the district director of customs at the port of entry. (i) the contractor shall provide written notice to the cognizant contract administration office immediately after notification by the contracting officer that duty free entry will be accorded foreign supplies or, for duty free supplies identified in the schedule, upon award by the contractor to the overseas supplier. the notice shall identify the  (1) foreign supplies; (2) country of origin; (3) contract number; and (4) scheduled delivery date(s). (j) the contractor shall include the substance of this clause in any subcontract if  (1) supplies identified in the schedule to be accorded duty free entry will be imported into the customs territory of the united states; or (2) other foreign supplies in excess of $15,000 may be imported into the customs territory of the united states. (end of clause) as prescribed in 25.1102(a), insert the following clause: buy american construction materials (oct 2022) (a) definitions. as used in this clause  commercially available off the shelf (cots) item  (1) means any item of supply (including construction material) that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” at federal acquisition regulation (far) 2.101); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and (2) does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. "construction material" means an article, material, or supply brought to the construction site by the contractor or a subcontractor for incorporation into the building or work. the term also includes an item brought to the site preassembled from articles, materials, or supplies. however, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. materials purchased directly by the government are supplies, not construction material. cost of components means  (1) for components purchased by the contractor, the acquisition cost, including transportation costs to the place of incorporation into the construction material (whether or not such costs are paid to a domestic firm), and any applicable duty (whether or not a duty free entry certificate is issued); or (2) for components manufactured by the contractor, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1) of this definition, plus allocable overhead costs, but excluding profit. cost of components does not include any costs associated with the manufacture of the construction material. critical component means a component that is mined, produced, or manufactured in the united states and deemed critical to the u.s. supply chain. the list of critical components is at far 25.105. critical item means a domestic construction material or domestic end product that is deemed critical to u.s. supply chain resiliency. the list of critical items is at far 25.105. domestic construction material means  (1) for construction material that does not consist wholly or predominantly of iron or steel or a combination of both  (i) an unmanufactured construction material mined or produced in the united states; or (ii) a construction material manufactured in the united states, if  (a) the cost of its components mined, produced, or manufactured in the united states exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. components of foreign origin of the same class or kind for which nonavailability determinations have been made are treated as domestic. components of unknown origin are treated as foreign; or (b) the construction material is a cots item; or (2) for construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the united states if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all components used in such construction material. the cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding cots fasteners. iron or steel components of unknown origin are treated as foreign. if the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of "cost of components". fastener means a hardware device that mechanically joins or affixes two or more objects together. examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. foreign construction material means a construction material other than a domestic construction material. foreign iron and steel means iron or steel products not produced in the united states. produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. the origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. the cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding cots fasteners. steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. "united states" means the 50 states, the district of columbia, and outlying areas. (b) domestic preference. (1) this clause implements 41 u.s.c. chapter 83, buy american, by providing a preference for domestic construction material. in accordance with 41 u.s.c. 1907, the domestic content test of the buy american statute is waived for construction material that is a cots item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the construction materials, excluding cots fasteners. (see far 12.505(a)(2)). the contractor shall use only domestic construction material in performing this contract, except as provided in paragraphs (b)(2) and (b)(3) of this clause. (2) this requirement does not apply to information technology that is a commercial product or to the construction materials or components listed by the government as follows: ________________________________________________[contracting officer to list applicable excepted materials or indicate "none"] (3) the contracting officer may add other foreign construction material to the list in paragraph (b)(2) of this clause if the government determines that  (i) the cost of domestic construction material would be unreasonable. (a) for domestic construction material that is not a critical item or does not contain critical components. (1) the cost of a particular domestic construction material subject to the requirements of the buy american statute is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent; (2) for construction material that is not a cots item and does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that is manufactured in the united states and does not exceed 55 percent domestic content, the contracting officer will treat the lowest offer of foreign construction material that exceeds 55 percent domestic content as a domestic offer and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(3)(i)(a)(1) of this clause. (3) the procedures in paragraph (b)(3)(i)(a)(2) of this clause will no longer apply as of january 1, 2030. (b) for domestic construction material that is a critical item or contains critical components. (1) the cost of a particular domestic construction material that is a critical item or contains critical components, subject to the requirements of the buy american statute, is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent plus the additional preference factor identified for the critical item or construction material containing critical components listed at far 25.105. (2) for construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer will treat the lowest foreign offer of construction material that is manufactured in the united states and exceeds 55 percent domestic content as a domestic offer, and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(3)(i)(b)(1) of this clause. (3) the procedures in paragraph (b)(3)(i)(b)(2) of this clause will no longer apply as of january 1, 2030. (ii) the application of the restriction of the buy american statute to a particular construction material would be impracticable or inconsistent with the public interest; or (iii) the construction material is not mined, produced, or manufactured in the united states in sufficient and reasonably available commercial quantities of a satisfactory quality. (c) request for determination of inapplicability of the buy american statute. (1) (i) any contractor request to use foreign construction material in accordance with paragraph (b)(3) of this clause shall include adequate information for government evaluation of the request, including  (a) a description of the foreign and domestic construction materials; (b) unit of measure; (c) quantity; (d) price; (e) time of delivery or availability; (f) location of the construction project; (g) name and address of the proposed supplier; and (h) a detailed justification of the reason for use of foreign construction materials cited in accordance with paragraph (b)(3) of this clause. (ii) a request based on unreasonable cost shall include a reasonable survey of the market and a completed price comparison table in the format in paragraph (d) of this clause. (iii) the price of construction material shall include all delivery costs to the construction site and any applicable duty (whether or not a duty free certificate may be issued). (iv) any contractor request for a determination submitted after contract award shall explain why the contractor could not reasonably foresee the need for such determination and could not have requested the determination before contract award. if the contractor does not submit a satisfactory explanation, the contracting officer need not make a determination. (2) if the government determines after contract award that an exception to the buy american statute applies and the contracting officer and the contractor negotiate adequate consideration, the contracting officer will modify the contract to allow use of the foreign construction material. however, when the basis for the exception is the unreasonable price of a domestic construction material, adequate consideration is not less than the differential established in paragraph (b)(3)(i) of this clause. (3) unless the government determines that an exception to the buy american statute applies, use of foreign construction material is noncompliant with the buy american statute. (d) data. to permit evaluation of requests under paragraph (c) of this clause based on unreasonable cost, the contractor shall include the following information and any applicable supporting data based on the survey of suppliers: foreign and domestic construction materials price comparison item1: foreign construction material domestic construction material item2: foreign construction material domestic construction material [* include all delivery costs to the construction site and any applicable duty (whether or not a duty free entry certificate is issued)]. [list name, address, telephone number, and contact for suppliers surveyed. attach copy of response; if oral, attach summary.] [include other applicable supporting information.] (end of clause) alternate i (oct 2022). as prescribed in 25.1102 (a)(3) substitute the following sentence for the first sentence in paragraph (1)(ii)(a) of the definition of “domestic construction material” in paragraph (a): (a) the cost of its components mined, produced, or manufactured in the united states exceeds __ percent of the cost of all its components. [ contracting officer to insert the percentage. ] as prescribed in 25.1102(b)(1), insert the following provision: notice of buy american requirement construction materials (may 2014) (a) definitions. "commercially available off the shelf (cots) item," "construction material," "domestic construction material," and "foreign construction material," as used in this provision, are defined in the clause of this solicitation entitled "buy american construction materials" (federal acquisition regulation (far) clause 52.225 9). (b) requests for determinations of inapplicability. an offeror requesting a determination regarding the inapplicability of the buy american statute should submit the request to the contracting officer in time to allow a determination before submission of offers. the offeror shall include the information and applicable supporting data required by paragraphs (c) and (d) of the clause at far 52.225 9 in the request. if an offeror has not requested a determination regarding the inapplicability of the buy american statute before submitting its offer, or has not received a response to a previous request, the offeror shall include the information and supporting data in the offer. (c) evaluation of offers. (1) the government will evaluate an offer requesting exception to the requirements of the buy american statute, based on claimed unreasonable cost of domestic construction material, by adding to the offered price the appropriate percentage of the cost of such foreign construction material, as specified in paragraph (b)(3)(i) of the clause at far 52.225 9. (2) if evaluation results in a tie between an offeror that requested the substitution of foreign construction material based on unreasonable cost and an offeror that did not request an exception, the contracting officer will award to the offeror that did not request an exception based on unreasonable cost. (d) alternate offers. (1) when an offer includes foreign construction material not listed by the government in this solicitation in paragraph (b)(2) of the clause at far 52.225 9, the offeror also may submit an alternate offer based on use of equivalent domestic construction material. (2) if an alternate offer is submitted, the offeror shall submit a separate standard form 1442 for the alternate offer, and a separate price comparison table prepared in accordance with paragraphs (c) and (d) of the clause at far 52.225 9 for the offer that is based on the use of any foreign construction material for which the government has not yet determined an exception applies. (3) if the government determines that a particular exception requested in accordance with paragraph (c) of the clause at far 52.225 9 does not apply, the government will evaluate only those offers based on use of the equivalent domestic construction material, and the offeror shall be required to furnish such domestic construction material. an offer based on use of the foreign construction material for which an exception was requested  (i) will be rejected as nonresponsive if this acquisition is conducted by sealed bidding; or (ii) may be accepted if revised during negotiations. (end of provision) alternate i (may 2014). as prescribed in 25.1102 (b)(2), substitute the following paragraph (b) for paragraph (b) of the basic provision: (b) requests for determinations of inapplicability. an offeror requesting a determination regarding the inapplicability of the buy american statute shall submit the request with its offer, including the information and applicable supporting data required by paragraphs (c) and (d) of the clause at far 52.225 9. as prescribed in 25.1102(c), insert the following clause: buy american construction materials under trade agreements (nov 2023) (a) definitions. as used in this clause  caribbean basin country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of a caribbean basin country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in a caribbean basin country into a new and different construction material distinct from the materials from which it was transformed. commercially available off the shelf (cots) item  (1) means any item of supply (including construction material) that is  (i) a commercial product (as defined in paragraph (1) of the definition of “commercial product” at federal acquisition regulation (far) 2.101); (ii) sold in substantial quantities in the commercial marketplace; and (iii) offered to the government, under a contract or subcontract at any tier, without modification, in the same form in which it is sold in the commercial marketplace; and (2) does not include bulk cargo, as defined in 46 u.s.c. 40102(4), such as agricultural products and petroleum products. component means an article, material, or supply incorporated directly into a construction material. construction material means an article, material, or supply brought to the construction site by the contractor or subcontractor for incorporation into the building or work. the term also includes an item brought to the site preassembled from articles, materials, or supplies. however, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. materials purchased directly by the government are supplies, not construction material. cost of components means  (1) for components purchased by the contractor, the acquisition cost, including transportation costs to the place of incorporation into the construction material (whether or not such costs are paid to a domestic firm), and any applicable duty (whether or not a duty free entry certificate is issued); or (2) for components manufactured by the contractor, all costs associated with the manufacture of the component, including transportation costs as described in paragraph (1) of this definition, plus allocable overhead costs, but excluding profit. cost of components does not include any costs associated with the manufacture of the construction material. critical component means a component that is mined, produced, or manufactured in the united states and deemed critical to the u.s. supply chain. the list of critical components is at far 25.105. critical item means a domestic construction material or domestic end product that is deemed critical to u.s. supply chain resiliency. the list of critical items is at far 25.105. designated country means any of the following countries: (1) a world trade organization government procurement agreement (wto gpa) country (armenia, aruba, australia, austria, belgium, bulgaria, canada, croatia, cyprus, czech republic, denmark, estonia, finland, france, germany, greece, hong kong, hungary, iceland, ireland, israel, italy, japan, korea (republic of), latvia, liechtenstein, lithuania, luxembourg, malta, moldova, montenegro, netherlands, new zealand, north macedonia, norway, poland, portugal, romania, singapore, slovak republic, slovenia, spain, sweden, switzerland, taiwan, ukraine, or united kingdom); (2) a free trade agreement (fta) country (australia, bahrain, chile, colombia, costa rica, dominican republic, el salvador, guatemala, honduras, korea (republic of), mexico, morocco, nicaragua, oman, panama, peru, or singapore); (3) a least developed country (afghanistan, angola, bangladesh, benin, bhutan, burkina faso, burundi, cambodia, central african republic, chad, comoros, democratic republic of congo, djibouti, equatorial guinea, eritrea, ethiopia, gambia, guinea, guinea bissau, haiti, kiribati, laos, lesotho, liberia, madagascar, malawi, mali, mauritania, mozambique, nepal, niger, rwanda, samoa, sao tome and principe, senegal, sierra leone, solomon islands, somalia, south sudan, tanzania, timor leste, togo, tuvalu, uganda, vanuatu, yemen, or zambia); or (4) a caribbean basin country (antigua and barbuda, aruba, bahamas, barbados, belize, bonaire, british virgin islands, curacao, dominica, grenada, guyana, haiti, jamaica, montserrat, saba, st. kitts and nevis, st. lucia, st. vincent and the grenadines, sint eustatius, sint maarten, or trinidad and tobago). designated country construction material means a construction material that is a wto gpa country construction material, an fta country construction material, a least developed country construction material, or a caribbean basin country construction material. domestic construction material means  (1) for construction material that does not consist wholly or predominantly of iron or steel or a combination of both  (i) an unmanufactured construction material mined or produced in the united states; or (ii) a construction material manufactured in the united states, if  (a) the cost of its components mined, produced, or manufactured in the united states exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029. (b) the construction material is a cots item; or (2) for construction material that consists wholly or predominantly of iron or steel or a combination of both, a construction material manufactured in the united states if the cost of foreign iron and steel constitutes less than 5 percent of the cost of all components used in such construction material. the cost of foreign iron and steel includes but is not limited to the cost of foreign iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the construction material and a good faith estimate of the cost of all foreign iron or steel components excluding cots fasteners. iron or steel components of unknown origin are treated as foreign. if the construction material contains multiple components, the cost of all the materials used in such construction material is calculated in accordance with the definition of "cost of components". fastener means a hardware device that mechanically joins or affixes two or more objects together. examples of fasteners are nuts, bolts, pins, rivets, nails, clips, and screws. foreign construction material means a construction material other than a domestic construction material. foreign iron and steel means iron or steel products not produced in the united states. produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, from the initial melting stage through the application of coatings, except metallurgical processes involving refinement of steel additives. the origin of the elements of the iron or steel is not relevant to the determination of whether it is domestic or foreign. free trade agreement country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of a free trade agreement (fta) country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in a fta country into a new and different construction material distinct from the materials from which it was transformed. least developed country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of a least developed country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different construction material distinct from the materials from which it was transformed. predominantly of iron or steel or a combination of both means that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. the cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components excluding cots fasteners. steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. united states means the 50 states, the district of columbia, and outlying areas. wto gpa country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of a wto gpa country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in a wto gpa country into a new and different construction material distinct from the materials from which it was transformed. (b) construction materials. (1) this clause implements 41 u.s.c. chapter 83, buy american, by providing a preference for domestic construction material. in accordance with 41 u.s.c.1907, the domestic content test of the buy american statute is waived for construction material that is a cots item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the construction material, excluding cots fasteners. (see far 12.505(a)(2)). in addition, the contracting officer has determined that the wto gpa and free trade agreements (ftas) apply to this acquisition. therefore, the buy american restrictions are waived for designated country construction materials. (2) the contractor shall use only domestic or designated country construction material in performing this contract, except as provided in paragraphs (b)(3) and (b)(4) of this clause. (3) the requirement in paragraph (b)(2) of this clause does not apply to information technology that is a commercial product or to the construction materials or components listed by the government as follows: [contracting officer to list applicable excepted materials or indicate "none"] (4) the contracting officer may add other foreign construction material to the list in paragraph (b)(3) of this clause if the government determines that  (i) the cost of domestic construction material would be unreasonable. (a) for domestic construction material that is not a critical item or does not contain critical components. (1) the cost of a particular domestic construction material subject to the restrictions of the buy american statute is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent; (2) for construction material that is not a cots item and does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer will treat the lowest offer of foreign construction material that is manufactured in the united states and exceeds 55 percent domestic content as a domestic offer and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(4)(i)(a)(1) of this clause. (3) the procedures in paragraph (b)(4)(i)(a)(2) of this clause will no longer apply as of january 1, 2030. (b) for domestic construction material that is a critical item or contains critical components. (1) the cost of a particular domestic construction material that is a critical item or contains critical components, subject to the requirements of the buy american statute, is unreasonable when the cost of such material exceeds the cost of foreign material by more than 20 percent plus the additional preference factor identified for the critical item or construction material containing critical components listed at far 25.105. (2) for construction material that does not consist wholly or predominantly of iron or steel or a combination of both, if the cost of a particular domestic construction material is determined to be unreasonable or there is no domestic offer received, and the low offer is for foreign construction material that does not exceed 55 percent domestic content, the contracting officer will treat the lowest offer of foreign construction material that is manufactured in the united states and exceeds 55 percent domestic content as a domestic offer, and determine whether the cost of that offer is unreasonable by applying the evaluation factor listed in paragraph (b)(4)(i)(b)(1) of this clause. (3) the procedures in paragraph (b)(4)(i)(b)(2) of this clause will no longer apply as of january 1, 2030. (ii) the application of the restriction of the buy american act to a particular construction material would be impracticable or inconsistent with the public interest; or (iii) the construction material is not mined, produced, or manufactured in the united states in sufficient and reasonably available commercial quantities of a satisfactory quality. (c) request for determination of inapplicability of the buy american statute. (1) (i) any contractor request to use foreign construction material in accordance with paragraph (b)(4) of this clause shall include adequate information for government evaluation of the request, including  (a) a description of the foreign and domestic construction materials; (b) unit of measure; (c) quantity; (d) price; (e) time of delivery or availability; (f) location of the construction project; (g) name and address of the proposed supplier; and (h) a detailed justification of the reason for use of foreign construction materials cited in accordance with paragraph (b)(3) of this clause. (ii) a request based on unreasonable cost shall include a reasonable survey of the market and a completed price comparison table in the format in paragraph (d) of this clause. (iii) the price of construction material shall include all delivery costs to the construction site and any applicable duty (whether or not a duty free certificate may be issued). (iv) any contractor request for a determination submitted after contract award shall explain why the contractor could not reasonably foresee the need for such determination and could not have requested the determination before contract award. if the contractor does not submit a satisfactory explanation, the contracting officer need not make a determination. (2) if the government determines after contract award that an exception to the buy american statute applies and the contracting officer and the contractor negotiate adequate consideration, the contracting officer will modify the contract to allow use of the foreign construction material. however, when the basis for the exception is the unreasonable price of a domestic construction material, adequate consideration is not less than the differential established in paragraph (b)(4)(i) of this clause. (3) unless the government determines that an exception to the buy american statute applies, use of foreign construction material is noncompliant with the buy american statute. (d) data. to permit evaluation of requests under paragraph (c) of this clause based on unreasonable cost, the contractor shall include the following information and any applicable supporting data based on the survey of suppliers: item1 foreign construction material domestic construction material item1 foreign construction material domestic construction material [* include all delivery costs to the construction site and any applicable duty (whether or not a duty free entry certificate is issued)]. [ list name, address, telephone number, and contact for suppliers surveyed. attach copy of response; if oral, attach summary. ] [ include other applicable supporting information. ] (end of clause) alternate i (nov 2023) . as prescribed in 25.1102 (c)(3), add the following definition of "bahraini, mexican, or omani construction material" to paragraph (a) of the basic clause, and substitute the following paragraphs (b)(1) and (b)(2) for paragraphs (b)(1) and (b)(2) of the basic clause: "bahraini, mexican, or omani construction material" means a construction material that  (1) is wholly the growth, product, or manufacture of bahrain, mexico, or oman; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in bahrain, mexico, or oman into a new and different construction material distinct from the materials from which it was transformed. (b) construction materials. (1) this clause implements 41 u.s.c. chapter 83, buy american, by providing a preference for domestic construction material. in accordance with 41 u.s.c. 1907, the domestic content test of the buy american statute is waived for construction material that is a cots item, except that for construction material that consists wholly or predominantly of iron or steel or a combination of both, the domestic content test is applied only to the iron and steel content of the construction material, excluding cots fasteners. (see 12.505(a)(2)). in addition, the contracting officer has determined that the wto gpa and all the free trade agreements except the bahrain fta, united states mexico canada agreement, and the oman fta apply to this acquisition. therefore, the buy american statute restrictions are waived for designated country construction materials other than bahraini, mexican, or omani construction materials. (2) the contractor shall use only domestic or designated country construction material other than bahraini, mexican, or omani construction material in performing this contract, except as provided in paragraphs (b)(3) and (b)(4) of this clause. alternate ii (oct 2022). as prescribed in 25.1102 (c)(4) substitute the following sentence for the first sentence of paragraph (1)(ii)(a) of the definition of domestic construction material in paragraph (a): (a) the cost of its components mined, produced, or manufactured in the united states exceeds __ percent of the cost of all its components. [ contracting officer to insert the percentage. ] as prescribed in 25.1102(d)(1), insert the following provision: notice of buy american requirement construction materials under trade agreements (may 2014) (a) definitions. "commercially available off the shelf (cots) item," "construction material," "designated country construction material," "domestic construction material," and "foreign construction material," as used in this provision, are defined in the clause of this solicitation entitled "buy american construction materials under trade agreements" (federal acquisition regulation (far) clause 52.225 11). (b) requests for determination of inapplicability. an offeror requesting a determination regarding the inapplicability of the buy american statute should submit the request to the contracting officer in time to allow a determination before submission of offers. the offeror shall include the information and applicable supporting data required by paragraphs (c) and (d) of far clause 52.225 11 in the request. if an offeror has not requested a determination regarding the inapplicability of the buy american statute before submitting its offer, or has not received a response to a previous request, the offeror shall include the information and supporting data in the offer. (c) evaluation of offers. (1) the government will evaluate an offer requesting exception to the requirements of the buy american statute, based on claimed unreasonable cost of domestic construction materials, by adding to the offered price the appropriate percentage of the cost of such foreign construction material, as specified in paragraph (b)(4)(i) of far clause 52.225 11. (2) if evaluation results in a tie between an offeror that requested the substitution of foreign construction material based on unreasonable cost and an offeror that did not request an exception, the contracting officer will award to the offeror that did not request an exception based on unreasonable cost. (d) alternate offers. (1) when an offer includes foreign construction material, other than designated country construction material, that is not listed by the government in this solicitation in paragraph (b)(3) of far clause 52.225 11, the offeror also may submit an alternate offer based on use of equivalent domestic or designated country construction material. (2) if an alternate offer is submitted, the offeror shall submit a separate standard form 1442 for the alternate offer, and a separate price comparison table prepared in accordance with paragraphs (c) and (d) of far clause 52.225 11 for the offer that is based on the use of any foreign construction material for which the government has not yet determined an exception applies. (3) if the government determines that a particular exception requested in accordance with paragraph (c) of farclause 52.225 11 does not apply, the government will evaluate only those offers based on use of the equivalent domestic or designated country construction material, and the offeror shall be required to furnish such domestic or designated country construction material. an offer based on use of the foreign construction material for which an exception was requested  (i) will be rejected as nonresponsive if this acquisition is conducted by sealed bidding; or (ii) may be accepted if revised during negotiations. (end of provision) alternate i (may 2014). as prescribed in 25.1102 (d)(2), substitute the following paragraph (b) for paragraph (b) of the basic provision: (b) requests for determination of inapplicability. an offeror requesting a determination regarding the inapplicability of the buy american statute shall submit the request with its offer, including the information and applicable supporting data required by paragraphs (c) and (d) of far clause 52.225 11. alternate ii (nov 2023). as prescribed in 25.1102 (d)(3), add the definition of "bahraini, mexican, or omani construction material" to paragraph (a) and substitute the following paragraph (d) for paragraph (d) of the basic provision: (d) alternate offers. (1) when an offer includes foreign construction material, except foreign construction material from a designated country other than bahrain, mexico, or oman that is not listed by the government in this solicitation in paragraph (b)(3) of far clause 52.225 11, the offeror also may submit an alternate offer based on use of equivalent domestic or designated country construction material other than bahraini, mexican, or omani construction material. (2) if an alternate offer is submitted, the offeror shall submit a separate standard form 1442 for the alternate offer, and a separate price comparison table prepared in accordance with paragraphs (c) and (d) of far clause 52.225 11 for the offer that is based on the use of any foreign construction material for which the government has not yet determined an exception applies. (3) if the government determines that a particular exception requested in accordance with paragraph (c) of far clause 52.225 11 does not apply, the government will evaluate only those offers based on use of the equivalent domestic or designated country construction material other than bahraini, mexican, or omani construction material. an offer based on use of the foreign construction material for which an exception was requested  (i) will be rejected as nonresponsive if this acquisition is conducted by sealed bidding; or (ii) may be accepted if revised during negotiations. as prescribed in 25.1103(a), insert the following clause: restrictions on certain foreign purchases (feb 2021) (a) except as authorized by the office of foreign assets control (ofac) in the department of the treasury, the contractor shall not acquire, for use in the performance of this contract, any supplies or services if any proclamation, executive order, or statute administered by ofac, or if ofac’s implementing regulations at 31 cfr chapterv, would prohibit such a transaction by a person subject to the jurisdiction of the united states. (b) except as authorized by ofac, most transactions involving cuba, iran, and sudan are prohibited, as are most imports from burma or north korea, into the united states or its outlying areas. lists of entities and individuals subject to economic sanctions are included in ofac’s list of specially designated nationals and blocked persons at https://home.treasury.gov/policy issues/financial sanctions/specially designated nationals and blocked persons list sdn human readable lists. more information about these restrictions, as well as updates, is available in the ofac’s regulations at 31 cfr chapterv and/or on ofac’s website at https://home.treasury.gov/policy issues/office of foreign assets control sanctions programs and information. (c) the contractor shall insert this clause, including this paragraph (c), in all subcontracts. (end of clause) as prescribed at 25.1103(b), insert the following clause: inconsistency between english version and translation of contract (feb 2000) in the event of inconsistency between any terms of this contract and any translation into another language, the english language meaning shall control. (end of clause) as prescribed in 25.1103 (c)(, insert the following provision: evaluation of foreign currency offers (feb 2000) if the government receives offers in more than one currency, the government will evaluate offers by converting the foreign currency to united states currency using [contracting officer to insert source of rate] in effect as follows: (a) for acquisitions conducted using sealed bidding procedures, on the date of bid opening. (b) for acquisitions conducted using negotiation procedures  (1) on the date specified for receipt of offers, if award is based on initial offers; otherwise (2) on the date specified for receipt of proposal revisions. (end of provision) as prescribed in 25.1101 (f), insert the following provision: place of manufacture (aug 2018) (a) definitions. as used in this provision  manufactured end product means any end product in product and service codes (pscs) 1000 9999, except  (1) fpsc 5510, lumber and related basic wood materials; (2) product or service group (psg) 87, agricultural supplies; (3) psg 88, live animals; (4) psg 89, subsistence; (5) psc 9410, crude grades of plant materials; (6) psc 9430, miscellaneous crude animal products, inedible; (7) psc 9440, miscellaneous crude agricultural and forestry products; (8) psc 9610, ores; (9) psc 9620, minerals, natural and synthetic; and (10) psc 9630, additive metal materials. place of manufacture means the place where an end product is assembled out of components, or otherwise made or processed from raw materials into the finished product that is to be provided to the government. if a product is disassembled and reassembled, the place of reassembly is not the place of manufacture. (b) for statistical purposes only, the offeror shall indicate whether the place of manufacture of the end products it expects to provide in response to this solicitation is predominantly  (1) □ in the united states (check this box if the total anticipated price of offered end products manufactured in the united states exceeds the total anticipated price of offered end products manufactured outside the united states); or (2) □ outside the united states. (end of provision) as prescribed in 25.301 4 , insert the following clause: contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the united states (may 2020) (a) definitions. as used in this clause  chief of missionmeans the principal officer in charge of a diplomatic mission of the united states or of a united states office abroad which is designated by the secretary of state as diplomatic in nature, including any individual assigned under section 502(c) of the foreign service act of 1980 (public law 96 465) to be temporarily in charge of such a mission or office. combatant commandermeans the commander of a unified or specified combatant command established in accordance with 10 u.s.c. 161. designated operational area means a geographic area designated by the combatant commander or subordinate joint force commander for the conduct or support of specified military operations. "supporting a diplomatic or consular mission" means performing outside the united states under a contract administered by federal agency personnel who are subject to the direction of a chief of mission. (b) general. (1) this clause applies when contractor personnel are required to perform outside the united states  (i) in a designated operational area during  (a) contingency operations; (b) humanitarian or peacekeeping operations; or (c) other military operations; or military exercises, when designated by the combatant commander; or (ii) when supporting a diplomatic or consular mission  (a) that has been designated by the department of state as a danger pay post (see https://aoprals.state.gov/); or (b) that the contracting officer has indicated is subject to this clause. (2) contract performance may require work in dangerous or austere conditions. except as otherwise provided in the contract, the contractor accepts the risks associated with required contract performance in such operations. (3) contractor personnel are civilians. (i) except as provided in paragraph (b)(3)(ii) of this clause, and in accordance with paragraph (i)(3) of this clause, contractor personnel are only authorized to use deadly force in self defense. (ii) contractor personnel performing security functions are also authorized to use deadly force when use of such force reasonably appears necessary to execute their security mission to protect assets/persons, consistent with the terms and conditions contained in the contract or with their job description and terms of employment. (4) service performed by contractor personnel subject to this clause is not active duty or service under 38 u.s.c. 106 note. (c) support. unless specified elsewhere in the contract, the contractor is responsible for all logistical and security support required for contractor personnel engaged in this contract. (d) compliance with laws and regulations. the contractor shall comply with, and shall ensure that its personnel in the designated operational area or supporting the diplomatic or consular mission are familiar with and comply with, all applicable  (1) united states, host country, and third country national laws; (2) treaties and international agreements; (3) united states regulations, directives, instructions, policies, and procedures; and (4) force protection, security, health, or safety orders, directives, and instructions issued by the chief of mission or the combatant commander; however, only the contracting officer is authorized to modify the terms and conditions of the contract. (e) preliminary personnel requirements. (1) specific requirements for paragraphs (e)(2)(i) through (e)(2)(vi) of this clause will be set forth in the statement of work, or elsewhere in the contract. (2) before contractor personnel depart from the united states or a third country, and before contractor personnel residing in the host country begin contract performance in the designated operational area or supporting the diplomatic or consular mission, the contractor shall ensure the following: (i) all required security and background checks are complete and acceptable. (ii) all personnel are medically and physically fit and have received all required vaccinations. (iii) all personnel have all necessary passports, visas, entry permits, and other documents required for contractor personnel to enter and exit the foreign country, including those required for in transit countries. (iv) all personnel have received  (a) a country clearance or special area clearance, if required by the chief of mission; and (b) theater clearance, if required by the combatant commander. (v) all personnel have received personal security training. the training must at a minimum  (a) cover safety and security issues facing employees overseas; (b) identify safety and security contingency planning activities; and (c) identify ways to utilize safety and security personnel and other resources appropriately. (vi) all personnel have received isolated personnel training, if specified in the contract. isolated personnel are military or civilian personnel separated from their unit or organization in an environment requiring them to survive, evade, or escape while awaiting rescue or recovery. (vii) all personnel who are u.s. citizens are registered with the u.s. embassy or consulate with jurisdiction over the area of operations on line at http://www.travel.state.gov. (3) the contractor shall notify all personnel who are not a host country national or ordinarily resident in the host country that  (i) if this contract is with the department of defense, or the contract relates to supporting the mission of the department of defense outside the united states, such employees, and dependents residing with such employees, who engage in conduct outside the united states that would constitute an offense punishable by imprisonment for more than one year if the conduct had been engaged in within the special maritime and territorial jurisdiction of the united states, may potentially be subject to the criminal jurisdiction of the united states (see the military extraterritorial jurisdiction act of 2000 ( 18 u.s.c. 3261 et seq.); (ii) pursuant to the war crimes act, 18 u.s.c. 2441, federal criminal jurisdiction also extends to conduct that is determined to constitute a war crime when committed by a civilian national of the united states; and (iii) other laws may provide for prosecution of u.s. nationals who commit offenses on the premises of united states diplomatic, consular, military or other united states government missions outside the united states ( 18 u.s.c. 7(9)). (f) processing and departure points. the contractor shall require its personnel who are arriving from outside the area of performance to perform in the designated operational area or supporting the diplomatic or consular mission to  (1) process through the departure center designated in the contract or complete another process as directed by the contracting officer; (2) use a specific point of departure and transportation mode as directed by the contracting officer; and (3) process through a reception center as designated by the contracting officer upon arrival at the place of performance. (g) personnel data. (1) unless personnel data requirements are otherwise specified in the contract, the contractor shall establish and maintain with the designated government official a current list of all contractor personnel in the areas of performance. the contracting officer will inform the contractor of the government official designated to receive this data and the appropriate system to use for this effort. (2) the contractor shall ensure that all employees on this list have a current record of emergency data, for notification of next of kin, on file with both the contractor and the designated government official. (h) contractor personnel. the contracting officer may direct the contractor, at its own expense, to remove and replace any contractor personnel who fail to comply with or violate applicable requirements of this contract. such action may be taken at the government’s discretion without prejudice to its rights under any other provision of this contract, including termination for default or cause. (i) weapons. (1) if the contracting officer, subject to the approval of the combatant commander or the chief of mission, authorizes the carrying of weapons  (i) the contracting officer may authorize an approved contractor to issue contractor owned weapons and ammunition to specified employees; or (ii) the________ [contracting officer to specify individual, e.g., contracting officer representative, regional security officer, etc,] may issue government furnished weapons and ammunition to the contractor for issuance to specified contractor employees. (2) the contractor shall provide to the contracting officer a specific list of personnel for whom authorization to carry a weapon is requested. (3) the contractor shall ensure that its personnel who are authorized to carry weapons  (i) are adequately trained to carry and use them  (a) safely; (b) with full understanding of, and adherence to, the rules of the use of force issued by the combatant commander or the chief of mission; and (c) in compliance with applicable agency policies, agreements, rules, regulations, and other applicable law; (ii) are not barred from possession of a firearm by 18 u.s.c. 922; and (iii) adhere to all guidance and orders issued by the combatant commander or the chief of mission regarding possession, use, safety, and accountability of weapons and ammunition. (4) upon revocation by the contracting officer of the contractor’s authorization to possess weapons, the contractor shall ensure that all government furnished weapons and unexpended ammunition are returned as directed by the contracting officer. (5) whether or not weapons are government furnished, all liability for the use of any weapon by contractor personnel rests solely with the contractor and the contractor employee using such weapon. (j) vehicle or equipment licenses. contractor personnel shall possess the required licenses to operate all vehicles or equipment necessary to perform the contract in the area of performance. (k) military clothing and protective equipment. (1) contractor personnel are prohibited from wearing military clothing unless specifically authorized by the combatant commander. if authorized to wear military clothing, contractor personnel must wear distinctive patches, armbands, nametags, or headgear, in order to be distinguishable from military personnel, consistent with force protection measures. (2) contractor personnel may wear specific items required for safety and security, such as ballistic, nuclear, biological, or chemical protective equipment. (l) evacuation. (1) if the chief of mission or combatant commander orders a mandatory evacuation of some or all personnel, the government will provide to united states and third country national contractor personnel the level of assistance provided to private united states citizens. (2) in the event of a non mandatory evacuation order, the contractor shall maintain personnel on location sufficient to meet contractual obligations unless instructed to evacuate by the contracting officer. (m) personnel recovery. (1) in the case of isolated, missing, detained, captured or abducted contractor personnel, the government will assist in personnel recovery actions. (2) personnel recovery may occur through military action, action by non governmental organizations, other government approved action, diplomatic initiatives, or through any combination of these options. (3) the department of defense has primary responsibility for recovering dod contract service employees and, when requested, will provide personnel recovery support to other agencies in accordance with dod directive 2310.2, personnel recovery. (n) notification and return of personal effects. (1) the contractor shall be responsible for notification of the employee designated next of kin, and notification as soon as possible to the u.s. consul responsible for the area in which the event occurred, if the employee  (i) dies; (ii) requires evacuation due to an injury; or (iii) is isolated, missing, detained, captured, or abducted. (2) the contractor shall also be responsible for the return of all personal effects of deceased or missing contractor personnel, if appropriate, to next of kin. (o) mortuary affairs. mortuary affairs for contractor personnel who die in the area of performance will be handled as follows: (1) if this contract was awarded by dod, the remains of contractor personnel will be handled in accordance with dod directive 1300.22, mortuary affairs policy. (2) (i) if this contract was awarded by an agency other than dod, the contractor is responsible for the return of the remains of contractor personnel from the point of identification of the remains to the location specified by the employee or next of kin, as applicable, except as provided in paragraph (o)(2)(ii) of this clause. (ii) in accordance with 10 u.s.c. 1486, the department of defense may provide, on a reimbursable basis, mortuary support for the disposition of remains and personal effects of all u.s. citizens upon the request of the department of state. (p) changes. in addition to the changes otherwise authorized by the changes clause of this contract, the contracting officer may, at any time, by written order identified as a change order, make changes in place of performance or government furnished facilities, equipment, material, services, or site. any change order issued in accordance with this paragraph shall be subject to the provisions of the changes clause of this contract. (q) subcontracts. the contractor shall incorporate the substance of this clause, including this paragraph (q), in all subcontracts that require subcontractor personnel to perform outside the united states  (1) in a designated operational area during  (i) contingency operations; (ii) humanitarian or peacekeeping operations; or (iii) other military operations; or military exercises, when designated by the combatant commander; or (2) when supporting a diplomatic or consular mission  (i) that has been designated by the department of state as a danger pay post (see https://aoprals.state.gov/); or (ii) that the contracting officer has indicated is subject to this clause. (end of clause) as prescribed at 25.1103(d), insert the following provision: prohibition on conducting restricted business operations in sudan certification (aug 2009) (a) definitions. as used in this provision  business operations means engaging in commerce in any form, including by acquiring, developing, maintaining, owning, selling, possessing, leasing, or operating equipment, facilities, personnel, products, services, personal property, real property, or any other apparatus of business or commerce. marginalized populations of sudan means  (1) adversely affected groups in regions authorized to receive assistance under section 8(c) of the darfur peace and accountability act (pub. l. 109 344) ( 50 u.s.c. 1701 note); and (2) marginalized areas in northern sudan described in section 4(9) of such act. restricted business operations means business operations in sudan that include power production activities, mineral extraction activities, oil related activities, or the production of military equipment, as those terms are defined in the sudan accountability and divestment act of 2007 (pub. l. 110 174). restricted business operations do not include business operations that the person (as that term is defined in section 2 of the sudan accountability and divestment act of 2007) conducting the business can demonstrate  (1) are conducted under contract directly and exclusively with the regional government of southern sudan; (2) are conducted pursuant to specific authorization from the office of foreign assets control in the department of the treasury, or are expressly exempted under federal law from the requirement to be conducted under such authorization; (3) consist of providing goods or services to marginalized populations of sudan; (4) consist of providing goods or services to an internationally recognized peacekeeping force or humanitarian organization; (5) consist of providing goods or services that are used only to promote health or education; or (6) have been voluntarily suspended. (b) certification. by submission of its offer, the offeror certifies that the offeror does not conduct any restricted business operations in sudan. (end of provision) as prescribed in 25.1102(e), insert the following clause: required use of american iron, steel, and manufactured goods buy american statute construction materials (jan 2021) (a) definitions. as used in this clause  component means an article, material, or supply incorporated directly into a construction material. construction material means an article, material, or supply brought to the construction site by the contractor or a subcontractor for incorporation into the building or work. the term also includes an item brought to the site preassembled from articles, materials, or supplies. however, emergency life safety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. domestic construction material means the following  (1) an unmanufactured construction material mined or produced in the united states. (the buy american statute applies.) (2) a manufactured construction material that is manufactured in the united states and, if the construction material consists wholly or predominantly of iron or steel, the iron or steel was produced in the united states. (section 1605 of the recovery act applies.) foreign construction material means a construction material other than a domestic construction material. manufactured construction material means any construction material that is not unmanufactured construction material. steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. united states means the 50 states, the district of columbia, and outlying areas. unmanufactured construction material means raw material brought to the construction site for incorporation into the building or work that has not been  (1) processed into a specific form and shape; or (2) combined with other raw material to create a material that has different properties than the properties of the individual raw materials. (b) domestic preference. (1) this clause implements  (i) section 1605 of the american recovery and reinvestment act of 2009 (recovery act) (pub. l. 111 5), by requiring, unless an exception applies, that all manufactured construction material in the project is manufactured in the united states and, if the construction material consists wholly or predominantly of iron or steel, the iron or steel was produced in the united states (produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, except metallurgical processes involving refinement of steel additives); and (ii) 41 u.s.c chapter 83, buy american, by providing a preference for unmanufactured construction material mined or produced in the united states over unmanufactured construction material mined or produced in a foreign country. (2) the contractor shall use only domestic construction material in performing this contract, except as provided in paragraph (b)(3) and (b)(4) of this clause. (3) this requirement does not apply to the construction material or components listed by the government as follows: ____________________________________________________________________________[contracting officer to list applicable excepted materials or indicate "none"] (4) the contracting officer may add other foreign construction material to the list in paragraph (b)(3) of this clause if the government determines that  (i) the cost of domestic construction material would be unreasonable; (a) the cost of domestic manufactured construction material, when compared to the cost of comparable foreign manufactured construction material, is unreasonable when the cumulative cost of such material will increase the cost of the contract by more than 25 percent; (b) the cost of domestic unmanufactured construction material is unreasonable when the cost of such material exceeds the cost of comparable foreign unmanufactured construction material by more than 20 percent; (ii) the construction material is not mined, produced, or manufactured in the united states in sufficient and reasonably available quantities and of a satisfactory quality; (iii) the application of the restriction of section 1605 of the recovery act to a particular manufactured construction material would be inconsistent with the public interest or the application of the buy american statute to a particular unmanufactured construction material would be impracticable or inconsistent with the public interest. (c) request for determination of inapplicability of section 1605 of the recovery act or the buy american statute. (1) (i) any contractor request to use foreign construction material in accordance with paragraph (b)(4) of this clause shall include adequate information for government evaluation of the request, including  (a) a description of the foreign and domestic construction materials; (b) unit of measure; (c) quantity; (d) cost; (e) time of delivery or availability; (f) location of the construction project; (g) name and address of the proposed supplier; and (h) a detailed justification of the reason for use of foreign construction materials cited in accordance with paragraph (b)(4) of this clause. (ii) a request based on unreasonable cost shall include a reasonable survey of the market and a completed cost comparison table in the format in paragraph (d) of this clause. (iii) the cost of construction material shall include all delivery costs to the construction site and any applicable duty. (iv) any contractor request for a determination submitted after contract award shall explain why the contractor could not reasonably foresee the need for such determination and could not have requested the determination before contract award. if the contractor does not submit a satisfactory explanation, the contracting officer need not make a determination. (2) if the government determines after contract award that an exception to section 1605 of the recovery act or the buy american statute applies and the contracting officer and the contractor negotiate adequate consideration, the contracting officer will modify the contract to allow use of the foreign construction material. however, when the basis for the exception is the unreasonable cost of a domestic construction material, adequate consideration is not less than the differential established in paragraph (b)(4)(i) of this clause. (3) unless the government determines that an exception to section 1605 of the recovery act or the buy american statute applies, use of foreign construction material is noncompliant with section 1605 of the american recovery and reinvestment act or the buy american statute. (d) data. to permit evaluation of requests under paragraph (c) of this clause based on unreasonable cost, the contractor shall include the following information and any applicable supporting data based on the survey of suppliers: item 1: foreign construction material ________ ________ ________ domestic construction material ________ ________ ________ item 2: foreign construction material ________ ________ ________ domestic construction material ________ ________ ________ [list name, address, telephone number, and contact for suppliers surveyed. attach copy of response; if oral, attach summary.] [include other applicable supporting information.] [* include all delivery costs to the construction site.] (end of clause) as prescribed in 25.1102(e), insert the following provision: notice of required use of american iron, steel, and manufactured goods buy american statute construction materials (jan 2021) (a) definitions. "construction material," "domestic construction material," "foreign construction material," "manufacturedconstructionmaterial," "steel," and "unmanufactured construction material," as used in this provision, are defined in the clause of this solicitation entitled "required use of iron, steel, and manufactured goods buy american statute construction materials" (federal acquisition regulation (far) clause 52.225 21). (b) requests for determinations of inapplicability. an offeror requesting a determination regarding the inapplicability of section 1605 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act) or the buy american statute should submit the request to the contracting officer in time to allow a determination before submission of offers. the offeror shall include the information and applicable supporting data required by paragraphs (c) and (d) of the clause at far 52.225 21 in the request. if an offeror has not requested a determination regarding the inapplicability of section 1605 of the recovery act or the buy american statute before submitting its offer, or has not received a response to a previous request, the offeror shall include the information and supporting data in the offer. (c) evaluation of offers. (1) if the government determines that an exception based on unreasonable cost of domestic construction material applies in accordance with far 25.604, the government will evaluate an offer requesting exception to the requirements of section 1605 of the recovery act or the buy american statute by adding to the offered price of the contract  (i) 25 percent of the offered price of the contract, if foreign manufactured construction material is incorporated in the offer based on an exception for unreasonable cost of comparable manufactured domestic construction material; and (ii) 20 percent of the cost of foreign unmanufactured construction material included in the offer based on an exception for the unreasonable cost of comparable domestic unmanufactured construction material. (2) if the solicitation specifies award on the basis of factors in addition to cost or price, the contracting officer will apply the evaluation factors as specified in paragraph (c)(1) of this provision and use the evaluated price in determining the offer that represents the best value to the government. (3) unless paragraph (c)(2) of this provision applies, if two or more offers are equal in price, the contracting officer will give preference to an offer that does not include foreign construction material excepted at the request of the offeror on the basis of unreasonable cost of comparable domestic construction material. (d) alternate offers. (1) when an offer includes foreign construction material not listed by the government in this solicitation in paragraph (b)(3) of the clause at far 52.225 21, the offeror also may submit an alternate offer based on use of equivalent domestic construction material. (2) if an alternate offer is submitted, the offeror shall submit a separate standard form 1442 for the alternate offer and a separate cost comparison table prepared in accordance with paragraphs (c) and (d) of the clause at far 52.225 21 for the offer that is based on the use of any foreign construction material for which the government has not yet determined an exception applies. (3) if the government determines that a particular exception requested in accordance with paragraph (c) of the clause at far 52.225 21 does not apply, the government will evaluate only those offers based on use of the equivalent domestic construction material, and the offeror shall be required to furnish such domestic construction material. an offer based on use of the foreign construction material for which an exception was requested  (i) will be rejected as nonresponsive if this acquisition is conducted by sealed bidding; or (ii) may be accepted if revised during negotiations. (end of provision) alternate i (may 2014). as prescribed in 25.1102 (e), substitute the following paragraph (b) for paragraph (b) of the basic provision: (b)requests for determinations of inapplicability. an offeror requesting a determination regarding the inapplicability of section 1605 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act) or the buy american statute shall submit the request with its offer, including the information and applicable supporting data required by paragraphs (c) and (d) of the clause at far 52.225 21. as prescribed in 25.1102(e), insert the following clause: required use of american iron, steel, and manufactured goods buy american statute construction materials under trade agreements (nov 2023) (a) definitions. as used in this clause  component means an article, material, or supply incorporated directly into a construction material. construction material means an article, material, or supply brought to the construction site by the contractor or subcontractor for incorporation into the building or work. the term also includes an item brought to the site preassembled from articles, materials, or supplies. however, emergency lifes afety systems, such as emergency lighting, fire alarm, and audio evacuation systems, that are discrete systems incorporated into a public building or work and that are produced as complete systems, are evaluated as a single and distinct construction material regardless of when or how the individual parts or components of those systems are delivered to the construction site. designated country means any of the following countries: (1) a world trade organization government procurement agreement (wto gpa) country (armenia, aruba, australia, austria, belgium, bulgaria, canada, croatia, cyprus, czech republic, denmark, estonia, finland, france, germany, greece, hong kong, hungary, iceland, ireland, israel, italy, japan, korea (republic of), latvia, liechtenstein, lithuania, luxembourg, malta, moldova, montenegro, netherlands, new zealand, north macedonia, norway, poland, portugal, romania, singapore, slovak republic, slovenia, spain, sweden, switzerland, taiwan, ukraine, or united kingdom); (2) a free trade agreement (fta) country (australia, bahrain, chile, colombia, costa rica, dominican republic, el salvador, guatemala, honduras, korea (republic of), mexico, morocco, nicaragua, oman, panama, peru, or singapore); (3) a least developed country (afghanistan, angola, bangladesh, benin, bhutan, burkina faso, burundi, cambodia, central african republic, chad, comoros, democratic republic of congo, djibouti, equatorial guinea, eritrea, ethiopia, gambia, guinea, guinea bissau, haiti, kiribati, laos, lesotho, liberia, madagascar, malawi, mali, mauritania, mozambique, nepal, niger, rwanda, samoa, sao tome and principe, senegal, sierra leone, solomon islands, somalia, south sudan, tanzania, timor leste, togo, tuvalu, uganda, vanuatu, yemen, or zambia); or (4) a caribbean basin country (antigua and barbuda, aruba, bahamas, barbados, belize, bonaire, british virgin islands, curacao, dominica, grenada, guyana, haiti, jamaica, montserrat, saba, st. kitts and nevis, st. lucia, st. vincent and the grenadines, sint eustatius, sint maarten, or trinidad and tobago). designated country construction material means a construction material that is a wto gpa country construction material, an fta country construction material, a least developed country construction material, or a caribbean basin country construction material. domestic construction material means the following: (1) an unmanufactured construction material mined or produced in the united states. (the buy american statute applies.) (2) a manufactured construction material that is manufactured in the united states and, if the construction material consists wholly or predominantly of iron or steel, the iron or steel was produced in the united states. (section 1605 of the recovery act applies.) foreign construction material means a construction material other than a domestic construction material. free trade agreement (fta) country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of an fta country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in an fta country into a new and different construction material distinct from the materials from which it was transformed. least developed country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of a least developed country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different construction material distinct from the materials from which it was transformed. manufactured construction material means any construction material that is not unmanufactured construction material. nondesignated country means a country other than the united states or a designated country. recovery act designated country means any of the following countries: (1) a world trade organization government procurement agreement (wto gpa) country (armenia, aruba, australia, austria, belgium, bulgaria, canada, croatia, cyprus, czech republic, denmark, estonia, finland, france, germany, greece, hong kong, hungary, iceland, ireland, israel, italy, japan, korea (republic of), latvia, liechtenstein, lithuania, luxembourg, malta, moldova, montenegro, netherlands, new zealand, norway, poland, portugal, romania, singapore, slovak republic, slovenia, spain, sweden, switzerland, taiwan, ukraine, or united kingdom); (2) a free trade agreement country (fta) (australia, bahrain, chile, colombia, costa rica, dominican republic, el salvador, guatemala, honduras, korea (republic of), mexico, morocco, nicaragua, oman, panama, peru, or singapore); or (3) a least developed country (afghanistan, angola, bangladesh, benin, bhutan, burkina faso, burundi, cambodia, central african republic, chad, comoros, democratic republic of congo, djibouti, equatorial guinea, eritrea, ethiopia, gambia, guinea, guinea bissau, haiti, kiribati, laos, lesotho, liberia, madagascar, malawi, mali, mauritania, mozambique, nepal, niger, rwanda, samoa, sao tome and principe, senegal, sierra leone, solomon islands, somalia, south sudan, tanzania, timor leste, togo, tuvalu, uganda, vanuatu, yemen, or zambia). recovery act designated country construction material means a construction material that is a wto gpa country construction material, an fta country construction material, or a least developed country construction material. steel means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other elements. united states means the 50 states, the district of columbia, and outlying areas. unmanufactured construction material means raw material brought to the construction site for incorporation into the building or work that has not been  (1) processed into a specific form and shape; or (2) combined with other raw material to create a material that has different properties than the properties of the individual raw materials. wto gpa country construction material means a construction material that  (1) is wholly the growth, product, or manufacture of a wto gpa country; or (2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in a wto gpa country into a new and different construction material distinct from the materials from which it was transformed. (b) construction materials. (1) the restrictions of section 1605 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act) do not apply to recovery act designated country manufactured construction material. the restrictions of the buy american statute do not apply to designated country unmanufactured construction material. consistent with u.s. obligations under international agreements, this clause implements  (i) section 1605 of the recovery act by requiring, unless an exception applies, that all manufactured construction material in the project is manufactured in the united states and, if the construction material consists wholly or predominantly of iron or steel, the iron or steel was produced in the united states (produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, except metallurgical processes involving refinement of steel additives); and. (ii) the buy american statute by providing a preference for unmanufactured construction material mined or produced in the united states over unmanufactured construction material mined or produced in a nondesignated country. (2) the contractor shall use only domestic construction material, recovery act designated country manufactured construction material, or designated country unmanufactured construction material in performing this contract, except as provided in paragraphs (b)(3) and (b)(4) of this clause. (3) the requirement in paragraph (b)(2) of this clause does not apply to the construction materials or components listed by the government as follows: [contracting officer to list applicable excepted materials or indicate "none".] (4) the contracting officer may add other construction material to the list in paragraph (b)(3) of this clause if the government determines that  (i) the cost of domestic construction material would be unreasonable; (a) the cost of domestic manufactured construction material is unreasonable when the cumulative cost of such material, when compared to the cost of comparable foreign manufactured construction material, other than recovery act designated country construction material, will increase the overall cost of the contract by more than 25 percent; (b) the cost of domestic unmanufactured construction material is unreasonable when the cost of such material exceeds the cost of comparable foreign unmanufactured construction material, other than designated country construction material, by more than 20 percent; (ii) the construction material is not mined, produced, or manufactured in the united states in sufficient and reasonably available commercial quantities of a satisfactory quality; or (iii) the application of the restriction of section 1605 of the recovery act to a particular manufactured construction material would be inconsistent with the public interest or the application of the buy american statute to a particular unmanufactured construction material would be impracticable or inconsistent with the public interest. (c) request for determination of inapplicability of section 1605 of the recovery act or the buy american statute. (1) (i) any contractor request to use foreign construction material in accordance with paragraph (b)(4) of this clause shall include adequate information for government evaluation of the request, including  (a) a description of the foreign and domestic construction materials; (b) unit of measure; (c) quantity; (d) cost; (e) time of delivery or availability; (f) location of the construction project; (g) name and address of the proposed supplier; and (h) a detailed justification of the reason for use of foreign construction materials cited in accordance with paragraph (b)(4) of this clause. (ii) a request based on unreasonable cost shall include a reasonable survey of the market and a completed cost comparison table in the format in paragraph (d) of this clause. (iii) the cost of construction material shall include all delivery costs to the construction site and any applicable duty. (iv) any contractor request for a determination submitted after contract award shall explain why the contractor could not reasonably foresee the need for such determination and could not have requested the determination before contract award. if the contractor does not submit a satisfactory explanation, the contracting officer need not make a determination. (2) if the government determines after contract award that an exception to section 1605 of the recovery act or the buy american statute applies and the contracting officer and the contractor negotiate adequate consideration, the contracting officer will modify the contract to allow use of the foreign construction material. however, when the basis for the exception is the unreasonable cost of a domestic construction material, adequate consideration is not less than the differential established in paragraph (b)(4)(i) of this clause. (3) unless the government determines that an exception to section 1605 of the recovery act or the buy american statute applies, use of foreign construction material other than manufactured construction material from a recovery act designated country or unmanufactured construction material from a designated country is noncompliant with the applicable statute. (d) data. to permit evaluation of requests under paragraph (c) of this clause based on unreasonable cost, the contractor shall include the following information and any applicable supporting data based on the survey of suppliers: foreign (nondesignated country) and domestic construction materials cost comparison item 1: foreign construction material ________ ________ ________ domestic construction material ________ ________ ________ item 2: foreign construction material ________ ________ ________ domestic construction material ________ ________ ________ [list name, address, telephone number, and contact for suppliers surveyed. attach copy of response; if oral, attach summary.] [include other applicable supporting information.] [* include all delivery costs to the construction site.] (end of clause) alternate i (nov 2023) . as prescribed in 25.1102 (e), add the following definition of "bahraini, mexican, or omani construction material" to paragraph (a) of the basic clause, and substitute the following paragraphs (b)(1) and (b)(2) for paragraphs (b)(1) and (b)(2) of the basic clause: bahraini, mexican, or omani construction material means a construction material that  (1)(1) is wholly the growth, product, or manufacture of bahrain, mexico, or oman; or (2)(2) in the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in bahrain, mexico, or oman into a new and different construction material distinct from the materials from which it was transformed. (b) construction materials. (1) the restrictions of section 1605 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act) do not apply to recovery act designated country manufactured construction material. the restrictions of the buy american statute do not apply to designated country unmanufactured construction material. consistent with u.s. obligations under international agreements, this clause implements  (i) section 1605 of the recovery act, by requiring, unless an exception applies, that all manufactured construction material in the project is manufactured in the united states and, if the construction material consists wholly or predominantly of iron or steel, the iron or steel was produced in the united states (produced in the united states means that all manufacturing processes of the iron or steel must take place in the united states, except metallurgical processes involving refinement of steel additives); and (ii) the buy american statute by providing a preference for unmanufactured construction material mined or produced in the united states over unmanufactured construction material mined or produced in a nondesignated country. (2) the contractor shall use only domestic construction material, recovery act designated country manufactured construction material, or designated country unmanufactured construction material, other than bahraini, mexican, or omani construction material, in performing this contract, except as provided in paragraphs (b)(3) and (b)(4) of this clause. as prescribed in 25.1102(e), insert the following provision: notice of required use of american iron, steel, and manufactured goods buy american statute construction materials under trade agreements (jan 2021) (a) definitions. "construction material," "domestic construction material," "foreign construction material," "manufactured construction material," "recovery act designated country construction material," "steel," and "unmanufactured construction material," as used in this provision, are defined in the clause of this solicitation entitled "required use of iron, steel, and manufactured goods buy american statute construction materials under trade agreements" (federal acquisition regulation (far) clause 52.225 23). (b) requests for determination of inapplicability. an offeror requesting a determination regarding the inapplicability of section 1605 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act) or the buy american statute should submit the request to the contracting officer in time to allow a determination before submission of offers. the offeror shall include the information and applicable supporting data required by paragraphs (c) and (d) of far clause 52.225 23 in the request. if an offeror has not requested a determination regarding the inapplicability of section 1605 of the recovery act or the buy american statute before submitting its offer, or has not received a response to a previous request, the offeror shall include the information and supporting data in the offer. (c) evaluation of offers. (1) if the government determines that an exception based on unreasonable cost of domestic construction material applies in accordance with far 25.604, the government will evaluate an offer requesting exception to the requirements of section 1605 of the recovery act or the buy american statute by adding to the offered price of the contract  (i) 25 percent of the offered price of the contract, if foreign manufactured construction material is included in the offer based on an exception for the unreasonable cost of comparable manufactured domestic construction material; and (ii) 20 percent of the cost of foreign unmanufactured construction material included in the offer based on an exception for the unreasonable cost of comparable domestic unmanufactured construction material. (2) if the solicitation specifies award on the basis of factors in addition to cost or price, the contracting officer will apply the evaluation factors as specified in paragraph (c)(1) of this provision and use the evaluated cost or price in determining the offer that represents the best value to the government. (3) unless paragraph (c)(2) of this provision applies, if two or more offers are equal in price, the contracting officer will give preference to an offer that does not include foreign construction material excepted at the request of the offeror on the basis of unreasonable cost. (d) alternate offers. (1) when an offer includes foreign construction material, other than recovery act designated country construction material, that is not listed by the government in this solicitation in paragraph (b)(3) of far clause 52.225 23, the offeror also may submit an alternate offer based on use of equivalent domestic or recovery act designated country construction material. (2) if an alternate offer is submitted, the offeror shall submit a separate standard form 1442 for the alternate offer and a separate cost comparison table prepared in accordance with paragraphs (c) and (d) of far clause 52.225 23 for the offer that is based on the use of any foreign construction material for which the government has not yet determined an exception applies. (3) if the government determines that a particular exception requested in accordance with paragraph (c) of far clause 52.225 23 does not apply, the government will evaluate only those offers based on use of the equivalent domestic or recovery act designated country construction material, and the offeror shall be required to furnish such domestic or recovery act designated country construction material. an offer based on use of the foreign construction material for which an exception was requested  (i) will be rejected as nonresponsive if this acquisition is conducted by sealed bidding; or (ii) may be accepted if revised during negotiations. (end of provision) alternate i (may 2014). as prescribed in 25.1102 (e), substitute the following paragraph (b) for paragraph (b) of the basic provision: (b) requests for determination of inapplicability. an offeror requesting a determination regarding the inapplicability of section 1605 of the american recovery and reinvestment act of 2009 (pub. l. 111 5) (recovery act) or the buy american statute shall submit the request with its offer, including the information and applicable supporting data required by paragraphs (c) and (d) of far clause 52.225 23. alternate ii (nov 2023) . as prescribed in 25.1102 (e), add the definition of "bahraini, mexican, or omani construction material" to paragraph (a) and substitute the following paragraph (d) for paragraph (d) of the basic provision: (d) alternate offers. (1) when an offer includes foreign construction material, except foreign construction material from a recovery act designated country other than bahrain, mexico, or oman that is not listed by the government in this solicitation in paragraph (b)(3) of far clause 52.225 23, the offeror also may submit an alternate offer based on use of equivalent domestic or recovery act designated country construction material other than bahraini, mexican, or omani construction material. (2) if an alternate offer is submitted, the offeror shall submit a separate standard form 1442 for the alternate offer and a separate cost comparison table prepared in accordance with paragraphs (c) and (d) of far clause 52.225 23 for the offer that is based on the use of any foreign construction material for which the government has not yet determined an exception applies. (3) if the government determines that a particular exception requested in accordance with paragraph (c) of far clause 52.225 23 does not apply, the government will evaluate only those offers based on use of the equivalent domestic or recovery act designated country construction material other than bahraini, mexican, or omani construction material. an offer based on use of the foreign construction material for which an exception was requested  (i) will be rejected as nonresponsive if this acquisition is conducted by sealed bidding; or (ii) may be accepted if revised during negotiations. as prescribed at 25.1103(e), insert the following provision: prohibition on contracting with entities engaging in certain activities or transactions relating to iran representation and certifications (jun 2020) (a) definitions. as used in this provision  person  (1) means  (i) a natural person; (ii) a corporation, business association, partnership, society, trust, financial institution, insurer, underwriter, guarantor, and any other business organization, any other nongovernmental entity, organization, or group, and any governmental entity operating as a business enterprise; and (iii) any successor to any entity described in paragraph (1)(ii) of this definition; and (2) does not include a government or governmental entity that is not operating as a business enterprise. sensitive technology  (1) means hardware, software, telecommunications equipment, or any other technology that is to be used specifically  (i) to restrict the free flow of unbiased information in iran; or (ii) to disrupt, monitor, or otherwise restrict speech of the people of iran; and (2) does not include information or informational materials the export of which the president does not have the authority to regulate or prohibit pursuant to section 203(b)(3) of the international emergency economic powers act ( 50 u.s.c. 1702(b)(3)). (b) the offeror shall e mail questions concerning sensitive technology to the department of state at cisada106@state.gov. (c) except as provided in paragraph (d) of this provision or if a waiver has been granted in accordance with federal acquisition regulation (far) 25.703 4, by submission of its offer, the offeror  (1) represents, to the best of its knowledge and belief, that the offeror does not export any sensitive technology to the government of iran or any entities or individuals owned or controlled by, or acting on behalf or at the direction of, the government of iran; (2) certifies that the offeror, or any person owned or controlled by the offeror, does not engage in any activities for which sanctions may be imposed under section 5 of the iran sanctions act. these sanctioned activities are in the areas of development of the petroleum resources of iran, production of refined petroleum products in iran, sale and provision of refined petroleum products to iran, and contributing to iran's ability to acquire or develop certain weapons or technologies; and (3) certifies that the offeror, and any person owned or controlled by the offeror, does not knowingly engage in any transaction that exceeds the threshold at far 25.703 2(a)(2) with iran's revolutionary guard corps or any of its officials, agents, or affiliates, the property and interests in property of which are blocked pursuant to the international emergency economic powers act ( 50 u.s.c. 1701 et seq.) (see ofac's specially designated nationals and blocked persons list at https://www.treasury.gov/resource center/sanctions/sdn list/pages/default.aspx). (d) exception for trade agreements. the representation requirement of paragraph (c)(1) and the certification requirements of paragraphs (c)(2) and (c)(3) of this provision do not apply if  (1) this solicitation includes a trade agreements notice or certification (e.g., 52.225 4, 52.225 6, 52.225 12, 52.225 24, or comparable agency provision); and (2) the offeror has certified that all the offered products to be supplied are designated country end products or designated country construction material. (end of provision) as prescribed in 25.302 6 insert the following clause: contractors performing private security functions outside the united states (oct 2016) (a) definition. as used in this clause  area of combat operations means an area of operations designated as such by the secretary of defense when enhanced coordination of contractors performing private security functions working for government agencies is required full cooperation  (1) means disclosure to the government of the information sufficient to identify the nature and extent of the incident and the individuals responsible for the conduct. it includes providing timely and complete responses to government auditors' and investigators' requests for documents and access to employees with information; (2) does not foreclose any contractor rights arising in law, the far, or the terms of the contract. it does not require  (i) the contractor to waive its attorney client privilege or the protections afforded by the attorney work product doctrine; or (ii) any officer, director, owner, or employee of the contractor, including a sole proprietor, to waive his or her attorney client privilege or fifth amendment rights; and (3) does not restrict the contractor from  (i) conducting an internal investigation; or (ii) defending a proceeding or dispute arising under the contract or related to a potential or disclosed violation. other significant military operations means activities, other than combat operations, as part of a contingency operation outside the united states that is carried out by united states armed forces in an uncontrolled or unpredictable high threat environment where personnel performing security functions may be called upon to use deadly force. private security functions means activities engaged in by a contractor, as follows: (1) guarding of personnel, facilities, designated sites, or property of a federal agency, the contractor or subcontractor, or a third party. (2) any other activity for which personnel are required to carry weapons in the performance of their duties in accordance with the terms of this contract. (b) applicability. if this contract is performed both in a designated area and in an area that is not designated, the clause only applies to performance in the following designated areas  (1) combat operations, as designated by the secretary of defense; or (2) other significant military operations, as designated by the secretary of defense, and only upon agreement of the secretary of defense and the secretary of state. (c) requirements. the contractor is required to  (1) ensure that all employees of the contractor who are responsible for performing private security functions under this contract comply with 32 cfr part 159, and with any orders, directives, and instructions to contractors performing private security functions that are identified in the contract for   (i) registering, processing, accounting for, managing, overseeing, and keeping appropriate records of personnel performing private security functions; (ii) authorizing and accounting for weapons to be carried by or available to be used by personnel performing private security functions; (iii) registering and identifying armored vehicles, helicopters, and other military vehicles operated by contractors performing private security functions; and (iv) reporting incidents in which  (a) a weapon is discharged by personnel performing private security functions; (b) personnel performing private security functions are attacked, killed, or injured; (c) persons are killed or injured or property is destroyed as a result of conduct by contractor personnel; (d) a weapon is discharged against personnel performing private security functions or personnel performing such functions believe a weapon was so discharged; or (e) active, non lethal countermeasures (other than the discharge of a weapon) are employed by personnel performing private security functions in response to a perceived immediate threat; (2) ensure that the contractor and all employees of the contractor who are responsible for performing private security functions under this contract are briefed on and understand their obligation to comply with  (i) qualification, training, screening (including, if applicable, thorough background checks), and security requirements established by 32 cfr part 159, private security contractors operating in contingency operations; (ii) applicable laws and regulations of the united states and the host country and applicable treaties and international agreements regarding performance of private security functions; (iii) orders, directives, and instructions issued by the applicable commander of a combatant command or relevant chief of mission relating to weapons, equipment, force protection, security, health, safety, or relations and interaction with locals; and (iv) rules on the use of force issued by the applicable commander of a combatant command or relevant chief of mission for personnel performing private security functions; and (3) provide full cooperation with any government authorized investigation of incidents reported pursuant to paragraph (c)(1)(iv) of this clause and incidents of alleged misconduct by personnel performing private security functions under this contract by providing  (i) access to employees performing private security functions; and (ii) relevant information in the possession of the contractor regarding the incident concerned. (d) remedies. in addition to other remedies available to the government  (1) the contracting officer may direct the contractor, at its own expense, to remove and replace any contractor or subcontractor personnel performing private security functions who fail to comply with or violate applicable requirements of this clause or 32 cfr part 159. such action may be taken at the government's discretion without prejudice to its rights under any other provision of this contract. (2) the contractor’s failure to comply with the requirements of this clause will be included in appropriate databases of past performance and considered in any responsibility determination or evaluation of past performance; and (3) if this is an award fee contract, the contractor's failure to comply with the requirements of this clause shall be considered in the evaluation of the contractor's performance during the relevant evaluation period, and the contracting officer may treat such failure to comply as a basis for reducing or denying award fees for such period or for recovering all or part of award fees previously paid for such period. (e) rule of construction. the duty of the contractor to comply with the requirements of this clause shall not be reduced or diminished by the failure of a higher  or lower tier contractor or subcontractor to comply with the clause requirements or by a failure of the contracting activity to provide required oversight. (f) subcontracts. the contractor shall include the substance of this clause, including this paragraph (f), in all subcontracts that will be performed outside the united states in areas of  (1) combat operations, as designated by the secretary of defense; or (2) other significant military operations, upon agreement of the secretaries of defense and state that the clause applies in that area. (end of clause) as prescribed in 26.104 , insert the following clause: utilization of indian organizations and indian owned economic enterprises (june 2000) (a) definitions. as used in this clause: indian means any person who is a member of any indian tribe, band, group, pueblo, or community that is recognized by the federal government as eligible for services from the bureau of indian affairs (bia) in accordance with 25 u.s.c. 1452(c) and any "native" as defined in the alaska native claims settlement act ( 43 u.s.c. 1601). indian organization means the governing body of any indian tribe or entity established or recognized by the governing body of an indian tribe for the purposes of 25 u.s.c., chapter 17. indian owned economic enterprise means any indian owned (as determined by the secretary of the interior) commercial, industrial, or business activity established or organized for the purpose of profit, provided that indian ownership constitutes not less than 51 percent of the enterprise. indian tribe means any indian tribe, band, group, pueblo, or community, including native villages and native groups (including corporations organized by kenai, juneau, sitka, and kodiak) as defined in the alaska native claims settlement act, that is recognized by the federal government as eligible for services from bia in accordance with 25 u.s.c. 1452(c). interested party means a prime contractor or an actual or prospective offeror whose direct economic interest would be affected by the award of a subcontract or by the failure to award a subcontract. (b) the contractor shall use its best efforts to give indian organizations and indian owned economic enterprises ( 25 u.s.c. 1544) the maximum practicable opportunity to participate in the subcontracts it awards to the fullest extent consistent with efficient performance of its contract. (1) the contracting officer and the contractor, acting in good faith, may rely on the representation of an indian organization or indian owned economic enterprise as to its eligibility, unless an interested party challenges its status or the contracting officer has independent reason to question that status. in the event of a challenge to the representation of a subcontractor, the contracting officer will refer the matter to the u.s. department of the interior bureau of indian affairs (bia) attn: chief, division of contracting and grants administration 1849 c street, nw, ms 2626 mib washington, dc 20240 4000. the bia will determine the eligibility and notify the contracting officer. no incentive payment will be made within 50 working days of subcontract award or while a challenge is pending. if a subcontractor is determined to be an ineligible participant, no incentive payment will be made under the indian incentive program. (2) the contractor may request an adjustment under the indian incentive program to the following: (i) the estimated cost of a cost type contract. (ii) the target cost of a cost plus incentive fee prime contract. (iii) the target cost and ceiling price of a fixed price incentive prime contract. (iv) the price of a firm fixed price prime contract. (3) the amount of the adjustment to the prime contract is 5 percent of the estimated cost, target cost, or firm fixed price included in the subcontract initially awarded to the indian organization or indian owned economic enterprise. (4) the contractor has the burden of proving the amount claimed and must assert its request for an adjustment prior to completion of contract performance. (c) the contracting officer, subject to the terms and conditions of the contract and the availability of funds, will authorize an incentive payment of 5 percent of the amount paid to the subcontractor. the contracting officer will seek funding in accordance with agency procedures. (end of clause) as prescribed in 26.304 , insert the following provision: historically black college or university and minority institution representation (oct 2014) (a) definitions. as used in this provision  historically black college or university means an institution determined by the secretary of education to meet the requirements of 34 cfr 608.2. minority institution means an institution of higher education meeting the requirements of section 365(3) of the higher education act of1965 ( 20 u.s.c. 1067k), including a hispanic serving institution of higher education, as defined in section502(a) of the act ( 20 u.s.c. 1101a). (b) representation. the offeror represents that it  □ is □ is not a historically black college or university; □ is □ is not a minority institution. (end of provision) as prescribed in 26.206(a), insert the following provision: disaster or emergency area representation (nov 2007) (a) set aside area. the area covered in this contract is: ________________________________________________ [contracting officer to fill in with definite geographic boundaries.] (b) representations. the offeror represents that it □ does □ does not reside or primarily do business in the designated set aside area. (c) an offeror is considered to be residing or primarily doing business in the set aside area if, during the last twelve months  (1) the offeror had its main operating office in the area; and (2) that office generated at least half of the offeror’s gross revenues and employed at least half of the offeror’s permanent employees. (d) if the offeror does not meet the criteria in paragraph (c) of this provision, factors to be considered in determining whether an offeror resides or primarily does business in the set aside area include  (1) physical location(s) of the offeror’s permanent office(s) and date any office in the set aside area(s) was established; (2) current state licenses; (3) record of past work in the set aside area(s) (e.g., how much and for how long); (4) contractual history the offeror has had with subcontractors and/or suppliers in the set aside area; (5) percentage of the offeror’s gross revenues attributable to work performed in the set aside area; (6) number of permanent employees the offeror employs in the set aside area; (7) membership in local and state organizations in the set aside area; and (8) other evidence that establishes the offeror resides or primarily does business in the set aside area. for example, sole proprietorships may submit utility bills and bank statements. (e) if the offeror represents it resides or primarily does business in the set aside area, the offeror shall furnish documentation to support its representation if requested by the contracting officer. the solicitation may require the offeror to submit with its offer documentation to support the representation. (end of provision) as prescribed in 26.206(b), insert the following clause: notice of disaster or emergency area set aside (nov 2007) (a) set aside area. offers are solicited only from businesses residing or primarily doing business in ________________________________________________ [contracting officer to fill in with definite geographic boundaries.] offers received from other businesses shall not be considered. (b) this set aside is in addition to any small business set aside contained in this contract. (end of clause) as prescribed in 26.206(c), insert the following clause: restrictions on subcontracting outside disaster or emergency area (nov 2007) (a) definitions. the definitions of the following terms used in this clause are found in the small business administration regulations at 13 cfr 125.6(e): cost of the contract, cost of contract performance incurred for personnel, cost of manufacturing, cost of materials, personnel, and subcontracting. (b) the contractor agrees that in performance of the contract in the case of a contract for  (1) services (except construction). at least 50 percent of the cost of contract performance incurred for personnel shall be expended for employees of the contractor or employees of other businesses residing or primarily doing business in the area designated in the clause at far 52.226 4, notice of disaster or emergency area set aside; (2) supplies (other than procurement from a nonmanufacturer of such supplies). the contractor or employees of other businesses residing or primarily doing business in the set aside area shall perform work for at least 50 percent of the cost of manufacturing the supplies, not including the cost of materials; (3) general construction. the contractor will perform at least 15 percent of the cost of the contract, not including the cost of materials, with its own employees or employees of other businesses residing or primarily doing business in the set aside area; or (4) construction by special trade contractors. the contractor will perform at least 25 percent of the cost of the contract, not including the cost of materials, with its own employees or employees of other businesses residing or primarily doing business in the set aside area. (end of clause) as prescribed in 26.404 , insert the following clause: promoting excess food donation to nonprofit organizations (jun 2020) (a) definitions. as used in this clause  apparently wholesome food means food that meets all quality and labeling standards imposed by federal, state, and local laws and regulations even though the food may not be readily marketable due to appearance, age, freshness, grade, size, surplus, or other conditions. excess food means food that  (1) is not required to meet the needs of the executive agencies; and (2) would otherwise be discarded. food insecure means inconsistent access to sufficient, safe, and nutritious food. nonprofit organization means any organization that is  (1) described in section 501(c) of the internal revenue code of 1986; and (2) exempt from tax under section 501(a) of that code. (b) in accordance with the federal food donation act of 2008 ( 42 u.s.c. 1792), the contractor is encouraged, to the maximum extent practicable and safe, to donate excess, apparently wholesome food to nonprofit organizations that provide assistance to food insecure people in the united states. (c) costs. (1) the contractor, including any subcontractors, shall assume the responsibility for all the costs and the logistical support to collect, transport, maintain the safety of, or distribute the excess, apparently wholesome food to the nonprofit organization(s) that provides assistance to food insecure people. (2) the contractor will not be reimbursed for any costs incurred or associated with the donation of excess foods. any costs incurred for excess food donations are unallowable. (d) liability. the government and the contractor, including any subcontractors, shall be exempt from civil and criminal liability to the extent provided under the bill emerson good samaritan food donation act ( 42 u.s.c. 1791). nothing in this clause shall be construed to supersede state or local health regulations (subsection (f) of 42 u.s.c. 1791). (e) subcontracts. the contractor shall insert this clause in all contracts, task orders, delivery orders, purchase orders, and other similar instruments that exceed the threshold specified in federal acquisition regulation 26.404 on the date of subcontract award with its subcontractors or suppliers, at any tier, who will perform, under this contract, the provision, service, or sale of food in the united states. (end of clause) as prescribed in 26.506 , insert the following clause: drug free workplace (may 2024) (a) definitions. as used in this clause  controlled substance means a controlled substance in schedules i through v of section 202 of the controlled substances act ( 21 u.s.c. 812) and as further defined in regulation at 21 cfr 1308.11   1308.15. conviction means a finding of guilt (including a plea of nolo contendere) or imposition of sentence, or both, by any judicial body charged with the responsibility to determine violations of the federal or state criminal drug statutes. criminal drug statute means a federal or non federal criminal statute involving the manufacture, distribution, dispensing, possession, or use of any controlled substance. drug free workplace means the site(s) for the performance of work done by the contractor in connection with a specific contract where employees of the contractor are prohibited from engaging in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance. employee means an employee of a contractor directly engaged in the performance of work under a government contract. "directly engaged" is defined to include all direct cost employees and any other contractor employee who has other than a minimal impact or involvement in contract performance. individual means an offeror/contractor that has no more than one employee including the offeror/contractor. (b) the contractor, if other than an individual, shall within 30 days after award (unless a longer period is agreed to in writing for contracts of 30 days or more performance duration), or as soon as possible for contracts of less than 30 days performance duration  (1) publish a statement notifying its employees that the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance is prohibited in the contractor’s workplace and specifying the actions that will be taken against employees for violations of such prohibition; (2) establish an ongoing drug free awareness program to inform such employees about  (i) the dangers of drug abuse in the workplace; (ii) the contractor’s policy of maintaining a drug free workplace; (iii) any available drug counseling, rehabilitation, and employee assistance programs; and (iv) the penalties that may be imposed upon employees for drug abuse violations occurring in the workplace; (3) provide all employees engaged in performance of the contract with a copy of the statement required by paragraph (b)(1) of this clause; (4) notify such employees in writing in the statement required by paragraph (b)(1) of this clause that, as a condition of continued employment on this contract, the employee will  (i) abide by the terms of the statement; and (ii) notify the employer in writing of the employee’s conviction under a criminal drug statute for a violation occurring in the workplace no later than 5 days after such conviction; (5) notify the contracting officer in writing within 10 days after receiving notice under subdivision (b)(4)(ii) of this clause, from an employee or otherwise receiving actual notice of such conviction. the notice shall include the position title of the employee; (6) within 30 days after receiving notice under subdivision (b)(4)(ii) of this clause of a conviction, take one of the following actions with respect to any employee who is convicted of a drug abuse violation occurring in the workplace: (i) taking appropriate personnel action against such employee, up to and including termination; or (ii) require such employee to satisfactorily participate in a drug abuse assistance or rehabilitation program approved for such purposes by a federal, state, or local health, law enforcement, or other appropriate agency; and (7) make a good faith effort to maintain a drug free workplace through implementation of paragraphs (b)(1) through (b)(6) of this clause. (c) the contractor, if an individual, agrees by award of the contract or acceptance of a purchase order, not to engage in the unlawful manufacture, distribution, dispensing, possession, or use of a controlled substance while performing this contract. (d) in addition to other remedies available to the government, the contractor’s failure to comply with the requirements of paragraph (b) or (c) of this clause may, pursuant to far 26.505, render the contractor subject to suspension of contract payments, termination of the contract or default, and suspension or debarment. (end of clause) as prescribed in 26.605 , insert the following clause: encouraging contractor policies to ban text messaging while driving (may 2024) (a) definitions. as used in this clause  "driving"  (1) means operating a motor vehicle on an active roadway with the motor running, including while temporarily stationary because of traffic, a traffic light, stop sign, or otherwise. (2) does not include operating a motor vehicle with or without the motor running when one has pulled over to the side of, or off, an active roadway and has halted in a location where one can safely remain stationary. text messaging means reading from or entering data into any handheld or other electronic device, including for the purpose of short message service texting, e mailing, instant messaging, obtaining navigational information, or engaging in any other form of electronic data retrieval or electronic data communication. the term does not include glancing at or listening to a navigational device that is secured in a commercially designed holder affixed to the vehicle, provided that the destination and route are programmed into the device either before driving or while stopped in a location off the roadway where it is safe and legal to park. (b) this clause implements executive order 13513, federal leadership on reducing text messaging while driving, dated october 1, 2009. (c) the contractor is encouraged to  (1) adopt and enforce policies that ban text messaging while driving  (i) company owned or rented vehicles or government owned vehicles; or (ii) privately owned vehicles when on official government business or when performing any work for or on behalf of the government. (2) conduct initiatives in a manner commensurate with the size of the business, such as  (i) establishment of new rules and programs or reevaluation of existing programs to prohibit text messaging while driving; and (ii) education, awareness, and other outreach to employees about the safety risks associated with texting while driving. (d) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts that exceed the micro purchase threshold, as defined in federal acquisition regulation 2.101 on the date of subcontract award. (end of clause) as prescribed in 27.201 2(a)(1), insert the following clause: authorization and consent (jun 2020) (a) the government authorizes and consents to all use and manufacture, in performing this contract or any subcontract at any tier, of any invention described in and covered by a united states patent  (1) embodied in the structure or composition of any article the delivery of which is accepted by the government under this contract; or (2) used in machinery, tools, or methods whose use necessarily results from compliance by the contractor or a subcontractor with (i) specifications or written provisions forming a part of this contract or (ii) specific written instructions given by the contracting officer directing the manner of performance. the entire liability to the government for infringement of a united states patent shall be determined solely by the provisions of the indemnity clause, if any, included in this contract or any subcontract hereunder (including any lower tier subcontract), and the government assumes liability for all other infringement to the extent of the authorization and consent hereinabove granted. (b) the contractor shall include the substance of this clause, including this paragraph (b), in all subcontracts that are expected to exceed the simplified acquisition threshold, as defined in federal acquisition regulation (far) 2.101 on the date of subcontract award. however, omission of this clause from any subcontract, including those at or below the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, does not affect this authorization and consent. (end of clause) alternate i (apr 1984). as prescribed in 27.201 2 (a)(2), substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the government authorizes and consents to all use and manufacture of any invention described in and covered by a united states patent in the performance of this contract or any subcontract at any tier. alternate ii (apr 1984). as prescribed in 27.201 2 (a)(3), substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the government authorizes and consents to all use and manufacture in the performance of any order at any tier or subcontract at any tier placed under this contract for communication services and facilities for which rates, charges, and tariffs are not established by a government regulatory body, of any invention described in and covered by a united states patent  (1) embodied in the structure or composition of any article the delivery of which is accepted by the government under this contract; or (2) used in machinery, tools, or methods whose use necessarily results from compliance by the contractor or a subcontractor with specifications or written provisions forming a part of this contract or with specific written instructions given by the contracting officer directing the manner of performance. as prescribed in 27.201 2(b), insert the following clause: notice and assistance regarding patent and copyright infringement (jun 2020) (a) the contractor shall report to the contracting officer, promptly and in reasonable written detail, each notice or claim of patent or copyright infringement based on the performance of this contract of which the contractor has knowledge. (b) in the event of any claim or suit against the government on account of any alleged patent or copyright infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or services performed under this contract, the contractor shall furnish to the government, when requested by the contracting officer, all evidence and information in the contractor’s possession pertaining to such claim or suit. such evidence and information shall be furnished at the expense of the government except where the contractor has agreed to indemnify the government. (c) the contractor shall include the substance of this clause, including this paragraph (c), in all subcontracts that are expected to exceed the simplified acquisition threshold, as defined in federal acquisition regulation (far) 2.101 on the date of subcontract award. (end of clause) as prescribed in 27.201 2(c)(1), insert the following clause: patent indemnity (apr 1984) (a) the contractor shall indemnify the government and its officers, agents, and employees against liability, including costs, for infringement of any united states patent (except a patent issued upon an application that is now or may hereafter be withheld from issue pursuant to a secrecy order under 35 u.s.c. 181) arising out of the manufacture or delivery of supplies, the performance of services, or the construction, alteration, modification, or repair of real property (hereinafter referred to as "construction work") under this contract, or out of the use or disposal by or for the account of the government of such supplies or construction work. (b) this indemnity shall not apply unless the contractor shall have been informed as soon as practicable by the government of the suit or action alleging such infringement and shall have been given such opportunity as is afforded by applicable laws, rules, or regulations to participate in its defense. further, this indemnity shall not apply to  (1) an infringement resulting from compliance with specific written instructions of the contracting officer directing a change in the supplies to be delivered or in the materials or equipment to be used, or directing a manner of performance of the contract not normally used by the contractor; (2) an infringement resulting from addition to or change in supplies or components furnished or construction work performed that was made subsequent to delivery or performance; or (3) a claimed infringement that is unreasonably settled without the consent of the contractor, unless required by final decree of a court of competent jurisdiction. (end of clause) alternate i (apr 1984). as prescribed in 27.201 2 (c)(2), add the following paragraph (c) to the basic clause: (c) this patent indemnification shall not apply to the following items: __________________________________________________ [contracting officer list and/or identify the items to be excluded from this indemnity.] alternate ii (apr 1984). as prescribed in 27.201 2 (c)(2), add the following paragraph (c) to the basic clause: (c) this patent indemnification shall cover the following items: __________________________________________________ [list and/or identify the items to be included under this indemnity.] alternate iii (jun 2020). as prescribed in 27.201 2 (c)(3), add the following paragraph (c) to the basic clause: ( ) as to subcontracts at any tier for communication service, this clause shall apply only to individual communication service authorizations over the simplified acquisition threshold, as defined in federal acquisition regulation 2.101 on the date of subcontract award, issued under this contract and covering those communications services and facilities  (1) that are or have been sold or offered for sale by the contractor to the public, (2) that can be provided over commercially available equipment, or (3) that involve relatively minor modifications. as prescribed in 27.201 2(d)(1), insert the following clause: patent indemnity construction contracts (dec 2007) except as otherwise provided, the contractor shall indemnify the government and its officers, agents, and employees against liability, including costs and expenses, for infringement of any united states patent (except a patent issued upon an application that is now or may hereafter be withheld from issue pursuant to a secrecy order under ( 35 u.s.c. 181) arising out of performing this contract or out of the use or disposal by or for the account of the government of supplies furnished or work performed under this contract. (end of clause) alternate i (dec 2007). as prescribed in 27.201 2 (d)(2), designate the first paragraph of the basic clause as paragraph (a) and add the following paragraph (b) to the basic clause: (b) this patent indemnification shall not apply to the following items: __________________________________________________ [contracting officer list the items to be excluded.] as prescribed in 27.201 2(e), insert the following clause: waiver of indemnity (apr 1984) any provision or clause of this contract to the contrary notwithstanding, the government hereby authorizes and consents to the use and manufacture, solely in performing this contract, of any invention covered by the united states patents identified below and waives indemnification by the contractor with respect to such patents: __________________________________________________ [contracting officer identify the patents by number or by other means if more appropriate.] (end of clause) as prescribed in 27.202 5(a)(1), insert the following provision: royalty information (apr 1984) (a) cost or charges for royalties. when the response to this solicitation contains costs or charges for royalties totaling more than $250, the following information shall be included in the response relating to each separate item of royalty or license fee: (1) name and address of licensor. (2) date of license agreement. (3) patent numbers, patent application serial numbers, or other basis on which the royalty is payable. (4) brief description, including any part or model numbers of each contract item or component on which the royalty is payable. (5) percentage or dollar rate of royalty per unit. (6) unit price of contract item. (7) number of units. (8) total dollar amount of royalties. (b) copies of current licenses. in addition, if specifically requested by the contracting officer before execution of the contract, the offeror shall furnish a copy of the current license agreement and an identification of applicable claims of specific patents. (end of provision) alternate i (apr 1984). as prescribed in 27.202 5 (a)(2), substitute the following for the introductory portion of paragraph (a) of the basic provision: when the response to this solicitation covers charges for special construction or special assembly that contain costs or charges for royalties totaling more than $250, the following information shall be included in the response relating to each separate item of royalty or license fee: as prescribed at 27.202 5(b), insert the following provision: patents notice of government licensee (apr 1984) the government is obligated to pay a royalty applicable to the proposed acquisition because of a license agreement between the government and the patent owner. the patent number is ____ [contracting officer fill in], and the royalty rate is ____ [contracting officer fill in]. if the offeror is the owner of, or a licensee under, the patent, indicate below: □ owner □ licensee if an offeror does not indicate that it is the owner or a licensee of the patent, its offer will be evaluated by adding thereto an amount equal to the royalty. (end of provision) as prescribed in 27.202 5(c), insert the following clause: refund of royalties (apr 1984) (a) the contract price includes certain amounts for royalties payable by the contractor or subcontractors or both, which amounts have been reported to the contracting officer. (b) the term "royalties" as used in this clause refers to any costs or charges in the nature of royalties, license fees, patent or license amortization costs, or the like, for the use of or for rights in patents and patent applications in connection with performing this contract or any subcontract hereunder. (c) the contractor shall furnish to the contracting officer, before final payment under this contract, a statement of royalties paid or required to be paid in connection with performing this contract and subcontracts hereunder together with the reasons. (d) the contractor will be compensated for royalties reported under paragraph (c) of this clause, only to the extent that such royalties were included in the contract price and are determined by the contracting officer to be properly chargeable to the government and allocable to the contract. to the extent that any royalties that are included in the contract price are not in fact paid by the contractor or are determined by the contracting officer not to be properly chargeable to the government and allocable to the contract, the contract price shall be reduced. repayment or credit to the government shall be made as the contracting officer directs. (e) if, at any time within 3 years after final payment under this contract, the contractor for any reason is relieved in whole or in part from the payment of the royalties included in the final contract price as adjusted pursuant to paragraph (d) of this clause, the contractor shall promptly notify the contracting officer of that fact and shall reimburse the government in a corresponding amount. (f) the substance of this clause, including this paragraph (f), shall be included in any subcontract in which the amount of royalties reported during negotiation of the subcontract exceeds $250. (end of clause) as prescribed at 27.203 2 , insert the following clause: filing of patent applications classified subject matter (dec 2007) (a) before filing or causing to be filed a patent application in the united states disclosing any subject matter of this contract classified "secret" or higher, the contractor shall, citing the 30 day provision below, transmit the proposed application to the contracting officer. the government shall determine whether, for reasons of national security, the application should be placed under an order of secrecy, sealed in accordance with the provision of 35 u.s.c. 181  188, or the issuance of a patent otherwise delayed under pertinent united states statutes or regulations. the contractor shall observe any instructions of the contracting officer regarding the manner of delivery of the patent application to the united states patent office, but the contractor shall not be denied the right to file the application. if the contracting officer shall not have given any such instructions within 30 days from the date of mailing or other transmittal of the proposed application, the contractor may file the application. (b) before filing a patent application in the united states disclosing any subject matter of this contract classified "confidential," the contractor shall furnish to the contracting officer a copy of the application for government determination whether, for reasons of national security, the application should be placed under an order of secrecy or the issuance of a patent should be otherwise delayed under pertinent united states statutes or regulations. (c) where the subject matter of this contract is classified for reasons of security, the contractor shall not file, or cause to be filed, in any country other than in the united states as provided in paragraphs (a) and (b) of this clause, an application or registration for a patent containing any of the subject matter of this contract without first obtaining written approval of the contracting officer. (d) when filing any patent application coming within the scope of this clause, the contractor shall observe all applicable security regulations covering the transmission of classified subject matter and shall promptly furnish to the contracting officer the serial number, filing date, and name of the country of any such application. when transmitting the application to the united states patent office, the contractor shall by separate letter identify by agency and number the contract or contracts that require security classification markings to be placed on the application. (e) the contractor shall include the substance of this clause, including this paragraph (e), in all subcontracts that cover or are likely to cover classified subject matter. (end of clause) as prescribed in 27.303(b)(1), insert the following clause: patent rights ownership by the contractor (may 2014) (a) as used in this clause  invention means any invention or discovery that is or may be patentable or otherwise protectable under title 35 of the u.s. code, or any variety of plant that is or may be protectable under the plant variety protection act ( 7 u.s.c. 2321, et seq.) made means  (1) when used in relation to any invention other than a plant variety, the conception or first actual reduction to practice of the invention; or (2) when used in relation to a plant variety, that the contractor has at least tentatively determined that the variety has been reproduced with recognized characteristics. nonprofit organization means a university or other institution of higher education or an organization of the type described in section 501(c)(3) of the internal revenue code of 1954 ( 26 u.s.c. 501(c)) and exempt from taxation under section 501(a) of the internal revenue code ( 26 u.s.c. 501(a)), or any nonprofit scientific or educational organization qualified under a state nonprofit organization statute. "practical application" means to manufacture, in the case of a composition of product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or government regulations, available to the public on reasonable terms. subject invention means any invention of the contractor made in the performance of work under this contract. (b) contractor’s rights. (1) ownership. the contractor may retain ownership of each subject invention throughout the world in accordance with the provisions of this clause. (2) license. (i) the contractor shall retain a nonexclusive royalty free license throughout the world in each subject invention to which the government obtains title, unless the contractor fails to disclose the invention within the times specified in paragraph (c) of this clause. the contractor’s license extends to any domestic subsidiaries and affiliates within the corporate structure of which the contractor is a part, and includes the right to grant sublicenses to the extent the contractor was legally obligated to do so at contract award. the license is transferable only with the written approval of the agency, except when transferred to the successor of that part of the contractor’s business to which the invention pertains. (ii) the contractor’s license may be revoked or modified by the agency to the extent necessary to achieve expeditious practical application of the subject invention in a particular country in accordance with the procedures in far 27.302(i)(2) and 27.304 1(f). (c) contractor’s obligations. (1) the contractor shall disclose in writing each subject invention to the contracting officer within 2 months after the inventor discloses it in writing to contractor personnel responsible for patent matters. the disclosure shall identify the inventor(s) and this contract under which the subject invention was made. it shall be sufficiently complete in technical detail to convey a clear understanding of the subject invention. the disclosure shall also identify any publication, on sale (i.e., sale or offer for sale), or public use of the subject invention, or whether a manuscript describing the subject invention has been submitted for publication and, if so, whether it has been accepted for publication. in addition, after disclosure to the agency, the contractor shall promptly notify the contracting officer of the acceptance of any manuscript describing the subject invention for publication and any on sale or public use. (2) the contractor shall elect in writing whether or not to retain ownership of any subject invention by notifying the contracting officer within 2 years of disclosure to the agency. however, in any case where publication, on sale, or public use has initiated the 1 year statutory period during which valid patent protection can be obtained in the united states, the period for election of title may be shortened by the agency to a date that is no more than 60 days prior to the end of the statutory period. (3) the contractor shall file either a provisional or a nonprovisional patent application or a plant variety protection application on an elected subject invention within 1 year after election. however, in any case where a publication, on sale, or public use has initiated the 1 year statutory period during which valid patent protection can be obtained in the united states, the contractor shall file the application prior to the end of that statutory period. if the contractor files a provisional application, it shall file a nonprovisional application within 10 months of the filing of the provisional application. the contractor shall file patent applications in additional countries or international patent offices within either 10 months of the first filed patent application (whether provisional or nonprovisional) or 6 months from the date permission is granted by the commissioner of patents to file foreign patent applications where such filing has been prohibited by a secrecy order. (4) the contractor may request extensions of time for disclosure, election, or filing under paragraphs (c)(1), (c)(2), and (c)(3) of this clause. (d) government’s rights  (1) ownership. the contractor shall assign to the agency, on written request, title to any subject invention  (i) if the contractor fails to disclose or elect ownership to the subject invention within the times specified in paragraph (c) of this clause, or elects not to retain ownership; provided, that the agency may request title only within 60 days after learning of the contractor's failure to disclose or elect within the specified times. (ii) in those countries in which the contractor fails to file patent applications within the times specified in paragraph (c) of this clause; provided, however, that if the contractor has filed a patent application in a country after the times specified in paragraph (c) of this clause, but prior to its receipt of the written request of the agency, the contractor shall continue to retain ownership in that country. (iii) in any country in which the contractor decides not to continue the prosecution of any application for, to pay the maintenance fees on, or defend in reexamination or opposition proceeding on, a patent on a subject invention. (2) license. if the contractor retains ownership of any subject invention, the government shall have a nonexclusive, nontransferable, irrevocable, paid up license to practice, or have practiced for or on its behalf, the subject invention throughout the world. (e) contractor action to protect the government’s interest. (1) the contractor shall execute or have executed and promptly deliver to the agency all instruments necessary to  (i) establish or confirm the rights the government has throughout the world in those subject inventions in which the contractor elects to retain ownership; and (ii) assign title to the agency when requested under paragraph (d) of this clause and to enable the government to obtain patent protection and plant variety protection for that subject invention in any country. (2) the contractor shall require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in the contractor's format, each subject invention in order that the contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the government's rights in the subject inventions. the disclosure format should require, as a minimum, the information required by paragraph (c)(1) of this clause. the contractor shall instruct such employees, through employee agreements or other suitable educational programs, as to the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to u.s. or foreign statutory bars. (3) the contractor shall notify the contracting officer of any decisions not to file a nonprovisional patent application, continue the prosecution of a patent application, pay maintenance fees, or defend in a reexamination or opposition proceeding on a patent, in any country, not less than 30 days before the expiration of the response or filing period required by the relevant patent office. (4) the contractor shall include, within the specification of any united states nonprovisional patent or plant variety protection application and any patent or plant variety protection certificate issuing thereon covering a subject invention, the following statement, "this invention was made with government support under (identify the contract) awarded by (identify the agency). the government has certain rights in the invention." (f) reporting on utilization of subject inventions. the contractor shall submit, on request, periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining utilization of the subject invention that are being made by the contractor or its licensees or assignees. the reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the contractor, and other data and information as the agency may reasonably specify. the contractor also shall provide additional reports as may be requested by the agency in connection with any march in proceeding undertaken by the agency in accordance with paragraph (h) of this clause. the contractor also shall mark any utilization report as confidential/proprietary to help prevent inadvertent release outside the government. as required by 35 u.s.c. 202(c)(5), the agency will not disclose that information to persons outside the government without the contractor’s permission. (g) preference for united states industry. notwithstanding any other provision of this clause, neither the contractor nor any assignee shall grant to any person the exclusive right to use or sell any subject invention in the united states unless the person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the united states. however, in individual cases, the requirement for an agreement may be waived by the agency upon a showing by the contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the united states, or that under the circumstances domestic manufacture is not commercially feasible. (h) march in rights. the contractor acknowledges that, with respect to any subject invention in which it has retained ownership, the agency has the right to require licensing pursuant to 35 u.s.c. 203 and 210(c), and in accordance with the procedures in 37 cfr 401.6 and any supplemental regulations of the agency in effect on the date of contract award. (i) special provisions for contracts with nonprofit organizations. if the contractor is a nonprofit organization, it shall  (1) not assign rights to a subject invention in the united states without the written approval of the agency, except where an assignment is made to an organization that has as one of its primary functions the management of inventions, provided, that the assignee shall be subject to the same provisions as the contractor; (2) share royalties collected on a subject invention with the inventor, including federal employee co inventors (but through their agency if the agency deems it appropriate) when the subject invention is assigned in accordance with 35 u.s.c. 202(e) and 37 cfr 401.10; (3) use the balance of any royalties or income earned by the contractor with respect to subject inventions, after payment of expenses (including payments to inventors) incidental to the administration of subject inventions for the support of scientific research or education; and (4) make efforts that are reasonable under the circumstances to attract licensees of subject inventions that are small business concerns, and give a preference to a small business concern when licensing a subject invention if the contractor determines that the small business concern has a plan or proposal for marketing the invention which, if executed, is equally as likely to bring the invention to practical application as any plans or proposals from applicants that are not small business concerns; provided, that the contractor is also satisfied that the small business concern has the capability and resources to carry out its plan or proposal. the decision whether to give a preference in any specific case will be at the discretion of the contractor. (5) allow the secretary of commerce to review the contractor’s licensing program and decisions regarding small business applicants, and negotiate changes to its licensing policies, procedures, or practices with the secretary of commerce when the secretary’s review discloses that the contractor could take reasonable steps to more effectively implement the requirements of paragraph (i)(4) of this clause. (j) communications. [complete according to agency instructions.] (k) subcontracts. (1) the contractor shall include the substance of this clause, including this paragraph (k), in all subcontracts for experimental, developmental, or research work to be performed by a small business concern or nonprofit organization. (2) the contractor shall include in all other subcontracts for experimental, developmental, or research work the substance of the patent rights clause required by far subpart 27.3. (3) at all tiers, the patent rights clause must be modified to identify the parties as follows: references to the government are not changed, and the subcontractor has all rights and obligations of the contractor in the clause. the contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor’s subject inventions. (4) in subcontracts, at any tier, the agency, the subcontractor, and the contractor agree that the mutual obligations of the parties created by this clause constitute a contract between the subcontractor and the agency with respect to the matters covered by the clause; provided, however, that nothing in this paragraph is intended to confer any jurisdiction under the contract disputes statute in connection with proceedings under paragraph (h) of this clause. (end of clause) alternate i (jun 1989). as prescribed in 27.303 (b)(3), add the following sentence at the end of paragraph (d)(2) of the basic clause: the license shall include the right of the government to sublicense foreign governments, their nationals and international organizations pursuant to the following treaties or international agreements: _______* [*contracting officer complete with the names of applicable existing treaties or international agreements. the above language is not intended to apply to treaties or agreements that are in effect on the date of the award but are not listed.] alternate ii (dec 2007). as prescribed in 27.303 (b)(4), add the following sentence at the end of paragraph (d)(2) of the basic clause: the agency reserves the right to unilaterally amend this contract to identify specific treaties or international agreements entered into by the government before or after the effective date of the contract and effectuate those license or other rights that are necessary for the government to meet its obligations to foreign governments, their nationals, and international organizations under the treaties or international agreements with respect to subject inventions made after the date of the amendment. alternate iii (jun 1989). as prescribed in 27.303 (b)(5), substitute the following paragraph (i)(3) in place of paragraph (i)(3) of the basic clause: (3) after payment of patenting costs, licensing costs, payments to inventors, and other expenses incidental to the administration of subject inventions, the balance of any royalties or income earned and retained by the contractor during any fiscal year on subject inventions under this or any successor contract containing the same requirement, up to any amount equal to 5 percent of the budget of the facility for that fiscal year, shall be used by the contractor for the scientific research, development, and education consistent with the research and development mission and objectives of the facility, including activities that increase the licensing potential of other inventions of the facility. if the balance exceeds 5 percent, 75 percent of the excess above 5 percent shall be paid by the contractor to the treasury of the united states and the remaining 25 percent shall be used by the contractor only for the same purposes as described above. to the extent it provides the most effective technology transfer, the licensing of subject inventions shall be administered by contractor employees on location at the facility. alternate iv (jun 1989). as prescribed in 27.303 (b)(6), include the following paragraph (e)(5) in paragraph (e) of the basic clause: (5) the contractor shall establish and maintain active and effective procedures to ensure that subject inventions are promptly identified and timely disclosed, and shall submit a description of the procedures to the contracting officer so that the contracting officer may evaluate and determine their effectiveness. alternate v (dec 2007). as prescribed in 27.303 (b)(7), include the following paragraph (d)(3) in paragraph (d) of the basic clause: (d)(3) crada licensing. if the contractor performs services at a government owned and operated laboratory or at a government owned and contractor operated laboratory directed by the government to fulfill the government’s obligations under a cooperative research and development agreement (crada) authorized by 15 u.s.c. 3710a, the government may require the contractor to negotiate an agreement with the crada collaborating party or parties regarding the allocation of rights to any subject invention the contractor makes, solely or jointly, under the crada. the agreement shall be negotiated prior to the contractor undertaking the crada work or, with the permission of the government, upon the identification of a subject invention. in the absence of such an agreement, the contractor agrees to grant the collaborating party or parties an option for a license in its inventions of the same scope and terms set forth in the crada for inventions made by the government. as prescribed at 27.303(e), insert the following clause: patent rights ownership by the government (dec 2007) (a) definitions. as used in this clause  invention means any invention or discovery that is or may be patentable or otherwise protectable under title 35 of the u.s. code or any variety of plant that is or may be protectable under the plant variety protection act ( 7 u.s.c. 2321, et seq.) made means  (1) when used in relation to any invention other than a plant variety, means the conception or first actual reduction to practice of the invention; or (2) when used in relation to a plant variety, means that the contractor has at least tentatively determined that the variety has been reproduced with recognized characteristics. "practical application" means to manufacture, in the case of a composition or product; to practice, in the case of a process or method; or to operate, in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are, to the extent permitted by law or government regulations, available to the public on reasonable terms. subject invention means any invention of the contractor made in the performance of work under this contract. (b) ownership. (1) assignment to the government. the contractor shall assign to the government title throughout the world to each subject invention, except to the extent that rights are retained under paragraphs (b)(2) and (d) of this clause. (2) greater rights determinations. (i) the contractor, or an employee inventor after consultation with the contractor, may request greater rights than the nonexclusive license provided in paragraph (d) of this clause. the request for a greater rights must be submitted to the contracting officer at the time of the first disclosure of the subject invention pursuant to paragraph (e)(2) of this clause, or not later than 8 months thereafter, unless a longer period is authorized in writing by the contracting officer for good cause shown in writing by the contractor. each determination of greater rights under this contract normally shall be subject to paragraph (c) of this clause, and to the reservations and conditions deemed to be appropriate by the agency. (ii) upon request, the contractor shall provide the filing date, serial number and title, a copy of the patent application (including an english language version if filed in a language other than english), and patent number and issue date for any subject invention in any country for which the contractor has retained title. (iii) upon request, the contractor shall furnish the agency an irrevocable power to inspect and make copies of the patent application file. (c) minimum rights acquired by the government. (1) regarding each subject invention to which the contractor retains ownership, the contractor agrees as follows: (i) the government will have a nonexclusive, nontransferable, irrevocable, paid up license to practice, or have practiced for or on its behalf, the subject invention throughout the world. (ii) the agency has the right to require licensing pursuant to 35 u.s.c. 203 and 210(c) and in accordance with the procedures set forth in 37 cfr 401.6 and any supplemental regulations of the agency in effect on the date of the contract award. (iii) upon request, the contractor shall submit periodic reports no more frequently than annually on the utilization, or efforts to obtain utilization, of a subject invention by the contractor or its licensees or assignees. the reports shall include information regarding the status of development, date of first commercial sale or use, gross royalties received by the contractor, and any other data and information as the agency may reasonably specify. the contractor also shall provide additional reports as may be requested by the agency in connection with any march in proceedings undertaken by the agency in accordance with paragraph (c)(1)(ii) of this clause. to the extent data or information supplied under this section is considered by the contractor, or its licensees, or assignees to be privileged and confidential and is so marked, the agency, to the extent permitted by law, will not disclose such information to persons outside the government. (iv) when licensing a subject invention, the contractor shall  (a) ensure that no royalties are charged on acquisitions involving government funds, including funds derived through a military assistance program of the government or otherwise derived through the government; (b) refund any amounts received as royalty charges on a subject invention in acquisitions for, or on behalf of, the government; (c) provide for this refund in any instrument transferring rights in the subject invention to any party. (v) when transferring rights in a subject invention, the contractor shall provide for the government’s rights set forth in paragraphs (c)(1)(i) through (c)(1)(iv) of this clause. (2) nothing contained in paragraph (c) of this clause shall be deemed to grant to the government rights in any invention other than a subject invention. (d) minimum rights to the contractor. (1) the contractor is hereby granted a revocable, nonexclusive, paid up license in each patent application filed in any country on a subject invention and any resulting patent in which the government obtains title, unless the contractor fails to disclose the subject invention within the times specified in paragraph (e)(2) of this clause. the contractor’s license extends to any of its domestic subsidiaries and affiliates within the corporate structure of which the contractor is a part, and includes the right to grant sublicenses to the extent the contractor was legally obligated to do so at contract award. the license is transferable only with the written approval of the agency except when transferred to the successor of that part of the contractor’s business to which the subject invention pertains. (2) the contractor’s license may be revoked or modified by the agency to the extent necessary to achieve expeditious practical application of the subject invention in a particular country in accordance with the procedures in far 27.302(i)(2) and 27.304 1(f). (3) when the government elects not to apply for a patent in any foreign country, the contractor retains rights in that foreign country to apply for a patent, subject to the government’s rights in paragraph (c)(1) of this clause. (e) invention identification, disclosures, and reports. (1) the contractor shall establish and maintain active and effective procedures to educate its employees in order to assure that subject inventions are promptly identified and disclosed to contractor personnel responsible for patent matters. the procedures shall include the maintenance of laboratory notebooks or equivalent records and other records as are reasonably necessary to document the conception and/or the first actual reduction to practice of subject inventions, and records that show the procedures for identifying and disclosing subject inventions are followed. upon request, the contractor shall furnish the contracting officer a description of these procedures for evaluation and for a determination as to their effectiveness. (2) the contractor shall disclose in writing each subject invention to the contracting officer within 2 months after the inventor discloses it in writing to contractor personnel responsible for patent matters or, if earlier, within 6 months after the contractor becomes aware that a subject invention has been made, but in any event before any on sale (i.e., sale or offer for sale), public use, or publication of the subject invention known to the contractor. the disclosure shall identify the contract under which the subject invention was made and the inventor(s). it shall be sufficiently complete in technical detail to convey a clear understanding of the subject invention. the disclosure shall also identify any publication, on sale, or public use of the subject invention and whether a manuscript describing the subject invention has been submitted for publication and, if so, whether it has been accepted for publication. in addition, after disclosure to the agency, the contractor shall promptly notify the contracting officer of the acceptance of any manuscript describing the subject invention for publication and any on sale or public use. (3) the contractor shall furnish the contracting officer the following: (i) interim reports every 12 months (or a longer period as may be specified by the contracting officer) from the date of the contract, listing subject inventions during that period, and stating that all subject inventions have been disclosed (or that there are none) and that the procedures required by paragraph (e)(1) of this clause have been followed. (ii) a final report, within 3 months after completion of the contracted work, listing all subject inventions or stating that there were none, and listing all subcontracts at any tier containing a patent rights clause or stating that there were none. (4) the contractor shall require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in the contractor’s format each subject invention in order that the contractor can comply with the disclosure provisions of paragraph (c) of this clause, and to execute all papers necessary to file patent applications on subject inventions and to establish the government’s rights in the subject inventions. this disclosure format should require, as a minimum, the information required by paragraph (e)(2) of this clause. the contractor shall instruct such employees, through employee agreements or other suitable educational programs, as to the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to u.s. or foreign statutory bars. (5) subject to far 27.302(i), the contractor agrees that the government may duplicate and disclose subject invention disclosures and all other reports and papers furnished or required to be furnished pursuant to this clause. (f) examination of records relating to inventions. (1) the contracting officer or any authorized representative shall, until 3 years after final payment under this contract, have the right to examine any books (including laboratory notebooks), records, and documents of the contractor relating to the conception or first actual reduction to practice of inventions in the same field of technology as the work under this contract to determine whether  (i) any inventions are subject inventions; (ii) the contractor has established and maintains the procedures required by paragraphs (e)(1) and (e)(4) of this clause; and (iii) the contractor and its inventors have complied with the procedures. (2) the contractor shall disclose to the contracting officer, for the determination of ownership rights, any unreported invention that the contracting officer believes may be a subject invention. (3) any examination of records under paragraph (f) of this clause will be subject to appropriate conditions to protect the confidentiality of the information involved. (g) withholding of payment. (this paragraph does not apply to subcontracts.) (1) any time before final payment under this contract, the contracting officer may, in the government's interest, withhold payment until a reserve not exceeding $50,000 or 5 percent of the amount of this contract, whichever is less, shall have been set aside if, in the contracting office’s opinion, the contractor fails to  (i) establish, maintain, and follow effective procedures for identifying and disclosing subject inventions pursuant to paragraph (e)(1) of this clause; (ii) disclose any subject invention pursuant to paragraph (e)(2) of this clause; (iii) deliver acceptable interim reports pursuant to paragraph (e)(3)(i) of this clause; or (iv) provide the information regarding subcontracts pursuant to paragraph (i)(4) of this clause. (2) the contracting officer will withhold the reserve or balance until the contracting officer has determined that the contractor has rectified whatever deficiencies exist and has delivered all reports, disclosures, and other information required by this clause. (3) the contracting officer will not make final payment under this contract before the contractor delivers to the contracting officer, as required by this clause, all disclosures of subject inventions, an acceptable final report, and all due confirmatory instruments. (4) the contracting officer may decrease or increase the sums withheld up to the maximum authorized. the contracting officer will not withhold any amount under this paragraph while the amount specified by this paragraph is being withheld under other provisions of the contract. the withholding of any amount or the subsequent payment shall not be construed as a waiver of any government rights. (h) preference for united states industry. unless provided otherwise, neither the contractor nor any assignee shall grant to any person the exclusive right to use or sell any subject invention in the united states unless the person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the united states. however, in individual cases, the requirement may be waived by the agency upon a showing by the contractor or assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the united states or that, under the circumstances, domestic manufacture is not commercially feasible. (i) subcontracts. (1) the contractor shall include the substance of the patent rights clause required by far subpart 27.3 in all subcontracts for experimental, developmental, or research work. the prescribed patent rights clause must be modified to identify the parties as follows: references to the government are not changed, and the subcontractor has all rights and obligations of the contractor in the clause. the contractor shall not, as part of the consideration for awarding the subcontract, obtain rights in the subcontractor’s subject inventions. (2) in the event of a refusal by a prospective subcontractor to accept the clause, the contractor  (i) shall promptly submit a written notice to the contracting officer setting forth the subcontractor’s reasons for such refusal and other pertinent information that may expedite disposition of the matter; and (ii) shall not proceed with such subcontract without the written authorization of the contracting officer. (3) in subcontracts at any tier, the agency, the subcontractor, and the contractor agree that the mutual obligations of the parties created by the patent rights clause constitute a contract between the subcontractor and the agency with respect to those matters covered by this clause. (4) the contractor shall promptly notify the contracting officer in writing upon the award of any subcontract at any tier containing a patent rights clause by identifying the subcontractor, the applicable patent rights clause, the work to be performed under the subcontract, and the dates of award and estimated completion. upon request of the contracting officer, the contractor shall furnish a copy of such subcontract, and, no more frequently than annually, a listing of the subcontracts that have been awarded. (end of clause) alternate i (jun 1989). as prescribed in 27.303 (e) (4), add the following sentence at the end of paragraph (c)(1)(i) of the basic clause: the license will include the right of the government to sublicense foreign governments, their nationals, and international organizations pursuant to the following treaties or international agreements: _____________________* [*contracting officer complete with the names of applicable existing treaties or international agreements. the above language is not intended to apply to treaties or agreements that are in effect on the date of the award but are not listed.] alternate ii (dec 2007). as prescribed in 27.303 (e)(5), add the following sentence at the end of paragraph (c)(1)(i) of the basic clause: the agency reserves the right to unilaterally amend this contract to identify specific treaties or international agreements entered into by the government before or after the effective date of this contract, and effectuate those license or other rights that are necessary for the government to meet its obligations to foreign governments, their nationals, and international organizations under treaties or international agreements with respect to subject inventions made after the date of the amendment. as prescribed in 27.409(b)(1), insert the following clause with any appropriate alternates: rights in data general (may 2014) (a) definitions. as used in this clause  computer database or "database means" a collection of recorded information in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. the term does not include computer software. computer software  (1) means (i) computer programs that comprise a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations; and (ii) recorded information comprising source code listings, design details, algorithms, processes, flow charts, formulas, and related material that would enable the computer program to be produced, created, or compiled. (2) does not include computer databases or computer software documentation. computer software documentation means owner’s manuals, user’s manuals, installation instructions, operating instructions, and other similar items, regardless of storage medium, that explain the capabilities of the computer software or provide instructions for using the software. data means recorded information, regardless of form or the media on which it may be recorded. the term includes technical data and computer software. the term does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information. form, fit, and function data means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, and data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements. for computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithms, processes, formulas, and flow charts of the software. limited rights means the rights of the government in limited rights data as set forth in the limited rights notice of paragraph (g)(3) if included in this clause. limited rights data means data, other than computer software, that embody trade secrets or are commercial or financial and confidential or privileged, to the extent that such data pertain to items, components, or processes developed at private expense, including minor modifications. restricted computer software means computer software developed at private expense and that is a trade secret, is commercial or financial and confidential or privileged, or is copyrighted computer software, including minor modifications of the computer software. restricted rights, as used in this clause, means the rights of the government in restricted computer software, as set forth in a restricted rights notice of paragraph (g) if included in this clause, or as otherwise may be provided in a collateral agreement incorporated in and made part of this contract, including minor modifications of such computer software. technical data means recorded information (regardless of the form or method of the recording) of a scientific or technical nature (including computer databases and computer software documentation). this term does not include computer software or financial, administrative, cost or pricing, or management data or other information incidental to contract administration. the term includes recorded information of a scientific or technical nature that is included in computer databases (see 41 u.s.c. 116). unlimited rights means the rights of the government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so. (b) allocation of rights. (1) except as provided in paragraph (c) of this clause, the government shall have unlimited rights in  (i) data first produced in the performance of this contract; (ii) form, fit, and function data delivered under this contract; (iii) data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair of items, components, or processes delivered or furnished for use under this contract; and (iv) all other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) of this clause. (2) the contractor shall have the right to  (i) assert copyright in data first produced in the performance of this contract to the extent provided in paragraph (c)(1) of this clause; (ii) use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the contractor in the performance of this contract, unless provided otherwise in paragraph (d) of this clause; (iii) substantiate the use of, add, or correct limited rights, restricted rights, or copyright notices and to take other appropriate action, in accordance with paragraphs (e) and (f) of this clause; and (iv) protect from unauthorized disclosure and use those data that are limited rights data or restricted computer software to the extent provided in paragraph (g) of this clause. (c) copyright  (1) data first produced in the performance of this contract. (i) unless provided otherwise in paragraph (d) of this clause, the contractor may, without prior approval of the contracting officer, assert copyright in scientific and technical articles based on or containing data first produced in the performance of this contract and published in academic, technical or professional journals, symposia proceedings, or similar works. the prior, express written permission of the contracting officer is required to assert copyright in all other data first produced in the performance of this contract. (ii) when authorized to assert copyright to the data, the contractor shall affix the applicable copyright notices of 17 u.s.c. 401 or 402, and an acknowledgment of government sponsorship (including contract number). (iii) for data other than computer software, the contractor grants to the government, and others acting on its behalf, a paid up, nonexclusive, irrevocable, worldwide license in such copyrighted data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly by or on behalf of the government. for computer software, the contractor grants to the government, and others acting on its behalf, a paid up, nonexclusive, irrevocable, worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly (but not to distribute copies to the public) by or on behalf of the government. (2) data not first produced in the performance of this contract. the contractor shall not, without the prior written permission of the contracting officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract unless the contractor  (i) identifies the data; and (ii) grants to the government, or acquires on its behalf, a license of the same scope as set forth in paragraph (c)(1) of this clause or, if such data are restricted computer software, the government shall acquire a copyright license as set forth in paragraph (g)(4) of this clause (if included in this contract) or as otherwise provided in a collateral agreement incorporated in or made part of this contract. (3) removal of copyright notices. the government will not remove any authorized copyright notices placed on data pursuant to this paragraph (c), and will include such notices on all reproductions of the data. (d) release, publication, and use of data. the contractor shall have the right to use, release to others, reproduce, distribute, or publish any data first produced or specifically used by the contractor in the performance of this contract, except  (1) as prohibited by federal law or regulation (e.g., export control or national security laws or regulations); (2) as expressly set forth in this contract; or (3) if the contractor receives or is given access to data necessary for the performance of this contract that contain restrictive markings, the contractor shall treat the data in accordance with such markings unless specifically authorized otherwise in writing by the contracting officer. (e) unauthorized marking of data. (1) notwithstanding any other provisions of this contract concerning inspection or acceptance, if any data delivered under this contract are marked with the notices specified in paragraph (g)(3) or (g) (4) if included in this clause, and use of the notices is not authorized by this clause, or if the data bears any other restrictive or limiting markings not authorized by this contract, the contracting officer may at any time either return the data to the contractor, or cancel or ignore the markings. however, pursuant to 41 u.s.c. 4703, the following procedures shall apply prior to canceling or ignoring the markings. (i) the contracting officer will make written inquiry to the contractor affording the contractor 60 days from receipt of the inquiry to provide written justification to substantiate the propriety of the markings; (ii) if the contractor fails to respond or fails to provide written justification to substantiate the propriety of the markings within the 60 day period (or a longer time approved in writing by the contracting officer for good cause shown), the government shall have the right to cancel or ignore the markings at any time after said period and the data will no longer be made subject to any disclosure prohibitions. (iii) if the contractor provides written justification to substantiate the propriety of the markings within the period set in paragraph (e)(1)(i) of this clause, the contracting officer will consider such written justification and determine whether or not the markings are to be cancelled or ignored. if the contracting officer determines that the markings are authorized, the contractor will be so notified in writing. if the contracting officer determines, with concurrence of the head of the contracting activity, that the markings are not authorized, the contracting officer will furnish the contractor a written determination, which determination will become the final agency decision regarding the appropriateness of the markings unless the contractor files suit in a court of competent jurisdiction within 90 days of receipt of the contracting officer’s decision. the government will continue to abide by the markings under this paragraph (e)(1)(iii) until final resolution of the matter either by the contracting officer’s determination becoming final (in which instance the government will thereafter have the right to cancel or ignore the markings at any time and the data will no longer be made subject to any disclosure prohibitions), or by final disposition of the matter by court decision if suit is filed. (2) the time limits in the procedures set forth in paragraph (e)(1) of this clause may be modified in accordance with agency regulations implementing the freedom of information act ( 5 u.s.c. 552) if necessary to respond to a request thereunder. (3) except to the extent the government’s action occurs as the result of final disposition of the matter by a court of competent jurisdiction, the contractor is not precluded by paragraph (e) of the clause from bringing a claim, in accordance with the disputes clause of this contract, that may arise as the result of the government removing or ignoring authorized markings on data delivered under this contract. (f) omitted or incorrect markings. (1) data delivered to the government without any restrictive markings shall be deemed to have been furnished with unlimited rights. the government is not liable for the disclosure, use, or reproduction of such data. (2) if the unmarked data has not been disclosed without restriction outside the government, the contractor may request, within 6 months (or a longer time approved by the contracting officer in writing for good cause shown) after delivery of the data, permission to have authorized notices placed on the data at the contractor’s expense. the contracting officer may agree to do so if the contractor  (i) identifies the data to which the omitted notice is to be applied; (ii) demonstrates that the omission of the notice was inadvertent; (iii) establishes that the proposed notice is authorized; and (iv) acknowledges that the government has no liability for the disclosure, use, or reproduction of any data made prior to the addition of the notice or resulting from the omission of the notice. (3) if data has been marked with an incorrect notice, the contracting officer may  (i) permit correction of the notice at the contractor’s expense if the contractor identifies the data and demonstrates that the correct notice is authorized; or (ii) correct any incorrect notices. (g) protection of limited rights data and restricted computer software. (1) the contractor may withhold from delivery qualifying limited rights data or restricted computer software that are not data identified in paragraphs (b)(1)(i), (ii), and (iii) of this clause. as a condition to this withholding, the contractor shall  (i) identify the data being withheld; and (ii) furnish form, fit, and function data instead. (2) limited rights data that are formatted as a computer database for delivery to the government shall be treated as limited rights data and not restricted computer software. (3) [reserved] (h) subcontracting. the contractor shall obtain from its subcontractors all data and rights therein necessary to fulfill the contractor’s obligations to the government under this contract. if a subcontractor refuses to accept terms affording the government those rights, the contractor shall promptly notify the contracting officer of the refusal and shall not proceed with the subcontract award without authorization in writing from the contracting officer. (i) relationship to patents or other rights. nothing contained in this clause shall imply a license to the government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the government. (end of clause) alternate i (dec 2007). as prescribed in 27.409 (b)(2), substitute the following definition for "limited rights data" in paragraph (a) of the basic clause: limited rights data means data, other than computer software, developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. alternate ii (dec 2007). as prescribed in 27.409 (b)(3), insert the following paragraph (g)(3) in the basic clause: (g)(3) notwithstanding paragraph (g)(1) of this clause, the contract may identify and specify the delivery of limited rights data, or the contracting officer may require by written request the delivery of limited rights data that has been withheld or would otherwise be entitled to be withheld. if delivery of that data is required, the contractor shall affix the following "limited rights notice" to the data and the government will treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with the notice: limited rights notice (dec 2007) (a) these data are submitted with limited rights under government contract no. _____ (and subcontract ______, if appropriate). these data may be reproduced and used by the government with the express limitation that they will not, without written permission of the contractor, be used for purposes of manufacture nor disclosed outside the government; except that the government may disclose these data outside the government for the following purposes, if any; provided that the government makes such disclosure subject to prohibition against further use and disclosure: [agencies may list additional purposes as set forth in 27.404 2(c)(1) or if none, so state.] (b) this notice shall be marked on any reproduction of these data, in whole or in part. (end of notice) alternate iii (dec 2007). as prescribed in 27.409 (b)(4), insert the following paragraph (g)(4) in the basic clause: (g)(4)(i) notwithstanding paragraph (g)(1) of this clause, the contract may identify and specify the delivery of restricted computer software, or the contracting officer may require by written request the delivery of restricted computer software that has been withheld or would otherwise be entitled to be withheld. if delivery of that computer software is required, the contractor shall affix the following "restricted rights notice" to the computer software and the government will treat the computer software, subject to paragraphs (e) and (f) of this clause, in accordance with the notice: restricted rights notice (dec 2007) (a) this computer software is submitted with restricted rights under government contract no. _______ (and subcontract ________, if appropriate). it may not be used, reproduced, or disclosed by the government except as provided in paragraph (b) of this notice or as otherwise expressly stated in the contract. (b) this computer software may be  (1) used or copied for use with the computer(s) for which it was acquired, including use at any government installation to which the computer(s) may be transferred; (2) used or copied for use with a backup computer if any computer for which it was acquired is inoperative; (3) reproduced for safekeeping (archives) or backup purposes; (4) modified, adapted, or combined with other computer software, provided that the modified, adapted, or combined portions of the derivative software incorporating any of the delivered, restricted computer software shall be subject to the same restricted rights; (5) disclosed to and reproduced for use by support service contractors or their subcontractors in accordance with paragraphs (b)(1) through (4) of this notice; and (6) used or copied for use with a replacement computer. (c) notwithstanding the foregoing, if this computer software is copyrighted computer software, it is licensed to the government with the minimum rights set forth in paragraph (b) of this notice. (d) any other rights or limitations regarding the use, duplication, or disclosure of this computer software are to be expressly stated in, or incorporated in, the contract. (e) this notice shall be marked on any reproduction of this computer software, in whole or in part. (end of notice) (ii) where it is impractical to include the restricted rights notice on restricted computer software, the following short form notice may be used instead: restricted rights notice short form (jun 1987) use, reproduction, or disclosure is subject to restrictions set forth in contract no. _______ (and subcontract, if appropriate) with ________ (name of contractor and subcontractor). (end of notice) (iii) if restricted computer software is delivered with the copyright notice of 17 u.s.c. 401, it will be presumed to be licensed to the government without disclosure prohibitions, with the minimum rights set forth in paragraph (b) of this clause. alternate iv (dec 2007). as prescribed in 27.409 (b)(5), substitute the following paragraph (c)(1) for paragraph (c)(1) of the basic clause: (c) copyright (1) data first produced in the performance of the contract. except as otherwise specifically provided in this contract, the contractor may assert copyright in any data first produced in the performance of this contract. when asserting copyright, the contractor shall affix the applicable copyright notice of 17 u.s.c. 401 or 402, and an acknowledgment of government sponsorship (including contract number), to the data when such data are delivered to the government, as well as when the data are published or deposited for registration as a published work in the u.s. copyright office. for data other than computer software, the contractor grants to the government, and others acting on its behalf, a paid up, nonexclusive, irrevocable, worldwide license for all such data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the government. for computer software, the contractor grants to the government and others acting on its behalf, a paid up, nonexclusive, irrevocable, worldwide license for all such computer software to reproduce, prepare derivative works, and perform publicly and display publicly (but not to distribute copies to the public), by or on behalf of the government. alternate v (dec 2007). as prescribed in 27.409 (b)(6), add the following paragraph (j) to the basic clause: (j) the contractor agrees, except as may be otherwise specified in this contract for specific data deliverables listed as not subject to this paragraph, that the contracting officer may, up to three years after acceptance of all deliverables under this contract, inspect at the contractor’s facility any data withheld pursuant to paragraph (g)(1) of this clause, for purposes of verifying the contractor’s assertion of limited rights or restricted rights status of the data or for evaluating work performance. when the contractor whose data are to be inspected demonstrates to the contracting officer that there would be a possible conflict of interest if a particular representative made the inspection, the contracting officer shall designate an alternate inspector. as prescribed in 27.409(c), insert the following provision: representation of limited rights data and restricted computer software (dec 2007) (a) this solicitation sets forth the government’s known delivery requirements for data (as defined in the clause at 52.227 14, rights in data general). any resulting contract may also provide the government the option to order additional data under the additional data requirements clause at 52.227 16, if included in the contract. any data delivered under the resulting contract will be subject to the rights in data general clause at 52.227 14 included in this contract. under the latter clause, a contractor may withhold from delivery data that qualify as limited rights data or restricted computer software, and deliver form, fit, and function data instead. the latter clause also may be used with its alternates ii and/or iii to obtain delivery of limited rights data or restricted computer software, marked with limited rights or restricted rights notices, as appropriate. in addition, use of alternate v with this latter clause provides the government the right to inspect such data at the contractor’s facility. (b) by completing the remainder of this paragraph, the offeror represents that it has reviewed the requirements for the delivery of technical data or computer software and states [offeror check appropriate block]  □ none of the data proposed for fulfilling the data delivery requirements qualifies as limited rights data or restricted computer software; or □ data proposed for fulfilling the data delivery requirements qualify as limited rights data or restricted computer software and are identified as follows: _____________ _____________ _____________ (c) any identification of limited rights data or restricted computer software in the offeror’s response is not determinative of the status of the data should a contract be awarded to the offeror. (end of provision) as prescribed in 27.409(d), insert the following clause: additional data requirements (june 1987) (a) in addition to the data (as defined in the clause at 52.227 14, rights in data general clause or other equivalent included in this contract) specified elsewhere in this contract to be delivered, the contracting officer may, at any time during contract performance or within a period of 3 years after acceptance of all items to be delivered under this contract, order any data first produced or specifically used in the performance of this contract. (b) the rights in data general clause or other equivalent included in this contract is applicable to all data ordered under this additional data requirements clause. nothing contained in this clause shall require the contractor to deliver any data the withholding of which is authorized by the rights in data general or other equivalent clause of this contract, or data which are specifically identified in this contract as not subject to this clause. (c) when data are to be delivered under this clause, the contractor will be compensated for converting the data into the prescribed form, for reproduction, and for delivery. (d) the contracting officer may release the contractor from the requirements of this clause for specifically identified data items at any time during the 3 year period set forth in paragraph (a) of this clause. (end of clause) as prescribed in 27.409(e), insert the following clause: rights in data special works (dec 2007) (a) definitions. as used in this clause  data means recorded information, regardless of form or the media on which it may be recorded. the term includes technical data and computer software. the term does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information. unlimited rights means the rights of the government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose, and to have or permit others to do so. (b) allocation of rights. (1) the government shall have  (i) unlimited rights in all data delivered under this contract, and in all data first produced in the performance of this contract, except as provided in paragraph (c) of this clause. (ii) the right to limit assertion of copyright in data first produced in the performance of this contract, and to obtain assignment of copyright in that data, in accordance with paragraph (c)(1) of this clause. (iii) the right to limit the release and use of certain data in accordance with paragraph (d) of this clause. (2) the contractor shall have, to the extent permission is granted in accordance with paragraph (c)(1) of this clause, the right to assert claim to copyright subsisting in data first produced in the performance of this contract. (c) copyright  (1) data first produced in the performance of this contract. (i) the contractor shall not assert or authorize others to assert any claim to copyright subsisting in any data first produced in the performance of this contract without prior written permission of the contracting officer. when copyright is asserted, the contractor shall affix the appropriate copyright notice of 17 u.s.c. 401 or 402 and acknowledgment of government sponsorship (including contract number) to the data when delivered to the government, as well as when the data are published or deposited for registration as a published work in the u.s. copyright office. the contractor grants to the government, and others acting on its behalf, a paid up, nonexclusive, irrevocable, worldwide license for all delivered data to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the government. (ii) if the government desires to obtain copyright in data first produced in the performance of this contract and permission has not been granted as set forth in paragraph (c)(1)(i) of this clause, the contracting officer shall direct the contractor to assign (with or without registration), or obtain the assignment of, the copyright to the government or its designated assignee. (2) data not first produced in the performance of this contract. the contractor shall not, without prior written permission of the contracting officer, incorporate in data delivered under this contract any data not first produced in the performance of this contract and that contain the copyright notice of 17 u.s.c. 401 or 402, unless the contractor identifies such data and grants to the government, or acquires on its behalf, a license of the same scope as set forth in paragraph (c)(1) of this clause. (d) release and use restrictions. except as otherwise specifically provided for in this contract, the contractor shall not use, release, reproduce, distribute, or publish any data first produced in the performance of this contract, nor authorize others to do so, without written permission of the contracting officer. (e) indemnity. the contractor shall indemnify the government and its officers, agents, and employees acting for the government against any liability, including costs and expenses, incurred as the result of the violation of trade secrets, copyrights, or right of privacy or publicity, arising out of the creation, delivery, publication, or use of any data furnished under this contract; or any libelous or other unlawful matter contained in such data. the provisions of this paragraph do not apply unless the government provides notice to the contractor as soon as practicable of any claim or suit, affords the contractor an opportunity under applicable laws, rules, or regulations to participate in the defense of the claim or suit, and obtains the contractor’s consent to the settlement of any claim or suit other than as required by final decree of a court of competent jurisdiction; and these provisions do not apply to material furnished to the contractor by the government and incorporated in data to which this clause applies. (end of clause) as prescribed in 27.409(f), insert the following clause: rights in data existing works (dec 2007) (a) except as otherwise provided in this contract, the contractor grants to the government, and others acting on its behalf, a paid up nonexclusive, irrevocable, worldwide license to reproduce, prepare derivative works, and perform publicly and display publicly, by or on behalf of the government, for all the material or subject matter called for under this contract, or for which this clause is specifically made applicable. (b) the contractor shall indemnify the government and its officers, agents, and employees acting for the government against any liability, including costs and expenses, incurred as the result of (1) the violation of trade secrets, copyrights, or right of privacy or publicity, arising out of the creation, delivery, publication or use of any data furnished under this contract; or (2) any libelous or other unlawful matter contained in such data. the provisions of this paragraph do not apply unless the government provides notice to the contractor as soon as practicable of any claim or suit, affords the contractor an opportunity under applicable laws, rules, or regulations to participate in the defense of the claim or suit, and obtains the contractor’s consent to the settlement of any claim or suit other than as required by final decree of a court of competent jurisdiction; and do not apply to material furnished to the contractor by the government and incorporated in data to which this clause applies. (end of clause) as prescribed in 27.409(g), insert the following clause: commercial computer software license (dec 2007) (a) notwithstanding any contrary provisions contained in the contractor’s standard commercial license or lease agreement, the contractor agrees that the government will have the rights that are set forth in paragraph (b) of this clause to use, duplicate or disclose any commercial computer software delivered under this contract. the terms and provisions of this contract shall comply with federal laws and the federal acquisition regulation. (b) (1) the commercial computer software delivered under this contract may not be used, reproduced, or disclosed by the government except as provided in paragraph (b)(2) of this clause or as expressly stated otherwise in this contract. (2) the commercial computer software may be  (i) used or copied for use with the computer(s) for which it was acquired, including use at any government installation to which the computer(s) may be transferred; (ii) used or copied for use with a backup computer if any computer for which it was acquired is inoperative; (iii) reproduced for safekeeping (archives) or backup purposes; (iv) modified, adapted, or combined with other computer software, provided that the modified, adapted, or combined portions of the derivative software incorporating any of the delivered, commercial computer software shall be subject to same restrictions set forth in this contract; (v) disclosed to and reproduced for use by support service contractors or their subcontractors, subject to the same restrictions set forth in this contract; and (vi) used or copied for use with a replacement computer. (3) if the commercial computer software is otherwise available without disclosure restrictions, the contractor licenses it to the government without disclosure restrictions. (c) the contractor shall affix a notice substantially as follows to any commercial computer software delivered under this contract: notice notwithstanding any other lease or license agreement that may pertain to, or accompany the delivery of, this computer software, the rights of the government regarding its use, reproduction and disclosure are as set forth in government contract no.___________________________. (end of clause) as prescribed in 27.409(h), insert the following clause: rights in data sbir program (may 2014) (a) definitions. as used in this clause  computer database or "database" means a collection of recorded information in a form capable of, and for the purpose of, being stored in, processed, and operated on by a computer. the term does not include computer software. computer software  (1) means. (i) computer programs that comprise a series of instructions, rules, routines, or statements, regardless of the media in which recorded, that allow or cause a computer to perform a specific operation or series of operations; and (ii) recorded information comprising source code listings, design details, algorithms, processes, flow charts, formulas, and related material that would enable the computer program to be produced, created, or compiled. (2) does not include computer databases or computer software documentation. computer software documentation means owner’s manuals, user’s manuals, installation instructions, operating instructions, and other similar items, regardless of storage medium, that explain the capabilities of the computer software or provide instructions for using the software. data means recorded information, regardless of form or the media on which it may be recorded. the term includes technical data and computer software. the term does not include information incidental to contract administration, such as financial, administrative, cost or pricing or management information. form, fit, and function data means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, and data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements. for computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithms, processes, formulas, and flow charts of the software. limited rights data means data (other than computer software) developed at private expense that embody trade secrets or are commercial or financial and confidential or privileged. restricted computer software means computer software developed at private expense and that is a trade secret, is commercial or financial and confidential or privileged, or is copyrighted computer software, including minor modifications of the computer software. sbir data means data first produced by a contractor that is a small business concern in performance of a small business innovation research contract issued under the authority of 15 u.s.c. 638, which data are not generally known, and which data without obligation as to its confidentiality have not been made available to others by the contractor or are not already available to the government. sbir rights means the rights in sbir data set forth in the sbir rights notice of paragraph (d) of this clause. technical data means recorded information (regardless of the form or method of the recording) of a scientific or technical nature (including computer databases and computer software documentation). this term does not include computer software or financial, administrative, cost or pricing, or management data or other information incidental to contract administration. the term includes recorded information of a scientific or technical nature that is included in computer databases. (see 41 u.s.c. 116.) unlimited rights means the right of the government to use, disclose, reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, in any manner and for any purpose whatsoever, and to have or permit others to do so. (b) allocation of rights. (1) except as provided in paragraph (c) of this clause regarding copyright, the government shall have unlimited rights in  (i) data specifically identified in this contract as data to be delivered without restriction; (ii) form, fit, and function data delivered under this contract; (iii) data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair of items, components, or processes delivered or furnished for use under this contract; and (iv) all other data delivered under this contract unless provided otherwise for sbir data in accordance with paragraph (d) of this clause or for limited rights data or restricted computer software in accordance with paragraph (f) of this clause. (2) the contractor shall have the right to  (i) assert copyright in data first produced in the performance of this contract to the extent provided in paragraph (c)(1) of this clause; (ii) protect sbir rights in sbir data delivered under this contract in the manner and to the extent provided in paragraph (d) of this clause; (iii) substantiate use of, add, or correct sbir rights or copyright notices and to take other appropriate action, in accordance with paragraph (e) of this clause; and (iv) withhold from delivery those data which are limited rights data or restricted computer software to the extent provided in paragraph (f) of this clause. (c) copyright  (1) data first produced in the performance of this contract. (i) except as otherwise specifically provided in this contract, the contractor may assert copyright subsisting in any data first produced in the performance of this contract. (ii) when asserting copyright, the contractor shall affix the applicable copyright notice of 17 u.s.c. 401 or 402 and an acknowledgment of government sponsorship (including contract number). (iii) for data other than computer software, the contractor grants to the government, and others acting on its behalf, a paid up nonexclusive, irrevocable, worldwide license to reproduce, prepare derivative works, distribute copies to the public, and perform publicly and display publicly, by or on behalf of the government. for computer software, the contractor grants to the government, and others acting on its behalf, a paid up, nonexclusive, irrevocable, worldwide license in such copyrighted computer software to reproduce, prepare derivative works, and perform publicly and display publicly, by or on behalf of the government. (2) data not first produced in the performance of this contract. the contractor shall not, without prior written permission of the contracting officer, incorporate in data delivered under this contract any data that are not first produced in the performance of this contract unless the contractor (i) identifies such data and (ii) grants to the government, or acquires on its behalf, a license of the same scope as set forth in paragraph (c)(1) of this clause. (3) removal of copyright notices. the government will not remove any copyright notices placed on data pursuant to this paragraph (c), and will include such notices on all reproductions of the data. (d) rights to sbir data. (1) the contractor is authorized to affix the following "sbir rights notice" to sbir data delivered under this contract and the government will treat the data, subject to the provisions of paragraphs (e) and (f) of this clause, in accordance with the notice: sbir rights notice (dec 2007) these sbir data are furnished with sbir rights under contract no._____ (and subcontract _____, if appropriate). for a period of 4 years, unless extended in accordance with far 27.409(h), after acceptance of all items to be delivered under this contract, the government will use these data for government purposes only, and they shall not be disclosed outside the government (including disclosure for procurement purposes) during such period without permission of the contractor, except that, subject to the foregoing use and disclosure prohibitions, these data may be disclosed for use by support contractors. after the protection period, the government has a paid up license to use, and to authorize others to use on its behalf, these data for government purposes, but is relieved of all disclosure prohibitions and assumes no liability for unauthorized use of these data by third parties. this notice shall be affixed to any reproductions of these data, in whole or in part. (end of notice) (2) the government’s sole obligation with respect to any sbir data shall be as set forth in this paragraph (d). (e) omitted or incorrect markings. (1) data delivered to the government without any notice authorized by paragraph (d) of this clause shall be deemed to have been furnished with unlimited rights. the government assumes no liability for the disclosure, use, or reproduction of such data. (2) if the unmarked data has not been disclosed without restriction outside the government, the contractor may request, within 6 months (or a longer time approved by the contracting officer in writing for good cause shown) after delivery of the data, permission to have authorized notices placed on the data at the contractor’s expense, and the contracting officer may agree to do so if the contractor  (i) identifies the data to which the omitted notice is to be applied; (ii) demonstrates that the omission of the notice was inadvertent; (iii) establishes that the use of the proposed notice is authorized; and (iv) acknowledges that the government has no liability with respect to the disclosure or use of any such data made prior to the addition of the notice or resulting from the omission of the notice. (3) if the data has been marked with an incorrect notice, the contracting officer may  (i) permit correction of the notice at the contractor’s expense, if the contractor identifies the data and demonstrates that the correct notice is authorized; or (ii) correct any incorrect notices. (f) protection of limited rights data and restricted computer software. the contractor may withhold from delivery qualifying limited rights data and restricted computer software that are not identified in paragraphs (b)(1)(i), (ii), and (iii) of this clause. as a condition to this withholding, the contractor shall identify the data being withheld, and furnish form, fit, and function data instead. (g) subcontracting. the contractor shall obtain from its subcontractors all data and rights therein necessary to fulfill the contractor’s obligations to the government under this contract. if a subcontractor refuses to accept terms affording the government those rights, the contractor shall promptly notify the contracting officer of the refusal and not proceed with the subcontract award without further authorization in writing from the contracting officer. (h) relationship to patents. nothing contained in this clause shall imply a license to the government under any patent or be construed as affecting the scope of any license or other right otherwise granted to the government. (end of clause) as prescribed in 27.409(j), insert the following clause: technical data declaration, revision, and withholding of payment major systems (may 2014) (a) scope of declaration. the contractor shall provide, in accordance with 41 u.s.c. 2302(e)(7), the following declaration with respect to all technical data that relate to a major system and that are delivered or required to be delivered under this contract or that are delivered within 3 years after acceptance of all items (other than technical data) delivered under this contract unless a different period is set forth in the contract. the contracting officer may release the contractor from all or part of the requirements of this clause for specifically identified technical data items at any time during the period covered by this clause. (b) technical data declaration. (1) all technical data that are subject to this clause shall be accompanied by the following declaration upon delivery: technical data declaration (jan 1997) the contractor, __________________, hereby declares that, to the best of its knowledge and belief, the technical data delivered herewith under government contract no. _______ (and subcontract _________________, if appropriate) are complete, accurate, and comply with the requirements of the contract concerning such technical data. (end of declaration) (2) the government may, at any time during the period covered by this clause, direct correction of any deficiencies that are not in compliance with contract requirements. the corrections shall be made at the expense of the contractor. unauthorized markings on data shall not be considered a deficiency for the purpose of this clause, but will be treated in accordance with paragraph (e) of the rights in data general clause included in this contract. (c) technical data revision. the contractor also shall, at the request of the contracting officer, revise technical data that are subject to this clause to reflect engineering design changes made during the performance of this contract and affecting the form, fit, and function of any item (other than technical data) delivered under this contract. the contractor may submit a request for an equitable adjustment to the terms and conditions of this contract for any revisions to technical data made pursuant to this paragraph. (d) withholding of payment. (1) at any time before final payment under this contract the contracting officer may withhold payment as a reserve up to an amount not exceeding $100,000 or 5 percent of the amount of this contract, whichever is less, if the contractor fails to  (i) make timely delivery of the technical data; (ii) provide the declaration required by paragraph (b)(1) of this clause; (iii) make the corrections required by paragraph (b)(2) of this clause; or (iv) make revisions requested under paragraph (c) of this clause. (2) the contracting officer may withhold the reserve until the contractor has complied with the direction or requests of the contracting officer or determines that the deficiencies relating to delivered data, arose out of causes beyond the control of the contractor and without the fault or negligence of the contractor. (3) the withholding of any reserve under this clause, or the subsequent payment of the reserve, shall not be construed as a waiver of any government rights. (end of clause) as prescribed in 27.409(k), insert the following clause: major system minimum rights (june 1987) notwithstanding any other provision of this contract, the government shall have unlimited rights in any technical data, other than computer software, developed in the performance of this contract and relating to a major system or supplies for a major system procured or to be procured by the government, to the extent that delivery of such technical data is required as an element of performance under this contract. the rights of the government under this clause are in addition to and not in lieu of its rights under the other provisions of this contract. (end of clause) as prescribed in 27.409(l), insert the following clause: rights to proposal data (technical) (june 1987) except for data contained on pages _____, it is agreed that as a condition of award of this contract, and notwithstanding the conditions of any notice appearing thereon, the government shall have unlimited rights (as defined in the "rights in data general" clause contained in this contract) in and to the technical data contained in the proposal dated ____________, upon which this contract is based. (end of clause) as prescribed in 28.101 2 , insert a provision or clause substantially as follows: bid guarantee (sept 1996) (a) failure to furnish a bid guarantee in the proper form and amount, by the time set for opening of bids, may be cause for rejection of the bid. (b) the bidder shall furnish a bid guarantee in the form of a firm commitment, e.g., bid bond supported by good and sufficient surety or sureties acceptable to the government, postal money order, certified check, cashier’s check, irrevocable letter of credit, or, under treasury department regulations, certain bonds or notes of the united states. the contracting officer will return bid guarantees, other than bid bonds  (1) to unsuccessful bidders as soon as practicable after the opening of bids; and (2) to the successful bidder upon execution of contractual documents and bonds (including any necessary coinsurance or reinsurance agreements), as required by the bid as accepted. (c) the amount of the bid guarantee shall be ______ percent of the bid price or $________, whichever is less. (d) if the successful bidder, upon acceptance of its bid by the government within the period specified for acceptance, fails to execute all contractual documents or furnish executed bond(s) within 10 days after receipt of the forms by the bidder, the contracting officer may terminate the contract for default. (e) in the event the contract is terminated for default, the bidder is liable for any cost of acquiring the work that exceeds the amount of its bid, and the bid guarantee is available to offset the difference. (end of clause) as prescribed in 28.106 4(a), insert the following clause: additional bond security (oct 1997) the contractor shall promptly furnish additional security required to protect the government and persons supplying labor or materials under this contract if  (a) any surety upon any bond, or issuing financial institution for other security, furnished with this contract becomes unacceptable to the government; (b) any surety fails to furnish reports on its financial condition as required by the government; (c) the contract price is increased so that the penal sum of any bond becomes inadequate in the opinion of the contracting officer; or (d) an irrevocable letter of credit (ilc) used as security will expire before the end of the period of required security. if the contractor does not furnish an acceptable extension or replacement ilc, or other acceptable substitute, at least 30 days before an ilc’s scheduled expiration, the contracting officer has the right to immediately draw on the ilc. (end of clause) as prescribed in 28.309(a), insert the following clause: workers’ compensation insurance (defense base act) (jul 2014) (a) the contractor shall (1) before commencing performance under this contract, establish provisions to provide for the payment of disability compensation and medical benefits to covered employees and death benefits to their eligible survivors, by purchasing workers’ compensation insurance or qualifying as a self insurer under the longshore and harbor workers’ compensation act ( 33 u.s.c. 932) as extended by the defense base act ( 42 u.s.c.1651, etseq.), and continue to maintain provisions to provide such defense base act benefits until contract performance is completed; (2) within ten days of an employee’s injury or death or from the date the contractor has knowledge of the injury or death, submit form ls 202 (employee’s first report of injury or occupational illness) to the department of labor in accordance with the longshore and harbor workers’ compensation act ( 33 u.s.c. 930(a), 20 cfr 702.201 to 702.203); (3) pay all compensation due for disability or death within the time frames required by the longshore and harbor workers’ compensation act ( 33 u.s.c. 914, 20 cfr 702.231 and 703.232); (4) provide for medical care as required by the longshore and harbor workers’ compensation act ( 33 u.s.c. 907, 20 cfr 702.402 and 702.419); (5) if controverting the right to compensation, submit form ls 207 (notice of controversion of right to compensation) to the department of labor in accordance with the longshore and harbor workers’ compensation act ( 33 u.s.c. 914(d), 20 cfr 702.251); (6) immediately upon making the first payment of compensation in any case, submit form ls 206 (payment of compensation without award) to the department of labor in accordance with the longshore and harbor workers’ compensation act ( 33 u.s.c. 914(c), 20 cfr 702.234); (7) when payments are suspended or when making the final payment, submit form ls 208 (notice of final payment or suspension of compensation payments) to the department of labor in accordance with the longshore and harbor workers’ compensation act ( 33 u.s.c. 914(c) and (g), 20 cfr 702.234 and 702.235); and (8) adhere to all other provisions of the longshore and harbor workers’ compensation act as extended by the defense base act, and department of labor regulations at 20 cfr parts 701 to 704. (b) for additional information on the longshore and harbor workers’ compensation act requirements see http://www.dol.gov/owcp/dlhwc/lsdba.htm. (c) the contractor shall insert the substance of this clause, including this paragraph (c), in all subcontracts to which the defense base act applies. (end of clause) as prescribed in 28.309(b), insert the following clause: workers’ compensation and war hazard insurance overseas (apr 1984) (a) this paragraph applies if the contractor employs any person who, but for a waiver granted by the secretary of labor, would be subject to workers’ compensation insurance under the defense base act ( 42 u.s.c.1651, etseq.). on behalf of employees for whom the applicability of the defense base act has been waived, the contractor shall (1) provide, before commencing performance under this contract, at least that workers’ compensation insurance or the equivalent as the laws of the country of which these employees are nationals may require, and (2) continue to maintain it until performance is completed. the contractor shall insert, in all subcontracts under this contract to which the defense base act would apply but for the waiver, a clause similar to this paragraph (a) (including this sentence) imposing upon those subcontractors this requirement to provide such workers’ compensation insurance coverage. (b) this paragraph applies if the contractor or any subcontractor under this contract employs any person who, but for a waiver granted by the secretary of labor, would be subject to the war hazards compensation act ( 42 u.s.c.1701, etseq.). on behalf of employees for whom the applicability of the defense base act (and hence that of the war hazards compensation act) has been waived, the contractor shall, subject to reimbursement as provided elsewhere in this contract, afford the same protection as that provided in the war hazards compensation act, except that the level of benefits shall conform to any law or international agreement controlling the benefits to which the employees may be entitled. in all other respects, the standards of the war hazards compensation act shall apply; e.g., the definition of war hazard risks (injury, death, capture, or detention as the result of a war hazard as defined in the act), proof of loss, and exclusion of benefits otherwise covered by workers’ compensation insurance or the equivalent. unless the contractor elects to assume directly the liability to subcontractor employees created by this clause, the contractor shall insert, in all subcontracts under this contract to which the war hazards compensation act would apply but for the waiver, a clause similar to this paragraph (b) (including this sentence) imposing upon those subcontractors this requirement to provide war hazard benefits. (end of clause) as prescribed in 28.310 , insert the following clause: insurance work on a government installation (jan 1997) (a) the contractor shall, at its own expense, provide and maintain during the entire performance of this contract, at least the kinds and minimum amounts of insurance required in the schedule or elsewhere in the contract. (b) before commencing work under this contract, the contractor shall notify the contracting officer in writing that the required insurance has been obtained. the policies evidencing required insurance shall contain an endorsement to the effect that any cancellation or any material change adversely affecting the government’s interest shall not be effective  (1) for such period as the laws of the state in which this contract is to be performed prescribe; or (2) until 30 days after the insurer or the contractor gives written notice to the contracting officer, whichever period is longer. (c) the contractor shall insert the substance of this clause, including this paragraph (c), in subcontracts under this contract that require work on a government installation and shall require subcontractors to provide and maintain the insurance required in the schedule or elsewhere in the contract. the contractor shall maintain a copy of all subcontractors’ proofs of required insurance, and shall make copies available to the contracting officer upon request. (end of clause) as prescribed in 28.311 1 , insert the following clause: insurance liability to third persons (mar 1996) (a) (1) except as provided in paragraph (a)(2) of this clause, the contractor shall provide and maintain workers’ compensation, employer’s liability, comprehensive general liability (bodily injury), comprehensive automobile liability (bodily injury and property damage) insurance, and such other insurance as the contracting officer may require under this contract. (2) the contractor may, with the approval of the contracting officer, maintain a self insurance program, provided that, with respect to workers’ compensation, the contractor is qualified pursuant to statutory authority. (3) all insurance required by this paragraph shall be in a form and amount and for those periods as the contracting officer may require or approve and with insurers approved by the contracting officer. (b) the contractor agrees to submit for the contracting officer’s approval, to the extent and in the manner required by the contracting officer, any other insurance that is maintained by the contractor in connection with the performance of this contract and for which the contractor seeks reimbursement. (c) the contractor shall be reimbursed  (1) for that portion  (i) of the reasonable cost of insurance allocable to this contract; and (ii) required or approved under this clause; and (2) for certain liabilities (and expenses incidental to such liabilities) to third persons not compensated by insurance or otherwise without regard to and as an exception to the limitation of cost or the limitation of funds clause of this contract. these liabilities must arise out of the performance of this contract, whether or not caused by the negligence of the contractor or of the contractor’s agents, servants, or employees, and must be represented by final judgments or settlements approved in writing by the government. these liabilities are for  (i) loss of or damage to property (other than property owned, occupied, or used by the contractor, rented to the contractor, or in the care, custody, or control of the contractor); or (ii) death or bodily injury. (d) the government’s liability under paragraph (c) of this clause is subject to the availability of appropriated funds at the time a contingency occurs. nothing in this contract shall be construed as implying that the congress will, at a later date, appropriate funds sufficient to meet deficiencies. (e) the contractor shall not be reimbursed for liabilities (and expenses incidental to such liabilities)  (1) for which the contractor is otherwise responsible under the express terms of any clause specified in the schedule or elsewhere in the contract; (2) for which the contractor has failed to insure or to maintain insurance as required by the contracting officer; or (3) that result from willful misconduct or lack of good faith on the part of any of the contractor’s directors, officers, managers, superintendents, or other representatives who have supervision or direction of  (i) all or substantially all of the contractor’s business; (ii) all or substantially all of the contractor’s operations at any one plant or separate location in which this contract is being performed; or (iii) a separate and complete major industrial operation in connection with the performance of this contract. (f) the provisions of paragraph (e) of this clause shall not restrict the right of the contractor to be reimbursed for the cost of insurance maintained by the contractor in connection with the performance of this contract, other than insurance required in accordance with this clause; provided, that such cost is allowable under the allowable cost and payment clause of this contract. (g) if any suit or action is filed or any claim is made against the contractor, the cost and expense of which may be reimbursable to the contractor under this contract, and the risk of which is then uninsured or is insured for less than the amount claimed, the contractor shall  (1) immediately notify the contracting officer and promptly furnish copies of all pertinent papers received; (2) authorize government representatives to collaborate with counsel for the insurance carrier in settling or defending the claim when the amount of the liability claimed exceeds the amount of coverage; and (3) authorize government representatives to settle or defend the claim and to represent the contractor in or to take charge of any litigation, if required by the government, when the liability is not insured or covered by bond. the contractor may, at its own expense, be associated with the government representatives in any such claim or litigation. (end of clause) as prescribed in 28.312 , insert the following clause: liability and insurance leased motor vehicles (may 1999) (a) the government shall be responsible for loss of or damage to  (1) leased vehicles, except for  (i) normal wear and tear; and (ii) loss or damage caused by the negligence of the contractor, its agents, or employees; and (2) property of third persons, or the injury or death of third persons, if the government is liable for such loss, damage, injury, or death under the federal tort claims act ( 28 u.s.c. 2671  2680). (b) the contractor shall be liable for, and shall indemnify and hold harmless the government against, all actions or claims for loss of or damage to property or the injury or death of persons, resulting from the fault, negligence, or wrongful act or omission of the contractor, its agents, or employees. (c) the contractor shall provide and maintain insurance covering its liabilities under paragraph (b) of this clause, in amounts of at least $200,000 per person and $500,000 per occurrence for death or bodily injury and $20,000 per occurrence for property damage or loss. (d) before commencing work under this contract, the contractor shall notify the contracting officer in writing that the required insurance has been obtained. the policies evidencing required insurance shall contain an endorsement to the effect that any cancellation or any material change adversely affecting the interests of the government shall not be effective (1) for such period as the laws of the state in which this contract is to be performed prescribe or (2) until 30 days after written notice to the contracting officer, whichever period is longer. the policies shall exclude any claim by the insurer for subrogation against the government by reason of any payment under the policies. (e) the contract price shall not include any costs for insurance or contingency to cover losses, damage, injury, or death for which the government is responsible under paragraph (a) of this clause. (end of clause) as prescribed in 28.313(a), insert the following clause: cargo insurance (may 1999) (a) the contractor, at the contractor’s expense, shall provide and maintain, during the continuance of this contract, cargo insurance of $______ per vehicle to cover the value of property on each vehicle and of $_______ to cover the total value of the property in the shipment. (b) all insurance shall be written on companies acceptable to ____________ [insert name of contracting agency], and policies shall include such terms and conditions as required by __________ [insert name of contracting agency]. the contractor shall provide evidence of acceptable cargo insurance to ____________ [insert name of contracting agency] before commencing operations under this contract. (c) each cargo insurance policy shall include the following statement: "it is a condition of this policy that the company shall furnish  (1) written notice to __________ [insert name and address of contracting agency], 30 days in advance of the effective date of any reduction in, or cancellation of, this policy; and (2) evidence of any renewal policy to the address specified in paragraph (1) of this statement, not less than 15 days prior to the expiration of any current policy on file with ____________ [insert name of contracting agency]." (end of clause) as prescribed in 28.313(b), insert a clause substantially the same as the following in solicitations and contracts for transportation or for transportation related services when the contracting officer determines that vehicular liability or general public liability insurance required by law is not sufficient: vehicular and general public liability insurance (apr 1984) (a) the contractor, at the contractor’s expense, agrees to maintain, during the continuance of this contract, vehicular liability and general public liability insurance with limits of liability for  (1) bodily injury of not less than $______ for each person and $______ for each occurrence; and (2) property damage of not less than $______ for each accident and $______ in the aggregate. (b) the contractor also agrees to maintain workers’ compensation and other legally required insurance with respect to the contractor’s own employees and agents. (end of clause) as prescribed in 28.203 4 (b), insert the following clause: individual surety pledge of assets (feb 2021) (a)the contractor shall obtain from each person acting as an individual surety on a performance bond or a payment bond  (1)a pledge of assets that meets the eligibility, valuation, and security requirements described in the federal acquisition regulation (far) 28.203 1; and (2)standard form 28, affidavit of individual surety. (b)the contracting officer may release a portion of the security interest on the individual surety's assets based upon substantial performance of the contractor's obligations under its performance bond. the security interest in support of a performance bond shall be maintained  (1) contracts for the construction, alteration, or repair of any public building or public work of the federal government exceeding $150,000 (40 u.s.c. 3131). until completion of any warranty period, or for 1 year following final payment, whichever is later. (2) contracts subject to alternative payment protection (see far 28.102 1(b)(1)). for the full contract performance period plus 1 year. (3) other contracts not subject to the requirements of paragraph (b)(1) of this clause. until completion of any warranty period, or for 90 days following final payment, whichever is later. (c)a surety's assets pledged in support of a payment bond may be released to a subcontractor or supplier upon government receipt of a federal district court judgment, or a sworn statement by the subcontractor or supplier that the claim is correct along with a notarized authorization of the release by the surety stating that it approves of such release. the security interest on the individual surety's assets in support of a payment bond shall be maintained  (1) contracts for the construction, alteration, or repair of any public building or public work of the federal government exceeding $150,000 which require performance and payment bonds (40 u.s.c. 3131). for 1 year following final payment, or until resolution of all pending claims filed against the payment bond during the 1 year period following final payment, whichever is later. (2) contracts subject to alternative payment protection (see far 28.102 1(b)(1)). for the full contract performance period plus 1 year. (3)other contracts not subject to the requirements of paragraph (c)(1) of this clause. for 90 days following final payment. (d)the contracting officer may allow the contractor to substitute an individual surety, for a performance or payment bond, after contract award. the contractor shall comply with the requirements of paragraph (a) of this clause within the timeframe established by the contracting officer. (end of clause) as prescribed in 28.106 4(b), use the following clause: prospective subcontractor requests for bonds (dec 2022) in accordance with section 806(a)(3) of pub. l. 102 190, as amended by sections 2091 and 8105 of pub. l. 103 355 ( 10 u.s.c. 4601 note prec.), upon the request of a prospective subcontractor or supplier offering to furnish labor or material for the performance of this contract for which a payment bond has been furnished to the government pursuant to 40 u.s.c. chapter 31, subchapter iii, bonds, the contractor shall promptly provide a copy of such payment bond to the requester. (end of clause) as prescribed in 28.102 3(b), insert the following clause: alternative payment protections (july 2000) (a) the contractor shall submit one of the following payment protections: ________________________________________________________________________________ (b) the amount of the payment protection shall be 100 percent of the contract price. (c) the submission of the payment protection is required within _________ days of contract award. (d) the payment protection shall provide protection for the full contract performance period plus a one year period. (e) except for escrow agreements and payment bonds, which provide their own protection procedures, the contracting officer is authorized to access funds under the payment protection when it has been alleged in writing by a supplier of labor or material that a nonpayment has occurred, and to withhold such funds pending resolution by administrative or judicial proceedings or mutual agreement of the parties. (f) when a tripartite escrow agreement is used, the contractor shall utilize only suppliers of labor and material that signed the escrow agreement. (end of clause) as prescribed in 28.204 4 , insert the following clause: irrevocable letter of credit (nov 2014) (a) "irrevocable letter of credit" (ilc), as used in this clause, means a written commitment by a federally insured financial institution to pay all or part of a stated amount of money, until the expiration date of the letter, upon presentation by the government (the beneficiary) of a written demand therefor. neither the financial institution nor the offeror/contractor can revoke or condition the letter of credit. (b) if the offeror intends to use an ilc in lieu of a bid bond, or to secure other types of bonds such as performance and payment bonds, the letter of credit and letter of confirmation formats in paragraphs (e) and (f) of this clause shall be used. (c) the letter of credit shall be irrevocable, shall require presentation of no document other than a written demand and the ilc (including confirming letter, if any), shall be issued/confirmed by an acceptable federally insured financial institution as provided in paragraph (d) of this clause, and  (1) if used as a bid guarantee, the ilc shall expire no earlier than 60 days after the close of the bid acceptance period; (2) if used as an alternative to corporate or individual sureties as security for a performance or payment bond, the offeror/contractor may submit an ilc with an initial expiration date estimated to cover the entire period for which financial security is required or may submit an ilc with an initial expiration date that is a minimum period of one year from the date of issuance. the ilc shall provide that, unless the issuer provides the beneficiary written notice of non renewal at least 60 days in advance of the current expiration date, the ilc is automatically extended without amendment for one year from the expiration date, or any future expiration date, until the period of required coverage is completed and the contracting officer provides the financial institution with a written statement waiving the right to payment. the period of required coverage shall be: (i) for contracts subject to 40 u.s.c. chapter 31, subchapter iii, bonds, the later of  (a) oneyear following the expected date of final payment; (b) for performance bonds only, until completion of any warranty period; or (c) for payment bonds only, until resolution of all claims filed against the payment bond during the one year period following final payment. (ii) for contracts not subject to 40 u.s.c. chapter 31, subchapter iii, bonds, the later of  (a) 90 days following final payment; or (b) for performance bonds only, until completion of any warranty period. (d) (1) only federally insured financial institutions rated investment grade by a commercial rating service shall issue or confirm the ilc. (2) unless the financial institution issuing the ilc had letter of credit business of at least $25 million in the past year, ilcs over $5 million must be confirmed by another acceptable financial institution that had letter of credit business of at least $25 million in the past year. (3) the offeror/contractor shall provide the contracting officer a credit rating that indicates the financial institutions have the required credit rating as of the date of issuance of the ilc. (4) the current rating for a financial institution is available through any of the following rating services registered with the u.s. securities and exchange commission (sec) as a nationally recognized statistical rating organization (nrsro). nrsro’s can be located at the website http://www.sec.gov/answers/nrsro.htm maintained by the sec. (e) the following format shall be used by the issuing financial institution to create an ilc: _________________________________________________ [issuing financial institution’s letterhead ornameandaddress] issue date __________ irrevocable letter of credit no. _______________________ account party’s name _______________________________ account party’s address ______________________________ for solicitation no. _________________ (for reference only) to: [u.s. government agency] [u.s. government agency’s address] 1. we hereby establish this irrevocable and transferable letter of credit in your favor for one or more drawings up to united states $______. this letter of credit is payable at [issuing financial institution’s and, if any, confirming financial institution’s] office at [issuing financial institution’s address and, if any, confirming financial institution’s address] and expires with our close of business on ___________, or any automatically extended expiration date. 2. we hereby undertake to honor your or the transferee’s sight draft(s) drawn on the issuing or, if any, the confirming financial institution, for all or any part of this credit if presented with this letter of credit and confirmation, if any, at the office specified in paragraph 1 of this letter of credit on or before the expiration date or any automatically extended expiration date. 3. [this paragraph is omitted if used as a bid guarantee, and subsequent paragraphs are renumbered.] it is a condition of this letter of credit that it is deemed to be automatically extended without amendment for oneyear from the expiration date hereof, or any future expiration date, unless at least 60 days prior to any expiration date, we notify you or the transferee by registered mail, or other receipted means of delivery, that we elect not to consider this letter of credit renewed for any such additional period. at the time we notify you, we also agree to notify the account party (and confirming financial institution, if any) by the same means of delivery. 4. this letter of credit is transferable. transfers and assignments of proceeds are to be effected without charge to either the beneficiary or the transferee/assignee of proceeds. such transfer or assignment shall be only at the written direction of the government (the beneficiary) in a form satisfactory to the issuing financial institution and the confirming financial institution, if any. 5. this letter of credit is subject to the uniform customs and practice (ucp) for documentary credits, international chamber of commerce publication no. _____________________ (insert version in effect at the time of ilc issuance, e.g., "publication 600, 2006 edition") and to the extent not inconsistent therewith, to the laws of _____________________ [state of confirming financial institution, if any, otherwise state of issuing financial institution]. 6. if this credit expires during an interruption of business of this financial institution as described in article 17 of the ucp, the financial institution specifically agrees to effect payment if this credit is drawn against within 30 days after the resumption of our business. sincerely, _______________________________ [issuing financial institution] (f) the following format shall be used by the financial institution to confirm an ilc: [confirming financial institution’s letterhead or name and address] ______________________________________________ (date) __________________ our letter of credit advice number ____________________ beneficiary: _________________ [u.s. government agency] issuing financial institution: __________________________ issuing financial institution’s lc no.: __________________ gentlemen: 1. we hereby confirm the above indicated letter of credit, the original of which is attached, issued by __________ [name of issuing financial institution] for drawings of up to united states dollars ___________/u.s. $_______ and expiring with our close of business on _____________ [the expiration date], or any automatically extended expiration date. 2. draft(s) drawn under the letter of credit and this confirmation are payable at our office located at ___________________. 3. we hereby undertake to honor sight draft(s) drawn under and presented with the letter of credit and this confirmation at our offices as specified herein. 4. [this paragraph is omitted if used as a bid guarantee, and subsequent paragraphs are renumbered.] it is a condition of this confirmation that it be deemed automatically extended without amendment for oneyear from the expiration date hereof, or any automatically extended expiration date, unless: (a) at least 60 days prior to any such expiration date, we shall notify the contracting officer, or the transferee and the issuing financial institution, by registered mail or other receipted means of delivery, that we elect not to consider this confirmation extended for any such additional period; or (b) the issuing financial institution shall have exercised its right to notify you or the transferee, the account party, and ourselves, of its election not to extend the expiration date of the letter of credit. 5. this confirmation is subject to the uniform customs and practice (ucp) for documentary credits, international chamber of commerce publication no. _____________________ (insert version in effect at the time of ilc issuance, e.g., "publication 600, 2006 edition") and to the extent not inconsistent therewith, to the laws of _____________________ [state of confirming financial institution]. 6. if this confirmation expires during an interruption of business of this financial institution as described in article 17 of the ucp, we specifically agree to effect payment if this credit is drawn against within 30 days after the resumption of our business. sincerely, _______________________________ [confirming financial institution] (g) the following format shall be used by the contracting officer for a sight draft to draw on the letter of credit: sight draft _______________________________ [city, state] (date) _____________________________ [name and address of financial institution] pay to the order of ______________ [beneficiary agency] ___________ the sum of united states $____________. this draft is drawn under irrevocable letter of credit no. _______________________. _______________________________ [beneficiary agency] _______________________________ [by] (end of clause) as prescribed in 28.102 3(a), insert a clause substantially as follows: performance and payment bonds construction (jun 2020) (a) definitions. as used in this clause  original contract price means the award price of the contract; or, for requirements contracts, the price payable for the estimated total quantity; or, for indefinite quantity contracts, the price payable for the specified minimum quantity. original contract price does not include the price of any options, except those options exercised at the time of contract award. (b) amount of required bonds. unless the resulting contract price is valued at or below the threshold specified in federal acquisition regulation 28.102 1(a) on the date of award of this contract, the successful offeror shall furnish performance and payment bonds to the contracting officer as follows: (1) performance bonds ( standard form 25). the penal amount of performance bonds at the time of contract award shall be 100 percent of the original contract price. (2) payment bonds ( standard form 25a). the penal amount of payment bonds at the time of contract award shall be 100 percent of the original contract price. (3) additional bond protection. (i) the government may require additional performance and payment bond protection if the contract price is increased. the increase in protection generally will equal 100 percent of the increase in contract price. (ii) the government may secure the additional protection by directing the contractor to increase the penal amount of the existing bond or to obtain an additional bond. (c) furnishing executed bonds. the contractor shall furnish all executed bonds, including any necessary reinsurance agreements, to the contracting officer, within the time period specified in the bid guarantee provision of the solicitation, or otherwise specified by the contracting officer, but in any event, before starting work. (d) surety or other security for bonds. the bonds shall be in the form of firm commitment, supported by corporate sureties whose names appear on the list contained in treasury department circular 570, individual sureties, or by other acceptable security such as postal money order, certified check, cashier's check, irrevocable letter of credit, or, in accordance with treasury department regulations, certain bonds or notes of the united states. treasury circular 570 is published in the federal register or may be obtained from the: u.s. department of the treasury, financial management, service surety bond branch, 3700 east west highway, room 6 f01, hyattsville, md 20782. or via the internet at http://www.fms.treas.gov/c570/. (e) notice of subcontractor waiver of protection (40 u.s.c. 3133(c)). any waiver of the right to sue on the payment bond is void unless it is in writing, signed by the person whose right is waived, and executed after such person has first furnished labor or material for use in the performance of the contract. (end of clause) as prescribed in 28.103 4 , insert a clause substantially as follows: performance and payment bonds other than construction (nov 2006) (a) definitions. as used in this clause  "original contract price" means the award price of the contract or, for requirements contracts, the price payable for the estimated quantity; or, for indefinite quantity contracts, the price payable for the specified minimum quantity. original contract price does not include the price of any options, except those options exercised at the time of contract award. (b) the contractor shall furnish a performance bond ( standard form 1418) for the protection of the government in an amount equal to _______ percent of the original contract price and a payment bond standard form 1416) in an amount equal to ______ percent of the original contract price. (c) the contractor shall furnish all executed bonds, including any necessary reinsurance agreements, to the contracting officer, within ________ days, but in any event, before starting work. (d) the government may require additional performance and payment bond protection if the contract price is increased. the government may secure the additional protection by directing the contractor to increase the penal amount of the existing bonds or to obtain additional bonds. (e) the bonds shall be in the form of firm commitment, supported by corporate sureties whose names appear on the list contained in treasury department circular 570, individual sureties, or by other acceptable security such as postal money order, certified check, cashier's check, irrevocable letter of credit, or, in accordance with treasury department regulations, certain bonds or notes of the united states. treasury circular 570 is published in the federal register, or may be obtained from the: u.s. department of the treasury, financial management service, surety bond branch, 3700 east west highway, room 6 f01 hyattsville, md 20782. or via the internet at http://www.fms.treas.gov/c570/. (end of clause) alternate i (july2000). as prescribed in 28.103 4 , substitute the following paragraphs (b) and (d) for paragraphs (b) and (d) of the basic clause: (b) the contractor shall furnish a performance bond ( standard form 1418) for the protection of the government in an amount equal to ______ percent of the original contract price. (d) the government may require additional performance bond protection if the contract price is increased. the government may secure the additional protection by directing the contractor to increase the penal amount of the existing bond or to obtain an additional bond. as prescribed in 28.203 4 (a), insert the following provision: individual surety pledge of assets (feb 2021) (a)offerors shall obtain from each person acting as an individual surety on a bid guarantee  (1)a pledge of assets that meets the eligibility, valuation, and security requirements described in the federal acquisition regulation (far) 28.203 1; and (2)standard form 28, affidavit of individual surety. (b)the offeror shall include with its offer the information required at paragraph (a) of this provision within the timeframe specified in the provision at far 52.228 1, bid guarantee, or as otherwise established by the contracting officer. (c)the contracting officer may release the security interest on the individual surety's assets in support of a bid guarantee based upon evidence that the offer supported by the individual surety will not result in contract award. (end of provision) as prescribed in 29.401 1 , insert the following clause: state and local taxes (apr 1984) notwithstanding the terms of the federal, state, and local taxes clause, the contract price excludes all state and local taxes levied on or measured by the contract or sales price of the services or completed supplies furnished under this contract. the contractor shall state separately on its invoices taxes excluded from the contract price, and the government agrees either to pay the amount of the taxes to the contractor or provide evidence necessary to sustain an exemption. (end of clause) as prescribed in 29.401 2 , insert the following clause in solicitations and contracts for construction to be performed in north carolina: north carolina state and local sales and use tax (apr 1984) (a) "materials," as used in this clause, means building materials, supplies, fixtures, and equipment that become a part of or are annexed to any building or structure erected, altered, or repaired under this contract. (b) if this is a fixed price contract, the contract price includes north carolina state and local sales and use taxes to be paid on materials, notwithstanding any other provision of this contract. if this is a cost reimbursement contract, any north carolina state and local sales and use taxes paid by the contractor on materials shall constitute an allowable cost under this contract. (c) at the time specified in paragraph (d) of this section, the contractor shall furnish the contracting officer certified statements setting forth the cost of the materials purchased from each vendor and the amount of north carolina state and local sales and use taxes paid. in the event the contractor makes several purchases from the same vendor, the certified statement shall indicate the invoice numbers, the inclusive dates of the invoices, the total amount of the invoices, and the north carolina state and local sales and use taxes paid. the statement shall also include the cost of any tangible personal property withdrawn from the contractor’s warehouse stock and the amount of north carolina state and local sales or use tax paid on this property by the contractor. any local sales or use taxes included in the contractor’s statements must be shown separately from the state sales or use taxes. the contractor shall furnish any additional information the commissioner of revenue of the state of north carolina may require to substantiate a refund claim for sales or use taxes. the contractor shall also obtain and furnish to the contracting officer similar certified statements by its subcontractors. (d) if this contract is completed before the next october 1, the certified statements to be furnished pursuant to paragraph (c) of this clause shall be submitted within 60 days after completion. if this contract is not completed before the next october 1, the certified statements shall be submitted on or before november 30 of eachyear and shall cover taxes paid during the 12 month period that ended the preceding september 30. (e) the certified statements to be furnished pursuant to paragraph (c) of this clause shall be in the following form: i hereby certify that during the period ______ to _____ [insert dates], ____ [insert name of contractor or subcontractor] paid north carolina state and local sales and use taxes aggregating $______ (state) and $______ (local), with respect to building materials, supplies, fixtures, and equipment that have become a part of or annexed to a building or structure erected, altered, or repaired by _________ [insert name of contractor or subcontractor] for the united states of america, and that the vendors from whom the property was purchased, the dates and numbers of the invoices covering the purchases, the total amount of the invoices of each vendor, the north carolina state and local sales and use taxes paid on the property (shown separately), and the cost of property withdrawn from warehouse stock and north carolina state and local sales or use taxes paid on this property are as set forth in the attachments. (end of clause) alternate i (apr 1984). if the requirement is for vessel repair to be performed in north carolina, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) "materials," as used in this clause, means materials, supplies, fixtures, and equipment that become a part of or are annexed to any vessel altered or repaired under this contract. as prescribed in 29.401 3 , insert the following clause: federal, state, and local taxes (feb 2013) (a) as used in this clause  after imposed federal tax means any new or increased federal excise tax or duty, or tax that was exempted or excluded on the contract date but whose exemption was later revoked or reduced during the contract period, on the transactions or property covered by this contract that the contractor is required to pay or bear as the result of legislative, judicial, or administrative action taking effect after the contract date. it does not include social security tax or other employment taxes. after relieved federal tax means any amount of federal excise tax or duty, except social security or other employment taxes, that would otherwise have been payable on the transactions or property covered by this contract, but which the contractor is not required to pay or bear, or for which the contractor obtains a refund or drawback, as the result of legislative, judicial, or administrative action taking effect after the contract date. all applicable federal, state, and local taxes and duties means all taxes and duties, in effect on the contract date, that the taxing authority is imposing and collecting on the transactions or property covered by this contract. contract date means the date set for bid opening or, if this is a negotiated contract or a modification, the effective date of this contract or modification. local taxes includes taxes imposed by a possession or territory of the united states, puerto rico, or the northern mariana islands, if the contract is performed wholly or partly in any of those areas. (b) (1) the contract price includes all applicable federal, state, and local taxes and duties, except as provided in subparagraph (b)(2)(i) of this clause. (2) taxes imposed under 26 u.s.c. 5000 c may not be  (i) included in the contract price; nor (ii) reimbursed. (c) the contract price shall be increased by the amount of any after imposed federal tax, provided the contractor warrants in writing that no amount for such newly imposed federal excise tax or duty or rate increase was included in the contract price, as a contingency reserve or otherwise. (d) the contract price shall be decreased by the amount of any after relieved federal tax. (e) the contract price shall be decreased by the amount of any federal excise tax or duty, except social security or other employment taxes, that the contractor is required to pay or bear, or does not obtain a refund of, through the contractor’s fault, negligence, or failure to follow instructions of the contracting officer. (f) no adjustment shall be made in the contract price under this clause unless the amount of the adjustment exceeds $250. (g) the contractor shall promptly notify the contracting officer of all matters relating to any federal excise tax or duty that reasonably may be expected to result in either an increase or decrease in the contract price and shall take appropriate action as the contracting officer directs. (h) the government shall, without liability, furnish evidence appropriate to establish exemption from any federal, state, or local tax when the contractor requests such evidence and a reasonable basis exists to sustain the exemption. (end of clause) as prescribed in 29.401 3 , insert the following clause: federal, state, and local taxes (state and local adjustments (feb 2013) (a) as used in this clause  after imposed tax means any new or increased federal, state, or local tax or duty, or tax that was excluded on the contract date but whose exclusion was later revoked or amount of exemption reduced during the contract period, other than an excepted tax, on the transactions or property covered by this contract that the contractor is required to pay or bear as the result of legislative, judicial, or administrative action taking effect after the contract date. after relieved tax means any amount of federal, state, or local tax or duty, other than an excepted tax, that would otherwise have been payable on the transactions or property covered by this contract, but which the contractor is not required to pay or bear, or for which the contractor obtains a refund or drawback, as the result of legislative, judicial, or administrative action taking effect after the contract date. all applicable federal, state, and local taxes and duties means all taxes and duties, in effect on the contract date, that the taxing authority is imposing and collecting on the transactions or property covered by this contract. contract date means the effective date of this contract and, for any modification to this contract, the effective date of the modification. excepted tax means social security or other employment taxes, net income and franchise taxes, excess profits taxes, capital stock taxes, transportation taxes, unemployment compensation taxes, and property taxes. "excepted tax" does not include gross income taxes levied on or measured by sales or receipts from sales, property taxes assessed on completed supplies covered by this contract, or any tax assessed on the contractor’s possession of, interest in, or use of property, title to which is in the government. local taxes includes taxes imposed by a possession or territory of the united states, puerto rico, or the northern mariana islands, if the contract is performed wholly or partly in any of those areas. (b) (1) unless otherwise provided in this contract, the contract price includes all applicable federal, state, and local taxes and duties, except as provided in subparagraph (b)(2)(i) of this clause. (2) taxes imposed under 26 u.s.c. 5000 c may not be  (i) included in the contract price; nor (ii) reimbursed. (c) the contract price shall be increased by the amount of any after imposed tax, or of any tax or duty specifically excluded from the contract price by a term or condition of this contract that the contractor is required to pay or bear, including any interest or penalty, if the contractor states in writing that the contract price does not include any contingency for such tax and if liability for such tax, interest, or penalty was not incurred through the contractor’s fault, negligence, or failure to follow instructions of the contracting officer. (d) the contract price shall be decreased by the amount of any after relieved tax. the government shall be entitled to interest received by the contractor incident to a refund of taxes to the extent that such interest was earned after the contractor was paid by the government for such taxes. the government shall be entitled to repayment of any penalty refunded to the contractor to the extent that the penalty was paid by the government. (e) the contract price shall be decreased by the amount of any federal, state, or local tax, other than an excepted tax, that was included in the contract price and that the contractor is required to pay or bear, or does not obtain a refund of, through the contractor’s fault, negligence, or failure to follow instructions of the contracting officer. (f) no adjustment shall be made in the contract price under this clause unless the amount of the adjustment exceeds $250. (g) the contractor shall promptly notify the contracting officer of all matters relating to federal, state, and local taxes and duties that reasonably may be expected to result in either an increase or decrease in the contract price and shall take appropriate action as the contracting officer directs. the contract price shall be equitably adjusted to cover the costs of action taken by the contractor at the direction of the contracting officer, including any interest, penalty, and reasonable attorneys’ fees. (h) the government shall furnish evidence appropriate to establish exemption from any federal, state, or local tax when  (1) the contractor requests such exemption and states in writing that it applies to a tax excluded from the contract price; and (2) a reasonable basis exists to sustain the exemption. (end of clause) as prescribed in 29.402 1(a), insert the following clause: taxes foreign fixed price contracts (feb 2013) (a) to the extent that this contract provides for furnishing supplies or performing services outside the united states and its outlying areas, this clause applies in lieu of any federal, state, and local taxes clause of the contract. (b) definitions. as used in this clause  contract date means the date set for bid opening or, if this is a negotiated contract or a modification, the effective date of this contract or modification. country concerned means any country, other than the united states and its outlying areas, in which expenditures under this contract are made. tax and "taxes" include fees and charges for doing business that are levied by the government of the country concerned or by its political subdivisions. all applicable taxes and duties means all taxes and duties, in effect on the contract date, that the taxing authority is imposing and collecting on the transactions or property covered by this contract, pursuant to written ruling or regulation in effect on the contract date. after imposed tax means any new or increased tax or duty, or tax that was exempted or excluded on the contract date but whose exemption was later revoked or reduced during the contract period, other than excepted tax, on the transactions or property covered by this contract that the contractor is required to pay or bear as the result of legislative, judicial, or administrative action taking effect after the contract date. after relieved tax means any amount of tax or duty, other than an excepted tax, that would otherwise have been payable on the transactions or property covered by this contract, but which the contractor is not required to pay or bear, or for which the contractor obtains a refund, as the result of legislative, judicial, or administrative action taking effect after the contract date. excepted tax means social security or other employment taxes, net income and franchise taxes, excess profits taxes, capital stock taxes, transportation taxes, unemployment compensation taxes, and property taxes. "excepted tax" does not include gross income taxes levied on or measured by sales or receipts from sales, property taxes assessed on completed supplies covered by this contract, or any tax assessed on the contractor’s possession of, interest in, or use of property, title to which is in the u.s. government. (c) (1) unless otherwise provided in this contract, the contract price includes all applicable taxes and duties, except taxes and duties that the government of the united states and the government of the country concerned have agreed shall not be applicable to expenditures in such country by or on behalf of the united states, except as provided in subparagraph (c)(2) of this clause. (2) taxes imposed under 26 u.s.c. 5000 c may not be  (i) included in the contract price; nor (ii) reimbursed. (d) (1) except as provided in subparagraph (d)(2) of this clause, the contract price shall be increased by the amount of any after imposed tax or of any tax or duty specifically excluded from the contract price by a provision of this contract that the contractor is required to pay or bear, including any interest or penalty, if the contractor states in writing that the contract price does not include any contingency for such tax and if liability for such tax, interest, or penalty was not incurred through the contractor’s fault, negligence, or failure to follow instructions of the contracting officer or to comply with the provisions of paragraph (i) of this clause. (2) the contract price may not be increased to offset taxes imposed under 26 u.s.c. 5000 c. (e) the contract price shall be decreased by the amount of any after relieved tax, including any interest or penalty. the government of the united states shall be entitled to interest received by the contractor incident to a refund of taxes to the extent that such interest was earned after the contractor was paid by the government of the united states for such taxes. the government of the united states shall be entitled to repayment of any penalty refunded to the contractor to the extent that the penalty was paid by the government. (f) the contract price shall be decreased by the amount of any tax or duty, other than an excepted tax, that was included in the contract and that the contractor is required to pay or bear, or does not obtain a refund of, through the contractor’s fault, negligence, or failure to follow instructions of the contracting officer or to comply with the provisions of paragraph (i) of this clause. (g) no adjustment shall be made in the contract price under this clause unless the amount of the adjustment exceeds $250. (h) if the contractor obtains a reduction in tax liability under the united states internal revenue code (title26, u.s. code) because of the payment of any tax or duty that either was included in the contract price or was the basis of an increase in the contract price, the amount of the reduction shall be paid or credited to the government of the united states as the contracting officer directs. (i) the contractor shall take all reasonable action to obtain exemption from or refund of any taxes or duties, including interest or penalty, from which the united states government, the contractor, any subcontractor, or the transactions or property covered by this contract are exempt under the laws of the country concerned or its political subdivisions or which the governments of the united states and of the country concerned have agreed shall not be applicable to expenditures in such country by or on behalf of the united states. (j) the contractor shall promptly notify the contracting officer of all matters relating to taxes or duties that reasonably may be expected to result in either an increase or decrease in the contract price and shall take appropriate action as the contracting officer directs. the contract price shall be equitably adjusted to cover the costs of action taken by the contractor at the direction of the contracting officer, including any interest, penalty, and reasonable attorneys’ fees. (end of clause) as prescribed in 29.402 1(b), insert the following clause: taxes fixed price contracts with foreign governments (feb 2013) (a) "contract date," as used in this clause, means the date set for bid opening or, if this is a negotiated contract or a modification, the effective date of this contract or modification. (b) (1) the contract price, including the prices in any subcontracts under this contract, does not include any tax or duty that the government of the united states and the government of ______ [insert name of the foreign government] have agreed shall not apply to expenditures made by the united states in ______ [insert name of country], or any tax or duty not applicable to this contract or any subcontracts under this contract, pursuant to the laws of ______ [insert name of country]. if any such tax or duty has been included in the contract price, through error or otherwise, the contract price shall be correspondingly reduced. (2) taxes imposed under 26 u.s.c. 5000 c may not be included in the contract price. (c) if, after the contract date, the government of the united states and the government of ______ [insert name of the foreign government] agree that any tax or duty included in the contract price shall not apply to expenditures by the united states in ________ [insert name of country], the contract price shall be reduced accordingly. (d) no adjustment shall be made in the contract price under this clause unless the amount of the adjustment exceeds $250. (end of clause) as prescribed in 29.402 2(a), insert the following clause: taxes foreign cost reimbursement contracts (mar 1990) (a) any tax or duty from which the united states government is exempt by agreement with the government of ______ [insert name of the foreign government], or from which the contractor or any subcontractor under this contract is exempt under the laws of ______ [insert name of country], shall not constitute an allowable cost under this contract. (b) if the contractor or subcontractor under this contract obtains a foreign tax credit that reduces its federal income tax liability under the united states internal revenue code (title26, u.s. code) because of the payment of any tax or duty that was reimbursed under this contract, the amount of the reduction shall be paid or credited at the time of such offset to the government of the united states as the contracting officer directs. (end of clause) as prescribed in 29.402 2(b), insert the following clause: taxes cost reimbursement contracts with foreign governments (mar 1990) (a) any tax or duty from which the united states government is exempt by agreement with the government of ______ [insert name of the foreign government], or from which any subcontractor under this contract is exempt under the laws of ______ [insert name of country], shall not constitute an allowable cost under this contract. (b) if any subcontractor obtains a foreign tax credit that reduces its federal income tax liability under the united states internal revenue code (title26, u.s. code) because of the payment of any tax or duty that was reimbursed under this contract, the amount of the reduction shall be paid (not credited to the contract) to the treasurer of the united states at the time the federal income tax return is filed. (end of clause) as prescribed in 29.401 4(b), insert the following clause: state of new mexico gross receipts and compensating tax (apr 2003) (a) within thirty (30) days after award of this contract, the contractor shall advise the state of new mexico of this contract by registering with the state of new mexico, taxation and revenue department, revenue division, pursuant to the tax administration act of the state of new mexico and shall identify the contract number. (b) the contractor shall pay the new mexico gross receipts taxes, pursuant to the gross receipts and compensating tax act of new mexico, assessed against the contract fee and costs paid for performance of this contract, or of any part or portion thereof, within the state of new mexico. the allowability of any gross receipts taxes or local option taxes lawfully paid to the state of new mexico by the contractor or its subcontractors will be determined in accordance with the allowable cost and payment clause of this contract except as provided in paragraph (d) of this clause. (c) the contractor shall submit applications for nontaxable transaction certificates, formcsr 3 c, to the: state of new mexico taxation and revenue dept. revenue division po box 630 santa fe, new mexico 87509 when the type 15 nontaxable transaction certificate is issued by the revenue division, the contractor shall use these certificates strictly in accordance with this contract, and the agreement between the (*________________) and the new mexico taxation and revenue department. (d) the contractor shall provide type 15 nontaxable transaction certificates to each vendor in new mexico selling tangible personal property to the contractor for use in the performance of this contract. failure to provide a type 15 nontaxable transaction certificate to vendors will result in the vendor’s liability for the gross receipt taxes and those taxes, which are then passed on to the contractor, shall not be reimbursable as an allowable cost by the government. (e) the contractor shall pay the new mexico compensating user tax for any tangible personal property which is purchased pursuant to a nontaxable transaction certificate if such property is not used for federal purposes. (f) out of state purchase of tangible personal property by the contractor which would be otherwise subject to compensation tax shall be governed by the principles of this clause. accordingly, compensating tax shall be due from the contractor only if such property is not used for federal purposes. (g) the (*_______________) may receive information regarding the contractor from the revenue division of the new mexico taxation and revenue department and, at the discretion of the (*_________________), may participate in any matters or proceedings pertaining to this clause or the abovementioned agreement. this shall not preclude the contractor from having its own representative nor does it obligate the (*______________) to represent its contractor. (h) the contractor agrees to insert the substance of this clause, including this paragraph (h), in each subcontract which meets the criteria in 29.401 4(b)(1) through (3) of the federal acquisition regulation, 48 cfr part 29. (i) paragraphs (a) through (h) of this clause shall be null and void should the agreement referred to in paragraph (c) of this clause be terminated; provided, however, that such termination shall not nullify obligations already incurred prior to the date of termination. [*insert appropriate agency name in blanks.] (end of clause) as prescribed in 29.402 3(a), insert the following provision: tax on certain foreign procurements notice and representation (jun 2020) (a) definitions. as used in this provision  foreign person means any person other than a united states person. specified federal procurement payment means any payment made pursuant to a contract with a foreign contracting party that is for goods, manufactured or produced, or services provided in a foreign country that is not a party to an international procurement agreement with the united states. for purposes of the prior sentence, a foreign country does not include an outlying area. united states person as defined in 26 u.s.c. 7701(a)(30) means (1) a citizen or resident of the united states; (2) a domestic partnership; (3) a domestic corporation; (4) any estate (other than a foreign estate, within the meaning of 26 u.s.c. 701(a)(31)); and (5) any trust if  (i) a court within the united states is able to exercise primary supervision over the administration of the trust; and (ii) one or more united states persons have the authority to control all substantial decisions of the trust. (b) unless exempted, there is a 2 percent tax of the amount of a specified federal procurement payment on any foreign person receiving such payment. see 26 u.s.c. 5000c and its implementing regulations at 26 cfr 1.5000c 1 through 1.5000c 7. (c) exemptions from withholding under this provision are described at 26 cfr 1.5000c 1(d)(5) through (7). the offeror would claim an exemption from the withholding by using the department of the treasury internal revenue service form w 14, certificate of foreign contracting party receiving federal procurement payments, available via the internet at www.irs.gov/w14. any exemption claimed and self certified on the irs form w 14 is subject to audit by the irs. any disputes regarding the imposition and collection of the 26 u.s.c. 5000c tax are adjudicated by the irs as the 26 u.s.c. 5000c tax is a tax matter, not a contract issue. the irs form w 14 is provided to the acquiring agency rather than to the irs. (d) for purposes of withholding under 26 u.s.c. 5000c, the offeror represents that (1) it □ is □ is not a foreign person; and (2) if the offeror indicates "is" in paragraph (d)(1) of this provision, then the offeror represents that i am claiming on the irs form w 14 □ a full exemption, or □ partial or no exemption [offeror shall select one] from the excise tax. (e) if the offeror represents it is a foreign person in paragraph (d)(1) of this provision, then  (1) the clause at far 52.229 12, tax on certain foreign procurements, will be included in any resulting contract; and (2) the offeror shall submit with its offer the irs form w 14. if the irs form w 14 is not submitted with the offer, exemptions will not be applied to any resulting contract and the government will withhold a full 2 percent of each payment. (f) if the offeror selects "is" in paragraph (d)(1) and "partial or no exemption" in paragraph (d)(2) of this provision, the offeror will be subject to withholding in accordance with the clause at far 52.229 12, tax on certain foreign procurements, in any resulting contract. (g) a taxpayer may, for a fee, seek advice from the internal revenue service (irs) as to the proper tax treatment of a transaction. this is called a private letter ruling. also, the irs may publish a revenue ruling, which is an official interpretation by the irs of the internal revenue code, related statutes, tax treaties, and regulations. a revenue ruling is the conclusion of the irs on how the law is applied to a specific set of facts. for questions relating to the interpretation of the irs regulations go to https://www.irs.gov/help/tax law questions. (end of provision) as prescribed in 29.402 3(b), insert the following clause: tax on certain foreign procurements notice and representation (feb 2021) (a) definitions. as used in this clause  foreign person means any person other than a united states person. united states person, as defined in 26 u.s.c. 7701(a)(30), means  (1) a citizen or resident of the united states; (2) a domestic partnership; (3) a domestic corporation; (4) any estate (other than a foreign estate, within the meaning of 26 u.s.c. 7701(a)(31)); and (5) any trust if  (i) a court within the united states is able to exercise primary supervision over the administration of the trust; and (ii) one or more united states persons have the authority to control all substantial decisions of the trust. (b) this clause applies only to foreign persons. it implements 26 u.s.c. 5000c and its implementing regulations at 26 cfr 1.5000c 1 through 1.5000c 7. (c) (1) if the contractor is a foreign person and has only a partial or no exemption to the withholding, the contractor shall include the department of the treasury internal revenue service form w 14, certificate of foreign contracting party receiving federal procurement payments, with each voucher or invoice submitted under this contract throughout the period in which this status is applicable. the excise tax withholding is applied at the payment level, not at the contract level. the contractor should revise each irs form w 14 submission to reflect the exemption (if any) that applies to that particular invoice, such as a different exemption applying. in the absence of a completed irs form w 14 accompanying a payment request, the default withholding percentage is 2 percent for the section 5000c withholding for that payment request. information about irs form w 14 and its separate instructions is available via the internet at www.irs.gov/w14. (2) if the contractor is a foreign person and has indicated in its offer in the provision 52.229 11, tax on certain foreign procurements notice and representation, that it is fully exempt from the withholding, and certified the full exemption on the irs form w 14, and if that full exemption no longer applies due to a change in circumstances during the performance of the contract that causes the contractor to become subject to the withholding for the 2 percent excise tax then the contractor shall  (i) notify the contracting officer within 30 days of a change in circumstances that causes the contractor to be subject to the excise tax withholding under 26 u.s.c. 5000c; and (ii) comply with paragraph (c)(1) of this clause. (d) the government will withhold a full 2 percent of each payment unless the contractor claims an exemption. if the contractor enters a ratio in line 12 of the irs form w 14, the result of line 11 divided by line 10, the government will withhold from each payment an amount equal to 2 percent multiplied by the contract ratio. if the contractor marks box 9 of the irs form w 14 (rather than completes lines 10 through 12), the contractor must identify and enter the specific exempt and nonexempt amounts in line 15 of the irs form w 14; the government will then withhold 2 percent only from the nonexempt amount. see the irs form w 14 and its instructions. (e) exemptions from the withholding under this clause are described at 26 cfr 1.5000c 1(d)(5) through (7). any exemption claimed and self certified on the irs form w 14 is subject to audit by the irs. any disputes regarding the imposition and collection of the 26 u.s.c. 5000c tax are adjudicated by the irs as the 26 u.s.c. 5000c tax is a tax matter, not a contract issue. (f) taxes imposed under 26 u.s.c. 5000c may not be  (1) included in the contract price; nor (2) reimbursed. (g) a taxpayer may, for a fee, seek advice from the internal revenue service (irs) as to the proper tax treatment of a transaction. this is called a private letter ruling. also, the irs may publish a revenue ruling, which is an official interpretation by the irs of the internal revenue code, related statutes, tax treaties, and regulations. a revenue ruling is the conclusion of the irs on how the law is applied to a specific set of facts. for questions relating to the interpretation of the irs regulations go to https://www.irs.gov/help/tax law questions. (end of clause) as prescribed in 29.402 4(a), use the following clause: taxes foreign contracts in afghanistan (nov 2021) (a) definition. u.s. forces, as used in this clause, means the entity comprising the members of the force and of the civilian component, and all property, equipment, and materiel of the united states armed forces present in the territory of afghanistan. (b) tax exemption. this acquisition is covered by the security and defense cooperation agreement (the agreement) between the islamic republic of afghanistan (afghanistan) and the united states of america signed on september 30, 2014, and entered into force on january 1, 2015. (1) the agreement exempts the united states government, and its contractors and subcontractors (other than those that are afghan legal entities or residents), from paying any tax or similar charge assessed by the government of afghanistan on activities associated with this contract within afghanistan if the activities are on behalf of or in support of u.s. forces. the agreement also exempts the acquisition, importation, exportation, reexportation, transportation, and use of supplies and services in afghanistan, on behalf of or in support of u.s. forces, from any taxes, customs, duties, fees, or similar charges imposed by the government of afghanistan. (2) the contractor shall exclude any afghan taxes, customs, duties, fees, or similar charges from the contract price, other than those charged to afghan legal entities or residents. (3) the agreement does not exempt afghan employees of government contractors and subcontractors from afghan tax laws. to the extent required by afghan law, the contractor shall withhold tax from the wages of these employees and remit those payments to the appropriate afghan taxing authority. these withholdings are an individual's liability, not a tax against the contractor. (c) subcontracts. the contractor shall include the substance of this clause, including this paragraph (c), in all subcontracts including subcontracts for commercial products or commercial services. (end of clause) as prescribed in 29.402 4(b), use the following clause: taxes foreign contracts in afghanistan (north atlantic treaty organization status of forces agreement) (nov 2021) (a) definition. north atlantic treaty organization (nato) forces, as used in this clause, means the members of the force, members of the civilian component, nato personnel and all property, equipment, and materiel of nato, nato member states, and operational partners present in the territory of afghanistan. (b) tax exemption. this acquisition is covered by the status of forces agreement (sofa) entered into between nato and the islamic republic of afghanistan (afghanistan) issued on september 30, 2014, and entered into force on january 1, 2015. (1) the sofa exempts nato forces and its contractors and subcontractors (other than those that are afghan legal entities or residents) from paying any tax or similar charge assessed by the government of afghanistan within afghanistan if the activities are on behalf of or in support of nato forces. the sofa also exempts the acquisition, importation, exportation, reexportation, transportation, and use of supplies and services in afghanistan on behalf of or in support of nato forces from all afghan taxes, customs, duties, fees, or similar charges. (2) the contractor shall exclude any afghan taxes, customs, duties, fees or similar charges from the contract price, other than those charged to afghan legal entities or residents. (3) afghan citizens employed by nato contractors and subcontractors are subject to afghan tax laws. to the extent required by afghan law, the contractor shall withhold tax from the wages of these employees and remit those withholdings to the appropriate afghan taxing authority. these withholdings are an individual's liability, not a tax against the contractor. (c) subcontracts. the contractor shall include the substance of this clause, including this paragraph (c), in all subcontracts including subcontracts for commercial products or commercial services. (end of clause) as prescribed in 30.201 3 (a), insert the following provision: cost accounting standards notices and certification (jun 2020) note: this notice does not apply to small businesses or foreign governments. this notice is in three parts, identified by roman numerals i through iii. offerors shall examine each part and provide the requested information in order to determine cost accounting standards (cas) requirements applicable to any resultant contract. if the offeror is an educational institution, part ii does not apply unless the contemplated contract will be subject to full or modified cas coverage pursuant to 48 cfr 9903.201 2(c)(5) or 9903.201 2(c)(6), respectively. i. disclosure statement cost accounting practices and certification (a) any contract in excess of the lower cas threshold specified in federal acquisition regulation (far) 30.201 4(b) resulting from this solicitation will be subject to the requirements of the cost accounting standards board ( 48 cfr chapter 99), except for those contracts which are exempt as specified in 48 cfr 9903.201 1. (b) any offeror submitting a proposal which, if accepted, will result in a contract subject to the requirements of 48 cfr chapter 99 must, as a condition of contracting, submit a disclosure statement as required by 48 cfr 9903.202. when required, the disclosure statement must be submitted as a part of the offeror’s proposal under this solicitation unless the offeror has already submitted a disclosure statement disclosing the practices used in connection with the pricing of this proposal. if an applicable disclosure statement has already been submitted, the offeror may satisfy the requirement for submission by providing the information requested in paragraph (c) of part i of this provision. caution: in the absence of specific regulations or agreement, a practice disclosed in a disclosure statement shall not, by virtue of such disclosure, be deemed to be a proper, approved, or agreed to practice for pricing proposals or accumulating and reporting contract performance cost data. (c) check the appropriate box below: (1) □ certificate of concurrent submission of disclosure statement. the offeror hereby certifies that, as a part of the offer, copies of the disclosure statement have been submitted as follows: (i) original and one copy to the cognizant administrative contracting officer (aco) or cognizant federal agency official authorized to act in that capacity (federal official), as applicable; and (ii) one copy to the cognizant federal auditor. (disclosure must be on form no. casb ds 1 or casb ds 2, as applicable. forms may be obtained from the cognizant aco or federal official.) date of disclosure statement: _________________________ name and address of cognizant aco or federal official where filed: _______________________________________ the offeror further certifies that the practices used in estimating costs in pricing this proposal are consistent with the cost accounting practices disclosed in the disclosure statement. (2) □ certificate of previously submitted disclosure statement. the offeror hereby certifies that the required disclosure statement was filed as follows: date of disclosure statement: _________________________ name and address of cognizant aco or federal official where filed: _______________________________________ the offeror further certifies that the practices used in estimating costs in pricing this proposal are consistent with the cost accounting practices disclosed in the applicable disclosure statement. (3) □ certificate of monetary exemption. the offeror hereby certifies that the offeror, together with all divisions, subsidiaries, and affiliates under common control, did not receive net awards of negotiated prime contracts and subcontracts subject to cas totaling $50 million or more in the cost accounting period immediately preceding the period in which this proposal was submitted. the offeror further certifies that if such status changes before an award resulting from this proposal, the offeror will advise the contracting officer immediately. (4) □ certificate of interim exemption. the offeror hereby certifies that (i) the offeror first exceeded the monetary exemption for disclosure, as defined in (3) of this subsection, in the cost accounting period immediately preceding the period in which this offer was submitted and (ii) in accordance with 48 cfr 9903.202 1, the offeror is not yet required to submit a disclosure statement. the offeror further certifies that if an award resulting from this proposal has not been made within 90 days after the end of that period, the offeror will immediately submit a revised certificate to the contracting officer, in the form specified under paragraph (c)(1) or (c)(2) of parti of this provision, as appropriate, to verify submission of a completed disclosure statement. caution: offerors currently required to disclose because they were awarded a cas covered prime contract or subcontract of $50 million or more in the current cost accounting period may not claim this exemption (4). further, the exemption applies only in connection with proposals submitted before expiration of the 90 day period following the cost accounting period in which the monetary exemption was exceeded. ii. cost accounting standards eligibility for modified contract coverage if the offeror is eligible to use the modified provisions of 48 cfr 9903.201 2(b) and elects to do so, the offeror shall indicate by checking the box below. checking the box below shall mean that the resultant contract is subject to the disclosure and consistency of cost accounting practices clause in lieu of the cost accounting standards clause. □ the offeror hereby claims an exemption from the cost accounting standards clause under the provisions of 48 cfr 9903.201 2(b) and certifies that the offeror is eligible for use of the disclosure and consistency of cost accounting practices clause because during the cost accounting period immediately preceding the period in which this proposal was submitted, the offeror received less than $50 million in awards of cas covered prime contracts and subcontracts. the offeror further certifies that if such status changes before an award resulting from this proposal, the offeror will advise the contracting officer immediately. caution: an offeror may not claim the above eligibility for modified contract coverage if this proposal is expected to result in the award of a cas covered contract of $50 million or more or if, during its current cost accounting period, the offeror has been awarded a single cas covered prime contract or subcontract of $50 million or more. iii. additional cost accounting standards applicable to existing contracts the offeror shall indicate below whether award of the contemplated contract would, in accordance with paragraph (a)(3) of the cost accounting standards clause, require a change in established cost accounting practices affecting existing contracts and subcontracts. □ yes □ no (end of provision) alternate i (apr 1996). as prescribed in 30.201 3 (b), add the following paragraph (c)(5) to part i of the basic provision: □(5) certificate of disclosure statement due date by educational institution. if the offeror is an educational institution that, under the transition provisions of 48 cfr 9903.202 1(f), is or will be required to submit a disclosure statement after receipt of this award, the offeror hereby certifies that (check one and complete): □ (i) a disclosure statement filing due date of _____________ has been established with the cognizant federal agency. □ (ii) the disclosure statement will be submitted within the 6 month period ending _________ months after receipt of this award. name and address of cognizant aco or federal official where disclosure statement is to be filed: __________________________________________________ __________________________________________________ as prescribed in 30.201 4(a)(1), insert the following clause: cost accounting standards (jun 2020) (a) unless the contract is exempt under 48 cfr 9903.201 1 and 9903.201 2, the provisions of 48 cfr part 9903 are incorporated herein by reference and the contractor, in connection with this contract, shall  (1) (cas covered contracts only) by submission of a disclosure statement, disclose in writing the contractor’s cost accounting practices as required by 48 cfr 9903.202 1 through 9903.202 5, including methods of distinguishing direct costs from indirect costs and the basis used for allocating indirect costs. the practices disclosed for this contract shall be the same as the practices currently disclosed and applied on all other contracts and subcontracts being performed by the contractor and which contain a cost accounting standards (cas) clause. if the contractor has notified the contracting officer that the disclosure statement contains trade secrets and commercial or financial information which is privileged and confidential, the disclosure statement shall be protected and shall not be released outside of the government. (2) follow consistently the contractor’s cost accounting practices in accumulating and reporting contract performance cost data concerning this contract. if any change in cost accounting practices is made for the purposes of any contract or subcontract subject to cas requirements, the change must be applied prospectively to this contract and the disclosure statement must be amended accordingly. if the contract price or cost allowance of this contract is affected by such changes, adjustment shall be made in accordance with paragraph (a)(4) or (a)(5) of this clause, as appropriate. (3) comply with all cas, including any modifications and interpretations indicated thereto contained in 48 cfr part 9904, in effect on the date of award of this contract or, if the contractor has submitted certified cost or pricing data, on the date of final agreement on price as shown on the contractor’s signed certificate of current cost or pricing data. the contractor shall also comply with any cas (or modifications to cas) which hereafter become applicable to a contract or subcontract of the contractor. such compliance shall be required prospectively from the date of applicability to such contract or subcontract. (4) (i) (agree to an equitable adjustment as provided in the changes clause of this contract if the contract cost is affected by a change which, pursuant to paragraph (a)(3) of this clause, the contractor is required to make to the contractor’s established cost accounting practices. (ii) negotiate with the contracting officer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of paragraph (a)(4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the united states. (iii) when the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(i) of this clause, negotiate an equitable adjustment as provided in the changes clause of this contract. (5) agree to an adjustment of the contract price or cost allowance, as appropriate, if the contractor or a subcontractor fails to comply with an applicable cost accounting standard, or to follow any cost accounting practice consistently and such failure results in any increased costs paid by the united states. such adjustment shall provide for recovery of the increased costs to the united states, together with interest thereon computed at the annual rate established under section 6621(a)(2) of the internal revenue code of 1986 ( 26 u.s.c. 6621(a)(2)) for such period, from the time the payment by the united states was made to the time the adjustment is effected. in no case shall the government recover costs greater than the increased cost to the government, in the aggregate, on the relevant contracts subject to the price adjustment, unless the contractor made a change in its cost accounting practices of which it was aware or should have been aware at the time of price negotiations and which it failed to disclose to the government. (b) if the parties fail to agree whether the contractor or a subcontractor has complied with an applicable cas in 48 cfr 9904 or a cas rule or regulation in 48 cfr 9903 and as to any cost adjustment demanded by the united states, such failure to agree will constitute a dispute under 41 u.s.c. chapter 71, contract disputes. (c) the contractor shall permit any authorized representatives of the government to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause. (d) the contractor shall include in all negotiated subcontracts which the contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all cas in effect on the subcontractor’s award date or if the subcontractor has submitted certified cost or pricing data, on the date of final agreement on price as shown on the subcontractor’s signed certificate of current cost or pricing data. if the subcontract is awarded to a business unit which pursuant to 48 cfr 9903.201 2 is subject to other types of cas coverage, the substance of the applicable clause set forth in subsection 30.201 4 of the federal acquisition regulation (far) shall be inserted. this requirement shall apply only to negotiated subcontracts in excess of the lower cas threshold specified in far 30.201 4(b) on the date of subcontract award, except that the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a cas clause as specified in 48 cfr 9903.201 1. (end of clause) as prescribed in 30.201 4(b)(1), insert the following clause: disclosure and consistency of cost accounting practices (jun 2020) (a) the contractor, in connection with this contract, shall  (1) comply with the requirements of 48 cfr 9904.401, consistency in estimating, accumulating, and reporting costs; 48 cfr 9904.402, consistency in allocating costs incurred for the same purpose; 48 cfr 9904.405, accounting for unallowable costs; and 48 cfr 9904.406, cost accounting standard cost accounting period, in effect on the date of award of this contract as indicated in 48 cfr part 9904. (2) (cas covered contracts only) if it is a business unit of a company required to submit a disclosure statement, disclose in writing its cost accounting practices as required by 48 cfr 9903.202 1 through 9903.202 5. if the contractor has notified the contracting officer that the disclosure statement contains trade secrets and commercial or financial information which is privileged and confidential, the disclosure statement shall be protected and shall not be released outside of the government. (3) (i) follow consistently the contractor’s cost accounting practices. a change to such practices may be proposed, however, by either the government or the contractor, and the contractor agrees to negotiate with the contracting officer the terms and conditions under which a change may be made. after the terms and conditions under which the change is to be made have been agreed to, the change must be applied prospectively to this contract, and the disclosure statement, if affected, must be amended accordingly. (ii) the contractor shall, when the parties agree to a change to a cost accounting practice and the contracting officer has made the finding required in 48 cfr 9903.201 6(c), that the change is desirable and not detrimental to the interests of the government, negotiate an equitable adjustment as provided in the changes clause of this contract. in the absence of the required finding, no agreement may be made under this contract clause that will increase costs paid by the united states. (4) agree to an adjustment of the contract price or cost allowance, as appropriate, if the contractor or a subcontractor fails to comply with the applicable cas or to follow any cost accounting practice, and such failure results in any increased costs paid by the united states. such adjustment shall provide for recovery of the increased costs to the united states together with interest thereon computed at the annual rate established under section 6621(a)(2) of the internal revenue code of1986 ( 26 u.s.c. 6621(a)(2)), from the time the payment by the united states was made to the time the adjustment is effected. (b) if the parties fail to agree whether the contractor has complied with an applicable cas, rule, or regulation as specified in 48 cfr 9903 and 9904 and as to any cost adjustment demanded by the united states, such failure to agree will constitute a dispute under 41 u.s.c. chapter 71, contract disputes. (c) the contractor shall permit any authorized representatives of the government to examine and make copies of any documents, papers, and records relating to compliance with the requirements of this clause. (d) the contractor shall include in all negotiated subcontracts, which the contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts of any tier, except that  (1) if the subcontract is awarded to a business unit which pursuant to 48 cfr 9903.201 2 is subject to other types of cas coverage, the substance of the applicable clause set forth in section 30.201 4 of the federal acquisition regulation (far) shall be inserted. (2) the requirement in this paragraph (d) shall apply only to negotiated subcontracts in excess of the lower cas threshold specified in far 30.201 4(b) on the date of subcontract award. (3) the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a cas clause as specified in 48 cfr 9903.201 1. (end of clause) as prescribed in 30.201 4(c)(1), insert the following clause: disclosure and consistency of cost accounting practices foreign concerns (jun 2020) (a) the contractor, in connection with this contract, shall  (1) comply with the requirements of 48 cfr 9904.401, consistency in estimating, accumulating, and reporting costs; and 48 cfr 9904.402, consistency in allocating costs incurred for the same purpose, in effect on the date of award of this contract, as indicated in 48 cfr 9904. (2) (cost accounting standard (cas) covered contracts only). if it is a business unit of a company required to submit a disclosure statement, disclose in writing its cost accounting practices as required by 48 cfr 9903.202 1 through 48 cfr 9903.202 5. if the contractor has notified the contracting officer that the disclosure statement contains trade secrets and commercial or financial information which is privileged and confidential, the disclosure statement shall be protected and shall not be released outside of the u.s. government. (3) (i) follow consistently the contractor’s cost accounting practices. a change to such practices may be proposed, however, by either the u.s. government or the contractor, and the contractor agrees to negotiate with the contracting officer the terms and conditions under which a change may be made. after the terms and conditions under which the change is to be made have been agreed to, the change must be applied prospectively to this contract, and the disclosure statement, if affected, must be amended accordingly. (ii) the contractor shall, when the parties agree to a change to a cost accounting practice and the contracting officer has made the finding required in 48 cfr 9903.201 6(c) that the change is desirable and not detrimental to the interests of the u.s. government, negotiate an equitable adjustment as provided in the changes clause of this contract. in the absence of the required finding, no agreement may be made under this contract clause that will increase costs paid by the u.s. government. (4) agree to an adjustment of the contract price or cost allowance, as appropriate, if the contractor or a subcontractor fails to comply with the applicable cas or to follow any cost accounting practice, and such failure results in any increased costs paid by the u.s. government. such adjustment shall provide for recovery of the increased costs to the u.s. government, together with interest thereon computed at the annual rate established under section 6621(a)(2) of the internal revenue code of 1986 ( 26 u.s.c. 6621(a)(2)) for such period, from the time the payment by the u.s. government was made to the time the adjustment is effected. (b) if the parties fail to agree whether the contractor has complied with an applicable cas rule, or regulation as specified in 48 cfr 9903 and 48 cfr 9904 and as to any cost adjustment demanded by the u.s. government, such failure to agree will constitute a dispute under 41 u.s.c. chapter 71, contract disputes. (c) the contractor shall permit any authorized representatives of the u.s. government to examine and make copies of any documents, papers, and records relating to compliance with the requirements of this clause. (d) the contractor shall include in all negotiated subcontracts, which the contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts of any tier, except that  (1) if the subcontract is awarded to a business unit which pursuant to 48 cfr 9903.201 2 is subject to other types of cas coverage, the substance of the applicable clause prescribed in federal acquisition regulation (far) 30.201 4 shall be inserted. (2) the requirement in this paragraph (d) shall apply only to negotiated subcontracts in excess of the lower cas threshold specified in far 30.201 4(b) on the date of subcontract award. (3) the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a cas clause as specified in 48 cfr 9903.201 1. (end of clause) as prescribed in 30.201 4(e)(1), insert the following clause: cost accounting standards educational institution (jun 2020) (a) unless the contract is exempt under 48 cfr 9903.201 1 and 9903.201 2, the provisions of 48 cfr 9903 are incorporated herein by reference and the contractor, in connection with this contract, shall  (1) (cas covered contracts only). if a business unit of an educational institution (defined as an institution of higher education in the omb uniform guidance at 2 cfr part 200, subpart a and 20 u.s.c. 1001) is required to submit a disclosure statement, disclose in writing the contractor’s cost accounting practices as required by 48 cfr 9003.202 1 through 9903.202 5, including methods of distinguishing direct costs from indirect costs and the basis used for accumulating and allocating indirect costs. the practices disclosed for this contract shall be the same as the practices currently disclosed and applied on all other contracts and subcontracts being performed by the contractor and which contain a cost accounting standards (cas) clause. if the contractor has notified the contracting officer that the disclosure statement contains trade secrets, and commercial or financial information which is privileged and confidential, the disclosure statement shall be protected and shall not be released outside of the government. (2) follow consistently the contractor’s cost accounting practices in accumulating and reporting contract performance cost data concerning this contract. if any change in cost accounting practices is made for the purposes of any contract or subcontract subject to cas requirements, the change must be applied prospectively to this contract and the disclosure statement, if required, must be amended accordingly. if an accounting principle change mandated under omb uniform guidance at 2 cfr part 200, subpart e and appendix iii, requires that a change in the contractor’s cost accounting practices be made after the date of this contract award, the change must be applied prospectively to this contract and the disclosure statement, if required, must be amended accordingly. if the contract price or cost allowance of this contract is affected by such changes, adjustment shall be made in accordance with paragraph (a)(4) or (a)(5) of this clause, as appropriate. (3) comply with all cas, including any modifications and interpretations indicated thereto contained in 48 cfr 9905 in effect on the date of award of this contract or, if the contractor has submitted certified cost or pricing data, on the date of final agreement on price as shown on the contractor’s signed certificate of current cost or pricing data. the contractor shall also comply with any cas (or modifications to cas) which hereafter become applicable to a contract or subcontract of the contractor. such compliance shall be required prospectively from the date of applicability to such contract or subcontract. (4) (i) agree to an equitable adjustment as provided in the changes clause of this contract if the contract cost is affected by a change which, pursuant to paragraph (a)(3) of this clause, the contractor is required to make to the contractor’s established cost accounting practices. (ii) negotiate with the contracting officer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of paragraph (a)(4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the united states. (iii) when the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(i) or (a)(4)(iv) of this clause, negotiate an equitable adjustment as provided in the changes clause of this contract. (iv) agree to an equitable adjustment as provided in the changes clause of this contract, if the contract cost is materially affected by an accounting principle amendment required under the omb uniform guidance at 2 cfr part 200, subpart e and appendix iii, which, on becoming effective after the date of contract award, requires the contractor to make a change to the contractor’s established cost accounting practices. (5) agree to an adjustment of the contract price or cost allowance, as appropriate, if the contractor or a subcontractor fails to comply with an applicable cost accounting standard, or to follow any cost accounting practice consistently and such failure results in any increased costs paid by the united states. such adjustment shall provide for recovery of the increased costs to the united states, together with interest thereon computed at the annual rate established under section 6621(a)(2) of the internal revenue code of 1986 ( 26 u.s.c. 6621(a)(2)) for such period, from the time the payment by the united states was made to the time the adjustment is effected. in no case shall the government recover costs greater than the increased cost to the government, in the aggregate, on the relevant contracts subject to the price adjustment, unless the contractor made a change in its cost accounting practices of which it was aware or should have been aware at the time of price negotiations and which it failed to disclose to the government. (b) if the parties fail to agree whether the contractor or a subcontractor has complied with an applicable cas or a cas rule or regulation in 48 cfr 9903 and as to any cost adjustment demanded by the united states, such failure to agree will constitute a dispute under 41 u.s.c. chapter 71, contract disputes. (c) the contractor shall permit any authorized representatives of the government to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause. (d) the contractor shall include in all negotiated subcontracts which the contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all applicable cas in effect on the subcontractor’s award date or, if the subcontractor has submitted certified cost or pricing data, on the date of final agreement on price as shown on the subcontractor’s signed certificate of current cost or pricing data, except that  (1) if the subcontract is awarded to a business unit which pursuant to 48 cfr 9903.201 2 is subject to other types of cas coverage, the substance of the applicable clause set forth in 48 cfr 9903.201 4 shall be inserted; (2) the requirement in this paragraph (d) shall apply only to negotiated subcontracts in excess of the lower cas threshold specified in federal acquisition regulation (far) 30.201 4(b) on the date of subcontract award; and (3) the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a cas clause as specified in 48 cfr 9903.201 1. (end of clause) as prescribed in 30.201 4(d)(1), insert the following clause: administration of cost accounting standards (june 2010) for the purpose of administering the cost accounting standards (cas) requirements under this contract, the contractor shall take the steps outlined in paragraphs (b) through (i) and (k) through (n) of this clause: (a) definitions. as used in this clause  affected cas covered contract or subcontract means a contract or subcontract subject to cas rules and regulations for which a contractor or subcontractor  (1) used one cost accounting practice to estimate costs and a changed cost accounting practice to accumulate and report costs under the contract or subcontract; or (2) used a noncompliant practice for purposes of estimating or accumulating and reporting costs under the contract or subcontract. cognizant federal agency official (cfao) means the contracting officer assigned by the cognizant federal agency to administer the cas. desirable change means a compliant change to a contractor’s established or disclosed cost accounting practices that the cfao finds is desirable and not detrimental to the government and is, therefore, not subject to the no increased cost prohibition provisions of cas covered contracts and subcontracts affected by the change. fixed price contracts and subcontracts means  (1) fixed price contracts and subcontracts described at far 16.202, 16.203, (except when price adjustments are based on actual costs of labor or material, described at 16.203 1(a)(2)), and 16.207; (2) fixed price incentive contracts and subcontracts where the price is not adjusted based on actual costs incurred (far subpart 16.4); (3) orders issued under indefinite delivery contracts and subcontracts where final payment is not based on actual costs incurred (far subpart 16.5); and (4) the fixed hourly rate portion of time and materials and labor hours contracts and subcontracts (far subpart 16.6). flexibly priced contracts and subcontracts means  (1) fixed price contracts and subcontracts described at far 16.203 1(a)(2), 16.204, 16.205, and 16.206; (2) cost reimbursement contracts and subcontracts (far subpart 16.3); (3) incentive contracts and subcontracts where the price may be adjusted based on actual costs incurred (far subpart 16.4); (4) orders issued under indefinite delivery contracts and subcontracts where final payment is based on actual costs incurred (far subpart 16.5); and (5) the materials portion of time and materials contracts and subcontracts (far subpart 16.6). noncompliance means a failure in estimating, accumulating, or reporting costs to  (1) comply with applicable cas; or (2) consistently follow disclosed or established cost accounting practices. required change means  (1) a change in cost accounting practice that a contractor is required to make in order to comply with applicable standards, modifications or interpretations thereto, that subsequently become applicable to existing cas covered contracts or subcontracts due to the receipt of another cas covered contract or subcontract; or (2) a prospective change to a disclosed or established cost accounting practice when the cfao determines that the former practice was in compliance with applicable cas and the change is necessary for the contractor to remain in compliance. unilateral change means a change in cost accounting practice from one compliant practice to another compliant practice that a contractor with a cas covered contract(s) or subcontract(s) elects to make that has not been deemed a desirable change by the cfao and for which the government will pay no aggregate increased costs. (b) submit to the cfao a description of any cost accounting practice change as outlined in paragraphs (b)(1) through (3) of this clause (including revisions to the disclosure statement, if applicable), and any written statement that the cost impact of the change is immaterial. if a change in cost accounting practice is implemented without submitting the notice required by this paragraph, the cfao may determine the change to be a failure to follow paragraph (a)(2) of the clause at far 52.230 2, cost accounting standards; paragraph (a)(4) of the clause at far 52.230 3, disclosure and consistency of cost accounting practices; paragraph (a)(4) of the clause at far 52.230 4, disclosure and consistency of cost accounting practices foreign concerns; or paragraph (a)(2) of the clause at far 52.230 5, cost accounting standards educational institution. (1) when a description has been submitted for a change in cost accounting practice that is dependent on a contact award and that contract is subsequently awarded, notify the cfao within 15 days after such award. (2) for any change in cost accounting practice not covered by (b)(1) of this clause that is required in accordance with paragraphs (a)(3) and (a)(4)(i) of the clause at far 52.230 2; or paragraphs (a)(3), (a)(4)(i), or (a)(4)(iv) of the clause at far 52.230 5; submit a description of the change to the cfao not less than 60 days (or such other date as may be mutually agreed to by the cfao and the contractor) before implementation of the change. (3) for any change in cost accounting practices proposed in accordance with paragraph (a)(4)(ii) or (iii) of the clauses at far 52.230 2 and far 52.230 5; or with paragraph (a)(3) of the clauses at far 52.230 3 and far 52.230 4, submit a description of the change not less than 60 days (or such other date as may be mutually agreed to by the cfao and the contractor) before implementation of the change. if the change includes a proposed retroactive date submit supporting rationale. (4) submit a description of the change necessary to correct a failure to comply with an applicable cas or to follow a disclosed practice (as contemplated by paragraph (a)(5) of the clause at far 52.230 2 and far 52.230 5; or by paragraph (a)(4) of the clauses at far 52.230 3 and far 52.230 4)  (i) within 60 days (or such other date as may be mutually agreed to by the cfao and the contractor) after the date of agreement with the cfao that there is a noncompliance; or (ii) in the event of contractor disagreement, within 60 days after the cfao notifies the contractor of the determination of noncompliance. (c) when requested by the cfao, submit on or before a date specified by the cfao  (1) a general dollar magnitude (gdm) proposal in accordance with paragraph (d) or (g) of this clause. the contractor may submit a detailed cost impact (dci) proposal in lieu of the requested gdm proposal provided the dci proposal is in accordance with paragraph (e) or (h) of this clause; (2) a detailed cost impact (dci) proposal in accordance with paragraph (e) or (h) of this clause; (3) for any request for a desirable change that is based on the criteria in far 30.603 2(b)(3)(ii), the data necessary to demonstrate the required cost savings; and (4) for any request for a desirable change that is based on criteria other than that in far 30.603 2(b)(3)(ii), a gdm proposal and any other data necessary for the cfao to determine if the change is a desirable change. (d) for any change in cost accounting practice subject to paragraph (b)(1), (b)(2), or (b)(3) of this clause, the gdm proposal shall  (1) ) calculate the cost impact in accordance with paragraph (f) of this clause; (2) use one or more of the following methods to determine the increase or decrease in cost accumulations: (i) a representative sample of affected cas covered contracts and subcontracts. (ii) the change in indirect rates multiplied by the total estimated base computed for each of the following groups: (a) fixed price contracts and subcontracts. (b) flexibly priced contracts and subcontracts. (iii) any other method that provides a reasonable approximation of the total increase or decrease in cost accumulations for all affected fixed price and flexibly priced contracts and subcontracts; (3) use a format acceptable to the cfao but, as a minimum, include the following data: (i) the estimated increase or decrease in cost accumulations by executive agency, including any impact the change may have on contract and subcontract incentives, fees, and profits, for each of the following groups: (a) fixed price contracts and subcontracts. (b) flexibly priced contracts and subcontracts. (ii) for unilateral changes, the increased or decreased costs to the government for each of the following groups: (a) fixed price contracts and subcontracts. (b) flexibly priced contracts and subcontracts; and (4) when requested by the cfao, identify all affected cas covered contracts and subcontracts. (e) for any change in cost accounting practice subject to paragraph (b)(1), (b)(2), or (b)(3) of this clause, the dci proposal shall  (1) show the calculation of the cost impact in accordance with paragraph (f) of this clause; (2) show the estimated increase or decrease in cost accumulations for each affected cas covered contract and subcontract unless the cfao and contractor agree to include  (i) only those affected cas covered contracts and subcontracts having an estimate to complete exceeding a specified amount; and (ii) an estimate of the total increase or decrease in cost accumulations for all affected cas covered contracts and subcontracts, using the results in paragraph (e)(2)(i) of this clause; (3) use a format acceptable to the cfao but, as a minimum, include the information in paragraph (d)(3) of this clause; and (4) when requested by the cfao, identify all affected cas covered contracts and subcontracts. (f) for gdm and dci proposals that are subject to the requirements of paragraph (d) or (e) of this clause, calculate the cost impact as follows: (1) the cost impact calculation shall include all affected cas covered contracts and subcontracts regardless of their status (i.e., open or closed) or the fiscal year in which the costs were incurred (i.e., whether or not the final indirect rates have been established). (2) for unilateral changes  (i) determine the increased or decreased cost to the government for flexibly priced contracts and subcontracts as follows: (a) when the estimated cost to complete using the changed practice exceeds the estimated cost to complete using the current practice, the difference is increased cost to the government. (b) when the estimated cost to complete using the changed practice is less than the estimated cost to complete using the current practice, the difference is decreased cost to the government; (ii) determine the increased or decreased cost to the government for fixed priced contracts and subcontracts as follows: (a) when the estimated cost to complete using the changed practice is less than the estimated cost to complete using the current practice, the difference is increased cost to the government. (b) when the estimated cost to complete using the changed practice exceeds the estimated cost to complete using the current practice, the difference is decreased cost to the government; (iii) calculate the total increase or decrease in contract and subcontract incentives, fees, and profits associated with the increased or decreased costs to the government in accordance with 48 cfr 9903.306(c). the associated increase or decrease is based on the difference between the negotiated incentives, fees, and profits and the amounts that would have been negotiated had the cost impact been known at the time the contracts and subcontracts were negotiated; and (iv) calculate the increased cost to the government in the aggregate. (3) for equitable adjustments for required or desirable changes  (i) estimated increased cost accumulations are the basis for increasing contract prices, target prices and cost ceilings; and (ii) estimated decreased cost accumulations are the basis for decreasing contract prices, target prices and cost ceilings. (g) for any noncompliant cost accounting practice subject to paragraph (b)(4) of this clause, prepare the gdm proposal as follows: (1) calculate the cost impact in accordance with paragraph (i) of this clause. (2) use one or more of the following methods to determine the increase or decrease in contract and subcontract prices or cost accumulations, as applicable: (i) a representative sample of affected cas covered contracts and subcontracts. (ii) when the noncompliance involves cost accumulation the change in indirect rates multiplied by the applicable base for only flexibly priced contracts and subcontracts. (iii) any other method that provides a reasonable approximation of the total increase or decrease. (3) use a format acceptable to the cfao but, as a minimum, include the following data: (i) the total increase or decrease in contract and subcontract price and cost accumulations, as applicable, by executive agency, including any impact the noncompliance may have on contract and subcontract incentives, fees, and profits, for each of the following groups: (a) fixed price contracts and subcontracts. (b) flexibly priced contracts and subcontracts. (ii) the increased or decreased cost to the government for each of the following groups: (a) fixed price contracts and subcontracts. (b) flexibly priced contracts and subcontracts. (iii) the total overpayments and underpayments made by the government during the period of noncompliance. (4) when requested by the cfao, identify all cas covered contracts and subcontracts. (h) for any noncompliant practice subject to paragraph (b)(4) of this clause, prepare the dci proposal as follows: (1) calculate the cost impact in accordance with paragraph (i) of this clause. (2) show the increase or decrease in price and cost accumulations for each affected cas covered contract and subcontract unless the cfao and contractor agree to  (i) include only those affected cas covered contracts and subcontracts having  (a) contract and subcontract values exceeding a specified amount when the noncompliance involves estimating costs; and (b) incurred costs exceeding a specified amount when the noncompliance involves accumulating costs; and (ii) estimate the total increase or decrease in price and cost accumulations for all affected cas covered contracts and subcontracts using the results in paragraph (h)(2)(i) of this clause. (3) use a format acceptable to the cfao that, as a minimum, include the information in paragraph (g)(3) of this clause. (4) when requested by the cfao, identify all cas covered contracts and subcontracts. (i) for gdm and dci proposals that are subject to the requirements of paragraph (g) or (h) of this clause, calculate the cost impact as follows: (1) the cost impact calculation shall include all affected cas covered contracts and subcontracts regardless of their status (i.e., open or closed) or the fiscal year in which the costs are incurred (i.e., whether or not the final indirect rates have been established). (2) for noncompliances that involve estimating costs, determine the increased or decreased cost to the government for fixed price contracts and subcontracts as follows: (i) when the negotiated contract or subcontract price exceeds what the negotiated price would have been had the contractor used a compliant practice, the difference is increased cost to the government. (ii) when the negotiated contract or subcontract price is less than what the negotiated price would have been had the contractor used a compliant practice, the difference is decreased cost to the government. (3) for noncompliances that involve accumulating costs, determine the increased or decreased cost to the government for flexibly priced contracts and subcontracts as follows: (i) when the costs that were accumulated under the noncompliant practice exceed the costs that would have been accumulated using a compliant practice (from the time the noncompliant practice was first implemented until the date the noncompliant practice was replaced with a compliant practice), the difference is increased cost to the government. (ii) when the costs that were accumulated under the noncompliant practice are less than the costs that would have been accumulated using a compliant practice (from the time the noncompliant practice was first implemented until the date the noncompliant practice was replaced with a compliant practice), the difference is decreased cost to the government. (4) calculate the total increase or decrease in contract and subcontracts incentives, fees, and profits associated with the increased or decreased cost to the government in accordance with 48 cfr 9903.306(c). the associated increase or decrease is based on the difference between the negotiated incentives, fees, and profits and the amounts that would have been negotiated had the contractor used a compliant practice. (5) calculate the increased cost to the government in the aggregate. (j) if the contractor does not submit the information required by paragraph (b) or (c) of this clause within the specified time, or any extension granted by the cfao, the cfao may take one or both of the following actions: (1) withhold an amount not to exceed 10 percent of each subsequent amount payment to the contractor’s affected cas covered contracts, (up to the estimated general dollar magnitude of the cost impact), until such time as the contractor provides the required information to the cfao. (2) issue a final decision in accordance with far 33.211 and unilaterally adjust the contract(s) by the estimated amount of the cost impact. (k) agree to  (1) contract modifications to reflect adjustments required in accordance with paragraph (a)(4)(ii) or (a)(5) of the clauses at far 52.230 2 and 52.230 5; or with paragraph (a)(3)(i) or (a)(4) of the clauses at far 52.230 3 and far 52.230 4; and (2) repay the government for any aggregate increased cost paid to the contractor. (l) for all subcontracts subject to the clauses at far 52.230 2, 52.230 3, 52.230 4, or 52.230 5  (1) so state in the body of the subcontract, in the letter of award, or in both (do not use self deleting clauses); (2) include the substance of this clause in all negotiated subcontracts; and (3) within 30 days after award of the subcontract, submit the following information to the contractor’s cfao: (i) subcontractor’s name and subcontract number. (ii) dollar amount and date of award. (iii) name of contractor making the award. (m) notify the cfao in writing of any adjustments required to subcontracts under this contract and agree to an adjustment to this contract price or estimated cost and fee. the contractor shall  (1) provide this notice within 30 days after the contractor receives the proposed subcontract adjustments; and (2) include a proposal for adjusting the higher tier subcontract or the contract appropriately. (n) for subcontracts containing the clause or substance of the clause at far 52.230 2, far 52.230 3, far 52.230 4, or far 52.230 5, require the subcontractor to comply with all standards in effect on the date of award or of final agreement on price, as shown on the subcontractor’s signed certificate of current cost or pricing data, whichever is earlier. (end of clause) as prescribed in 30.201 3(c), insert the following provision: proposal disclosure cost accounting practice changes (apr 2005) the offeror shall check "yes" below if the contract award will result in a required or unilateral change in cost accounting practice, including unilateral changes requested to be desirable changes. □ yes □ no if the offeror checked "yes" above, the offeror shall  (1) prepare the price proposal in response to the solicitation using the changed practice for the period of performance for which the practice will be used; and (2) submit a description of the changed cost accounting practice to the contracting officer and the cognizant federal agency official as pricing support for the proposal. (end of provision) as prescribed in 32.111(a)(1), insert the following clause, appropriately modified with respect to payment due date in accordance with agency regulations, in solicitations and contracts when a fixed price supply contract, a fixed price service contract, or a contract for nonregulated communication services is contemplated: payments (apr 1984) the government shall pay the contractor, upon the submission of proper invoices or vouchers, the prices stipulated in this contract for supplies delivered and accepted or services rendered and accepted, less any deductions provided in this contract. unless otherwise specified in this contract, payment shall be made on partial deliveries accepted by the government if  (a) the amount due on the deliveries warrants it; or (b) the contractor requests it and the amount due on the deliveries is at least $1,000 or 50 percent of the total contract price. (end of clause) as prescribed in 32.111(a)(2), insert the following clause, as appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts when a fixed price research and development contract is contemplated: payments under fixed price research and development contracts (apr 1984) the government shall pay the contractor, upon submission of proper invoices or vouchers, the prices stipulated in this contract for work delivered or rendered and accepted, less any deductions provided in this contract. unless otherwise specified, payment shall be made upon acceptance of any portion of the work delivered or rendered for which a price is separately stated in the contract. (end of clause) as prescribed in 32.111(a)(3), insert the following clause, appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts for personal services: payments under personal services contracts (apr 1984) the government shall pay the contractor for the services performed by the contractor, as set forth in the schedule of this contract, at the rates prescribed, upon the submission by the contractor of proper invoices or time statements to the office or officer designated and at the time provided for in this contract. the government shall also pay the contractor  (a) a per diem rate in lieu of subsistence for each day the contractor is in a travel status away from home or regular place of employment in accordance with federal travel regulations (41 cfr 101 7) as authorized in appropriate travel orders; and (b) any other transportation expenses if provided for in the schedule. (end of clause) as prescribed in 32.111(a)(4), insert the following clause, appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts for transportation or transportation related services: payments under transportation contracts and transportation related services contracts (apr 1984) the government shall pay the contractor upon the submission of properly certified invoices or vouchers, the amount due for services rendered and accepted, less deductions, if any, as herein provided. (end of clause) as prescribed in 32.111(a)(5), insert the following clause: payments under fixed price construction contracts (may 2014) (a) payment of price. the government shall pay the contractor the contract price as provided in this contract. (b) progress payments. the government shall make progress payments monthly as the work proceeds, or at more frequent intervals as determined by the contracting officer, on estimates of work accomplished which meets the standards of quality established under the contract, as approved by the contracting officer. (1) the contractor’s request for progress payments shall include the following substantiation: (i) an itemization of the amounts requested, related to the various elements of work required by the contract covered by the payment requested. (ii) a listing of the amount included for work performed by each subcontractor under the contract. (iii) a listing of the total amount of each subcontract under the contract. (iv) a listing of the amounts previously paid to each such subcontractor under the contract. (v) additional supporting data in a form and detail required by the contracting officer. (2) in the preparation of estimates, the contracting officer may authorize material delivered on the site and preparatory work done to be taken into consideration. material delivered to the contractor at locations other than the site also may be taken into consideration if  (i) consideration is specifically authorized by this contract; and (ii) the contractor furnishes satisfactory evidence that it has acquired title to such material and that the material will be used to perform this contract. (c) contractor certification. along with each request for progress payments, the contractor shall furnish the following certification, or payment shall not be made: (however, if the contractor elects to delete paragraph (c)(4) from the certification, the certification is still acceptable.) i hereby certify, to the best of my knowledge and belief, that  (1) the amounts requested are only for performance in accordance with the specifications, terms, and conditions of the contract; (2) all payments due to subcontractors and suppliers from previous payments received under the contract have been made, and timely payments will be made from the proceeds of the payment covered by this certification, in accordance with subcontract agreements and the requirements of chapter 39 of title 31, united states code; (3) this request for progress payments does not include any amounts which the prime contractor intends to withhold or retain from a subcontractor or supplier in accordance with the terms and conditions of the subcontract; and (4) this certification is not to be construed as final acceptance of a subcontractor’s performance. __________________________________________________ (name) __________________________________________________ (title) __________________________________________________ (date) (d) refund of unearned amounts. if the contractor, after making a certified request for progress payments, discovers that a portion or all of such request constitutes a payment for performance by the contractor that fails to conform to the specifications, terms, and conditions of this contract (hereinafter referred to as the "unearned amount"), the contractor shall  (1) notify the contracting officer of such performance deficiency; and (2) be obligated to pay the government an amount (computed by the contracting officer in the manner provided in paragraph (j) of this clause) equal to interest on the unearned amount from the 8 thday after the date of receipt of the unearned amount until  (i) the date the contractor notifies the contracting officer that the performance deficiency has been corrected; or (ii) the date the contractor reduces the amount of any subsequent certified request for progress payments by an amount equal to the unearned amount. (e) retainage. if the contracting officer finds that satisfactory progress was achieved during any period for which a progress payment is to be made, the contracting officer shall authorize payment to be made in full. however, if satisfactory progress has not been made, the contracting officer may retain a maximum of 10 percent of the amount of the payment until satisfactory progress is achieved. when the work is substantially complete, the contracting officer may retain from previously withheld funds and future progress payments that amount the contracting officer considers adequate for protection of the government and shall release to the contractor all the remaining withheld funds. also, on completion and acceptance of each separate building, public work, or other division of the contract, for which the price is stated separately in the contract, payment shall be made for the completed work without retention of a percentage. (f) title, liability, and reservation of rights. all material and work covered by progress payments made shall, at the time of payment, become the sole property of the government, but this shall not be construed as  (1) relieving the contractor from the sole responsibility for all material and work upon which payments have been made or the restoration of any damaged work; or (2) waiving the right of the government to require the fulfillment of all of the terms of the contract. (g) reimbursement for bond premiums. in making these progress payments, the government shall, upon request, reimburse the contractor for the amount of premiums paid for performance and payment bonds (including coinsurance and reinsurance agreements, when applicable) after the contractor has furnished evidence of full payment to the surety. the retainage provisions in paragraph (e) of this clause shall not apply to that portion of progress payments attributable to bond premiums. (h) final payment. the government shall pay the amount due the contractor under this contract after  (1) completion and acceptance of all work; (2) presentation of a properly executed voucher; and (3) presentation of release of all claims against the government arising by virtue of this contract, other than claims, in stated amounts, that the contractor has specifically excepted from the operation of the release. a release may also be required of the assignee if the contractor’s claim to amounts payable under this contract has been assigned under the assignment of claims act of1940 ( 31 u.s.c.3727 and 41 u.s.c. 6305). (i) limitation because of undefinitized work. notwithstanding any provision of this contract, progress payments shall not exceed 80 percent on work accomplished on undefinitized contract actions. a "contract action" is any action resulting in a contract, as defined in far subpart 2.1, including contract modifications for additional supplies or services, but not including contract modifications that are within the scope and under the terms of the contract, such as contract modifications issued pursuant to the changes clause, or funding and other administrative changes. (j) interest computation on unearned amounts. in accordance with 31 u.s.c. 3903(c)(1), the amount payable under paragraph (d)(2) of this clause shall be  (1) computed at the rate of average bond equivalent rates of 91 day treasury bills auctioned at the most recent auction of such bills prior to the date the contractor receives the unearned amount; and (2) deducted from the next available payment to the contractor. (end of clause) as prescribed in 32.111(a)(6), insert the following clause, appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts for regulated communication services by common carriers: payment under communication service contracts with common carriers (apr 1984) the government shall pay the contractor, in arrears, upon submission of invoices for services and facilities furnished in accordance with the terms of csas issued under this contract, the rates and charges for the services and facilities as set forth in the clause entitled "rates, charges and services." (end of clause) as prescribed in 32.111(a)(7), insert the following clause: payments under time and materials and labor hour contracts (nov 2021) the government will pay the contractor as follows upon the submission of vouchers approved by the contracting officer or the authorized representative: (a) hourly rate. (1) hourly rate means the rate(s) prescribed in the contract for payment for labor that meets the labor category qualifications of a labor category specified in the contract that are  (i) performed by the contractor; (ii) performed by the subcontractors; or (iii) transferred between divisions, subsidiaries, or affiliates of the contractor under a common control. (2) the amounts shall be computed by multiplying the appropriate hourly rates prescribed in the schedule by the number of direct labor hours performed. (3) the hourly rates shall be paid for all labor performed on the contract that meets the labor qualifications specified in the contract. labor hours incurred to perform tasks for which labor qualifications were specified in the contract will not be paid to the extent the work is performed by employees that do not meet the qualifications specified in the contract, unless specifically authorized by the contracting officer. (4) the hourly rates shall include wages, indirect costs, general and administrative expense, and profit. fractional parts of an hour shall be payable on a prorated basis. (5) vouchers may be submitted not more than once every two weeks, to the contracting officer or authorized representative. a small business concern may receive more frequent payments than every two weeks. the contractor shall substantiate vouchers (including any subcontractor hours reimbursed at the hourly rate in the schedule) by evidence of actual payment and by  (i) individual daily job timekeeping records; (ii) records that verify the employees meet the qualifications for the labor categories specified in the contract; or (iii) other substantiation approved by the contracting officer. (6) promptly after receipt of each substantiated voucher, the government shall, except as otherwise provided in this contract, and subject to the terms of paragraph (e) of this clause, pay the voucher as approved by the contracting officer or authorized representative. (7) unless otherwise prescribed in the schedule, the contracting officer may unilaterally issue a contract modification requiring the contractor to withhold amounts from its billings until a reserve is set aside in an amount that the contracting officer considers necessary to protect the government's interests. the contracting officer may require a withhold of 5 percent of the amounts due under paragraph (a) of this clause, but the total amount withheld for the contract shall not exceed $50,000. the amounts withheld shall be retained until the contractor executes and delivers the release required by paragraph (g) of this clause. (8) unless the schedule prescribes otherwise, the hourly rates in the schedule shall not be varied by virtue of the contractor having performed work on an overtime basis. if no overtime rates are provided in the schedule and overtime work is approved in advance by the contracting officer, overtime rates shall be negotiated. failure to agree upon these overtime rates shall be treated as a dispute under the disputes clause of this contract. 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 the contracting officer. (b) materials. (1) for the purposes of this clause  (i) direct materials means those materials that enter directly into the end product, or that are used or consumed directly in connection with the furnishing of the end product or service. (ii) materials means  (a) direct materials, including supplies transferred between divisions, subsidiaries, or affiliates of the contractor under a common control; (b) subcontracts for supplies and incidental services for which there is not a labor category specified in the contract; (c) other direct costs (e.g., incidental services for which there is not a labor category specified in the contract, travel, computer usage charges, etc.); and (d) applicable indirect costs. (2) if the contractor furnishes its own materials that meet the definition of a commercial product or commercial service in federal acquisition regulation (far) 2.101, the price to be paid for such materials shall not exceed the contractor's established catalog or market price, adjusted to reflect the  (i) quantities being acquired; and (ii) actual cost of any modifications necessary because of contract requirements. (3) except as provided for in paragraph (b)(2) of this clause, the government will reimburse the contractor for allowable cost of materials provided the contractor  (i) has made payments for materials in accordance with the terms and conditions of the agreement or invoice; or (ii) ordinarily makes these payments within 30 days of the submission of the contractor's payment request to the government and such payment is in accordance with the terms and conditions of the agreement or invoice. (4) payment for materials is subject to the allowable cost and payment clause of this contract. the contracting officer will determine allowable costs of materials in accordance with far subpart 31.2 in effect on the date of this contract. (5) the contractor may include allocable indirect costs and other direct costs to the extent they are  (i) comprised only of costs that are clearly excluded from the hourly rate; (ii) allocated in accordance with the contractor's written or established accounting practices; and (iii) indirect costs are not applied to subcontracts that are paid at the hourly rates. (6) to the extent able, the contractor shall  (i) obtain materials at the most advantageous prices available with due regard to securing prompt delivery of satisfactory materials; and (ii) take all cash and trade discounts, rebates, allowances, credits, salvage, commissions, and other benefits. when unable to take advantage of the benefits, the contractor shall promptly notify the contracting officer and give the reasons. the contractor shall give credit to the government for cash and trade discounts, rebates, scrap, commissions, and other amounts that have accrued to the benefit of the contractor, or would have accrued except for the fault or neglect of the contractor. the contractor shall not deduct from gross costs the benefits lost without fault or neglect on the part of the contractor, or lost through fault of the government. (7) except as provided for in 31.205 26(e) and (f), the government will not pay profit or fee to the prime contractor on materials. (c) if the contractor enters into any subcontract that requires consent under the clause at 52.244 2, subcontracts, without obtaining such consent, the government is not required to reimburse the contractor for any costs incurred under the subcontract prior to the date the contractor obtains the required consent. any reimbursement of subcontract costs incurred prior to the date the consent was obtained shall be at the sole discretion of the government. (d) total cost. it is estimated that the total cost to the government for the performance of this contract shall not exceed the ceiling price set forth in the schedule, and the contractor agrees to use its best efforts to perform the work specified in the schedule and all obligations under this contract within such ceiling price. if at any time the contractor has reason to believe that the hourly rate payments and material costs that will accrue in performing this contract 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, the contractor shall notify the contracting officer giving a revised estimate of the total price to the government for performing this contract with supporting reasons and documentation. if at any time during performing this contract, the contractor has reason to believe that the total price to the government for performing this contract will be substantially greater or less than the then stated ceiling price, the contractor shall so notify the contracting officer, giving a revised estimate of the total price for performing this contract, with supporting reasons and documentation. if at any time during performing this contract, the government has reason to believe that the work to be required in performing this contract will be substantially greater or less than the stated ceiling price, the contracting officer will so advise the contractor, giving the then revised estimate of the total amount of effort to be required under the contract. (e) ceiling price. the government will not be obligated to pay the contractor any amount in excess of the ceiling price in the schedule, and the contractor shall not be obligated to continue performance if to do so would exceed the ceiling price set forth in the schedule, unless and until the contracting officer notifies the contractor in writing that the ceiling price has been increased and specifies in the notice a revised ceiling that shall constitute the ceiling price for performance under this contract. 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 the contractor 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. (f) audit. at any time before final payment under this contract, the contracting officer may request audit of the vouchers and supporting documentation. each payment previously made shall be subject to reduction to the extent of amounts, on preceding vouchers, that are found by the contracting officer or 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 designated by the contractor as the "completion voucher" and supporting documentation, and upon compliance by the contractor with all terms of this contract (including, without limitation, terms relating to patents and the terms of paragraph (g) of this clause), the government shall promptly pay any balance due the contractor. the completion voucher, and supporting documentation, shall be submitted by the contractor as promptly as practicable following completion of the work under this contract, but in no event later than 120 days (or such longer period as the contracting officer may approve in writing) from the date of completion. (g) assignment and release of claims. the contractor, and each assignee under an assignment entered into under this contract and in effect at the time of final payment under this contract, shall execute and deliver, at the time of and as a condition precedent to final payment under this contract, a release discharging the government, its officers, agents, and employees of and from all liabilities, obligations, and claims arising out of or under this contract, 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 the contractor. (2) claims, together with reasonable incidental expenses, based upon the liabilities of the contractor to third parties arising out of performing this contract, that are not known to the contractor on the date of the execution of the release, and of which the contractor gives notice in writing to the contracting officer not more than 6 years after the date of the release or the date of any notice to the contractor that the government is prepared to make final payment, whichever is earlier. (3) claims for reimbursement of costs (other than expenses of the contractor by reason of its indemnification of the government against patent liability), including reasonable incidental expenses, incurred by the contractor under the terms of this contract relating to patents. (h) interim payments on contracts for other than services. (1) interim payments made prior to the final payment under the contract are contract financing payments. contract financing payments are not subject to the interest penalty provisions of the prompt payment act. (2) the designated payment office will make interim payments for contract financing on the _________ [contracting officer insert day as prescribed by agency head; if not prescribed, insert "30th ] day after the designated billing office receives a proper payment request. in the event that the government requires an audit or other review of a specific payment request to ensure compliance with the terms and conditions of the contract, the designated payment office is not compelled to make payment by the specified due date. (i) interim payments on contracts for services. for interim payments made prior to the final payment under this contract, the government will make payment in accordance with the prompt payment act ( 31 u.s.c. 3903) and prompt payment regulations at 5 cfr part 1315. (end of clause) as prescribed in 32.111(b)(1), insert the following clause: discounts for prompt payment (feb 2002) (a) discounts for prompt payment will not be considered in the evaluation of offers. however, any offered discount will form a part of the award, and will be taken if payment is made within the discount period indicated in the offer by the offeror. as an alternative to offering a discount for prompt payment in conjunction with the offer, offerors awarded contracts may include discounts for prompt payment on individual invoices. (b) in connection with any discount offered for prompt payment, time shall be computed from the date of the invoice. if the contractor has not placed a date on the invoice, the due date shall be calculated from the date the designated billing office receives a proper invoice, provided the agency annotates such invoice with the date of receipt at the time of receipt. for the purpose of computing the discount earned, payment shall be considered to have been made on the date that appears on the payment check or, for an electronic funds transfer, the specified payment date. when the discount date falls on a saturday, sunday, or legal holiday when federal government offices are closed and government business is not expected to be conducted, payment may be made on the following business day. (end of clause) as prescribed in 32.111(b)(2), insert a clause substantially as follows, appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts when a supply contract, service contract, time and materials contract, labor hour contract, or research and development contract is contemplated that includes two or more terms authorizing the temporary withholding of amounts otherwise payable to the contractor for supplies delivered or services performed: limitation on withholding of payments (apr 1984) if more than one clause or schedule term of this contract authorizes the temporary withholding of amounts otherwise payable to the contractor for supplies delivered or services performed, the total of the amounts withheld at any one time shall not exceed the greatest amount that may be withheld under any one clause or schedule term at that time; provided, that this limitation shall not apply to  (a) withholdings pursuant to any clause relating to wages or hours of employees; (b) withholdings not specifically provided for by this contract; (c) the recovery of overpayments; and (d) any other withholding for which the contracting officer determines that this limitation is inappropriate. (end of clause) as prescribed in 32.111(c)(1), insert the following clause: payments under fixed price architect engineer contracts (apr 2010) (a) estimates shall be made monthly of the amount and value of the work and services performed by the contractor under this contract which meet the standards of quality established under this contract. the estimates, along with any supporting data required by the contracting officer, shall be prepared by the contractor and submitted along with its voucher. (b) after receipt of each substantiated voucher, the government shall pay the voucher as approved by the contracting officer or authorized representative. the contracting officer shall require a withholding from amounts due under paragraph (a) of this clause of up to 10 percent only if the contracting officer determines that such a withholding is necessary to protect the government’s interest and ensure satisfactory completion of the contract. the amount withheld shall be determined based upon the contractor’s performance record under this contract. whenever the contracting officer determines that the work is substantially complete and that the amount retained is in excess of the amount adequate for the protection of the government, the contracting officer shall release the excess amount to the contractor. (c) upon satisfactory completion by the contractor and final acceptance by the contracting officer of all the work done by the contractor under the "statement of architect engineer services", the contractor will be paid the unpaid balance of any money due for work under the statement, including all withheld amounts. (d) before final payment under the contract, or before settlement upon termination of the contract, and as a condition precedent thereto, the contractor shall execute and deliver to the contracting officer a release of all claims against the government arising under or by virtue of this contract, other than any claims that are specifically excepted by the contractor from the operation of the release in amounts stated in the release. (e) notwithstanding any other provision in this contract, and specifically paragraph (b) of this clause, progress payments shall not exceed 80 percent on work accomplished on undefinitized contract actions. a "contract action" is any action resulting in a contract, as defined in far subpart 2.1, including contract modifications for additional supplies or services, but not including contract modifications that are within the scope and under the terms of the contract, such as contract modifications issued pursuant to the changes clause, or funding and other administrative changes. (end of clause) as prescribed in 32.111(c)(2), insert the following clause, appropriately modified with respect to payment due dates in accordance with agency regulations, in solicitations and contracts when a fixed price supply contract, fixed price service contract, or transportation contract is contemplated: extras (apr 1984) except as otherwise provided in this contract, no payment for extras shall be made unless such extras and the price therefor have been authorized in writing by the contracting officer. (end of clause) as prescribed in 32.412(a), insert the following clause: advance payments (may 2001) (a) requirements for payment. advance payments will be made under this contract (1) upon submission of properly certified invoices or vouchers by the contractor, and approval by the administering office, ________ [insert the name of the office designated under agency procedures], or (2) under a letter of credit. the amount of the invoice or voucher submitted plus all advance payments previously approved shall not exceed $_______. if a letter of credit is used, the contractor shall withdraw cash only when needed for disbursements acceptable under this contract and report cash disbursements and balances as required by the administering office. the contractor shall apply terms similar to this clause to any advance payments to subcontractors. (b) special account. until (1) the contractor has liquidated all advance payments made under the contract and related interest charges and (2) the administering office has approved in writing the release of any funds due and payable to the contractor, all advance payments and other payments under this contract shall be made by check payable to the contractor marked for deposit only in the contractor’s special account with the _____ [insert the name of the financial institution]. none of the funds in the special account shall be mingled with other funds of the contractor. withdrawals from the special account may be made only by check of the contractor countersigned by the contracting officer or a government countersigning agent designated in writing by the contracting officer. (c) use of funds. the contractor may withdraw funds from the special account only to pay for properly allocable, allowable, and reasonable costs for direct materials, direct labor, and indirect costs. other withdrawals require approval in writing by the administering office. determinations of whether costs are properly allocable, allowable, and reasonable shall be in accordance with generally accepted accounting principles, subject to any applicable subparts of part 31 of the federal acquisition regulation. (d) repayment to the government. at any time, the contractor may repay all or any part of the funds advanced by the government. whenever requested in writing to do so by the administering office, the contractor shall repay to the government any part of unliquidated advance payments considered by the administering office to exceed the contractor’s current requirements or the amount specified in paragraph (a) of this clause. if the contractor fails to repay the amount requested by the administering office, all or any part of the unliquidated advance payments may be withdrawn from the special account by check signed by only the countersigning agent and applied to reduction of the unliquidated advance payments under this contract. (e) maximum payment. when the sum of all unliquidated advance payments, unpaid interest charges, and other payments exceed _____ percent of the contract price, the government shall withhold further payments to the contractor. on completion or termination of the contract, the government shall deduct from the amount due to the contractor all unliquidated advance payments and all interest charges payable. if previous payments to the contractor exceed the amount due, the excess amount shall be paid to the government on demand. for purposes of this paragraph, the contract price shall be considered to be the stated contract price of $_____, less any subsequent price reductions under the contract, plus (1) any price increases resulting from any terms of this contract for price redetermination or escalation, and (2) any other price increases that do not, in the aggregate, exceed $_____ [insert an amount not higher than 10 percent of the stated contract amount inserted in this paragraph]. any payments withheld under this paragraph shall be applied to reduce the unliquidated advance payments. if full liquidation has been made, payments under the contract shall resume. (f) interest. (1) the contractor shall pay interest to the government on the daily unliquidated advance payments at the daily rate specified in paragraph (f)(3) of this clause. interest shall be computed at the end of each calendar month for the actual number of days involved. for the purpose of computing the interest charge  (i) advance payments shall be considered as increasing the unliquidated balance as of the date of the advance payment check; (ii) repayments by contractor check shall be considered as decreasing the unliquidated balance as of the date on which the check is received by the government authority designated by the contracting officer; and (iii) liquidations by deductions from government payments to the contractor shall be considered as decreasing the unliquidated balance as of the date of the check for the reduced payment. (2) interest charges resulting from the monthly computation shall be deducted from payments, other than advance payments, due the contractor. if the accrued interest exceeds the payment due, any excess interest shall be carried forward and deducted from subsequent payments. interest carried forward shall not be compounded. interest on advance payments shall cease to accrue upon satisfactory completion or termination of the contract for the convenience of the government. the contractor shall charge interest on advance payments to subcontractors in the manner described above and credit the interest to the government. interest need not be charged on advance payments to nonprofit educational or research subcontractors for experimental, developmental, or research work. (3) if interest is required under the contract, the contracting officer shall determine a daily interest rate based on the higher of (i) the published prime rate of the financial institution (depository) in which the special account is established or (ii) the rate established by the secretary of the treasury under pub.l.92 41 (50 u.s.c. app.1215(b)(2)). the contracting officer shall revise the daily interest rate during the contract period in keeping with any changes in the cited interest rates. (4) if the full amount of interest charged under this paragraph has not been paid by deduction or otherwise upon completion or termination of this contract, the contractor shall pay the remaining interest to the government on demand. (g) financial institution agreement. before an advance payment is made under this contract, the contractor shall transmit to the administering office, in the form prescribed by the administering office, an agreement in triplicate from the financial institution in which the special account is established, clearly setting forth the special character of the account and the responsibilities of the financial institution under the account. the contractor shall select a financial institution that is a member bank of the federal reserve system, an "insured" bank within the meaning of the federal deposit insurance corporation act ( 12 u.s.c. 1811), or a credit union insured by the national credit union administration. (h) lien on special bank account. the government shall have a lien upon any balance in the special account paramount to all other liens. the government lien shall secure the repayment of any advance payments made under this contract and any related interest charges. (i) lien on property under contract. (1) all advance payments under this contract, together with interest charges, shall be secured, when made, by a lien in favor of the government, paramount to all other liens, on the supplies or other things covered by this contract and on material and other property acquired for or allocated to the performance of this contract, except to the extent that the government by virtue of any other terms of this contract, or otherwise, shall have valid title to the supplies, materials, or other property as against other creditors of the contractor. (2) the contractor shall identify, by marking or segregation, all property that is subject to a lien in favor of the government by virtue of any terms of this contract in such a way as to indicate that it is subject to a lien and that it has been acquired for or allocated to performing this contract. if, for any reason, the supplies, materials, or other property are not identified by marking or segregation, the government shall be considered to have a lien to the extent of the government’s interest under this contract on any mass of property with which the supplies, materials, or other property are commingled. the contractor shall maintain adequate accounting control over the property on its books and records. (3) if, at any time during the progress of the work on the contract, it becomes necessary to deliver to a third person any items or materials on which the government has a lien, the contractor shall notify the third person of the lien and shall obtain from the third person a receipt in duplicate acknowledging the existence of the lien. the contractor shall provide a copy of each receipt to the contracting officer. (4) if, under the termination clause, the contracting officer authorizes the contractor to sell or retain termination inventory, the approval shall constitute a release of the government’s lien to the extent that  (i) the termination inventory is sold or retained; and (ii) the sale proceeds or retention credits are applied to reduce any outstanding advance payments. (j) insurance. (1) the contractor shall maintain with responsible insurance carriers  (i) insurance on plant and equipment against fire and other hazards, to the extent that similar properties are usually insured by others operating plants and properties of similar character in the same general locality; (ii) adequate insurance against liability on account of damage to persons or property; and (iii) adequate insurance under all applicable workers’ compensation laws. (2) until work under this contract has been completed and all advance payments made under the contract have been liquidated, the contractor shall  (i) maintain this insurance; (ii) maintain adequate insurance on any materials, parts, assemblies, subassemblies, supplies, equipment, and other property acquired for or allocable to this contract and subject to the government lien under paragraph (i) of this clause; and (iii) furnish any evidence with respect to its insurance that the administering office may require. (k) default. (1) if any of the following events occurs, the government may, by written notice to the contractor, withhold further withdrawals from the special account and further payments on this contract: (i) termination of this contract for a fault of the contractor. (ii) a finding by the administering office that the contractor has failed to  (a) observe any of the conditions of the advance payment terms; (b) comply with any material term of this contract; (c) make progress or maintain a financial condition adequate for performance of this contract; (d) limit inventory allocated to this contract to reasonable requirements; or (e) avoid delinquency in payment of taxes or of the costs of performing this contract in the ordinary course of business. (iii) the appointment of a trustee, receiver, or liquidator for all or a substantial part of the contractor’s property, or the institution of proceedings by or against the contractor for bankruptcy, reorganization, arrangement, or liquidation. (iv) the service of any writ of attachment, levy of execution, or commencement of garnishment proceedings concerning the special account. (v) the commission of an act of bankruptcy. (2) if any of the events described in paragraph (k)(1) of this clause continue for 30 days after the written notice to the contractor, the government may take any of the following additional actions: (i) withdraw by checks payable to the treasurer of the united states, signed only by the countersigning agency, all or any part of the balance in the special account and apply the amounts to reduce outstanding advance payments and any other claims of the government against the contractor. (ii) charge interest, in the manner prescribed in paragraph (f) of this clause, on outstanding advance payments during the period of any event described in paragraph (k)(1) of this clause. (iii) demand immediate repayment by the contractor of the unliquidated balance of advance payments. (iv) take possession of and, with or without advertisement, sell at public or private sale all or any part of the property on which the government has a lien under this contract and, after deducting any expenses incident to the sale, apply the net proceeds of the sale to reduce the unliquidated balance of advance payments or other government claims against the contractor. (3) the government may take any of the actions described in paragraphs (k)(1) and (2) of this clause it considers appropriate at its discretion and without limiting any other rights of the government. (l) prohibition against assignment. notwithstanding any other terms of this contract, the contractor shall not assign this contract, any interest therein, or any claim under the contract to any party. (m) information and access to records. the contractor shall furnish to the administering office (1) monthly or at other intervals as required, signed or certified balance sheets and profit and loss statements together with a report on the operation of the special account in the form prescribed by the administering office; and (2) if requested, other information concerning the operation of the contractor’s business. the contractor shall provide the authorized government representatives proper facilities for inspection of the contractor’s books, records, and accounts. (n) other security. the terms of this contract are considered to provide adequate security to the government for advance payments; however, if the administering office considers the security inadequate, the contractor shall furnish additional security satisfactory to the administering office, to the extent that the security is available. (o) representations. the contractor represents the following: (1) the balance sheet, the profit and loss statement, and any other supporting financial statements furnished to the administering office fairly reflect the financial condition of the contractor at the date shown or the period covered, and there has been no subsequent materially adverse change in the financial condition of the contractor. (2) no litigation or proceedings are presently pending or threatened against the contractor, except as shown in the financial statements. (3) the contractor has disclosed all contingent liabilities, except for liability resulting from the renegotiation of defense production contracts, in the financial statements furnished to the administering office. (4) none of the terms in this clause conflict with the authority under which the contractor is doing business or with the provision of any existing indenture or agreement of the contractor. (5) the contractor has the power to enter into this contract and accept advance payments, and has taken all necessary action to authorize the acceptance under the terms of this contract. (6) the assets of the contractor are not subject to any lien or encumbrance of any character except for current taxes not delinquent, and except as shown in the financial statements furnished by the contractor. there is no current assignment of claims under any contract affected by these advance payment provisions. (7) all information furnished by the contractor to the administering office in connection with each request for advance payments is true and correct. (8) these representations shall be continuing and shall be considered to have been repeated by the submission of each invoice for advance payments. (p) covenants. to the extent the government considers it necessary while any advance payments made under this contract remain outstanding, the contractor, without the prior written consent of the administering office, shall not  (1) mortgage, pledge, or otherwise encumber or allow to be encumbered, any of the assets of the contractor now owned or subsequently acquired, or permit any preexisting mortgages, liens, or other encumbrances to remain on or attach to any assets of the contractor which are allocated to performing this contract and with respect to which the government has a lien under this contract; (2) sell, assign, transfer, or otherwise dispose of accounts receivable, notes, or claims for money due or to become due; (3) declare or pay any dividends, except dividends payable in stock of the corporation, or make any other distribution on account of any shares of its capital stock, or purchase, redeem, or otherwise acquire for value any of its stock, except as required by sinking fund or redemption arrangements reported to the administering office incident to the establishment of these advance payment provisions; (4) sell, convey, or lease all or a substantial part of its assets; (5) acquire for value the stock or other securities of any corporation, municipality, or governmental authority, except direct obligations of the united states; (6) make any advance or loan or incur any liability as guarantor, surety, or accommodation endorser for any party; (7) permit a writ of attachment or any similar process to be issued against its property without getting a release or bonding the property within 30 days after the entry of the writ of attachment or other process; (8) pay any remuneration in any form to its directors, officers, or key employees higher than rates provided in existing agreements of which notice has been given to the administering office; accrue excess remuneration without first obtaining an agreement subordinating it to all claims of the government; or employ any person at a rate of compensation over $_____ ayear; (9) change substantially the management, ownership, or control of the corporation; (10) merge or consolidate with any other firm or corporation, change the type of business, or engage in any transaction outside the ordinary course of the contractor’s business as presently conducted; (11) deposit any of its funds except in a bank or trust company insured by the federal deposit insurance corporation or a credit union insured by the national credit union administration; (12) create or incur indebtedness for advances, other than advances to be made under the terms of this contract, or for borrowings; (13) make or covenant for capital expenditures exceeding $_____ in total; (14) permit its net current assets, computed in accordance with generally accepted accounting principles, to become less than $_____; or (15) make any payments on account of the obligations listed below, except in the manner and to the extent provided in this contract: [list the pertinent obligations] (end of clause) alternate i (apr 1984). if the agency desires to waive the countersignature requirement because of the contractor’s financial strength, good performance record, and favorable experience concerning cost disallowances, add the following sentence, if appropriate, to paragraph (b) of the basic clause: however, for this contract, countersignature on behalf of the government will not be required unless it is determined necessary by the administering office. alternate ii (may 2001). if used in a cost reimbursement contract, substitute the following paragraphs (c) and (e), and paragraphs (f)(1) and (f)(2) for paragraphs (c) and (e) and paragraphs (f)(1) and (2) of the basic clause: (c) use of funds. the contractor shall withdraw funds from the special account only to pay for allowable costs as prescribed by the _____ clause of this contract. payment for any other types of expenses shall be approved in writing by the administering office. (e) maximum payment. when the sum of all unliquidated advance payments, unpaid interest charges, and other payments equal the total estimated cost of $_____ (not including fixed fee, if any) for the work under this contract, the government shall withhold further payments to the contractor. upon completion or termination of the contract, the government shall deduct from the amount due to the contractor all unliquidated advance payments and interest charges payable. the contractor shall pay any deficiency to the government upon demand. for purposes of this paragraph, the estimated cost shall be considered to be the stated estimated cost, less any subsequent reductions of the estimated cost, plus any increases in the estimated costs that do not, in the aggregate, exceed $_____ [insert an amount not higher than 10 percent of the stated estimated cost inserted in this paragraph]. the estimated cost shall include, without limitation, any reimbursable cost (as estimated by the contracting officer) incident to a termination for the convenience of the government. any payments withheld under this paragraph shall be applied to reduce the unliquidated advance payments. if full liquidation has been made, payments under the contract shall resume. (f) interest. (1) the contractor shall pay interest to the government on the daily unliquidated advance payments at the daily rate specified in paragraph (f)(3) of this clause. interest shall be computed at the end of each calendar month for the actual number of days involved. for the purpose of computing the interest charge, the following shall be observed: (i) advance payments shall be considered as increasing the unliquidated balance as of the date of the advance payment check. (ii) repayments by contractor check shall be considered as decreasing the unliquidated balance as of the date on which the check is received by the government authority designated by the contracting officer. (iii) liquidations by deductions from payments to the contractor shall be considered as decreasing the unliquidated balance as of the dates on which the contractor presents to the contracting officer full and accurate data for the preparation of each voucher. credits resulting from these deductions shall be made upon the approval of the reimbursement vouchers by the disbursing officer, based upon the contracting officer’s certification of the applicable dates. (2) interest charges resulting from the monthly computation shall be deducted from any payments on account of the fixed fee due to the contractor. if the accrued interest exceeds the payment due, any excess interest shall be carried forward and deducted from subsequent payments of the contract price or fixed fee. interest carried forward shall not be compounded. interest on advance payments shall cease to accrue upon (i) satisfactory completion or (ii) termination of the contract for the convenience of the government. the contractor shall charge interest on advance payments to subcontractors in the manner described above and credit the interest to the government. interest need not be charged on advance payments to nonprofit educational or research subcontractors for experimental, developmental, or research work. alternate iii (apr 1984). if the agency considers a more rapid liquidation appropriate, add the following sentence as the first sentence of paragraph (e) of the basic clause with the appropriate percentage specified: to liquidate the principal amount of any advance payment made to the contractor, there shall be deductions of _____ percent from all payments made by the government under the contracts involved. alternate iv (apr 1984). if the agency provides advance payments under the contract at no interest to the prime contractor, add the following sentences as the beginning sentences of paragraph (f) of the clause: no interest shall be charged to the prime contractor for advance payments except for interest charged during a period of default. the terms of this paragraph concerning interest charges for advance payments shall not apply to the prime contractor. alternate v (may 2001). if the requirement for a special account is eliminated in accordance with 32.409 3(e) or (g), insert the clause set forth below instead of the basic clause. if this alternate is used in combination with alternate ii, disregard the instructions concerning paragraph (c), use of funds, in alternate ii; substitute paragraph (e), maximum payment, in alternate ii for paragraph (d) below; and substitute paragraph (f), interest, in alternate ii for paragraph (e) below and change the reference to paragraph (f)(3) in the first sentence of paragraph (f) of alternate ii to (e)(3). if this alternate is used in combination with alternate iii, insert the additional sentence set forth in alternate iii as the first sentence of paragraph (d) of this alternate. if this alternate is used in combination with alternate iv, insert the additional sentences set forth in alternate iv as the beginning sentences of paragraph (e) of this alternate. advance payments without special account (may 2001) (a) requirements for payment. advance payments will be made under this contract (1) upon submission of properly certified invoices or vouchers by the contractor, and approval by the administering office, _______ [insert the name of the office designated under agency procedures], or (2) under a letter of credit. the amount of the invoice or voucher submitted plus all advance payments previously approved shall not exceed $_____. if a letter of credit is used, the contractor shall withdraw cash only when needed for disbursements acceptable under this contract and report cash disbursements and balances as required by the administering office. the contractor shall apply terms similar to this clause to any advance payments to subcontractors. (b) use of funds. the contractor may use advance payment funds only to pay for properly allocable, allowable, and reasonable costs for direct materials, direct labor, and indirect costs. determinations of whether costs are properly allocable, allowable, and reasonable shall be in accordance with generally accepted accounting principles, subject to any applicable subparts of part 31 of the federal acquisition regulation. (c) repayment to the government. at any time, the contractor may repay all or any part of the funds advanced by the government. whenever requested in writing to do so by the administering office, the contractor shall repay to the government any part of unliquidated advance payments considered by the administering office to exceed the contractor's current requirements or the amount specified in paragraph (a) of this clause. (d) maximum payment. when the sum of all unliquidated advance payments, unpaid interest charges, and other payments exceed ___ percent of the contract price, the government shall withhold further payments to the contractor. on completion or termination of the contract, the government shall deduct from the amount due to the contractor all unliquidated advance payments and all interest charges payable. if previous payments to the contractor exceed the amount due, the excess amount shall be paid to the government on demand. for purposes of this paragraph, the contract price shall be considered to be the stated contract price of $___, less any subsequent price reductions under the contract, plus (1) any price increases resulting from any terms of this contract for price redetermination or escalation, and (2) any other price increases that do not, in the aggregate, exceed $____ [insert an amount not higher than 10 percent of the stated contract amount inserted in this paragraph]. any payments withheld under this paragraph shall be applied to reduce the unliquidated advance payments. if full liquidation has been made, payments under the contract shall resume. (e)interest. (1) the contractor shall pay interest to the government on the daily unliquidated advance payments at the daily rate in paragraph (e)(3) of this clause. interest shall be computed at the end of each calendar month for the actual number of days involved. for the purpose of computing the interest charge  (i) advance payments shall be considered as increasing the unliquidated balance as of the date of the advance payment check; (ii) repayments by contractor check shall be considered as decreasing the unliquidated balance as of the date on which the check is received by the government authority designated by the contracting officer; and (iii) liquidations by deductions from government payments to the contractor shall be considered as decreasing the unliquidated balance as of the date of the check for the reduced payment. (2) interest charges resulting from the monthly computation shall be deducted from payments, other than advance payments, due the contractor. if the accrued interest exceeds the payment due, any excess interest shall be carried forward and deducted from subsequent payments. interest carried forward shall not be compounded. interest on advance payments shall cease to accrue upon satisfactory completion or termination of the contract for the convenience of the government. the contractor shall charge interest on advance payments to subcontractors in the manner described above and credit the interest to the government. interest need not be charged on advance payments to nonprofit educational or research subcontractors, for experimental, developmental, or research work. (3) if interest is required under the contract, the contracting officer shall determine a daily interest rate based on the rate established by the secretary of the treasury under pub.l.92 41 (50 u.s.c. app., 1215(b)(2)). the contracting officer shall revise the daily interest rate during the contract period in keeping with any changes in the cited interest rate. (4) if the full amount of interest charged under this paragraph has not been paid by deduction or otherwise upon completion or termination of this contract, the contractor shall pay the remaining interest to the government on demand. (f)lien on property under contract. (1) all advance payments under this contract, together with interest charges, shall be secured, when made, by a lien in favor of the government, paramount to all other liens, on the supplies or other things covered by this contract and on all material and other property acquired for or allocated to the performance of this contract, except to the extent that the government by virtue of any other terms of this contract, or otherwise, shall have valid title to the supplies, materials, or other property as against other creditors of the contractor. (2) the contractor shall identify, by marking or segregation, all property that is subject to a lien in favor of the government by virtue of any terms of this contract in such a way as to indicate that it is subject to a lien and that it has been acquired for or allocated to performing this contract. if, for any reason, the supplies, materials, or other property are not identified by marking or segregation, the government shall be considered to have a lien to the extent of the government's interest under this contract on any mass of property with which the supplies, materials, or other property are commingled. the contractor shall maintain adequate accounting control over the property on its books and records. (3) if, at any time during the progress of the work on the contract, it becomes necessary to deliver to a third person any items or materials on which the government has a lien, the contractor shall notify the third person of the lien and shall obtain from the third person a receipt in duplicate acknowledging the existence of the lien. the contractor shall provide a copy of each receipt to the contracting officer. (4) if, under the termination clause, the contracting officer authorizes the contractor to sell or retain termination inventory, the approval shall constitute a release of the government's lien to the extent that  (i) the termination inventory is sold or retained; and (ii) the sale proceeds or retention credits are applied to reduce any outstanding advance payments. (g)insurance. (1) the contractor shall maintain with responsible insurance carriers  (i) insurance on plant and equipment against fire and other hazards, to the extent that similar properties are usually insured by others operating plants and properties of similar character in the same general locality; (ii) adequate insurance against liability on account of damage to persons or property; and (iii) adequate insurance under all applicable workers' compensation laws. (2) until work under this contract has been completed and all advance payments made under the contract have been liquidated, the contractor shall  (i) maintain this insurance; (ii) maintain adequate insurance on any materials, parts, assemblies, subassemblies, supplies, equipment, and other property acquired for or allocable to this contract and subject to the government lien under paragraph (f) of this clause; and (iii) furnish any evidence with respect to its insurance that the administering office may require. (h) default. (1)if any of the following events occur, the government may, by written notice to the contractor, withhold further payments on this contract: (i) termination of this contract for a fault of the contractor. (ii) a finding by the administering office that the contractor has failed to  (a) observe any of the conditions of the advance payment terms; (b) comply with any material term of this contract; (c) make progress or maintain a financial condition adequate for performance of this contract; (d) limit inventory allocated to this contract to reasonable requirements; or (e) avoid delinquency in payment of taxes or of the costs of performing this contract in the ordinary course of business. (iii) the appointment of a trustee, receiver, or liquidator for all or a substantial part of the contractor's property, or the institution of proceedings by or against the contractor for bankruptcy, reorganization, arrangement, or liquidation. (iv) the commission of an act of bankruptcy. (2) if any of the events described in paragraph (h)(1) of this clause continue for 30 days after the written notice to the contractor, the government may take any of the following additional actions: (i) charge interest, in the manner prescribed in paragraph (e) of this clause, on outstanding advance payments during the period of any event described in paragraph (h)(1) of this clause. (ii) demand immediate repayment by the contractor of the unliquidated balance of advance payments. (iii) take possession of and, with or without advertisement, sell at public or private sale all or any part of the property on which the government has a lien under this contract and, after deducting any expenses incident to the sale, apply the net proceeds of the sale to reduce the unliquidated balance of advance payments or other government claims against the contractor. (3) the government may take any of the actions described in paragraphs (h)(1) and (h)(2) of this clause it considers appropriate at its discretion and without limiting any other rights of the government. (i) prohibition against assignment. notwithstanding any other terms of this contract, the contractor shall not assign this contract, any interest therein, or any claim under the contract to any party. (j) information and access to records. the contractor shall furnish to the administering office (1) monthly or at other intervals as required, signed or certified balance sheets and profit and loss statements, and, (2)if requested, other information concerning the operation of the contractor's business. the contractor shall provide the authorized government representatives proper facilities for inspection of the contractor's books, records, and accounts. (k) other security. the terms of this contract are considered to provide adequate security to the government for advance payments; however, if the administering office considers the security inadequate, the contractor shall furnish additional security satisfactory to the administering office, to the extent that the security is available. (l) representations. the contractor represents the following: (1) the balance sheet, the profit and loss statement, and any other supporting financial statements furnished to the administering office fairly reflect the financial condition of the contractor at the date shown or the period covered, and there has been no subsequent materially adverse change in the financial condition of the contractor. (2) no litigation or proceedings are presently pending or threatened against the contractor, except as shown in the financial statements. (3) the contractor has disclosed all contingent liabilities, except for liability resulting from the renegotiation of defense production contracts, in the financial statements furnished to the administering office. (4) none of the terms in this clause conflict with the authority under which the contractor is doing business or with the provision of any existing indenture or agreement of the contractor. (5) the contractor has the power to enter into this contract and accept advance payments, and has taken all necessary action to authorize the acceptance under the terms of this contract. (6) the assets of the contractor are not subject to any lien or encumbrance of any character except for current taxes not delinquent, and except as shown in the financial statements furnished by the contractor. there is no current assignment of claims under any contract affected by these advance payment provisions. (7) all information furnished by the contractor to the administering office in connection with each request for advance payments is true and correct. (8) these representations shall be continuing and shall be considered to have been repeated by the submission of each invoice for advance payments. (m) covenants. to the extent the government considers it necessary while any advance payments made under this contract remain outstanding, the contractor, without the prior written consent of the administering office, shall not  (1) mortgage, pledge, or otherwise encumber or allow to be encumbered, any of the assets of the contractor now owned or subsequently acquired, or permit any preexisting mortgages, liens, or other encumbrances to remain on or attach to any assets of the contractor which are allocated to performing this contract and with respect to which the government has a lien under this contract; (2) sell, assign, transfer, or otherwise dispose of accounts receivable, notes, or claims for money due or to become due; (3) declare or pay any dividends, except dividends payable in stock of the corporation, or make any other distribution on account of any shares of its capital stock, or purchase, redeem, or otherwise acquire for value any of its stock, except as required by sinking fund or redemption arrangements reported to the administering office incident to the establishment of these advance payment provisions; (4) sell, convey, or lease all or a substantial part of its assets; (5) acquire for value the stock or other securities of any corporation, municipality, or governmental authority, except direct obligations of the united states; (6) make any advance or loan or incur any liability as guarantor, surety, or accommodation endorser for any party; (7) permit a writ of attachment or any similar process to be issued against its property without getting a release or bonding the property within 30 days after the entry of the writ of attachment or other process; (8) pay any remuneration in any form to its directors, officers, or key employees higher than rates provided in existing agreements of which notice has been given to the administering office, accrue excess remuneration without first obtaining an agreement subordinating it to all claims of the government, or employ any person at a rate of compensation over $______ ayear; (9) change substantially the management, ownership, or control of the corporation; (10) merge or consolidate with any other firm or corporation, change the type of business, or engage in any transaction outside the ordinary course of the contractor’s business as presently conducted; (11) deposit any of its funds except in a bank or trust company insured by the federal deposit insurance corporation or a credit union insured by the national credit union administration; (12) create or incur indebtedness for advances, other than advances to be made under the terms of this contract, or for borrowings; (13) make or covenant for capital expenditures exceeding $______ in total; (14) permit its net current assets, computed in accordance with generally accepted accounting principles, to become less than $______; or (15) make any payments on account of the obligations listed below, except in the manner and to the extent provided in this contract: [list the pertinent obligations] as prescribed in 32.502 3(a), insert the following provision in invitations for bids and requests for proposals that include a progress payments clause: notice of progress payments (apr 1984) the need for customary progress payments conforming to the regulations in subpart 32.5 of the federal acquisition regulation (far) will not be considered as a handicap or adverse factor in the award of the contract. the progress payments clause included in this solicitation will be included in any resulting contract, modified or altered if necessary in accordance with subsection 52.232 16 and its alternate i of the far. even though the clause is included in the contract, the clause shall be inoperative during any time the contractor’s accounting system and controls are determined by the government to be inadequate for segregation and accumulation of contract costs. (end of clause) as prescribed in 32.502 3(b)(2), insert the following provision in invitations for bids if it is anticipated that (a) both small business concerns and others may submit bids in response to the same invitation and (b) only the small business bidders would need progress payments: notice of availability of progress payments exclusively for small business concerns (apr 1984) the progress payments clause will be available only to small business concerns. any bid conditioned upon inclusion of a progress payment clause in the resulting contract will be rejected as nonresponsive if the bidder is not a small business concern. (end of clause) as prescribed in 32.502 3(c), insert the following provision in invitations for bids if the solicitation will not contain one of the provisions prescribed in 32.502 3 (a) and (b): progress payments not included (apr 1984) a progress payments clause is not included in this solicitation, and will not be added to the resulting contract at the time of award. bids conditioned upon inclusion of a progress payment clause in the resulting contract will be rejected as nonresponsive. (end of clause) as prescribed in 32.502 4(a), insert the following clause: progress payments (nov 2021) the government will make progress payments to the contractor when requested as work progresses, but not more frequently than monthly, in amounts of $2,500 or more approved by the contracting officer, under the following conditions: (a) computation of amounts. (1) unless the contractor requests a smaller amount, the government will compute each progress payment as 80 percent of the contractor’s total costs incurred under this contract whether or not actually paid, plus financing payments to subcontractors (see paragraph (j) of this clause), less the sum of all previous progress payments made by the government under this contract. the contracting officer will consider cost of money that would be allowable under federal acquisition regulation (far) 31.205 10 as an incurred cost for progress payment purposes. (2) the amount of financing and other payments for supplies and services purchased directly for the contract are limited to the amounts that have been paid by cash, check, or other forms of payment, or that are determined due and will be paid to subcontractors  (i) in accordance with the terms and conditions of a subcontract or invoice; and (ii) ordinarily within 30 days of the submission of the contractor’s payment request to the government. (3) the government will exclude accrued costs of contractor contributions under employee pension plans until actually paid unless  (i) the contractor’s practice is to make contributions to the retirement fund quarterly or more frequently; and (ii) the contribution does not remain unpaid 30 days after the end of the applicable quarter or shorter payment period (any contribution remaining unpaid shall be excluded from the contractor’s total costs for progress payments until paid). (4) the contractor shall not include the following in total costs for progress payment purposes in paragraph (a)(1) of this clause: (i) costs that are not reasonable, allocable to this contract, and consistent with sound and generally accepted accounting principles and practices. (ii) costs incurred by subcontractors or suppliers. (iii) costs ordinarily capitalized and subject to depreciation or amortization except for the properly depreciated or amortized portion of such costs. (iv) payments made or amounts payable to subcontractors or suppliers, except for  (a) completed work, including partial deliveries, to which the contractor has acquired title; and (b) work under cost reimbursement or time and material subcontracts to which the contractor has acquired title. (5) the amount of unliquidated progress payments may exceed neither (i) the progress payments made against incomplete work (including allowable unliquidated progress payments to subcontractors) nor (ii) the value, for progress payment purposes, of the incomplete work. incomplete work shall be considered to be the supplies and services required by this contract, for which delivery and invoicing by the contractor and acceptance by the government are incomplete. (6) the total amount of progress payments shall not exceed 80 percent of the total contract price. (7) if a progress payment or the unliquidated progress payments exceed the amounts permitted by paragraphs (a)(4) or (a)(5) of this clause, the contractor shall repay the amount of such excess to the government on demand. (8) notwithstanding any other terms of the contract, the contractor agrees not to request progress payments in dollar amounts of less than $2,500. the contracting officer may make exceptions. (9) the costs applicable to items delivered, invoiced, and accepted shall not include costs in excess of the contract price of the items. (b) liquidation. except as provided in the termination for convenience of the government clause, all progress payments shall be liquidated by deducting from any payment under this contract, other than advance or progress payments, the unliquidated progress payments, or 80 percent of the amount invoiced, whichever is less. the contractor shall repay to the government any amounts required by a retroactive price reduction, after computing liquidations and payments on past invoices at the reduced prices and adjusting the unliquidated progress payments accordingly. the government reserves the right to unilaterally change from the ordinary liquidation rate to an alternate rate when deemed appropriate for proper contract financing. (c) reduction or suspension. the contracting officer may reduce or suspend progress payments, increase the rate of liquidation, or take a combination of these actions, after finding on substantial evidence any of the following conditions: (1) the contractor failed to comply with any material requirement of this contract (which includes paragraphs (f) and (g) of this clause). (2) performance of this contract is endangered by the contractor’s  (i) failure to make progress; or (ii) unsatisfactory financial condition. (3) inventory allocated to this contract substantially exceeds reasonable requirements. (4) the contractor is delinquent in payment of the costs of performing this contract in the ordinary course of business. (5) the fair value of the undelivered work is less than the amount of unliquidated progress payments for that work. (6) the contractor is realizing less profit than that reflected in the establishment of any alternate liquidation rate in paragraph (b) of this clause, and that rate is less than the progress payment rate stated in paragraph (a)(1) of this clause. (d) title. (1) title to the property described in this paragraph (d) shall vest in the government. vestiture shall be immediately upon the date of this contract, for property acquired or produced before that date. otherwise, vestiture shall occur when the property is or should have been allocable or properly chargeable to this contract. (2) "property," as used in this clause, includes all of the below described items acquired or produced by the contractor that are or should be allocable or properly chargeable to this contract under sound and generally accepted accounting principles and practices. (i) parts, materials, inventories, and work in process; (ii) special tooling and special test equipment to which the government is to acquire title; (iii) nondurable (i.e., noncapital) tools, jigs, dies, fixtures, molds, patterns, taps, gauges, test equipment, and other similar manufacturing aids, title to which would not be obtained as special tooling under paragraph (d)(2)(ii) of this clause; and (iv) drawings and technical data, to the extent the contractor or subcontractors are required to deliver them to the government by other clauses of this contract. (3) although title to property is in the government under this clause, other applicable clauses of this contract; e.g., the termination clauses, shall determine the handling and disposition of the property. (4) the contractor may sell any scrap resulting from production under this contract without requesting the contracting officer’s approval, but the proceeds shall be credited against the costs of performance. (5) to acquire for its own use or dispose of property to which title is vested in the government under this clause, the contractor must obtain the contracting officer’s advance approval of the action and the terms. the contractor shall (i) exclude the allocable costs of the property from the costs of contract performance, and (ii) repay to the government any amount of unliquidated progress payments allocable to the property. repayment may be by cash or credit memorandum. (6) when the contractor completes all of the obligations under this contract, including liquidation of all progress payments, title shall vest in the contractor for all property (or the proceeds thereof) not  (i) delivered to, and accepted by, the government under this contract; or (ii) incorporated in supplies delivered to, and accepted by, the government under this contract and to which title is vested in the government under this clause. (7) the terms of this contract concerning liability for government furnished property shall not apply to property to which the government acquired title solely under this clause. (e) risk of loss. before delivery to and acceptance by the government, the contractor shall bear the risk of loss for property, the title to which vests in the government under this clause, except to the extent the government expressly assumes the risk. the contractor shall repay the government an amount equal to the unliquidated progress payments that are based on costs allocable to property that is lost (see 45.101). (f) control of costs and property. the contractor shall maintain an accounting system and controls adequate for the proper administration of this clause. (g) reports, forms, and access to records. (1) the contractor shall promptly furnish reports, certificates, financial statements, and other pertinent information (including estimates to complete) reasonably requested by the contracting officer for the administration of this clause. also, the contractor shall give the government reasonable opportunity to examine and verify the contractor’s books, records, and accounts. (2) the contractor shall furnish estimates to complete that have been developed or updated within six months of the date of the progress payment request. the estimates to complete shall represent the contractor’s best estimate of total costs to complete all remaining contract work required under the contract. the estimates shall include sufficient detail to permit government verification. (3) each contractor request for progress payment shall: (i) be submitted on standard form 1443, contractor’s request for progress payment, or the electronic equivalent as required by agency regulations, in accordance with the form instructions and the contract terms; and (ii) include any additional supporting documentation requested by the contracting officer. (h) special terms regarding default. if this contract is terminated under the default clause, (i) the contractor shall, on demand, repay to the government the amount of unliquidated progress payments and (ii) title shall vest in the contractor, on full liquidation of progress payments, for all property for which the government elects not to require delivery under the default clause. the government shall be liable for no payment except as provided by the default clause. (i) reservations of rights. (1) no payment or vesting of title under this clause shall  (i) excuse the contractor from performance of obligations under this contract; or (ii) constitute a waiver of any of the rights or remedies of the parties under the contract. (2) the government’s rights and remedies under this clause  (i) shall not be exclusive but rather shall be in addition to any other rights and remedies provided by law or this contract; and (ii) shall not be affected by delayed, partial, or omitted exercise of any right, remedy, power, or privilege, nor shall such exercise or any single exercise preclude or impair any further exercise under this clause or the exercise of any other right, power, or privilege of the government. (j) financing payments to subcontractors. the financing payments to subcontractors mentioned in paragraphs (a)(1) and (a)(2) of this clause shall be all financing payments to subcontractors or divisions, if the following conditions are met: (1) the amounts included are limited to  (i) the unliquidated remainder of financing payments made; plus (ii) any unpaid subcontractor requests for financing payments. (2) the subcontract or interdivisional order is expected to involve a minimum of approximately 6 months between the beginning of work and the first delivery; or, if the subcontractor is a small business concern, 4 months. (3) if the financing payments are in the form of progress payments, the terms of the subcontract or interdivisional order concerning progress payments  (i) are substantially similar to the terms of this clause for any subcontractor that is a large business concern, or this clause with its alternate i for any subcontractor that is a small business concern; (ii) are at least as favorable to the government as the terms of this clause; (iii) are not more favorable to the subcontractor or division than the terms of this clause are to the contractor; (iv) are in conformance with the requirements of far 32.504(e); and (v) subordinate all subcontractor rights concerning property to which the government has title under the subcontract to the government’s right to require delivery of the property to the government if  (a) the contractor defaults; or (b) the subcontractor becomes bankrupt or insolvent. (4) if the financing payments are in the form of performance based payments, the terms of the subcontract or interdivisional order concerning payments  (i) are substantially similar to the performance based payments clause at far 52.232 32 and meet the criteria for, and definition of, performance based payments in far part 32; (ii) are in conformance with the requirements of far 32.504(f); and (iii) subordinate all subcontractor rights concerning property to which the government has title under the subcon  tract to the government’s right to require delivery of the property to the government if  (a) the contractor defaults; or (b) the subcontractor becomes bankrupt or insolvent. (5) if the financing payments are in the form of commercial product or commercial service financing payments, the terms of the subcontract or interdivisional order concerning payments  (i) are constructed in accordance with far 32.206(c) and included in a subcontract for a commercial product or commercial service purchase that meets the definition and standards for acquisition of commercial products and commercial services in far parts 2 and 12; (ii) are in conformance with the requirements of far 32.504(g); and (iii) subordinate all subcontractor rights concerning property to which the government has title under the subcontract to the government’s right to require delivery of the property to the government if  (a) the contractor defaults; or (b) the subcontractor becomes bankrupt or insolvent. (6) if financing is in the form of progress payments, the progress payment rate in the subcontract is the customary rate used by the contracting agency, depending on whether the subcontractor is or is not a small business concern. (7) concerning any proceeds received by the government for property to which title has vested in the government under the subcontract terms, the parties agree that the proceeds shall be applied to reducing any unliquidated financing payments by the government to the contractor under this contract. (8) if no unliquidated financing payments to the contractor remain, but there are unliquidated financing payments that the contractor has made to any subcontractor, the contractor shall be subrogated to all the rights the government obtained through the terms required by this clause to be in any subcontract, as if all such rights had been assigned and transferred to the contractor. (9) to facilitate small business participation in subcontracting under this contract, the contractor shall provide financing payments to small business concerns, in conformity with the standards for customary contract financing payments stated in far 32.113. the contractor shall not consider the need for such financing payments as a handicap or adverse factor in the award of subcontracts. (k) limitations on undefinitized contract actions. notwithstanding any other progress payment provisions in this contract, progress payments may not exceed 80 percent of costs incurred on work accomplished under undefinitized contract actions. a "contract action" is any action resulting in a contract, as defined in subpart 2.1, including contract modifications for additional supplies or services, but not including contract modifications that are within the scope and under the terms of the contract, such as contract modifications issued pursuant to the changes clause, or funding and other administrative changes. this limitation shall apply to the costs incurred, as computed in accordance with paragraph (a) of this clause, and shall remain in effect until the contract action is definitized. costs incurred which are subject to this limitation shall be segregated on contractor progress payment requests and invoices from those costs eligible for higher progress payment rates. for purposes of progress payment liquidation, as described in paragraph (b) of this clause, progress payments for undefinitized contract actions shall be liquidated at 80 percent of the amount invoiced for work performed under the undefinitized contract action as long as the contract action remains undefinitized. the amount of unliquidated progress payments for undefinitized contract actions shall not exceed 80 percent of the maximum liability of the government under the undefinitized contract action or such lower limit specified elsewhere in the contract. separate limits may be specified for separate actions. (l) due date. the designated payment office will make progress payments on the _________ [contracting officer insert date as prescribed by agency head; if not prescribed, insert "30th"] day after the designated billing office receives a proper progress payment request. in the event that the government requires an audit or other review of a specific progress payment request to ensure compliance with the terms and conditions of the contract, the designated payment office is not compelled to make payment by the specified due date. progress payments are considered contract financing and are not subject to the interest penalty provisions of the prompt payment act. (m) progress payments under indefinite delivery contracts. the contractor shall account for and submit progress payment requests under individual orders as if the order constituted a separate contract, unless otherwise specified in this contract. (end of clause) alternate i (mar 2000). if the contract is with a small business concern, change each mention of the progress payment and liquidation rates excepting paragraph (k) to the customary rate of 85 percent for small business concerns (see far 32.501 1). alternate ii (apr 2003). if the contract is a letter contract, add paragraphs (n) and (o). the amount specified in paragraph (o) shall not exceed 80 percent of the maximum liability of the government under the letter contract. the contracting officer may specify separate limits for separate parts of the work. (n) the contracting officer will liquidate progress payments made under this letter contract, unless previously liquidated under paragraph (b) of this clause, using the following procedures: (1) if this letter contract is superseded by a definitive contract, unliquidated progress payments made under this letter contract shall be liquidated by deducting the amount from the first progress or other payments made under the definitive contract. (2) if this letter contract is not superseded by a definitive contract calling for the furnishing of all or part of the articles or services covered under the letter contract, unliquidated progress payments made under the letter contract shall be liquidated by deduction from the amount payable under the termination clause. (3) if this letter contract is partly terminated and partly superseded by a contract, the government will allocate the unliquidated progress payments to the terminated and unterminated portions as the government deems equitable, and will liquidate each portion under the relevant procedure in paragraphs (n)(1) and (n)(2) of this clause. (4) if the method of liquidating progress payments provided in this clause does not result in full liquidation, the contractor shall immediately pay the unliquidated balance to the government on demand. (o) the amount of unliquidated progress payments shall not exceed _____________ [contracting officer specify dollar amount]. alternate iii (jun 2020). as prescribed in 32.502 4 (d), add the following paragraph (n) to the basic clause. if alternate ii is also being used, redesignate the following paragraph as paragraph (p): (n) the provisions of this clause will not be applicable to individual orders at or below the simplified acquisition threshold, as defined in far 2.101 on the date of individual order award. as prescribed in 32.611 (a) and (b), insert the following clause: interest (may 2014) (a) except as otherwise provided in this contract under a price reduction for defective certified cost or pricing data clause or a cost accounting standards clause, all amounts that become payable by the contractor to the government under this contract shall bear simple interest from the date due until paid unless paid within 30 days of becoming due. the interest rate shall be the interest rate established by the secretary of the treasury as provided in 41 u.s.c. 7109, which is applicable to the period in which the amount becomes due, as provided in paragraph (e) of this clause, and then at the rate applicable for each six month period as fixed by the secretary until the amount is paid. (b) the government may issue a demand for payment to the contractor upon finding a debt is due under the contract. (c) final decisions. the contracting officer will issue a final decision as required by 33.211 if  (1) the contracting officer and the contractor are unable to reach agreement on the existence or amount of a debt in a timely manner; (2) the contractor fails to liquidate a debt previously demanded by the contracting officer within the timeline specified in the demand for payment unless the amounts were not repaid because the contractor has requested an installment payment agreement; or (3) the contractor requests a deferment of collection on a debt previously demanded by the contracting officer (see 32.607 2). (d) if a demand for payment was previously issued for the debt, the demand for payment included in the final decision shall identify the same due date as the original demand for payment. (e) amounts shall be due at the earliest of the following dates: (1) the date fixed under this contract. (2) the date of the first written demand for payment, including any demand for payment resulting from a default termination. (f) the interest charge shall be computed for the actual number of calendar days involved beginning on the due date and ending on  (1) the date on which the designated office receives payment from the contractor; (2) the date of issuance of a government check to the contractor from which an amount otherwise payable has been withheld as a credit against the contract debt; or (3) the date on which an amount withheld and applied to the contract debt would otherwise have become payable to the contractor. (g) the interest charge made under this clause may be reduced under the procedures prescribed in 32.608 2 of the federal acquisition regulation in effect on the date of this contract. (end of clause) as prescribed in 32.706 1(a), insert the following clause: availability of funds (apr 1984) funds are not presently available for this contract. the government’s obligation under this contract is contingent upon the availability of appropriated funds from which payment for contract purposes can be made. no legal liability on the part of the government for any payment may arise until funds are made available to the contracting officer for this contract and until the contractor receives notice of such availability, to be confirmed in writing by the contracting officer. (end of clause) as prescribed in 32.706 1(b), insert the following clause: availability of funds for the next fiscal year (apr 1984) funds are not presently available for performance under this contract beyond ________. the government’s obligation for performance of this contract beyond that date is contingent upon the availability of appropriated funds from which payment for contract purposes can be made. no legal liability on the part of the government for any payment may arise for performance under this contract beyond _____, until funds are made available to the contracting officer for performance and until the contractor receives notice of availability, to be confirmed in writing by the contracting officer. (end of clause) as prescribed in 32.706 2(a), insert the following clause. the 60 day period may be varied from 30 to 90 days and the 75 percent from 75 to 85 percent. "task order" or other appropriate designation may be substituted for "schedule" wherever that word appears in the clause: limitation of cost (apr 1984) (a) the parties estimate that performance of this contract, exclusive of any fee, will not cost the government more than (1) the estimated cost specified in the schedule or, (2)if this is a cost sharing contract, the government’s share of the estimated cost specified in the schedule. the contractor agrees to use its best efforts to perform the work specified in the schedule and all obligations under this contract within the estimated cost, which, if this is a cost sharing contract, includes both the government’s and the contractor’s share of the cost. (b) the contractor shall notify the contracting officer in writing whenever it has reason to believe that  (1) the costs the contractor expects to incur under this contract 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 contract, exclusive of any fee, will be either greater or substantially less than had been previously estimated. (c) as part of the notification, the contractor shall provide the contracting officer a revised estimate of the total cost of performing this contract. (d) except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause  (1) the government is not obligated to reimburse the contractor for costs incurred in excess of (i) the estimated cost specified in the schedule or, (ii)if this is a cost sharing contract, the estimated cost to the government specified in the schedule; and (2) the contractor is not obligated to continue performance under this contract (including actions under the termination clause of this contract) or otherwise incur costs in excess of the estimated cost specified in the schedule, until the contracting officer (i) notifies the contractor in writing that the estimated cost has been increased and (ii) provides a revised estimated total cost of performing this contract. if this is a cost sharing contract, 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 paragraph (d)(2) of this clause, or from any person other than the contracting officer, shall affect this contract’s estimated cost to the government. in the absence of the specified notice, the government is not obligated to reimburse the contractor for any costs in excess of the estimated cost or, if this is a cost sharing contract, for any costs in excess of the estimated cost to the government specified in the schedule, whether those excess costs were incurred during the course of the contract or as a result of termination. (f) if the estimated cost specified in the schedule is increased, any costs the contractor 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 the contracting officer 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 the government specified in the schedule, unless they contain a statement increasing the estimated cost. (h) if this contract is terminated or the estimated cost is not increased, the government and the contractor shall negotiate an equitable distribution of all property produced or purchased under the contract, based upon the share of costs incurred by each. (end of clause) as prescribed in 32.706 2(b), insert the following clause. the 60 day period may be varied from 30 to 90 days and the 75 percent from 75 to 85 percent. "task order" or other appropriate designation may be substituted for "schedule" wherever that word appears in the clause: limitation of funds (apr 1984) (a) the parties estimate that performance of this contract will not cost the government more than (1) the estimated cost specified in the schedule or, (2)if this is a cost sharing contract, the government’s share of the estimated cost specified in the schedule. the contractor agrees to use its best efforts to perform the work specified in the schedule and all obligations under this contract within the estimated cost, which, if this is a cost sharing contract, includes both the government’s and the contractor’s share of the cost. (b) the schedule specifies the amount presently available for payment by the government and allotted to this contract, the items covered, the government’s share of the cost if this is a cost sharing contract, and the period of performance it is estimated the allotted amount will cover. the parties contemplate that the government will allot additional funds incrementally to the contract up to the full estimated cost to the government specified in the schedule, exclusive of any fee. the contractor agrees to perform, or have performed, work on the contract up to the point at which the total amount paid and payable by the government under the contract approximates but does not exceed the total amount actually allotted by the government to the contract. (c) the contractor shall notify the contracting officer in writing whenever it has reason to believe that the costs it expects to incur under this contract 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 contract by the government or, (2)if this is a cost sharing contract, the amount then allotted to the contract by the government plus the contractor’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) sixtydays before the end of the period specified in the schedule, the contractor shall notify the contracting officer in writing of the estimated amount of additional funds, if any, required to continue timely performance under the contract 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 the contractor’s written request the contracting officer will terminate this contract on that date in accordance with the provisions of the termination clause of this contract. if the contractor 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 the contracting officer may terminate this contract on that later date. (f) except as required by other provisions of this contract, specifically citing and stated to be an exception to this clause  (1) the government is not obligated to reimburse the contractor for costs incurred in excess of the total amount allotted by the government to this contract; and (2) the contractor is not obligated to continue performance under this contract (including actions under the termination clause of this contract) or otherwise incur costs in excess of  (i) the amount then allotted to the contract by the government or; (ii) if this is a cost sharing contract, the amount then allotted by the government to the contract plus the contractor’s corresponding share, until the contracting officer notifies the contractor in writing that the amount allotted by the government has been increased and specifies an increased amount, which shall then constitute the total amount allotted by the government to this contract. (g) the estimated cost shall be increased to the extent that (1) the amount allotted by the government or, (2)if this is a cost sharing contract, the amount then allotted by the government to the contract plus the contractor’s corresponding share, exceeds the estimated cost specified in the schedule. if this is a cost sharing contract, the increase shall be allocated in accordance with the formula specified in the schedule. (h) no notice, communication, or representation in any form other than that specified in paragraph (f)(2) of this clause, or from any person other than the contracting officer, shall affect the amount allotted by the government to this contract. in the absence of the specified notice, the government is not obligated to reimburse the contractor for any costs in excess of the total amount allotted by the government to this contract, whether incurred during the course of the contract or as a result of termination. (i) when and to the extent that the amount allotted by the government to the contract is increased, any costs the contractor incurs before the increase that are in excess of  (1) the amount previously allotted by the government or; (2) if this is a cost sharing contract, the amount previously allotted by the government to the contract plus the contractor’s corresponding share, shall be allowable to the same extent as if incurred afterward, unless the contracting officer 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 the government specified in the schedule, unless they contain a statement increasing the amount allotted. (k) nothing in this clause shall affect the right of the government to terminate this contract. if this contract is terminated, the government and the contractor shall negotiate an equitable distribution of all property produced or purchased under the contract, based upon the share of costs incurred by each. (l) if the government does not allot sufficient funds to allow completion of the work, the contractor is entitled to a percentage of the fee specified in the schedule equalling the percentage of completion of the work contemplated by this contract. (end of clause) as prescribed in 32.806(a)(1), insert the following clause: assignment of claims (may 2014) (a) the contractor, under the assignment of claims act, as amended, 31 u.s.c.3727, 41 u.s.c.6305 (hereafter referred to as "the act"), may assign its rights to be paid amounts due or to become due as a result of the performance of this contract to a bank, trust company, or other financing institution, including any federal lending agency. the assignee under such an assignment may thereafter further assign or reassign its right under the original assignment to any type of financing institution described in the preceding sentence. (b) any assignment or reassignment authorized under the act and this clause shall cover all unpaid amounts payable under this contract, and shall not be made to more than one party, except that an assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in the financing of this contract. (c) the contractor shall not furnish or disclose to any assignee under this contract any classified document (including this contract) or information related to work under this contract until the contracting officer authorizes such action in writing. (end of clause) alternate i (apr 1984). if a no setoff commitment is to be included in the contract (see 32.801 and 32.803(d)), add the following sentence at the end of paragraph (a) of the basic clause: unless otherwise stated in this contract, payments to an assignee of any amounts due or to become due under this contract shall not, to the extent specified in the act, be subject to reduction or setoff. as prescribed in 32.806(b), insert the following clause: prohibition of assignment of claims (may 2014) the assignment of claims under the assignment of claims act of 1940 "( 31 u.s.c.3727, 41 u.s.c. 6305)" is prohibited for this contract. (end of clause) as prescribed in 32.908(c), insert the following clause: prompt payment (jan 2017) notwithstanding any other payment clause in this contract, the government will make invoice payments under the terms and conditions specified in this clause. the government considers payment as being made on the day a check is dated or the date of an electronic funds transfer (eft). definitions of pertinent terms are set forth in sections 2.101, 32.001, and 32.902 of the federal acquisition regulation. all days referred to in this clause are calendar days, unless otherwise specified. (however, see paragraph (a)(4) of this clause concerning payments due on saturdays, sundays, and legal holidays.) (a) invoice payments  (1) due date. (i) except as indicated in paragraphs (a)(2) and (c) of this clause, the due date for making invoice payments by the designated payment office is the later of the following two events: (a) the 30 thday after the designated billing office receives a proper invoice from the contractor (except as provided in paragraph (a)(1)(ii) of this clause). (b) the 30 thday after government acceptance of supplies delivered or services performed. for a final invoice, when the payment amount is subject to contract settlement actions, acceptance is deemed to occur on the effective date of the contract settlement. (ii) if the designated billing office fails to annotate the invoice with the actual date of receipt at the time of receipt, the invoice payment due date is the 30 thday after the date of the contractor’s invoice, provided the designated billing office receives a proper invoice and there is no disagreement over quantity, quality, or contractor compliance with contract requirements. (2) certain food products and other payments. (i) due dates on contractor invoices for meat, meat food products, or fish; perishable agricultural commodities; and dairy products, edible fats or oils, and food products prepared from edible fats or oils are  (a) for meat or meat food products, as defined in section 2(a)(3) of the packers and stockyard act of1921 ( 7 u.s.c. 182(3)), and as further defined in pub.l.98 181, including any edible fresh or frozen poultry meat, any perishable poultry meat food product, fresh eggs, and any perishable egg product, as close as possible to, but not later than, the 7 thday after product delivery. (b) for fresh or frozen fish, as defined in section 204(3) of the fish and seafood promotion act of1986 ( 16 u.s.c. 4003(3)), as close as possible to, but not later than, the 7 thday after product delivery. (c) for perishable agricultural commodities, as defined in section 1(4) of the perishable agricultural commodities act of1930 ( 7 u.s.c. 499a(4)), as close as possible to, but not later than, the 10 thday after product delivery, unless another date is specified in the contract. (d) for dairy products, as defined in section 111(e) of the dairy production stabilization act of1983 ( 7 u.s.c. 4502(e)), edible fats or oils, and food products prepared from edible fats or oils, as close as possible to, but not later than, the 10 thday after the date on which a proper invoice has been received. liquid milk, cheese, certain processed cheese products, butter, yogurt, ice cream, mayonnaise, salad dressings, and other similar products, fall within this classification. nothing in the act limits this classification to refrigerated products. when questions arise regarding the proper classification of a specific product, prevailing industry practices will be followed in specifying a contract payment due date. the burden of proof that a classification of a specific product is, in fact, prevailing industry practice is upon the contractor making the representation. (ii) if the contract does not require submission of an invoice for payment (e.g., periodic lease payments), the due date will be as specified in the contract. (3) contractor's invoice. the contractor shall prepare and submit invoices to the designated billing office specified in the contract. a proper invoice must include the items listed in paragraphs (a)(3)(i) through (a)(3)(x) of this clause. if the invoice does not comply with these requirements, the designated billing office will return it within 7 days after receipt (3 days for meat, meat food products, or fish; 5 days for perishable agricultural commodities, dairy products, edible fats or oils, and food products prepared from edible fats or oils), with the reasons why it is not a proper invoice. the government will take into account untimely notification when computing any interest penalty owed the contractor. (i) name and address of the contractor. (ii) invoice date and invoice number. (the contractor should date invoices as close as possible to the date of the mailing or transmission.) (iii) contract number or other authorization for supplies delivered or services performed (including order number and line item number). (iv) description, quantity, unit of measure, unit price, and extended price of supplies delivered or services performed. (v) shipping and payment terms (e.g., shipment number and date of shipment, discount for prompt payment terms). bill of lading number and weight of shipment will be shown for shipments on government bills of lading. (vi) name and address of contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment). (vii) name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice. (viii) taxpayer identification number (tin). the contractor shall include its tin on the invoice only if required elsewhere in this contract. (ix) electronic funds transfer (eft) banking information. (a) the contractor shall include eft banking information on the invoice only if required elsewhere in this contract. (b) if eft banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the contractor shall have submitted correct eft banking information in accordance with the applicable solicitation provision (e.g., 52.232 38, submission of electronic funds transfer information with offer), contract clause (e.g., 52.232 33, payment by electronic funds transfer system for award management, or 52.232 34, payment by electronic funds transfer other than system for award management), or applicable agency procedures. (c) eft banking information is not required if the government waived the requirement to pay by eft. (x) any other information or documentation required by the contract (e.g., evidence of shipment). (4) interest penalty. the designated payment office will pay an interest penalty automatically, without request from the contractor, if payment is not made by the due date and the conditions listed in paragraphs (a)(4)(i) through (a)(4)(iii) of this clause are met, if applicable. however, when the due date falls on a saturday, sunday, or legal holiday, the designated payment office may make payment on the following working day without incurring a late payment interest penalty. (i) the designated billing office received a proper invoice. (ii) the government processed a receiving report or other government documentation authorizing payment, and there was no disagreement over quantity, quality, or contractor compliance with any contract term or condition. (iii) in the case of a final invoice for any balance of funds due the contractor for supplies delivered or services performed, the amount was not subject to further contract settlement actions between the government and the contractor. (5) computing penalty amount. the government will compute the interest penalty in accordance with the office of management and budget prompt payment regulations at 5 cfr part 1315. (i) for the sole purpose of computing an interest penalty that might be due the contractor, government acceptance is deemed to occur constructively on the 7 thday (unless otherwise specified in this contract) after the contractor delivers the supplies or performs the services in accordance with the terms and conditions of the contract, unless there is a disagreement over quantity, quality, or contractor compliance with a contract provision. if actual acceptance occurs within the constructive acceptance period, the government will base the determination of an interest penalty on the actual date of acceptance. the constructive acceptance requirement does not, however, compel government officials to accept supplies or services, perform contract administration functions, or make payment prior to fulfilling their responsibilities. (ii) the prompt payment regulations at 5 cfr1315.10(c) do not require the government to pay interest penalties if payment delays are due to disagreement between the government and the contractor over the payment amount or other issues involving contract compliance, or on amounts temporarily withheld or retained in accordance with the terms of the contract. the government and the contractor shall resolve claims involving disputes and any interest that may be payable in accordance with the clause at far 52.233 1, disputes. (6) discounts for prompt payment. the designated payment office will pay an interest penalty automatically, without request from the contractor, if the government takes a discount for prompt payment improperly. the government will calculate the interest penalty in accordance with the prompt payment regulations at 5 cfr part 1315. (7) additional interest penalty. (i) the designated payment office will pay a penalty amount, calculated in accordance with the prompt payment regulations at 5 cfr part 1315 in addition to the interest penalty amount only if  (a) the government owes an interest penalty of $1 or more; (b) the designated payment office does not pay the interest penalty within 10 days after the date the invoice amount is paid; and (c) the contractor makes a written demand to the designated payment office for additional penalty payment, in accordance with paragraph (a)(7)(ii) of this clause, postmarked not later than 40 days after the invoice amount is paid. (ii) (a) the contractor shall support written demands for additional penalty payments with the following data. the government will not request any additional data. the contractor shall  (1) specifically assert that late payment interest is due under a specific invoice, and request payment of all overdue late payment interest penalty and such additional penalty as may be required; (2) attach a copy of the invoice on which the unpaid late payment interest is due; and (3) state that payment of the principal has been received, including the date of receipt. (b) if there is no postmark or the postmark is illegible  (1) the designated payment office that receives the demand will annotate it with the date of receipt, provided the demand is received on or before the 40th day after payment was made; or (2) if the designated payment office fails to make the required annotation, the government will determine the demand’s validity based on the date the contractor has placed on the demand, provided such date is no later than the 40th day after payment was made. (iii) the additional penalty does not apply to payments regulated by other government regulations (e.g., payments under utility contracts subject to tariffs and regulation). (b) contract financing payment. if this contract provides for contract financing, the government will make contract financing payments in accordance with the applicable contract financing clause. (c) fast payment procedure due dates. if this contract contains the clause at 52.213 1, fast payment procedure, payments will be made within 15 days after the date of receipt of the invoice. (d) overpayments. if the contractor becomes aware of a duplicate contract financing or invoice payment or that the government has otherwise overpaid on a contract financing or invoice payment, the contractor shall  (1) remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the  (i) circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (ii) affected contract number and delivery order number if applicable; (iii) affected line item or subline item, if applicable; and (iv) contractor point of contact. (2) provide a copy of the remittance and supporting documentation to the contracting officer. (end of clause) alternate i (feb 2002). as prescribed in 32.908 (c)(3), add the following paragraph (e) to the basic clause: (e) invoices for interim payments. for interim payments under this cost reimbursement contract for services  (1) paragraphs (a)(2), (a)(3), (a)(4)(ii), (a)(4)(iii), and (a)(5)(i) do not apply; (2) for purposes of computing late payment interest penalties that may apply, the due date for payment is the 30 thday after the designated billing office receives a proper invoice; and (3) the contractor shall submit invoices for interim payments in accordance with paragraph (a) of far 52.216 7, allowable cost and payment. if the invoice does not comply with contract requirements, it will be returned within 7 days after the date the designated billing office received the invoice. as prescribed in 32.908(a), insert the following clause: prompt payment for fixed price architect engineer contracts (jan 2017) notwithstanding any other payment terms in this contract, the government will make invoice payments under the terms and conditions specified in this clause. the government considers payment as being made on the day a check is dated or the date of an electronic funds transfer. definitions of pertinent terms are set forth in sections 2.101, 32.001, and 32.902 of the federal acquisition regulation. all days referred to in this clause are calendar days, unless otherwise specified. (however, see paragraph (a)(3) of this clause concerning payments due on saturdays, sundays, and legal holidays.) (a) invoice payments  (1) due date. the due date for making invoice payments is  (i) for work or services completed by the contractor, the later of the following two events: (a) the 30th day after the designated billing office receives a proper invoice from the contractor (except as provided in paragraph (a)(1)(iii) of this clause). (b) the 30th day after government acceptance of the work or services completed by the contractor. for a final invoice, when the payment amount is subject to contract settlement actions (e.g., release of claims), acceptance is deemed to occur on the effective date of the settlement. (ii) the due date for progress payments is the 30 thday after government approval of contractor estimates of work or services accomplished. (iii) if the designated billing office fails to annotate the invoice or payment request with the actual date of receipt at the time of receipt, the payment due date is the 30 thday after the date of the contractor’s invoice or payment request, provided the designated billing office receives a proper invoice or payment request and there is no disagreement over quantity, quality, or contractor compliance with contract requirements. (2) contractor's invoice. the contractor shall prepare and submit invoices to the designated billing office specified in the contract. a proper invoice must include the items listed in paragraphs (a)(2)(i) through (a)(2)(x) of this clause. if the invoice does not comply with these requirements, the designated billing office will return it within 7 days after receipt, with the reasons why it is not a proper invoice. when computing any interest penalty owed the contractor, the government will take into account if the government notifies the contractor of an improper invoice in an untimely manner. (i) name and address of the contractor. (ii) invoice date and invoice number. (the contractor should date invoices as close as possible to the date of mailing or transmission.) (iii) contract number or other authorization for work or services performed (including order number and line item number). (iv) description of work or services performed. (v) delivery and payment terms (e.g., discount for prompt payment terms). (vi) name and address of contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment). (vii) name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice. (viii) taxpayer identification number (tin). the contractor shall include its tin on the invoice only if required elsewhere in this contract. (ix) electronic funds transfer (eft) banking information. (a) the contractor shall include eft banking information on the invoice only if required elsewhere in this contract. (b) if eft banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the contractor shall have submitted correct eft banking information in accordance with the applicable solicitation provision (e.g., 52.232 38, submission of electronic funds transfer information with offer), contract clause (e.g., 52.232 33, payment by electronic funds transfer system for award management, or 52.232 34, payment by electronic funds transfer other than system for award management), or applicable agency procedures. (c) eft banking information is not required if the government waived the requirement to pay by eft. (x) any other information or documentation required by the contract. (3) interest penalty. the designated payment office will pay an interest penalty automatically, without request from the contractor, if payment is not made by the due date and the conditions listed in paragraphs (a)(3)(i) through (a)(3)(iii) of this clause are met, if applicable. however, when the due date falls on a saturday, sunday, or legal holiday, the designated payment office may make payment on the following working day without incurring a late payment interest penalty. (i) the designated billing office received a proper invoice. (ii) the government processed a receiving report or other government documentation authorizing payment and there was no disagreement over quantity, quality, contractor compliance with any contract term or condition, or requested progress payment amount. (iii) in the case of a final invoice for any balance of funds due the contractor for work or services performed, the amount was not subject to further contract settlement actions between the government and the contractor. (4) computing penalty amount. the government will compute the interest penalty in accordance with the office of management and budget prompt payment regulations at 5 cfr part 1315. (i) for the sole purpose of computing an interest penalty that might be due the contractor, government acceptance or approval is deemed to occur constructively as shown in paragraphs (a)(4)(i)(a) and (b) of this clause. if actual acceptance or approval occurs within the constructive acceptance or approval period, the government will base the determination of an interest penalty on the actual date of acceptance or approval. constructive acceptance or constructive approval requirements do not apply if there is a disagreement over quantity, quality, contractor compliance with a contract provision, or requested progress payment amounts. these requirements also do not compel government officials to accept work or services, approve contractor estimates, perform contract administration functions, or make payment prior to fulfilling their responsibilities. (a) for work or services completed by the contractor, government acceptance is deemed to occur constructively on the 7 thday after the contractor completes the work or services in accordance with the terms and conditions of the contract. (b) for progress payments, government approval is deemed to occur on the 7th day after the designated billing office receives the contractor estimates. (ii) the prompt payment regulations at 5 cfr 1315.10(c) do not require the government to pay interest penalties if payment delays are due to disagreement between the government and the contractor over the payment amount or other issues involving contract compliance, or on amounts temporarily withheld or retained in accordance with the terms of the contract. the government and the contractor shall resolve claims involving disputes, and any interest that may be payable in accordance with the clause at far 52.233 1, disputes. (5) discounts for prompt payment. the designated payment office will pay an interest penalty automatically, without request from the contractor, if the government takes a discount for prompt payment improperly. the government will calculate the interest penalty in accordance with 5 cfr part 1315. (6) additional interest penalty. (i) the designated payment office will pay a penalty amount, calculated in accordance with the prompt payment regulations at 5 cfr part 1315, in addition to the interest penalty amount only if  (a) the government owes an interest penalty of $1 or more; (b) the designated payment office does not pay the interest penalty within 10 days after the date the invoice amount is paid; and (c) the contractor makes a written demand to the designated payment office for additional penalty payment, in accordance with paragraph (a)(6)(ii) of this clause, postmarked not later than 40 days after the date the invoice amount is paid. (ii) (a) the contractor shall support written demands for additional penalty payments with the following data. the government will not request any additional data. the contractor shall  (1) specifically assert that late payment interest is due under a specific invoice, and request payment of all overdue late payment interest penalty and such additional penalty as may be required; (2) attach a copy of the invoice on which the unpaid late payment interest is due; and (3) state that payment of the principal has been received, including the date of receipt. (b) if there is no postmark or the postmark is illegible  (1) the designated payment office that receives the demand will annotate it with the date of receipt, provided the demand is received on or before the 40 thday after payment was made; or (2) if the designated payment office fails to make the required annotation, the government will determine the demand’s validity based on the date the contractor has placed on the demand, provided such date is no later than the 40 thday after payment was made. (iii) the additional penalty does not apply to payments regulated by other government regulations (e.g., payments under utility contracts subject to tariffs and regulation). (b) contract financing payments. if this contract provides for contract financing, the government will make contract financing payments in accordance with the applicable contract financing clause. (c) overpayments. if the contractor becomes aware of a duplicate contract financing or invoice payment or that the government has otherwise overpaid on a contract financing or invoice payment, the contractor shall  (1) remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the  (i) circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (ii) affected contract number and delivery order number if applicable; (iii) affected line item or subline item, if applicable; and (iv) contractor point of contact. (2) provide a copy of the remittance and supporting documentation to the contracting officer. (end of clause) as prescribed in 32.908(b), insert the following clause: prompt payment for construction contracts (jan 2017) notwithstanding any other payment terms in this contract, the government will make invoice payments under the terms and conditions specified in this clause. the government considers payment as being made on the day a check is dated or the date of an electronic funds transfer. definitions of pertinent terms are set forth in sections 2.101, 32.001, and 32.902 of the federal acquisition regulation. all days referred to in this clause are calendar days, unless otherwise specified. (however, see paragraph (a)(3) concerning payments due on saturdays, sundays, and legal holidays.) (a) invoice payments  (1) types of invoice payments. for purposes of this clause, there are several types of invoice payments that may occur under this contract, as follows: (i) progress payments, if provided for elsewhere in this contract, based on contracting officer approval of the estimated amount and value of work or services performed, including payments for reaching milestones in any project. (a) the due date for making such payments is 14 days after the designated billing office receives a proper payment request. if the designated billing office fails to annotate the payment request with the actual date of receipt at the time of receipt, the payment due date is the 14 thday after the date of the contractor’s payment request, provided the designated billing office receives a proper payment request and there is no disagreement over quantity, quality, or contractor compliance with contract requirements. (b) the due date for payment of any amounts retained by the contracting officer in accordance with the clause at 52.232 5, payments under fixed price construction contracts, is as specified in the contract or, if not specified, 30 days after approval by the contracting officer for release to the contractor. (ii) final payments based on completion and acceptance of all work and presentation of release of all claims against the government arising by virtue of the contract, and payments for partial deliveries that have been accepted by the government (e.g., each separate building, public work, or other division of the contract for which the price is stated separately in the contract). (a) the due date for making such payments is the later of the following two events: (1) the 30 thday after the designated billing office receives a proper invoice from the contractor. (2) the 30 thday after government acceptance of the work or services completed by the contractor. for a final invoice when the payment amount is subject to contract settlement actions (e.g., release of claims), acceptance is deemed to occur on the effective date of the contract settlement. (b) if the designated billing office fails to annotate the invoice with the date of actual receipt at the time of receipt, the invoice payment due date is the 30 thday after the date of the contractor’s invoice, provided the designated billing office receives a proper invoice and there is no disagreement over quantity, quality, or contractor compliance with contract requirements. (2) contractor's invoice. the contractor shall prepare and submit invoices to the designated billing office specified in the contract. a proper invoice must include the items listed in paragraphs (a)(2)(i) through (a)(2)(xi) of this clause. if the invoice does not comply with these requirements, the designated billing office must return it within 7 days after receipt, with the reasons why it is not a proper invoice. when computing any interest penalty owed the contractor, the government will take into account if the government notifies the contractor of an improper invoice in an untimely manner. (i) name and address of the contractor. (ii) invoice date and invoice number. (the contractor should date invoices as close as possible to the date of mailing or transmission.) (iii) contract number or other authorization for work or services performed (including order number and line item number). (iv) description of work or services performed. (v) delivery and payment terms (e.g., discount for prompt payment terms). (vi) name and address of contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment). (vii) name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice. (viii) for payments described in paragraph (a)(1)(i) of this clause, substantiation of the amounts requested and certification in accordance with the requirements of the clause at 52.232 5, payments under fixed price construction contracts. (ix) taxpayer identification number (tin). the contractor shall include its tin on the invoice only if required elsewhere in this contract. (x) electronic funds transfer (eft) banking information. (a) the contractor shall include eft banking information on the invoice only if required elsewhere in this contract. (b) if eft banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the contractor shall have submitted correct eft banking information in accordance with the applicable solicitation provision (e.g., 52.232 38, submission of electronic funds transfer information with offer), contract clause (e.g., 52.232 33, payment by electronic funds transfer system for award management, or 52.232 34, payment by electronic funds transfer other than system for award management), or applicable agency procedures. (c) eft banking information is not required if the government waived the requirement to pay by eft. (xi) any other information or documentation required by the contract. (3) interest penalty. the designated payment office will pay an interest penalty automatically, without request from the contractor, if payment is not made by the due date and the conditions listed in paragraphs (a)(3)(i) through (a)(3)(iii) of this clause are met, if applicable. however, when the due date falls on a saturday, sunday, or legal holiday, the designated payment office may make payment on the following working day without incurring a late payment interest penalty. (i) the designated billing office received a proper invoice. (ii) the government processed a receiving report or other government documentation authorizing payment and there was no disagreement over quantity, quality, contractor compliance with any contract term or condition, or requested progress payment amount. (iii) in the case of a final invoice for any balance of funds due the contractor for work or services performed, the amount was not subject to further contract settlement actions between the government and the contractor. (4) computing penalty amount. the government will compute the interest penalty in accordance with the office of management and budget prompt payment regulations at 5 cfr part 1315. (i) for the sole purpose of computing an interest penalty that might be due the contractor for payments described in paragraph (a)(1)(ii) of this clause, government acceptance or approval is deemed to occur constructively on the 7 thday after the contractor has completed the work or services in accordance with the terms and conditions of the contract. if actual acceptance or approval occurs within the constructive acceptance or approval period, the government will base the determination of an interest penalty on the actual date of acceptance or approval. constructive acceptance or constructive approval requirements do not apply if there is a disagreement over quantity, quality, or contractor compliance with a contract provision. these requirements also do not compel government officials to accept work or services, approve contractor estimates, perform contract administration functions, or make payment prior to fulfilling their responsibilities. (ii) the prompt payment regulations at 5 cfr1315.10(c) do not require the government to pay interest penalties if payment delays are due to disagreement between the government and the contractor over the payment amount or other issues involving contract compliance, or on amounts temporarily withheld or retained in accordance with the terms of the contract. the government and the contractor shall resolve claims involving disputes, and any interest that may be payable in accordance with the clause at far 52.233 1, disputes. (5) discounts for prompt payment. the designated payment office will pay an interest penalty automatically, without request from the contractor, if the government takes a discount for prompt payment improperly. the government will calculate the interest penalty in accordance with the prompt payment regulations at 5 cfr part 1315. (6) additional interest penalty. (i) the designated payment office will pay a penalty amount, calculated in accordance with the prompt payment regulations at 5 cfr part 1315 in addition to the interest penalty amount only if  (a) the government owes an interest penalty of $1 or more; (b) the designated payment office does not pay the interest penalty within 10 days after the date the invoice amount is paid; and (c) the contractor makes a written demand to the designated payment office for additional penalty payment, in accordance with paragraph (a)(6)(ii) of this clause, postmarked not later than 40 days after the date the invoice amount is paid. (ii) (a) the contractor shall support written demands for additional penalty payments with the following data. the government will not request any additional data. the contractor shall  (1) specifically assert that late payment interest is due under a specific invoice, and request payment of all overdue late payment interest penalty and such additional penalty as may be required; (2) attach a copy of the invoice on which the unpaid late payment interest was due; and (3) state that payment of the principal has been received, including the date of receipt. (b) if there is no postmark or the postmark is illegible  (1) the designated payment office that receives the demand will annotate it with the date of receipt provided the demand is received on or before the 40 thday after payment was made; or (2) if the designated payment office fails to make the required annotation, the government will determine the demand’s validity based on the date the contractor has placed on the demand, provided such date is no later than the 40 thday after payment was made. (b) contract financing payments. if this contract provides for contract financing, the government will make contract financing payments in accordance with the applicable contract financing clause. (c) subcontract clause requirements. the contractor shall include in each subcontract for property or services (including a material supplier) for the purpose of performing this contract the following: (1) prompt payment for subcontractors. a payment clause that obligates the contractor to pay the subcontractor for satisfactory performance under its subcontract not later than 7 days from receipt of payment out of such amounts as are paid to the contractor under this contract. (2) interest for subcontractors. an interest penalty clause that obligates the contractor to pay to the subcontractor an interest penalty for each payment not made in accordance with the payment clause  (i) for the period beginning on the day after the required payment date and ending on the date on which payment of the amount due is made; and (ii) computed at the rate of interest established by the secretary of the treasury, and published in the federal register, for interest payments under 41 u.s.c. 7109 in effect at the time the contractor accrues the obligation to pay an interest penalty. (3) subcontractor clause flowdown. a clause requiring each subcontractor to  (i) include a payment clause and an interest penalty clause conforming to the standards set forth in paragraphs (c)(1) and (c)(2) of this clause in each of its subcontracts; and (ii) require each of its subcontractors to include such clauses in their subcontracts with each lower tier subcontractor or supplier. (d) subcontract clause interpretation. the clauses required by paragraph (c) of this clause shall not be construed to impair the right of the contractor or a subcontractor at any tier to negotiate, and to include in their subcontract, provisions that  (1) retainage permitted. permit the contractor or a subcontractor to retain (without cause) a specified percentage of each progress payment otherwise due to a subcontractor for satisfactory performance under the subcontract without incurring any obligation to pay a late payment interest penalty, in accordance with terms and conditions agreed to by the parties to the subcontract, giving such recognition as the parties deem appropriate to the ability of a subcontractor to furnish a performance bond and a payment bond; (2) withholding permitted. permit the contractor or subcontractor to make a determination that part or all of the subcontractor’s request for payment may be withheld in accordance with the subcontract agreement; and (3) withholding requirements. permit such withholding without incurring any obligation to pay a late payment penalty if  (i) a notice conforming to the standards of paragraph (g) of this clause previously has been furnished to the subcontractor; and (ii) the contractor furnishes to the contracting officer a copy of any notice issued by a contractor pursuant to paragraph (d)(3)(i) of this clause. (e) subcontractor withholding procedures. if a contractor, after making a request for payment to the government but before making a payment to a subcontractor for the subcontractor’s performance covered by the payment request, discovers that all or a portion of the payment otherwise due such subcontractor is subject to withholding from the subcontractor in accordance with the subcontract agreement, then the contractor shall  (1) subcontractor notice. furnish to the subcontractor a notice conforming to the standards of paragraph (g) of this clause as soon as practicable upon ascertaining the cause giving rise to a withholding, but prior to the due date for subcontractor payment; (2) contracting officer notice. furnish to the contracting officer, as soon as practicable, a copy of the notice furnished to the subcontractor pursuant to paragraph (e)(1) of this clause; (3) subcontractor progress payment reduction. reduce the subcontractor’s progress payment by an amount not to exceed the amount specified in the notice of withholding furnished under paragraph (e)(1) of this clause; (4) subsequent subcontractor payment. pay the subcontractor as soon as practicable after the correction of the identified subcontract performance deficiency, and  (i) make such payment within  (a) sevendays after correction of the identified subcontract performance deficiency (unless the funds therefor must be recovered from the government because of a reduction under paragraph (e)(5)(i)) of this clause; or (b) sevendays after the contractor recovers such funds from the government; or (ii) incur an obligation to pay a late payment interest penalty computed at the rate of interest established by the secretary of the treasury, and published in the federal register, for interest payments under 41 u.s.c. 7109 in effect at the time the contractor accrues the obligation to pay an interest penalty; (5) notice to contracting officer. notify the contracting officer upon  (i) reduction of the amount of any subsequent certified application for payment; or (ii) payment to the subcontractor of any withheld amounts of a progress payment, specifying  (a) the amounts withheld under paragraph (e)(1) of this clause; and (b) the dates that such withholding began and ended; and (6) interest to government. be obligated to pay to the government an amount equal to interest on the withheld payments (computed in the manner provided in 31 u.s.c. 3903(c)(1)), from the 8 thday after receipt of the withheld amounts from the government until  (i) the day the identified subcontractor performance deficiency is corrected; or (ii) the date that any subsequent payment is reduced under paragraph (e)(5)(i) of this clause. (f) third party deficiency reports  (1) withholding from subcontractor. if a contractor, after making payment to a first tier subcontractor, receives from a supplier or subcontractor of the first tier subcontractor (hereafter referred to as a "second tier subcontractor") a written notice in accordance with 40 u.s.c. 3133, asserting a deficiency in such first tier subcontractor’s performance under the contract for which the contractor may be ultimately liable, and the contractor determines that all or a portion of future payments otherwise due such first tier subcontractor is subject to withholding in accordance with the subcontract agreement, the contractor may, without incurring an obligation to pay an interest penalty under paragraph (e)(6) of this clause  (i) furnish to the first tier subcontractor a notice conforming to the standards of paragraph (g) of this clause as soon as practicable upon making such determination; and (ii) withhold from the first tier subcontractor’s next available progress payment or payments an amount not to exceed the amount specified in the notice of withholding furnished under paragraph (f)(1)(i) of this clause. (2) subsequent payment or interest charge. as soon as practicable, but not later than 7 days after receipt of satisfactory written notification that the identified subcontract performance deficiency has been corrected, the contractor shall  (i) pay the amount withheld under paragraph (f)(1)(ii) of this clause to such first tier subcontractor; or (ii) incur an obligation to pay a late payment interest penalty to such first tier subcontractor computed at the rate of interest established by the secretary of the treasury, and published in the federal register, for interest payments under 41 u.s.c. 7109 in effect at the time the contractor accrues the obligation to pay an interest penalty. (g) written notice of subcontractor withholding. the contractor shall issue a written notice of any withholding to a subcontractor (with a copy furnished to the contracting officer), specifying  (1) the amount to be withheld; (2) the specific causes for the withholding under the terms of the subcontract; and (3) the remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld. (h) subcontractor payment entitlement. the contractor may not request payment from the government of any amount withheld or retained in accordance with paragraph (d) of this clause until such time as the contractor has determined and certified to the contracting officer that the subcontractor is entitled to the payment of such amount. (i) prime subcontractor disputes. a dispute between the contractor and subcontractor relating to the amount or entitlement of a subcontractor to a payment or a late payment interest penalty under a clause included in the subcontract pursuant to paragraph (c) of this clause does not constitute a dispute to which the government is a party. the government may not be interpleaded in any judicial or administrative proceeding involving such a dispute. (j) preservation of prime subcontractor rights. except as provided in paragraph (i) of this clause, this clause shall not limit or impair any contractual, administrative, or judicial remedies otherwise available to the contractor or a subcontractor in the event of a dispute involving late payment or nonpayment by the contractor or deficient subcontract performance or nonperformance by a subcontractor. (k) non recourse for prime contractor interest penalty. the contractor’s obligation to pay an interest penalty to a subcontractor pursuant to the clauses included in a subcontract under paragraph (c) of this clause shall not be construed to be an obligation of the government for such interest penalty. a cost reimbursement claim may not include any amount for reimbursement of such interest penalty. (l) overpayments. if the contractor becomes aware of a duplicate contract financing or invoice payment or that the government has otherwise overpaid on a contract financing or invoice payment, the contractor shall  (1) remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the  (i) circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (ii) affected contract number and delivery order number if applicable; (iii) affected line item or subline item, if applicable; and (iv) contractor point of contact. (2) provide a copy of the remittance and supporting documentation to the contracting officer. (end of clause) as prescribed in 32.1005(b)(1), insert the following provision: invitation to propose performance based payments (mar 2000) (a) the government invites the offeror to propose terms under which the government will make performance based contract financing payments during contract performance. the government will consider performance based payment financing terms proposed by the offeror in the evaluation of the offeror’s proposal. the contracting officer will incorporate the financing terms of the successful offeror and the farclause, performance based payments, at far 52.232 32, in any resulting contract. (b) in the event of any conflict between the terms proposed by the offeror and the terms in the clause at far 52.232 32, performance based payments, the terms of the clause at far 52.232 32 shall govern. (c) the contracting officer will not accept the offeror’s proposed performance based payment financing if the financing does not conform to the following limitations: (1) the government will make delivery payments only for supplies delivered and accepted, or services rendered and accepted in accordance with the payment terms of this contract. (2) the terms and conditions of the performance based payments must  (i) comply with far 32.1004; (ii) be reasonable and consistent with all other technical and cost information included in the offeror’s proposal; and (iii) their total shall not exceed 90 percent of the contract price if on a whole contract basis, or 90 percent of the delivery item price if on a delivery item basis. (3) the terms and conditions of the performance based financing must be in the best interests of the government. (d) the offeror’s proposal of performance based payment financing shall include the following: (1) the proposed contractual language describing the performance based payments (see far 32.1004 for appropriate criteria for establishing performance bases and performance based finance payment amounts). (2) a listing of  (i) the projected performance based payment dates and the projected payment amounts; and (ii) the projected delivery date and the projected payment amount. (3) information addressing the contractor’s investment in the contract. (e) evaluation of the offeror’s proposed prices and financing terms will include whether the offeror’s proposed performance based payment events and payment amounts are reasonable and consistent with all other terms and conditions of the offeror’s proposal. (end of provision) alternate i (mar 2000). as prescribed in far 32.1005 (b)(2), add the following paragraph (f) to the basic provision: (f) the government will adjust each proposed price to reflect the cost of providing the proposed performance based payments to determine the total cost to the government of that particular combination of price and performance based financing. the government will make the adjustment using the procedure described in far 32.205(c). as prescribed in 32.206(b)(2), insert the following clause: terms for financing of purchases of commercial products and commercial services (nov 2021) (a) contractor entitlement to financing payments. the contractor may request, and the government shall pay, a contract financing payment as specified elsewhere in this contract when: the payment requested is properly due in accordance with this contract; the supplies deliverable or services due under the contract will be delivered or performed in accordance with the contract; and there has been no impairment or diminution of the government’s security under this contract. (b) special terms regarding termination for cause. if this contract is terminated for cause, the contractor shall, on demand, repay to the government the amount of unliquidated contract financing payments. the government shall be liable for no payment except as provided by the termination for cause paragraph of the clause at federal acquisition regulation (far) 52.212 4, contract terms and conditions commercial products and commercial services. (c) security for government financing. in the event the contractor fails to provide adequate security, as required in this contract, no financing payment shall be made under this contract. upon receipt of adequate security, financing payments shall be made, including all previous payments to which the contractor is entitled, in accordance with the terms of the provisions for contract financing. if at any time the contracting officer determines that the security provided by the contractor is insufficient, the contractor shall promptly provide such additional security as the contracting officer determines necessary. in the event the contractor fails to provide such additional security, the contracting officer may collect or liquidate such security that has been provided and suspend further payments to the contractor; and the contractor shall repay to the government the amount of unliquidated financing payments as the contracting officer at his sole discretion deems repayable. (d) reservation of rights. (1) no payment or other action by the government under this clause shall  (i) excuse the contractor from performance of obligations under this contract; or (ii) constitute a waiver of any of the rights or remedies of the parties under the contract. (2) the government’s rights and remedies under this clause  (i) shall not be exclusive, but rather shall be in addition to any other rights and remedies provided by law or this contract; and (ii) shall not be affected by delayed, partial, or omitted exercise of any right, remedy, power, or privilege, nor shall such exercise or any single exercise preclude or impair any further exercise under this clause or the exercise of any other right, power, or privilege of the government. (e) content of contractor's request for financing payment. the contractor’s request for financing payment shall contain the following: (1) the name and address of the contractor; (2) the date of the request for financing payment; (3) the contract number and/or other identifier of the contract or order under which the request is made; and (4) an appropriately itemized and totaled statement of the financing payments requested and such other information as is necessary for computation of the payment, prepared in accordance with the direction of the contracting officer. (f) limitation on frequency of financing payments. contractor financing payments shall be provided no more frequently than monthly. (g) dates for payment. a payment under this clause is a contract financing payment and not subject to the interest penalty provisions of the prompt payment act. the designated payment office will pay approved payment requests within 30 days of submittal of a proper request for payment. (h) conflict between terms of offeror and clause. in the event of any conflict between the terms proposed by the offeror in response to an invitation to propose financing terms (far 52.232 31) and the terms in this clause, the terms of this clause shall govern. (end of clause) as prescribed in 32.206(g), insert the following clause: installment payments for commercial products and commercial services (nov 2021) (a) contractor entitlement to financing payments. the contractor may request, and the government shall pay, a contract financing installment payment as specified in this contract when: the payment requested is properly due in accordance with this contract; the supplies deliverable or services due under the contract will be delivered or performed in accordance with the contract; and there has been no impairment or diminution of the government’s security under this contract. (b) computation of amounts. installment payment financing shall be paid to the contractor when requested for each separately priced unit of supply (but not for services) of each line item in amounts approved by the contracting officer pursuant to this clause. (1) number of installment payments for each line item. each separately priced unit of each line item is authorized a fixed number of monthly installment payments. the number of installment payments authorized for each unit of a line item is equal to the number of months from the date of contract award to the date onemonth before the first delivery of the first separately priced unit of the line item. for example, if the first scheduled delivery of any separately priced unit of a line item is 9 months after award of the contract, all separately priced units of that line item are authorized 8 installment payments. (2) amount of each installment payment. the amount of each installment payment for each separately priced unit of each line item is equal to 70 percent of the unit price divided by the number of installment payments authorized for that unit. (3) date of each installment payment. installment payments for any particular separately priced unit of a line item begin the number of months prior to the delivery of that unit that are equal to the number of installment payments authorized for that unit. for example, if 8 installment payments are authorized for each separately priced unit of a line item, the first installment payment for any particular unit of that line item would be 8 months before the scheduled delivery date for that unit. the last installment payment would be 1 month before scheduled delivery of a unit. (4) limitation on payment. prior to the delivery payment for a separately priced unit of a line item, the sum of all installment payments for that unit shall not exceed 70 percent of the price of that unit. (c) contractor request for installment payment. the contractor may submit requests for payment of installment payments not more frequently than monthly, in a form and manner acceptable to the contracting officer. unless otherwise authorized by the contracting officer, all installment payments in any month for which payment is being requested shall be included in a single request, appropriately itemized and totaled. (d) dates for payment. an installment payment under this clause is a contract financing payment under the prompt payment clause of this contract, and except as provided in paragraph (e) of this clause, approved requests shall be paid within 30 days of submittal of a proper request for payment. (e) liquidation of installment payments. installment payments shall be liquidated by deducting from the delivery payment of each item the total unliquidated amount of installment payments made for that separately priced unit of that line item. the liquidation amounts for each unit of each line item shall be clearly delineated in each request for delivery payment submitted by the contractor. (f) security for installment payment financing. in the event the contractor fails to provide adequate security as required in this contract, no financing payment shall be made under this contract. upon receipt of adequate security, financing payments shall be made, including all previous payments to which the contractor is entitled, in accordance with the terms of the contract. if at any time the contracting officer determines that the security provided by the contractor is insufficient, the contractor shall promptly provide such additional security as the contracting officer determines necessary. in the event the contractor fails to provide such additional security, the contracting officer may collect or liquidate such security that has been provided, and suspend further payments to the contractor; the contractor shall repay to the government the amount of unliquidated financing payments as the contracting officer at his sole discretion deems repayable. (g) special terms regarding termination for cause. if this contract is terminated for cause, the contractor shall, on demand, repay to the government the amount of unliquidated installment payments. the government shall be liable for no payment except as provided by the termination for cause paragraph of the clause at federal acquisition regulation 52.212 4, contract terms and conditions commercial products and commercial services. (h) reservation of rights. (1) no payment, vesting of title under this clause, or other action taken by the government under this clause shall  (i) excuse the contractor from performance of obligations under this contract; or (ii) constitute a waiver of any of the rights or remedies of the parties under the contract. (2) the government’s rights and remedies under this clause  (i) shall not be exclusive, but rather shall be in addition to any other rights and remedies provided by law or this contract; and (ii) shall not be affected by delayed, partial, or omitted exercise of any right, remedy, power, or privilege, nor shall such exercise or any single exercise preclude or impair any further exercise under this clause or the exercise of any other right, power, or privilege of the government. (i) content of contractor's request for installment payment. the contractor’s request for installment payment shall contain the following: (1) the name and address of the contractor; (2) the date of the request for installment payment; (3) the contract number and/or other identifier of the contract or order under which the request is made; and (4) an itemized and totaled statement of the items, installment payment amount, and month for which payment is being requested, for each separately priced unit of each line item. (end of clause) as prescribed in 32.205 (b) and 32.206 , insert the following provision: invitation to propose financing terms (dec 2022) (a) the offeror is invited to propose terms under which the government shall make contract financing payments during contract performance. the financing terms proposed by the offeror shall be a factor in the evaluation of the offeror’s proposal. the financing terms of the successful offeror and the clause, terms for financing of purchases of commercial products and commercial services, at federal acquisition regulation (far) 52.232 29, shall be incorporated in any resulting contract. (b) the offeror agrees that in the event of any conflict between the terms proposed by the offeror and the terms in the clause at far 52.232 29, terms for financing of purchases of commercial products and commercial services, the terms of the clause at far 52.232 29 shall govern. (c) because of statutory limitations ( 10 u.s.c. 3805 and 41 u.s.c. 4505), the offeror’s proposed financing shall not be acceptable if it does not conform to the following limitations: (1) delivery payments shall be made only for supplies delivered and accepted, or services rendered and accepted in accordance with the payment terms of this contract; (2) contract financing payments shall not exceed 15 percent of the contract price in advance of any performance of work under the contract; (3) the terms and conditions of the contract financing must be appropriate or customary in the commercial marketplace; and (4) the terms and conditions of the contract financing must be in the best interests of the united states. (d) the offeror’s proposal of financing terms shall include the following: (1) the proposed contractual language describing the contract financing (see far 32.202 2 for appropriate definitions of types of payments); and (2) a listing of the earliest date and greatest amount at which each contract financing payment may be payable and the amount of each delivery payment. any resulting contract shall provide that no contract financing payment shall be made at any earlier date or in a greater amount than shown in the offeror’s listing. (e) the offeror’s proposed prices and financing terms shall be evaluated to determine the cost to the united states of the proposal using the interest rate and delivery schedule specified elsewhere in this solicitation. (end of provision) as prescribed in 32.1005 , insert the following clause: performance based payments (apr 2012) (a) amount of payments and limitations on payments. subject to such other limitations and conditions as are specified in this contract and this clause, the amount of payments and limitations on payments shall be specified in the contract’s description of the basis for payment. (b) contractor request for performance based payment. the contractor may submit requests for payment of performance based payments not more frequently than monthly, in a form and manner acceptable to the contracting officer. unless otherwise authorized by the contracting officer, all performance based payments in any period for which payment is being requested shall be included in a single request, appropriately itemized and totaled. the contractor’s request shall contain the information and certification detailed in paragraphs (l) and (m) of this clause. (c) approval and payment of requests. (1) the contractor shall not be entitled to payment of a request for performance based payment prior to successful accomplishment of the event or performance criterion for which payment is requested. the contracting officer shall determine whether the event or performance criterion for which payment is requested has been successfully accomplished in accordance with the terms of the contract. the contracting officer may, at any time, require the contractor to substantiate the successful performance of any event or performance criterion which has been or is represented as being payable. (2) a payment under this performance based payment clause is a contract financing payment under the prompt payment clause of this contract and not subject to the interest penalty provisions of the prompt payment act. the designated payment office will pay approved requests on the _________ [contracting officer insert day as prescribed by agency head; if not prescribed, insert "30th"] day after receipt of the request for performance based payment by the designated payment office. however, the designated payment office is not required to provide payment if the contracting officer requires substantiation as provided in paragraph (c)(1) of this clause, or inquires into the status of an event or performance criterion, or into any of the conditions listed in paragraph (e) of this clause, or into the contractor certification. the payment period will not begin until the contracting officer approves the request. (3) the approval by the contracting officer of a request for performance based payment does not constitute an acceptance by the government and does not excuse the contractor from performance of obligations under this contract. (d) liquidation of performance based payments. (1) performance based finance amounts paid prior to payment for delivery of an item shall be liquidated by deducting a percentage or a designated dollar amount from the delivery payment. if the performance based finance payments are on a delivery item basis, the liquidation amount for each such line item shall be the percent of that delivery item price that was previously paid under performance based finance payments or the designated dollar amount. if the performance based finance payments are on a whole contract basis, liquidation shall be by either predesignated liquidation amounts or a liquidation percentage. (2) if at any time the amount of payments under this contract exceeds any limitation in this contract, the contractor shall repay to the government the excess. unless otherwise determined by the contracting officer, such excess shall be credited as a reduction in the unliquidated performance based payment balance(s), after adjustment of invoice payments and balances for any retroactive price adjustments. (e) reduction or suspension of performance based payments. the contracting officer may reduce or suspend performance based payments, liquidate performance based payments by deduction from any payment under the contract, or take a combination of these actions after finding upon substantial evidence any of the following conditions: (1) the contractor failed to comply with any material requirement of this contract (which includes paragraphs (h) and (i) of this clause). (2) performance of this contract is endangered by the contractor’s  (i) failure to make progress; or (ii) unsatisfactory financial condition. (3) the contractor is delinquent in payment of any subcontractor or supplier under this contract in the ordinary course of business. (f) title. (1) titleto the property described in this paragraph (f) shall vest in the government. vestiture shall be immediately upon the date of the first performance based payment under this contract, for property acquired or produced before that date. otherwise, vestiture shall occur when the property is or should have been allocable or properly chargeable to this contract. (2) "property," as used in this clause, includes all of the following described items acquired or produced by the contractor that are or should be allocable or properly chargeable to this contract under sound and generally accepted accounting principles and practices: (i) parts, materials, inventories, and work in process; (ii) special tooling and special test equipment to which the government is to acquire title; (iii) nondurable (i.e., noncapital) tools, jigs, dies, fixtures, molds, patterns, taps, gauges, test equipment and other similar manufacturing aids, title to which would not be obtained as special tooling under paragraph (f)(2)(ii) of this clause; and (iv) drawings and technical data, to the extent the contractor or subcontractors are required to deliver them to the government by other clauses of this contract. (3) although title to property is in the government under this clause, other applicable clauses of this contract (e.g., the termination clauses) shall determine the handling and disposition of the property. (4) the contractor may sell any scrap resulting from production under this contract, without requesting the contracting officer’s approval, provided that any significant reduction in the value of the property to which the government has title under this clause is reported in writing to the contracting officer. (5) in order to acquire for its own use or dispose of property to which title is vested in the government under this clause, the contractor shall obtain the contracting officer’s advance approval of the action and the terms. if approved, the basis for payment (the events or performance criteria) to which the property is related shall be deemed to be not in compliance with the terms of the contract and not payable (if the property is part of or needed for performance), and the contractor shall refund the related performance based payments in accordance with paragraph (d) of this clause. (6) when the contractor completes all of the obligations under this contract, including liquidation of all performance based payments, title shall vest in the contractor for all property (or the proceeds thereof) not  (i) delivered to, and accepted by, the government under this contract; or (ii) incorporated in supplies delivered to, and accepted by, the government under this contract and to which title is vested in the government under this clause. (7) the terms of this contract concerning liability for government furnished property shall not apply to property to which the government acquired title solely under this clause. (g) risk of loss. before delivery to and acceptance by the government, the contractor shall bear the risk of loss for property, the title to which vests in the government under this clause, except to the extent the government expressly assumes the risk. if any property is lost (see 45.101), the basis of payment (the events or performance criteria) to which the property is related shall be deemed to be not in compliance with the terms of the contract and not payable (if the property is part of or needed for performance), and the contractor shall refund the related performance based payments in accordance with paragraph (d) of this clause. (h) records and controls. the contractor shall maintain records and controls adequate for administration of this clause. the contractor shall have no entitlement to performance based payments during any time the contractor’s records or controls are determined by the contracting officer to be inadequate for administration of this clause. (i) reports and government access. the contractor shall promptly furnish reports, certificates, financial statements, and other pertinent information requested by the contracting officer for the administration of this clause and to determine that an event or other criterion prompting a financing payment has been successfully accomplished. the contractor shall give the government reasonable opportunity to examine and verify the contractor’s records and to examine and verify the contractor’s performance of this contract for administration of this clause. (j) special terms regarding default. if this contract is terminated under the default clause, (1) the contractor shall, on demand, repay to the government the amount of unliquidated performance based payments, and (2) title shall vest in the contractor, on full liquidation of all performance based payments, for all property for which the government elects not to require delivery under the default clause of this contract. the government shall be liable for no payment except as provided by the default clause. (k) reservation of rights. (1) no payment or vesting of title under this clause shall  (i) excuse the contractor from performance of obligations under this contract; or (ii) constitute a waiver of any of the rights or remedies of the parties under the contract. (2) the government’s rights and remedies under this clause  (i) shall not be exclusive, but rather shall be in addition to any other rights and remedies provided by law or this contract; and (ii) shall not be affected by delayed, partial, or omitted exercise of any right, remedy, power, or privilege, nor shall such exercise or any single exercise preclude or impair any further exercise under this clause or the exercise of any other right, power, or privilege of the government. (l) content of contractor’s request for performance based payment. the contractor’s request for performance based payment shall contain the following: (1) the name and address of the contractor; (2) the date of the request for performance based payment; (3) the contract number and/or other identifier of the contract or order under which the request is made; (4) such information and documentation as is required by the contract’s description of the basis for payment; and (5) a certification by a contractor official authorized to bind the contractor, as specified in paragraph (m) of this clause. (m) content of contractor's certification. as required in paragraph (l)(5) of this clause, the contractor shall make the following certification in each request for performance based payment: i certify to the best of my knowledge and belief that  (1) this request for performance based payment is true and correct; this request (and attachments) has been prepared from the books and records of the contractor, in accordance with the contract and the instructions of the contracting officer; (2) (except as reported in writing on __________), all payments to subcontractors and suppliers under this contract have been paid, or will be paid, currently, when due in the ordinary course of business; (3) there are no encumbrances (except as reported in writing on _________) against the property acquired or produced for, and allocated or properly chargeable to, the contract which would affect or impair the government's title; (4) there has been no materially adverse change in the financial condition of the contractor since the submission by the contractor to the government of the most recent written information dated _____________; and (5) after the making of this requested performance based payment, the amount of all payments for each deliverable item for which performance based payments have been requested will not exceed any limitation in the contract, and the amount of all payments under the contract will not exceed any limitation in the contract. (end of clause) as prescribed in 32.1110(a)(1), insert the following clause: payment by electronic funds transfer system for award management (oct 2018) (a) method of payment. (1) all payments by the government under this contract shall be made by electronic funds transfer (eft), except as provided in paragraph (a)(2) of this clause. as used in this clause, the term "eft" refers to the funds transfer and may also include the payment information transfer. (2) in the event the government is unable to release one or more payments by eft, the contractor agrees to either  (i) accept payment by check or some other mutually agreeable method of payment; or (ii) request the government to extend the payment due date until such time as the government can make payment by eft (but see paragraph (d) of this clause). (b) contractor's eft information. the government shall make payment to the contractor using the eft information contained in the system for award management (sam). in the event that the eft information changes, the contractor shall be responsible for providing the updated information to sam. (c) mechanisms for eft payment. the government may make payment by eft through either the automated clearing house (ach) network, subject to the rules of the national automated clearing house association, or the fedwire transfer system. the rules governing federal payments through the ach are contained in 31 cfr part 210. (d) suspension of payment. if the contractor’s eft information in the sam is incorrect, then the government need not make payment to the contractor under this contract until correct eft information is entered into the sam; and any invoice or contract financing request shall be deemed not to be a proper invoice for the purpose of prompt payment under this contract. the prompt payment terms of the contract regarding notice of an improper invoice and delays in accrual of interest penalties apply. (e) liability for uncompleted or erroneous transfers. (1) if an uncompleted or erroneous transfer occurs because the government used the contractor’s eft information incorrectly, the government remains responsible for  (i) making a correct payment; (ii) paying any prompt payment penalty due; and (iii) recovering any erroneously directed funds. (2) if an uncompleted or erroneous transfer occurs because the contractor’s eft information was incorrect, or was revised within 30 days of government release of the eft payment transaction instruction to the federal reserve system, and  (i) if the funds are no longer under the control of the payment office, the government is deemed to have made payment and the contractor is responsible for recovery of any erroneously directed funds; or (ii) if the funds remain under the control of the payment office, the government shall not make payment, and the provisions of paragraph (d) of this clause shall apply. (f) eft and prompt payment. a payment shall be deemed to have been made in a timely manner in accordance with the prompt payment terms of this contract if, in the eft payment transaction instruction released to the federal reserve system, the date specified for settlement of the payment is on or before the prompt payment due date, provided the specified payment date is a valid date under the rules of the federal reserve system. (g) eft and assignment of claims. if the contractor assigns the proceeds of this contract as provided for in the assignment of claims terms of this contract, the contractor shall require as a condition of any such assignment, that the assignee shall register separately in sam and shall be paid by eft in accordance with the terms of this clause. notwithstanding any other requirement of this contract, payment to an ultimate recipient other than the contractor, or a financial institution properly recognized under an assignment of claims pursuant to subpart 32.8, is not permitted. in all respects, the requirements of this clause shall apply to the assignee as if it were the contractor. eft information that shows the ultimate recipient of the transfer to be other than the contractor, in the absence of a proper assignment of claims acceptable to the government, is incorrect eft information within the meaning of paragraph (d) of this clause. (h) liability for change of eft information by financial agent. the government is not liable for errors resulting from changes to eft information made by the contractor’s financial agent. (i) payment information. the payment or disbursing office shall forward to the contractor available payment information that is suitable for transmission as of the date of release of the eft instruction to the federal reserve system. the government may request the contractor to designate a desired format and method(s) for delivery of payment information from a list of formats and methods the payment office is capable of executing. however, the government does not guarantee that any particular format or method of delivery is available at any particular payment office and retains the latitude to use the format and delivery method most convenient to the government. if the government makes payment by check in accordance with paragraph (a) of this clause, the government shall mail the payment information to the remittance address contained in sam. (end of clause) as prescribed in 32.1110(a)(2), insert the following clause: payment by electronic funds transfer other than system for award management (jul 2013) (a) method of payment. (1) all payments by the government under this contract shall be made by electronic funds transfer (eft) except as provided in paragraph (a)(2) of this clause. as used in this clause, the term "eft" refers to the funds transfer and may also include the payment information transfer. (2) in the event the government is unable to release one or more payments by eft, the contractor agrees to either  (i) accept payment by check or some other mutually agreeable method of payment; or (ii) request the government to extend payment due dates until such time as the government makes payment by eft (but see paragraph (d) of this clause). (b) mandatory submission of contractor's eft information. (1) the contractor is required to provide the government with the information required to make payment by eft (see paragraph (j) of this clause). the contractor shall provide this information directly to the office designated in this contract to receive that information (hereafter: "designated office") by _______________ [the contracting officer shall insert date, days after award, days before first request, the date specified for receipt of offers if the provision at 52.232 38 is utilized, or "concurrent with first request" as prescribed by the head of the agency; if not prescribed, insert "no later than 15 days prior to submission of the first request for payment"]. if not otherwise specified in this contract, the payment office is the designated office for receipt of the contractor’s eft information. if more than one designated office is named for the contract, the contractor shall provide a separate notice to each office. in the event that the eft information changes, the contractor shall be responsible for providing the updated information to the designated office(s). (2) if the contractor provides eft information applicable to multiple contracts, the contractor shall specifically state the applicability of this eft information in terms acceptable to the designated office. however, eft information supplied to a designated office shall be applicable only to contracts that identify that designated office as the office to receive eft information for that contract. (c) mechanisms for eft payment. the government may make payment by eft through either the automated clearing house (ach) network, subject to the rules of the national automated clearing house association, or the fedwire transfer system. the rules governing federal payments through the ach are contained in 31 cfr part 210. (d) suspension of payment. (1) the government is not required to make any payment under this contract until after receipt, by the designated office, of the correct eft payment information from the contractor. until receipt of the correct eft information, any invoice or contract financing request shall be deemed not to be a proper invoice for the purpose of prompt payment under this contract. the prompt payment terms of the contract regarding notice of an improper invoice and delays in accrual of interest penalties apply. (2) if the eft information changes after submission of correct eft information, the government shall begin using the changed eft information no later than 30 days after its receipt by the designated office to the extent payment is made by eft. however, the contractor may request that no further payments be made until the updated eft information is implemented by the payment office. if such suspension would result in a late payment under the prompt payment terms of this contract, the contractor’s request for suspension shall extend the due date for payment by the number of days of the suspension. (e) liability for uncompleted or erroneous transfers. (1) if an uncompleted or erroneous transfer occurs because the government used the contractor’s eft information incorrectly, the government remains responsible for  (i) making a correct payment; (ii) paying any prompt payment penalty due; and (iii) recovering any erroneously directed funds. (2) if an uncompleted or erroneous transfer occurs because the contractor’s eft information was incorrect, or was revised within 30 days of government release of the eft payment transaction instruction to the federal reserve system, and  (i) if the funds are no longer under the control of the payment office, the government is deemed to have made payment and the contractor is responsible for recovery of any erroneously directed funds; or (ii) if the funds remain under the control of the payment office, the government shall not make payment and the provisions of paragraph (d) shall apply. (f) eft and prompt payment. a payment shall be deemed to have been made in a timely manner in accordance with the prompt payment terms of this contract if, in the eft payment transaction instruction released to the federal reserve system, the date specified for settlement of the payment is on or before the prompt payment due date, provided the specified payment date is a valid date under the rules of the federal reserve system. (g) eft and assignment of claims. if the contractor assigns the proceeds of this contract as provided for in the assignment of claims terms of this contract, the contractor shall require as a condition of any such assignment, that the assignee shall provide the eft information required by paragraph (j) of this clause to the designated office, and shall be paid by eft in accordance with the terms of this clause. in all respects, the requirements of this clause shall apply to the assignee as if it were the contractor. eft information that shows the ultimate recipient of the transfer to be other than the contractor, in the absence of a proper assignment of claims acceptable to the government, is incorrect eft information within the meaning of paragraph (d) of this clause. (h) liability for change of eft information by financial agent. the government is not liable for errors resulting from changes to eft information provided by the contractor’s financial agent. (i) payment information. the payment or disbursing office shall forward to the contractor available payment information that is suitable for transmission as of the date of release of the eft instruction to the federal reserve system. the government may request the contractor to designate a desired format and method(s) for delivery of payment information from a list of formats and methods the payment office is capable of executing. however, the government does not guarantee that any particular format or method of delivery is available at any particular payment office and retains the latitude to use the format and delivery method most convenient to the government. if the government makes payment by check in accordance with paragraph (a) of this clause, the government shall mail the payment information to the remittance address in the contract. (j) eft information. the contractor shall provide the following information to the designated office. the contractor may supply this data for this or multiple contracts (see paragraph (b) of this clause). the contractor shall designate a single financial agent per contract capable of receiving and processing the eft information using the eft methods described in paragraph (c) of this clause. (1) the contract number (or other procurement identification number). (2) the contractor’s name and remittance address, as stated in the contract(s). (3) the signature (manual or electronic, as appropriate), title, and telephone number of the contractor official authorized to provide this information. (4) the name, address, and 9 digit routing transit number of the contractor’s financial agent. (5) the contractor’s account number and the type of account (checking, saving, or lockbox). (6) if applicable, the fedwire transfer system telegraphic abbreviation of the contractor’s financial agent. (7) if applicable, the contractor shall also provide the name, address, telegraphic abbreviation, and 9 digit routing transit number of the correspondent financial institution receiving the wire transfer payment if the contractor’s financial agent is not directly on line to the fedwire transfer system; and, therefore, not the receiver of the wire transfer payment. (end of clause) as prescribed in 32.1110(c), insert the following clause: designation of office for government receipt of electronic funds transfer information (jul 2013) (a) as provided in paragraph (b) of the clause at 52.232 34, payment by electronic funds transfer other than system for award management, the government has designated the office cited in paragraph (c) of this clause as the office to receive the contractor’s electronic funds transfer (eft) information, in lieu of the payment office of this contract. (b) the contractor shall send all eft information, and any changes to eft information to the office designated in paragraph (c) of this clause. the contractor shall not send eft information to the payment office, or any other office than that designated in paragraph (c). the government need not use any eft information sent to any office other than that designated in paragraph (c). (c) designated office: name: ____________________________________ ____________________________________ mailing address: ____________________________________ ____________________________________ ____________________________________ telephone number: ____________________________________ person to contact: ____________________________________ electronic address: ____________________________________ (end of clause) as prescribed in 32.1110(d), insert the following clause: payment by third party (may 2014) (a) general. (1) except as provided in paragraph (a)(2) of this clause, the contractor agrees to accept payments due under this contract, through payment by a third party in lieu of payment directly from the government, in accordance with the terms of this clause. the third party and, if applicable, the particular governmentwide commercial purchase card to be used are identified elsewhere in this contract. (2) the governmentwide commercial purchase card is not authorized as a method of payment during any period the system for award management (sam) indicates that the contractor has delinquent debt that is subject to collection under the treasury offset program (top). information on top is available at http://fms.treas.gov/debt/index.html. if the sam subsequently indicates that the contractor no longer has delinquent debt, the contractor may request the contracting officer to authorize payment by governmentwide commercial purchase card. (b) contractor payment request. (1) except as provided in paragraph (b)(2) of this clause, the contractor shall make payment requests through a charge to the government account with the third party, at the time and for the amount due in accordance with those clauses of this contract that authorize the contractor to submit invoices, contract financing requests, other payment requests, or as provided in other clauses providing for payment to the contractor. (2) when the contracting officer has notified the contractor that the governmentwide commercial purchase card is no longer an authorized method of payment, the contractor shall make such payment requests in accordance with instructions provided by the contracting officer during the period when the purchase card is not authorized. (c) payment. the contractor and the third party shall agree that payments due under this contract shall be made upon submittal of payment requests to the third party in accordance with the terms and conditions of an agreement between the contractor, the contractor’s financial agent (if any), and the third party and its agents (if any). no payment shall be due the contractor until such agreement is made. payments made or due by the third party under this clause are not payments made by the government and are not subject to the prompt payment act or any implementation thereof in this contract. (d) documentation. documentation of each charge against the government’s account shall be provided to the contracting officer upon request. (e) assignment of claims. notwithstanding any other provision of this contract, if any payment is made under this clause, then no payment under this contract shall be assigned under the provisions of the assignment of claims terms of this contract or the assignment of claims act of1940 ( 31 u.s.c.3727, 41 u.s.c. 6305). (f) other payment terms. the other payment terms of this contract shall govern the content and submission of payment requests. if any clause requires information or documents in or with the payment request, that is not provided in the third party agreement referenced in paragraph (c) of this clause, the contractor shall obtain instructions from the contracting officer before submitting such a payment request. (end of clause) as prescribed in 32.1110(e), insert the following clause: multiple payment arrangements (may 1999) this contract or agreement provides for payments to the contractor through several alternative methods. the applicability of specific methods of payment and the designation of the payment office(s) are either stated  (a) elsewhere in this contract or agreement; or (b) in individual orders placed under this contract or agreement. (end of clause) as prescribed in 32.1110(g), insert the following provision: submission of electronic funds transfer information with offer (jul 2013) the offeror shall provide, with its offer, the following information that is required to make payment by electronic funds transfer (eft) under any contract that results from this solicitation. this submission satisfies the requirement to provide eft information under paragraphs (b)(1) and (j) of the clause at 52.232 34, payment by electronic funds transfer other than system for award management. (1) the solicitation number (or other procurement identification number). (2) the offeror’s name and remittance address, as stated in the offer. (3) the signature (manual or electronic, as appropriate), title, and telephone number of the offeror’s official authorized to provide this information. (4) the name, address, and 9 digit routing transit number of the offeror’s financial agent. (5) the offeror’s account number and the type of account (checking, savings, or lockbox). (6) if applicable, the fedwire transfer system telegraphic abbreviation of the offeror’s financial agent. (7) if applicable, the offeror shall also provide the name, address, telegraphic abbreviation, and 9 digit routing transit number of the correspondent financial institution receiving the wire transfer payment if the offeror’s financial agent is not directly on line to the fedwire and, therefore, not the receiver of the wire transfer payment. (end of provision) as prescribed in 32.706 3 , insert the following clause: unenforceability of unauthorized obligations (jun 2013) (a) except as stated in paragraph (b) of this clause, when any supply or service acquired under this contract is subject to any end user license agreement (eula), terms of service (tos), or similar legal instrument or agreement, that includes any clause requiring the government to indemnify the contractor or any person or entity for damages, costs, fees, or any other loss or liability that would create an anti deficiency act violation ( 31 u.s.c. 1341), the following shall govern: (1) any such clause is unenforceable against the government. (2) neither the government nor any government authorized end user shall be deemed to have agreed to such clause by virtue of it appearing in the eula, tos, or similar legal instrument or agreement. if the eula, tos, or similar legal instrument or agreement is invoked through an "i agree" click box or other comparable mechanism (e.g., "click wrap" or "browse wrap" agreements), execution does not bind the government or any government authorized end user to such clause. (3) any such clause is deemed to be stricken from the eula, tos, or similar legal instrument or agreement. (b) paragraph (a) of this clause does not apply to indemnification by the government that is expressly authorized by statute and specifically authorized under applicable agency regulations and procedures. (end of clause) as prescribed in 32.009 2 , insert the following clause: providing accelerated payments to small business subcontractors (mar 2023) (a) (1) in accordance with 31 u.s.c. 3903 and 10 u.s.c. 3801, within 15 days after receipt of accelerated payments from the government, the contractor shall make accelerated payments to its small business subcontractors under this contract, to the maximum extent practicable and prior to when such payment is otherwise required under the applicable contract or subcontract, after receipt of a proper invoice and all other required documentation from the small business subcontractor. (2) the contractor agrees to make such payments to its small business subcontractors without any further consideration from or fees charged to the subcontractor. (b) the acceleration of payments under this clause does not provide any new rights under the prompt payment act. (c) include the substance of this clause, including this paragraph (c), in all subcontracts with small business concerns, including subcontracts with small business concerns for the acquisition of commercial products or commercial services. (end of clause) as prescribed in 33.215 , insert the following clause: disputes (may 2014) (a) this contract is subject to 41 u.s.c chapter 71, contract disputes. (b) except as provided in 41 u.s.c chapter 71, all disputes arising under or relating to this contract shall be resolved under this clause. (c) "claim," as used in this clause, means a written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to this contract. however, a written demand or written assertion by the contractor seeking the payment of money exceeding $100,000 is not a claim under 41 u.s.c chapter 71 until certified. a voucher, invoice, or other routine request for payment that is not in dispute when submitted is not a claim under 41 u.s.c chapter 71. the submission may be converted to a claim under 41 u.s.c chapter 71, by complying with the submission and certification requirements of this clause, if it is disputed either as to liability or amount or is not acted upon in a reasonable time. (d) (1) a claim by the contractor shall be made in writing and, unless otherwise stated in this contract, submitted within 6 years after accrual of the claim to the contracting officer for a written decision. a claim by the government against the contractor shall be subject to a written decision by the contracting officer. (2) (i) the contractor shall provide the certification specified in paragraph (d)(2)(iii) of this clause when submitting any claim exceeding $100,000. (ii) the certification requirement does not apply to issues in controversy that have not been submitted as all or part of a claim. (iii) the certification shall state as follows: "i certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the government is liable; and that i am authorized to certify the claim on behalf of the contractor." (3) the certification may be executed by any person authorized to bind the contractor with respect to the claim. (e) for contractor claims of $100,000 or less, the contracting officer must, if requested in writing by the contractor, render a decision within 60 days of the request. for contractor certified claims over $100,000, the contracting officer must, within 60 days, decide the claim or notify the contractor of the date by which the decision will be made. (f) the contracting officer’s decision shall be final unless the contractor appeals or files a suit as provided in 41 u.s.c chapter 71. (g) if the claim by the contractor is submitted to the contracting officer or a claim by the government is presented to the contractor, the parties, by mutual consent, may agree to use alternative dispute resolution (adr). if the contractor refuses an offer for adr, the contractor shall inform the contracting officer, in writing, of the contractor’s specific reasons for rejecting the offer. (h) the government shall pay interest on the amount found due and unpaid from (1) the date that the contracting officer receives the claim (certified, if required); or (2) the date that payment otherwise would be due, if that date is later, until the date of payment. with regard to claims having defective certifications, as defined in far 33.201, interest shall be paid from the date that the contracting officer initially receives the claim. simple interest on claims shall be paid at the rate, fixed by the secretary of the treasury as provided in the act, which is applicable to the period during which the contracting officer receives the claim and then at the rate applicable for each 6 month period as fixed by the treasury secretary during the pendency of the claim. (i) the contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under the contract, and comply with any decision of the contracting officer. (end of clause) alternate i (dec 1991). as prescribed in 33.215 , substitute the following paragraph (i) for paragraph (i) of the basic clause: (i) the contractor shall proceed diligently with performance of this contract, pending final resolution of any request for relief, claim, appeal, or action arising under or relating to the contract, and comply with any decision of the contracting officer. as prescribed in 33.106 , insert the following provision: service of protest (sept 2006) (a) protests, as defined in section 33.101 of the federal acquisition regulation, that are filed directly with an agency, and copies of any protests that are filed with the government accountability office (gao), shall be served on the contracting officer (addressed as follows) by obtaining written and dated acknowledgment of receipt from ______________________. [contracting officer designate the official or location where a protest may be served on the contracting officer.] (b) the copy of any protest shall be received in the office designated above within oneday of filing a protest with the gao. (end of provision) as prescribed in 33.106(b), insert the following clause: protest after award (aug 1996) (a) upon receipt of a notice of protest (as defined in far 33.101) or a determination that a protest is likely (see far 33.102(d)), the contracting officer may, by written order to the contractor, direct the contractor to stop performance of the work called for by this contract. the order shall be specifically identified as a stop work order issued under this clause. upon receipt of the order, the contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stop page. upon receipt of the final decision in the protest, the contracting officer shall either  (1) cancel the stop work order; or (2) terminate the work covered by the order as provided in the default, or the termination for convenience of the government, clause of this contract. (b) if a stop work order issued under this clause is canceled either before or after a final decision in the protest, the contractor shall resume work. the contracting officer shall make an equitable adjustment in the delivery schedule or contract price, or both, and the contract shall be modified, in writing, accordingly, if  (1) the stop work order results in an increase in the time required for, or in the contractor’s cost properly allocable to, the performance of any part of this contract; and (2) the contractor asserts its right to an adjustment within 30 days after the end of the period of work stoppage; provided, that if the contracting officer decides the facts justify the action, the contracting officer may receive and act upon a proposal at any time before final payment under this contract. (c) if a stop work order is not canceled and the work covered by the order is terminated for the convenience of the government, the contracting officer shall allow reasonable costs resulting from the stop work order in arriving at the termination settlement. (d) if a stop work order is not canceled and the work covered by the order is terminated for default, the contracting officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop work order. (e) the government’s rights to terminate this contract at any time are not affected by action taken under this clause. (f) if, as the result of the contractor’s intentional or negligent misstatement, misrepresentation, or miscertification, a protest related to this contract is sustained, and the government pays costs, as provided in far 33.102(b)(2) or 33.104(h)(1), the government may require the contractor to reimburse the government the amount of such costs. in addition to any other remedy available, and pursuant to the requirements of subpart 32.6, the government may collect this debt by offsetting the amount against any payment due the contractor under any contract between the contractor and the government. (end of clause) alternate i (june1985). as prescribed in 33.106 (b), substitute in paragraph (a)(2) the words "the termination clause of this contract" for the words "the default, or the termination for convenience of the government clause of this contract." in paragraph (b) substitute the words "an equitable adjustment in the delivery schedule, the estimated cost, the fee, or a combination thereof, and in any other terms of the contract that may be affected" for the words "an equitable adjustment in the delivery schedule or contract price, or both." as prescribed in 33.215(b), insert the following clause: applicable law for breach of contract claim (oct 2004) united states law will apply to resolve any claim of breach of this contract. (end of clause) as prescribed at 34.104 , insert the following clause: industrial resources developed under title iii defense production act (sept 2016) (a) definitions. "title iii industrial resource" means materials, services, processes, or manufacturing equipment (including the processes, technologies, and ancillary services for the use of such equipment) established or maintained under the authority of title iii, defense production act (50 u.s.c. app.2091 2093). title iii project contractor means a contractor that has received assistance for the development or manufacture of an industrial resource under title iii of defense production act (50 u.s.c. app.2091 2093). (b) the contractor shall refer any request from a title iii project contractor for testing and qualification of a title iii industrial resource to the contracting officer. (c) upon the direction of the contracting officer, the contractor shall test title iii industrial resources for qualification. the contractor shall provide the test results to the defense production act office, title iii program, located at wright patterson air force base, ohio 45433 7739. (d) when the contracting officer modifies the contract to direct testing pursuant to this clause, the government will provide the title iii industrial resource to be tested and will make an equitable adjustment in the contract for the costs of testing and qualification of the title iii industrial resource. (e) the contractor agrees to insert the substance of this clause, including paragraph (e), in every subcontract issued in performance of this contract. (end of clause) as prescribed in 34.203 (a) use the following provision: notice of earned value management system preaward integrated baseline review. (nov 2016) (a) the offeror shall provide documentation that the cognizant federal agency has determined that the proposed earned value management system (evms) complies with the evms guidelines in electronic industries alliance standard 748(eia 748) (current version at time of solicitation). (b) if the offeror proposes to use a system that has not been determined to be in compliance with the requirements of paragraph (a) of this provision, the offeror shall submit a comprehensive plan for compliance with the evms guidelines. (1) the plan shall  (i) (i) describe the evms the offeror intends to use in performance of the contracts; (ii) distinguish between the offeror’s existing management system and modifications proposed to meet the guidelines; (iii) (iii) describe the management system and its application in terms of the evms guidelines; (iv) (iv) describe the proposed procedure for administration of the guidelines, as applied to subcontractors; and (v) (v) provide documentation describing the process and results of any third party or self evaluation of the system’s compliance with the evms guidelines. (2) the offeror shall provide information and assistance as required by the contracting officer to support review of the plan. (3) the government will review and approve the offeror’s plan for an evms before contract award. (4) the offeror’s evms plan must provide milestones that indicate when the offeror anticipates that the evm system will be compliant with the eia 748 guidelines. (c) offerors shall identify the major subcontractors, or major subcontracted effort if major subcontractors have not been selected subject to the guidelines. the prime contractor and the government shall agree to subcontractors selected for application of the evms guidelines. (d) the government will conduct an integrated baseline review (ibr), as designated by the agency, prior to contract award. the objective of the ibr is for the government and the contractor to jointly assess technical areas, such as the contractor’s planning, to ensure complete coverage of the contract requirements, logical scheduling of the work activities, adequate resources, methodologies for earned value (budgeted cost for work performed (bcwp)), and identification of inherent risks. (end of provision) as prescribed in 34.203 (b) use the following provision: notice of earned value management system post award postaward integrated baseline review (nov 2016) (a) the offeror shall provide documentation that the cognizant federal agency has determined that the proposed earned value management system (evms) complies with the evms guidelines in electronic industries alliance standard 748 (eia 748) (current version at time of solicitation). (b) if the offeror proposes to use a system that has not been determined to be in compliance with the requirements of paragraph (a) of this provision, the offeror shall submit a comprehensive plan for compliance with the evms guidelines. (1) the plan shall  (i) describe the evms the offeror intends to use in performance of the contracts; (ii) distinguish between the offeror’s existing management system and modifications proposed to meet the guidelines; (iii) describe the management system and its application in terms of the evms guidelines; (iv) describe the proposed procedure for administration of the guidelines, as applied to subcontractors; and (v) provide documentation describing the process and results of any third party or self evaluation of the system’s compliance with the evms guidelines. (2) the offeror shall provide information and assistance as required by the contracting officer to support review of the plan (3) the government will review and approve the offeror’s plan for an evms before contract award. (4) the offeror’s evms plan must provide milestones that indicate when the offeror anticipates that the evm system will be compliant with the eia 748 guidelines. (c) offerors shall identify the major subcontractors, or major subcontracted effort if major subcontractors have not been selected, planned for application of the guidelines. the prime contractor and the government shall agree to subcontractors selected for application of the evms guidelines. (end of provision) as prescribed in 34.203(c), insert the following clause: earned value management system (nov 2016) (a) the contractor shall use an earned value management system (evms) that has been determined by the cognizant federal agency (cfa) to be compliant with the guidelines in electronic industries alliance standard 748 (eia 748) (current version at the time of award) to manage this contract. if the contractor’s current evms has not been determined compliant at the time of award, see paragraph (b) of this clause. the contractor shall submit reports in accordance with the requirements of this contract. (b) if, at the time of award, the contractor’s evm system has not been determined by the cfa as complying with evms guidelines or the contractor does not have an existing cost/schedule control system that is compliant with the guidelines in eia  748 (current version at time of award), the contractor shall  (1) apply the current system to the contract; and (2) take necessary actions to meet the milestones in the contractor’s evms plan approved by the contracting officer. (c) the government will conduct an integrated baseline review (ibr). if a pre award ibr has not been conducted, a post award ibr shall be conducted as early as practicable after contract award. (d) the contracting officer may require an ibr at  (1) exercise of significant options; or (2) incorporation of major modifications. (e) unless a waiver is granted by the cfa, contractor proposed evms changes require approval of the cfa prior to implementation. the cfa will advise the contractor of the acceptability of such changes within 30 calendar days after receipt of the notice of proposed changes from the contractor. if the advance approval requirements are waived by the cfa, the contractor shall disclose evms changes to the cfa at least 14 calendar days prior to the effective date of implementation. (f) the contractor shall provide access to all pertinent records and data requested by the contracting officer or a an authorized representative as necessary to permit government surveillance to ensure that the evms conforms, and continues to conform, with the performance criteria referenced in paragraph (a) of this clause. (g) the contractor shall require the subcontractors specified below to comply with the requirements of this clause: [insert list of applicable subcontractors.] ________________________________________________ ________________________________________________ ________________________________________________ ________________________________________________ (end of clause) (end of clause) as prescribed in 36.501(b), insert the following clause: [complete the clause by inserting the appropriate percentage consistent with the complexity and magnitude of the work and customary or necessary specialty subcontracting (see 36.501(a)).] performance of work by the contractor (apr 1984) the contractor shall perform on the site, and with its own organization, work equivalent to at least _______ [insert the appropriate number in words followed by numerals in parentheses] percent of the total amount of work to be performed under the contract. this percentage may be reduced by a supplemental agreement to this contract if, during performing the work, the contractor requests a reduction and the contracting officer determines that the reduction would be to the advantage of the government. (end of clause) as prescribed in 36.502 , insert the following clause: differing site conditions (apr 1984) (a) the contractor shall promptly, and before the conditions are disturbed, give a written notice to the contracting officer of  (1) subsurface or latent physical conditions at the site which differ materially from those indicated in this contract; or (2) unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract. (b) the contracting officer shall investigate the site conditions promptly after receiving the notice. if the conditions do materially so differ and cause an increase or decrease in the contractor’s cost of, or the time required for, performing any part of the work under this contract, whether or not changed as a result of the conditions, an equitable adjustment shall be made under this clause and the contract modified in writing accordingly. (c) no request by the contractor for an equitable adjustment to the contract under this clause shall be allowed, unless the contractor has given the written notice required; provided, that the time prescribed in paragraph (a) of this clause for giving written notice may be extended by the contracting officer. (d) no request by the contractor for an equitable adjustment to the contract for differing site conditions shall be allowed if made after final payment under this contract. (end of clause) as prescribed in 36.503 , insert the following clause: site investigation and conditions affecting the work (apr 1984) (a) the contractor acknowledges that it has taken steps reasonably necessary to ascertain the nature and location of the work, and that it has investigated and satisfied itself as to the general and local conditions which can affect the work or its cost, including but not limited to (1) conditions bearing upon transportation, disposal, handling, and storage of materials; (2) the availability of labor, water, electric power, and roads; (3) uncertainties of weather, river stages, tides, or similar physical conditions at the site; (4) the conformation and conditions of the ground; and (5) the character of equipment and facilities needed preliminary to and during work performance. the contractor also acknowledges that it has satisfied itself as to the character, quality, and quantity of surface and subsurface materials or obstacles to be encountered insofar as this information is reasonably ascertainable from an inspection of the site, including all exploratory work done by the government, as well as from the drawings and specifications made a part of this contract. any failure of the contractor to take the actions described and acknowledged in this paragraph will not relieve the contractor from responsibility for estimating properly the difficulty and cost of successfully performing the work, or for proceeding to successfully perform the work without additional expense to the government. (b) the government assumes no responsibility for any conclusions or interpretations made by the contractor based on the information made available by the government. nor does the government assume responsibility for any understanding reached or representation made concerning conditions which can affect the work by any of its officers or agents before the execution of this contract, unless that understanding or representation is expressly stated in this contract. (end of clause) as prescribed in 36.504 , insert the following clause in solicitations and contracts when a fixed price construction contract is contemplated and physical data (e.g., test borings, hydrographic, weather conditions data) will be furnished or made available to offerors. all information to be furnished or made available to offerors before award that pertains to the performance of the work should be identified in the clause. when paragraphs are not applicable they may be deleted. physical data (apr 1984) data and information furnished or referred to below is for the contractor’s information. the government shall not be responsible for any interpretation of or conclusion drawn from the data or information by the contractor. (a) the indications of physical conditions on the drawings and in the specifications are the result of site investigations by __________ [insert a description of investigational methods used, such as surveys, auger borings, core borings, test pits, probings, test tunnels]. (b) weather conditions __________ [insert a summary of weather records and warnings]. (c) transportation facilities _________ [insert a summary of transportation facilities providing access from the site, including information about their availability and limitations]. (d) ___________ [insert other pertinent information]. (end of clause) as prescribed in 36.505 , insert the following clause: material and workmanship (apr 1984) (a) all equipment, material, and articles incorporated into the work covered by this contract shall be new and of the most suitable grade for the purpose intended, unless otherwise specifically provided in this contract. references in the specifications to equipment, material, articles, or patented processes by trade name, make, or catalog number, shall be regarded as establishing a standard of quality and shall not be construed as limiting competition. the contractor may, at its option, use any equipment, material, article, or process that, in the judgment of the contracting officer, is equal to that named in the specifications, unless otherwise specifically provided in this contract. (b) the contractor shall obtain the contracting officer’s approval of the machinery and mechanical and other equipment to be incorporated into the work. when requesting approval, the contractor shall furnish to the contracting officer the name of the manufacturer, the model number, and other information concerning the performance, capacity, nature, and rating of the machinery and mechanical and other equipment. when required by this contract or by the contracting officer, the contractor shall also obtain the contracting officer’s approval of the material or articles which the contractor contemplates incorporating into the work. when requesting approval, the contractor shall provide full information concerning the material or articles. when directed to do so, the contractor shall submit samples for approval at the contractor’s expense, with all shipping charges prepaid. machinery, equipment, material, and articles that do not have the required approval shall be installed or used at the risk of subsequent rejection. (c) all work under this contract shall be performed in a skillful and workmanlike manner. the contracting officer may require, in writing, that the contractor remove from the work any employee the contracting officer deems incompetent, careless, or otherwise objectionable. (end of clause) as prescribed in 36.506 , insert the following clause: superintendence by the contractor (apr 1984) at all times during performance of this contract and until the work is completed and accepted, the contractor shall directly superintend the work or assign and have on the worksite a competent superintendent who is satisfactory to the contracting officer and has authority to act for the contractor. (end of clause) as prescribed in 36.507 , insert the following clause: permits and responsibilities (nov 1991) the contractor shall, without additional expense to the government, be responsible for obtaining any necessary licenses and permits, and for complying with any federal, state, and municipal laws, codes, and regulations applicable to the performance of the work. the contractor shall also be responsible for all damages to persons or property that occur as a result of the contractor’s fault or negligence. the contractor shall also be responsible for all materials delivered and work performed until completion and acceptance of the entire work, except for any completed unit of work which may have been accepted under the contract. (end of clause) as prescribed in 36.508 , insert the following clause: other contracts (apr 1984) the government may undertake or award other contracts for additional work at or near the site of the work under this contract. the contractor shall fully cooperate with the other contractors and with government employees and shall carefully adapt scheduling and performing the work under this contract to accommodate the additional work, heeding any direction that may be provided by the contracting officer. the contractor shall not commit or permit any act that will interfere with the performance of work by any other contractor or by government employees. (end of clause) as prescribed in 36.509 , insert the following clause: protection of existing vegetation, structures, equipment, utilities, and improvements (apr 1984) (a) the contractor shall preserve and protect all structures, equipment, and vegetation (such as trees, shrubs, and grass) on or adjacent to the work site, which are not to be removed and which do not unreasonably interfere with the work required under this contract. the contractor shall only remove trees when specifically authorized to do so, and shall avoid damaging vegetation that will remain in place. if any limbs or branches of trees are broken during contract performance, or by the careless operation of equipment, or by workmen, the contractor shall trim those limbs or branches with a clean cut and paint the cut with a tree pruning compound as directed by the contracting officer. (b) the contractor shall protect from damage all existing improvements and utilities (1)at or near the work site, and (2)on adjacent property of a third party, the locations of which are made known to or should be known by the contractor. the contractor shall repair any damage to those facilities, including those that are the property of a third party, resulting from failure to comply with the requirements of this contract or failure to exercise reasonable care in performing the work. if the contractor fails or refuses to repair the damage promptly, the contracting officer may have the necessary work performed and charge the cost to the contractor. (end of clause) as prescribed in 36.510 , insert the following clause: operations and storage areas (apr 1984) (a) the contractor shall confine all operations (including storage of materials) on government premises to areas authorized or approved by the contracting officer. the contractor shall hold and save the government, its officers and agents, free and harmless from liability of any nature occasioned by the contractor’s performance. (b) temporary buildings (e.g., storage sheds, shops, offices) and utilities may be erected by the contractor only with the approval of the contracting officer and shall be built with labor and materials furnished by the contractor without expense to the government. the temporary buildings and utilities shall remain the property of the contractor and shall be removed by the contractor at its expense upon completion of the work. with the written consent of the contracting officer, the buildings and utilities may be abandoned and need not be removed. (c) the contractor shall, under regulations prescribed by the contracting officer, use only established roadways, or use temporary roadways constructed by the contractor when and as authorized by the contracting officer. when materials are transported in prosecuting the work, vehicles shall not be loaded beyond the loading capacity recommended by the manufacturer of the vehicle or prescribed by any federal, state, or local law or regulation. when it is necessary to cross curbs or sidewalks, the contractor shall protect them from damage. the contractor shall repair or pay for the repair of any damaged curbs, sidewalks, or roads. (end of clause) as prescribed in 36.511 , insert the following clause: use and possession prior to completion (apr 1984) (a) the government shall have the right to take possession of or use any completed or partially completed part of the work. before taking possession of or using any work, the contracting officer shall furnish the contractor a list of items of work remaining to be performed or corrected on those portions of the work that the government intends to take possession of or use. however, failure of the contracting officer to list any item of work shall not relieve the contractor of responsibility for complying with the terms of the contract. the government’s possession or use shall not be deemed an acceptance of any work under the contract. (b) while the government has such possession or use, the contractor shall be relieved of the responsibility for the loss of or damage to the work resulting from the government’s possession or use, notwithstanding the terms of the clause in this contract entitled "permits and responsibilities." if prior possession or use by the government delays the progress of the work or causes additional expense to the contractor, an equitable adjustment shall be made in the contract price or the time of completion, and the contract shall be modified in writing accordingly. (end of clause) as prescribed in 36.512 , insert the following clause: cleaning up (apr 1984) the contractor shall at all times keep the work area, including storage areas, free from accumulations of waste materials. before completing the work, the contractor shall remove from the work and premises any rubbish, tools, scaffolding, equipment, and materials that are not the property of the government. upon completing the work, the contractor shall leave the work area in a clean, neat, and orderly condition satisfactory to the contracting officer. (end of clause) as prescribed in 36.513 , insert the following clause: accident prevention (nov 1991) (a) the contractor shall provide and maintain work environments and procedures which will  (1) safeguard the public and government personnel, property, materials, supplies, and equipment exposed to contractor operations and activities; (2) avoid interruptions of government operations and delays in project completion dates; and (3) control costs in the performance of this contract. (b) for these purposes on contracts for construction or dismantling, demolition, or removal of improvements, the contractor shall  (1) provide appropriate safety barricades, signs, and signal lights; (2) comply with the standards issued by the secretary of labor at 29 cfr part 1926 and 29 cfr part 1910 ; and (3) ensure that any additional measures the contracting officer determines to be reasonably necessary for the purposes are taken. (c) if this contract is for construction or dismantling, demolition or removal of improvements with any department of defense agency or component, the contractor shall comply with all pertinent provisions of the latest version of u.s. army corps of engineers safety and health requirements manual, em 385 1 1, in effect on the date of the solicitation. (d) whenever the contracting officer becomes aware of any noncompliance with these requirements or any condition which poses a serious or imminent danger to the health or safety of the public or government personnel, the contracting officer shall notify the contractor orally, with written confirmation, and request immediate initiation of corrective action. this notice, when delivered to the contractor or the contractor’s representative at the work site, shall be deemed sufficient notice of the noncompliance and that corrective action is required. after receiving the notice, the contractor shall immediately take corrective action. if the contractor fails or refuses to promptly take corrective action, the contracting officer may issue an order stopping all or part of the work until satisfactory corrective action has been taken. the contractor shall not be entitled to any equitable adjustment of the contract price or extension of the performance schedule on any stop work order issued under this clause. (e) the contractor shall insert this clause, including this paragraph (e), with appropriate changes in the designation of the parties, in subcontracts. (end of clause) alternate i ( nov 1991). if the contract will involve (a) work of a long duration or hazardous nature, or (b) performance on a government facility that on the advice of technical representatives involves hazardous materials or operations that might endanger the safety of the public and/or government personnel or property, add the following paragraph (f) to the basic clause: (f) before commencing the work, the contractor shall  (1) submit a written proposed plan for implementing this clause. the plan shall include an analysis of the significant hazards to life, limb, and property inherent in contract work performance and a plan for controlling these hazards; and (2) meet with representatives of the contracting officer to discuss and develop a mutual understanding relative to administration of the overall safety program. as prescribed in 36.514 , insert the following clause in solicitations and contracts when a fixed price construction contract or a fixed price dismantling, demolition, or removal of improvements contract is contemplated, the contract is to be performed on government sites when the contracting officer decides (a) that the existing utility system is adequate for the needs of both the government and the contractor, and (b) furnishing it is in the government’s interest. when this clause is used, the contracting officer shall list the available utilities in the contract. availability and use of utility services (apr 1984) (a) the government shall make all reasonably required amounts of utilities available to the contractor from existing outlets and supplies, as specified in the contract. unless otherwise provided in the contract, the amount of each utility service consumed shall be charged to or paid for by the contractor at prevailing rates charged to the government or, where the utility is produced by the government, at reasonable rates determined by the contracting officer. the contractor shall carefully conserve any utilities furnished without charge. (b) the contractor, at its expense and in a workmanlike manner satisfactory to the contracting officer, shall install and maintain all necessary temporary connections and distribution lines, and all meters required to measure the amount of each utility used for the purpose of determining charges. before final acceptance of the work by the government, the contractor shall remove all the temporary connections, distribution lines, meters, and associated paraphernalia. (end of clause) as prescribed in 36.515 , insert the following clause: schedules for construction contracts (apr 1984) (a) the contractor shall, within five days after the work commences on the contract or another period of time determined by the contracting officer, prepare and submit to the contracting officer for approval three copies of a practicable schedule showing the order in which the contractor proposes to perform the work, and the dates on which the contractor contemplates starting and completing the several salient features of the work (including acquiring materials, plant, and equipment). the schedule shall be in the form of a progress chart of suitable scale to indicate appropriately the percentage of work scheduled for completion by any given date during the period. if the contractor fails to submit a schedule within the time prescribed, the contracting officer may withhold approval of progress payments until the contractor submits the required schedule. (b) the contractor shall enter the actual progress on the chart as directed by the contracting officer, and upon doing so shall immediately deliver three copies of the annotated schedule to the contracting officer. if, in the opinion of the contracting officer, the contractor falls behind the approved schedule, the contractor shall take steps necessary to improve its progress, including those that may be required by the contracting officer, without additional cost to the government. in this circumstance, the contracting officer may require the contractor to increase the number of shifts, overtime operations, days of work, and/or the amount of construction plant, and to submit for approval any supplementary schedule or schedules in chart form as the contracting officer deems necessary to demonstrate how the approved rate of progress will be regained. (c) failure of the contractor to comply with the requirements of the contracting officer under this clause shall be grounds for a determination by the contracting officer that the contractor is not prosecuting the work with sufficient diligence to ensure completion within the time specified in the contract. upon making this determination, the contracting officer may terminate the contractor’s right to proceed with the work, or any separable part of it, in accordance with the default terms of this contract. (end of clause) as prescribed in 36.516 , the contracting officer may insert the following clause in solicitations and contracts when a fixed price construction contract providing for unit pricing of items and for payment based on quantity surveys is contemplated: quantity surveys (apr 1984) (a) quantity surveys shall be conducted, and the data derived from these surveys shall be used in computing the quantities of work performed and the actual construction completed and in place. (b) the government shall conduct the original and final surveys and make the computations based on them. the contractor shall conduct the surveys for any periods for which progress payments are requested and shall make the computations based on these surveys. all surveys conducted by the contractor shall be conducted under the direction of a representative of the contracting officer, unless the contracting officer waives this requirement in a specific instance. (c) promptly upon completing a survey, the contractor shall furnish the originals of all field notes and all other records relating to the survey or to the layout of the work to the contracting officer, who shall use them as necessary to determine the amount of progress payments. the contractor shall retain copies of all such material furnished to the contracting officer. (end of clause) alternate i (apr 1984). if it is determined at a level above that of the contracting officer that it is impracticable for government personnel to perform the original and final surveys, and the government wishes the contractor to perform these surveys, substitute the following paragraph (b) for paragraph (b) of the basic clause: (b) the contractor shall conduct the original and final surveys and surveys for any periods for which progress payments are requested. all these surveys shall be conducted under the direction of a representative of the contracting officer, unless the contracting officer waives this requirement in a specific instance. the government shall make such computations as are necessary to determine the quantities of work performed or finally in place. the contractor shall make the computations based on the surveys for any periods for which progress payments are requested. as prescribed in 36.517 , insert the following clause in solicitations and contracts when a fixed price construction contract is contemplated and use of this clause is appropriate due to a need for accurate work layout and for siting verification during work performance: layout of work (apr 1984) the contractor shall lay out its work from government established base lines and bench marks indicated on the drawings, and shall be responsible for all measurements in connection with the layout. the contractor shall furnish, at its own expense, all stakes, templates, platforms, equipment, tools, materials, and labor required to lay out any part of the work. the contractor shall be responsible for executing the work to the lines and grades that may be established or indicated by the contracting officer. the contractor shall also be responsible for maintaining and preserving all stakes and other marks established by the contracting officer until authorized to remove them. if such marks are destroyed by the contractor or through its negligence before their removal is authorized, the contracting officer may replace them and deduct the expense of the replacement from any amounts due or to become due to the contractor. (end of clause) as prescribed in 36.518 , insert the following clause in solicitations and contracts when cost reimbursement construction contracts are contemplated: work oversight in cost reimbursement construction contracts (apr 1984) the extent and character of the work to be done by the contractor shall be subject to the general supervision, direction, control, and approval of the contracting officer. (end of clause) as prescribed in 36.519 , insert the following clause in solicitations and contracts when a cost reimbursement construction contract is contemplated: organization and direction of the work (apr 1984) (a) when this contract is executed, the contractor shall submit to the contracting officer a chart showing the general executive and administrative organization, the personnel to be employed in connection with the work under this contract, and their respective duties. the contractor shall keep the data furnished current by supplementing it as additional information becomes available. (b) work performance under this contract shall be under the full time resident direction of (1) the contractor, if the contractor is an individual; (2) one or more principal partners, if the contractor is a partnership; or (3) one or more senior officers, if contractor is a corporation, association, or similar legal entity. however, if the contracting officer approves, the contractor may be represented in the direction of the work by a specific person or persons holding positions other than those identified in this paragraph. (end of clause) as prescribed in 36.521 , insert the following clause: specifications and drawings for construction (feb 1997) (a) the contractor shall keep on the work site a copy of the drawings and specifications and shall at all times give the contracting officer access thereto. anything mentioned in the specifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both. in case of difference between drawings and specifications, the specifications shall govern. in case of discrepancy in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the contracting officer, who shall promptly make a determination in writing. any adjustment by the contractor without such a determination shall be at its own risk and expense. the contracting officer shall furnish from time to time such detailed drawings and other information as considered necessary, unless otherwise provided. (b) wherever in the specifications or upon the drawings the words "directed," "required," "ordered," "designated," "prescribed," or words of like import are used, it shall be understood that the "direction," "requirement," "order," "designation," or "prescription," of the contracting officer is intended and similarly the words "approved," "acceptable," "satisfactory," or words of like import shall mean "approved by," or "acceptable to," or "satisfactory to" the contracting officer, unless otherwise expressly stated. (c) where "as shown," "as indicated," "as detailed," or words of similar import are used, it shall be understood that the reference is made to the drawings accompanying this contract unless stated otherwise. the word "provided" as used herein shall be understood to mean "provide complete in place," that is "furnished and installed." (d) shop drawings means drawings, submitted to the government by the contractor, subcontractor, or any lower tier subcontractor pursuant to a construction contract, showing in detail (1) the proposed fabrication and assembly of structural elements, and (2) the installation (i.e., fit, and attachment details) of materials or equipment. it includes drawings, diagrams, layouts, schematics, descriptive literature, illustrations, schedules, performance and test data, and similar materials furnished by the contractor to explain in detail specific portions of the work required by the contract. the government may duplicate, use, and disclose in any manner and for any purpose shop drawings delivered under this contract. (e) if this contract requires shop drawings, the contractor shall coordinate all such drawings, and review them for accuracy, completeness, and compliance with contract requirements and shall indicate its approval thereon as evidence of such coordination and review. shop drawings submitted to the contracting officer without evidence of the contractor’s approval may be returned for resubmission. the contracting officer will indicate an approval or disapproval of the shop drawings and if not approved as submitted shall indicate the government’s reasons therefor. any work done before such approval shall be at the contractor’s risk. approval by the contracting officer shall not relieve the contractor from responsibility for any errors or omissions in such drawings, nor from responsibility for complying with the requirements of this contract, except with respect to variations described and approved in accordance with (f) of this clause. (f) if shop drawings show variations from the contract requirements, the contractor shall describe such variations in writing, separate from the drawings, at the time of submission. if the contracting officer approves any such variation, the contracting officer shall issue an appropriate contract modification, except that, if the variation is minor or does not involve a change in price or in time of performance, a modification need not be issued. (g) the contractor shall submit to the contracting officer for approval four copies (unless otherwise indicated) of all shop drawings as called for under the various headings of these specifications. three sets (unless otherwise indicated) of all shop drawings, will be retained by the contracting officer and one set will be returned to the contractor. (end of clause) alternate i (apr 1984). when record shop drawings are required and reproducible shop drawings are needed, add the following sentences to paragraph (g) of the basic clause: upon completing the work under this contract, the contractor shall furnish a complete set of all shop drawings as finally approved. these drawings shall show all changes and revisions made up to the time the equipment is completed and accepted. alternate ii (apr 1984). when record shop drawings are required and reproducible shop drawings are not needed, the following sentences shall be added to paragraph (g) of the basic clause: upon completing the work under this contract, the contractor shall furnish _____ [contracting officer complete by inserting desired amount] sets of prints of all shop drawings as finally approved. these drawings shall show changes and revisions made up to the time the equipment is completed and accepted. as prescribed in 36.609 1(c), insert the following clause: design within funding limitations (apr 1984) (a) the contractor shall accomplish the design services required under this contract so as to permit the award of a contract, using standard federal acquisition regulation procedures for the construction of the facilities designed at a price that does not exceed the estimated construction contract price as set forth in paragraph (c) of this clause. when bids or proposals for the construction contract are received that exceed the estimated price, the contractor shall perform such redesign and other services as are necessary to permit contract award within the funding limitation. these additional services shall be performed at no increase in the price of this contract. however, the contractor shall not be required to perform such additional services at no cost to the government if the unfavorable bids or proposals are the result of conditions beyond its reasonable control. (b) the contractor will promptly advise the contracting officer if it finds that the project being designed will exceed or is likely to exceed the funding limitations and it is unable to design a usable facility within these limitations. upon receipt of such information, the contracting officer will review the contractor’s revised estimate of construction cost. the government may, if it determines that the estimated construction contract price set forth in this contract is so low that award of a construction contract not in excess of such estimate is improbable, authorize a change in scope or materials as required to reduce the estimated construction cost to an amount within the estimated construction contract price set forth in paragraph (c) of this clause, or the government may adjust such estimated construction contract price. when bids or proposals are not solicited or are unreasonably delayed, the government shall prepare an estimate of constructing the design submitted and such estimate shall be used in lieu of bids or proposals to determine compliance with the funding limitation. (c) the estimated construction contract price for the project described in this contract is $______. (end of clause) as prescribed in 36.609 2(b), insert the following clause: responsibility of the architect engineer contractor (apr 1984) (a) the contractor shall be responsible for the professional quality, technical accuracy, and the coordination of all designs, drawings, specifications, and other services furnished by the contractor under this contract. the contractor shall, without additional compensation, correct or revise any errors or deficiencies in its designs, drawings, specifications, and other services. (b) neither the government’s review, approval or acceptance of, nor payment for, the services required under this contract shall be construed to operate as a waiver of any rights under this contract or of any cause of action arising out of the performance of this contract, and the contractor shall be and remain liable to the government in accordance with applicable law for all damages to the government caused by the contractor’s negligent performance of any of the services furnished under this contract. (c) the rights and remedies of the government provided for under this contract are in addition to any other rights and remedies provided by law. (d) if the contractor is comprised of more than one legal entity, each such entity shall be jointly and severally liable hereunder. (end of clause) as prescribed in 36.609 3 , insert the following clause: work oversight in architect engineer contracts (apr 1984) the extent and character of the work to be done by the contractor shall be subject to the general oversight, supervision, direction, control, and approval of the contracting officer. (end of clause) as prescribed in 36.609 4 , insert the following clause: requirements for registration of designers (june 2003) architects or engineers registered to practice in the particular professional field involved in a state, the district of columbia, or an outlying area of the united states shall prepare or review and approve the design of architectural, structural, mechanical, electrical, civil, or other engineering features of the work. (end of clause) as prescribed in 36.522 , insert the following clause: preconstruction conference (feb 1995) if the contracting officer decides to conduct a preconstruction conference, the successful offeror will be notified and will be required to attend. the contracting officer’s notification will include specific details regarding the date, time, and location of the conference, any need for attendance by subcontractors, and information regarding the items to be discussed. (end of clause) as prescribed in 36.523 , insert a provision substantially the same as the following: site visit (construction) (feb 1995) (a) the clauses at 52.236 2, differing site conditions, and 52.236 3, site investigations and conditions affecting the work, will be included in any contract awarded as a result of this solicitation. accordingly, offerors or quoters are urged and expected to inspect the site where the work will be performed. (b) site visits may be arranged during normal duty hours by contacting: name: ____________________________________________ address: __________________________________________ __________________________________________________ telephone: ________________________________________ (end of provision) alternate i (feb 1995). if an organized site visit will be conducted, substitute a paragraph substantially the same as the following for paragraph (b) of the basic provision: (b) an organized site visit has been scheduled for  __________________________________________________ [insert date and time] (c) participants will meet at  __________________________________________________ [insert location] as prescribed in 36.520 , insert the following provision: preparation of proposals construction (oct 1997) (a) proposals must be (1) submitted on the forms furnished by the government or on copies of those forms; and (2) manually signed. the person signing a proposal must initial each erasure or change appearing on any proposal form. (b) the proposal form may require offerors to submit proposed prices for one or more items on various bases, including  (1) lump sum price; (2) alternate prices; (3) units of construction; or (4) any combination of paragraphs (b)(1) through (b)(3) of this provision. (c) if the solicitation requires submission of a proposal on all items, failure to do so may result in the proposal being rejected without further consideration. if a proposal on all items is not required, offerors should insert the words "no proposal" in the space provided for any item on which no price is submitted. (d) alternate proposals will not be considered unless this solicitation authorizes their submission. (end of provision) as prescribed in 37.110(a), insert the following provision: site visit (apr 1984) offerors or quoters are urged and expected to inspect the site where services are to be performed and to satisfy themselves regarding all general and local conditions that may affect the cost of contract performance, to the extent that the information is reasonably obtainable. in no event shall failure to inspect the site constitute grounds for a claim after contract award. (end of provision) as prescribed in 37.110(b), insert the following clause in solicitations and contracts for services to be performed on government installations, unless a construction contract is contemplated: protection of government buildings, equipment, and vegetation (apr 1984) the contractor shall use reasonable care to avoid damaging existing buildings, equipment, and vegetation on the government installation. if the contractor’s failure to use reasonable care causes damage to any of this property, the contractor shall replace or repair the damage at no expense to the government as the contracting officer directs. if the contractor fails or refuses to make such repair or replacement, the contractor shall be liable for the cost, which may be deducted from the contract price. (end of clause) as prescribed in 37.110(c), insert the following clause: continuity of services (jan 1991) (a) the contractor recognizes that the services under this contract are vital to the government and must be continued without interruption and that, upon contract expiration, a successor, either the government or another contractor, may continue them. the contractor agrees to  (1) furnish phase in training; and (2) exercise its best efforts and cooperation to effect an orderly and efficient transition to a successor. (b) the contractor shall, upon the contracting officer’s written notice, (1) furnish phase in, phase out services for up to 90 days after this contract expires and (2) negotiate in good faith a plan with a successor to determine the nature and extent of phase in, phase out services required. the plan shall specify a training program and a date for transferring responsibilities for each division of work described in the plan, and shall be subject to the contracting officer’s approval. the contractor shall provide sufficient experienced personnel during the phase in, phase out period to ensure that the services called for by this contract are maintained at the required level of proficiency. (c) the contractor shall allow as many personnel as practicable to remain on the job to help the successor maintain the continuity and consistency of the services required by this contract. the contractor also shall disclose necessary personnel records and allow the successor to conduct on site interviews with these employees. if selected employees are agreeable to the change, the contractor shall release them at a mutually agreeable date and negotiate transfer of their earned fringe benefits to the successor. (d) the contractor shall be reimbursed for all reasonable phase in, phase out costs (i.e., costs incurred within the agreed period after contract expiration that result from phase in, phase out operations) and a fee (profit) not to exceed a pro rata portion of the fee (profit) under this contract. (end of clause) as prescribed in 37.304(a), insert the following clause in solicitations and contracts solely for dismantling, demolition, or removal of improvements whenever the contracting officer determines that the government shall make payment to the contractor in addition to any title to property that the contractor may receive under the contract: payment by government to contractor (apr 1984) (a) in ______ [insert "full" if alternate i is used; otherwise insert "partial"] consideration of the performance of the work called for in the schedule, the government will pay to the contractor ______________ [fill in amount]. (b) the government shall make progress payments monthly as the work proceeds, or at more frequent intervals as determined by the contracting officer, on estimates approved by the contracting officer. except as provided in paragraph (c) of this clause, in making progress payments the contracting officer shall retain 10 percent of the estimated payment until final completion and acceptance of the contract work. however, if the contracting officer finds that satisfactory progress was achieved during any period for which a progress payment is to be made, the contracting officer may authorize such payment in full, without retaining a percentage. also, on completion and acceptance of each unit or division for which the price is stated separately, the contracting officer may authorize full payment for that unit or division without retaining a percentage. (c) when the work is substantially completed, the contracting officer shall retain an amount considered adequate for the protection of the government and, at the contracting officer’s discretion, may release all or a portion of any excess amount. (d) in further consideration of performance, the contractor shall receive title to all property to be dismantled or demolished that is not specifically designated as being retained by the government. the title shall vest in the contractor immediately upon the government’s issuing the notice of award, or if a performance bond is to be furnished after award, upon the government’s issuance of a notice to proceed with the work. the government shall not be responsible for the condition of, or any loss or damage to, the property. if the contractor does not wish to remove from the site any of the property acquired, the contracting officer may, upon written request, grant the contractor permission to leave the property on the premises. as a condition to the granting of this permission, the contractor agrees to waive any right, title, claim, or interest in and to the property. (e) upon completion and acceptance of all work and receipt of a properly executed voucher, the government shall make final payment of the amount due the contractor under this contract. if requested, the contractor shall release all claims against the government arising under this contract, other than any claims the contractor specifically excepts, in stated amounts, from operation of this release. (end of clause) alternate i (apr 1984). if the contracting officer determines that the government shall retain all material resulting from the dismantling or demolition work, delete paragraph (d) from the basic clause and renumber the remaining paragraphs. as prescribed in 37.304(b), insert the following clause in solicitations and contracts for dismantling, demolition, or removal of improvements whenever the contractor is to receive title to dismantled or demolished property and a net amount of compensation is due to the government, except if the contracting officer determines that it would be advantageous to the government for the contractor to pay in increments and the government to transfer title to the contractor for increments of property only upon receipt of those payments: payment by contractor to government (apr 1984) (a) the contractor shall receive title to all property to be dismantled, demolished, or removed under this contract and not specifically designated in the schedule as being retained by the government. the title shall vest in the contractor immediately upon the government’s issuing the notice of award, or if a performance bond is to be furnished, upon the government’s issuing a notice to proceed with the work. the government shall not be responsible for the condition of, or any loss or damage to, the property. (b) the contractor shall promptly remove from the site all property acquired by the contractor. the government shall not permit storage of property on the site beyond the completion date. if the contractor does not wish to remove from the site any of the property acquired, the contracting officer may, upon written request, grant the contractor permission to leave the property on the premises. as a condition of the granting of the permission, the contractor agrees to waive any right, title, claim, or interest in and to the property. (c) the contractor shall perform the work called for under this contract and within ________ days of receipt of notice of award, unless otherwise provided in the schedule and before proceeding with the work, shall pay _________ [fill in amount]. checks shall be made payable to the office designated in the contract and shall be forwarded to the contracting officer. (end of clause) as prescribed in 37.304(c), insert the following clause in solicitations and contracts for dismantling, demolition, or removal of improvements (a) if the contractor is to receive title to dismantled or demolished property and a net amount of compensation is due the government; and (b) if the contracting officer determines that it would be advantageous to the government for the contractor to pay in increments, and for the government to transfer title to the contractor for increments of property, only upon receipt of those payment: incremental payment by contractor to government (apr 1984) (a) the contractor shall perform the work called for under this contract and within _____ days of receipt of notice of award, unless otherwise provided in the schedule, and before proceeding with the work, shall pay _____ [fill in amount]. thereafter, the contractor shall make payment to the government in the amount and frequency specified in the schedule. checks shall be made payable to the office designated in the contract and shall be forwarded to the contracting officer. (b) upon the government’s receipt of each increment of payment, the contractor shall receive title to such property as the contracting officer determines to be fair and reasonable for that increment of payment. upon receipt of the contractor’s final payment, all title that has not passed to the contractor shall vest in the contractor, unless specifically designated in the schedule as being retained by the government. the government shall not be responsible for the condition of, or any loss or damage to, the property. (c) the contractor shall promptly remove from the site all property acquired by the contractor. the government will not permit storage of property on the site beyond the completion date. if the contractor does not wish to remove from the site any of the property acquired, the contracting officer may, upon written request, grant the contractor permission to leave the property on the premises. as a condition of the granting of this permission, the contractor agrees to waive any right, title, claim, or interest in and to the property. (end of clause) as prescribed in 37.403 , insert the following clause: indemnification and medical liability insurance (jan 1997) (a) it is expressly agreed and understood that this is a nonpersonal services contract, as defined in federal acquisition regulation (far) 37.101, under which the professional services rendered by the contractor are rendered in its capacity as an independent contractor. the government may evaluate the quality of professional and administrative services provided, but retains no control over professional aspects of the services rendered, including by example, the contractor’s professional medical judgment, diagnosis, or specific medical treatments. the contractor shall be solely liable for and expressly agrees to indemnify the government with respect to any liability producing acts or omissions by it or by its employees or agents. the contractor shall maintain during the term of this contract liability insurance issued by a responsible insurance carrier of not less than the following amount(s) per specialty per occurrence: *_______________. (b) an apparently successful offeror, upon request by the contracting officer, shall furnish prior to contract award evidence of its insurability concerning the medical liability insurance required by paragraph (a) of this clause. (c) liability insurance may be on either an occurrences basis or on a claims made basis. if the policy is on a claims made basis, an extended reporting endorsement (tail) for a period of not less than 3 years after the end of the contract term must also be provided. (d) evidence of insurance documenting the required coverage for each health care provider who will perform under this contract shall be provided to the contracting officer prior to the commencement of services under this contract. if the insurance is on a claims made basis and evidence of an extended reporting endorsement is not provided prior to the commencement of services, evidence of such endorsement shall be provided to the contracting officer prior to the expiration of this contract. final payment under this contract shall be withheld until evidence of the extended reporting endorsement is provided to the contracting officer. (e) the policies evidencing required insurance shall also contain an endorsement to the effect that any cancellation or material change adversely affecting the government’s interest shall not be effective until 30 days after the insurer or the contractor gives written notice to the contracting officer. if, during the performance period of the contract the contractor changes insurance providers, the contractor must provide evidence that the government will be indemnified to the limits specified in paragraph (a) of this clause, for the entire period of the contract, either under the new policy, or a combination of old and new policies. (f) the contractor shall insert the substance of this clause, including this paragraph (f), in all subcontracts under this contract for health care services and shall require such subcontractors to provide evidence of and maintain insurance in accordance with paragraph (a) of this clause. at least 5 days before the commencement of work by any subcontractor, the contractor shall furnish to the contracting officer evidence of such insurance. * contracting officer insert the dollar value(s) of standard coverage(s) prevailing within the local community as to the specific medical specialty, or specialties, concerned, or such higher amount as the contracting officer deems necessary to protect the government's interests. (end of clause) as prescribed in 37.113 2(a), use the following provision: restriction on severance payments to foreign nationals (aug 2003) (a) the federal acquisition regulation (far), at 31.205 6(g)(6), limits the cost allowability of severance payments to foreign nationals employed under a service contract performed outside the united states unless the agency grants a waiver pursuant to far 37.113 1 before contract award. (b) in making the determination concerning the granting of a waiver, the agency will determine that  (1) the application of the severance pay limitations to the contract would adversely affect the continuation of a program, project, or activity that provides significant support services for  (i) members of the armed forces stationed or deployed outside the united states; or (ii) employees of an executive agency posted outside the united states; (2) the contractor has taken (or has established plans to take) appropriate actions within its control to minimize the amount and number of incidents of the payment of severance pay to employees under the contract who are foreign nationals; and (3) the payment of severance pay is necessary in order to comply with a law that is generally applicable to a significant number of businesses in the country in which the foreign national receiving the payment performed services under the contract, or is necessary to comply with a collective bargaining agreement. (end of provision) as prescribed in 37.113 2(b), use the following clause: waiver of limitation on severance payments to foreign nationals (dec 2022) (a) pursuant to 10 u.s.c. 3744(b) or 41 u.s.c. 4304(b)(1), as applicable, the cost allowability limitations in far 31.205 6(g)(6) are waived. (b) this clause may be incorporated into subcontracts issued under this contract, if approved by the contracting officer. (end of clause) as prescribed in 37.115 3 , insert the following provision: identification of uncompensated overtime (mar 2015) (a) definitions. as used in this provision  adjusted hourly rate (including uncompensated overtime) is the rate that results from multiplying the hourly rate for a 40 hour work week by 40, and then dividing by the proposed hours per week which includes uncompensated overtime hours over and above the standard 40 hour work week. for example, 45 hours proposed on a 40 hour work week basis at $20 per hour would be converted to an uncompensated overtime rate of $17.78 per hour ($20.00 x 40 divided by 45 = $17.78). uncompensated overtime means the hours worked without additional compensation in excess of an average of 40 hours per week by direct charge employees who are exempt from the fair labor standards act. compensated personal absences such as holidays, vacations, and sick leave shall be included in the normal work week for purposes of computing uncompensated overtime hours. (b) (1) whenever there is uncompensated overtime, the adjusted hourly rate (including uncompensated overtime), rather than the hourly rate, shall be applied to all proposed hours, whether regular or overtime hours. (2) all proposed labor hours subject to the adjusted hourly rate (including uncompensated overtime) shall be identified as either regular or overtime hours, by labor categories, and described at the same level of detail. this is applicable to all proposals whether the labor hours are at the prime or subcontract level. this includes uncompensated overtime hours that are in indirect cost pools for personnel whose regular hours are normally charged direct. (c) the offeror’s accounting practices used to estimate uncompensated overtime must be consistent with its cost accounting practices used to accumulate and report uncompensated overtime hours. (d) proposals that include unrealistically low labor rates, or that do not otherwise demonstrate cost realism, will be considered in a risk assessment and will be evaluated for award in accordance with that assessment. (e) the offeror shall include a copy of its policy addressing uncompensated overtime with its proposal. (end of provision) as prescribed in 39.106 , insert a clause substantially the same as the following: privacy or security safeguards (aug 1996) (a) the contractor shall not publish or disclose in any manner, without the contracting officer’s written consent, the details of any safeguards either designed or developed by the contractor under this contract or otherwise provided by the government. (b) to the extent required to carry out a program of inspection to safeguard against threats and hazards to the security, integrity, and confidentiality of government data, the contractor shall afford the government access to the contractor’s facilities, installations, technical capabilities, operations, documentation, records, and databases. (c) if new or unanticipated threats or hazards are discovered by either the government or the contractor, or if existing safeguards have ceased to function, the discoverer shall immediately bring the situation to the attention of the other party. (end of clause) as prescribed in 40.203 8 , insert the following clause: prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities (nov 2024) (a) definitions. as used in this clause  american security drone act covered foreign entitymeans an entity included on a list developed and maintained by the federal acquisition security council (fasc) and published in the system for award management (sam) at https://www.sam.gov (section 1822 of the national defense authorization act for fiscal year 2024, pub. l. 118 31, 41 u.s.c. 3901 note prec.). fasc prohibited unmanned aircraft systemmeans an unmanned aircraft system manufactured or assembled by an american security drone act covered foreign entity. unmanned aircraftmeans an aircraft that is operated without the possibility of direct human intervention from within or on the aircraft ( 49 u.s.c. 44801(11)). unmanned aircraft systemmeans an unmanned aircraft and associated elements (including communication links and the components that control the unmanned aircraft) that are required for the operator to operate safely and efficiently in the national airspace system ( 49 u.s.c. 44801(12)). (b) prohibition. the contractor is prohibited from  (1) delivering any fasc prohibited unmanned aircraft system, which includes unmanned aircraft (i.e., drones) and associated elements (sections 1823 and 1826 of pub. l. 118 31, 41 u.s.c. 3901 note prec.); (2) on or after december 22, 2025, operating a fasc prohibited unmanned aircraft system in the performance of the contract (section 1824 of pub. l. 118 31, 41 u.s.c. 3901 note prec.); and (3) on or after december 22, 2025, using federal funds for the procurement or operation of a fasc prohibited unmanned aircraft system (section 1825 of pub. l. 118 31, 41 u.s.c. 3901 note prec.). (c) procedures. the contractor shall search sam at https://www.sam.gov for the fasc maintained list of american security drone act covered foreign entities prior to proposing, or using in performance of the contract, any unmanned aircraft system. additionally, the contractor shall ensure any effort or expenditure associated with a fasc prohibited unmanned aircraft system is consistent with a corresponding exemption, exception, or waiver determination expressly stated in the contract. (d) exemptions, exceptions, and waivers. the prohibitions in this clause do not apply where the agency has determined an exemption, exception, or waiver applies and the contract indicates that such a determination has been made. [see sections 1823 through 1825 and 1832 of public law 118 31 ( 41 u.s.c. 3901 note prec.) for statutory requirements pertaining to exemptions, exceptions, and waivers.]. (e) subcontracts. the contractor shall insert the substance of this clause, including this paragraph (e), in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial products or commercial services. (end of clause) as prescribed in 41.501(b), insert a provision substantially the same as the following: electric service territory compliance representation (may 1999) (a) section 8093 of public law100 202 generally requires purchases of electricity by any department, agency, or instrumentality of the united states to be consistent with state law governing the provision of electric utility service, including state utility commission rulings and electric utility franchises or service territories established pursuant to state statute, state regulation, or state approved territorial agreements. (b) by signing this offer, the offeror represents that this offer to sell electricity is consistent with section 8093 of public law100 202. (c) upon request of the contracting officer, the offeror shall submit supporting legal and factual rationale for this representation. (end of clause) as prescribed in 41.501(c)(1), insert a clause substantially the same as the following: order of precedence utilities (feb 1995) in the event of any inconsistency between the terms of this contract (including the specifications) and any rate schedule, rider, or exhibit incorporated in this contract by reference or otherwise, or any of the contractor’s rules and regulations, the terms of this contract shall control. (end of clause) as prescribed in 41.501(c)(2), insert a clause substantially the same as the following: scope and duration of contract (feb 1995) (a) for the period _______________________, [insert period of service] the contractor agrees to furnish and the government agrees to purchase _____________________ [insert type of service] utility service in accordance with the applicable tariff(s), rules, and regulations as approved by the applicable governing regulatory body and as set forth in the contract. (b) it is expressly understood that neither the contractor nor the government is under any obligation to continue any service under the terms and conditions of this contract beyond the expiration date. (c) the contractor shall provide the government with one complete set of rates, terms, and conditions of service which are in effect as of the date of this contract and any subsequently approved rates. (d) the contractor shall be paid at the applicable rate(s) under the tariff and the government shall be liable for the minimum monthly charge, if any, specified in this contract commencing with the period in which service is initially furnished and continuing for the term of this contract. any minimum monthly charge specified in this contract shall be equitably prorated for the periods in which commencement and termination of this contract become effective. (end of clause) as prescribed in 41.501(c)(3), insert a clause substantially the same as the following: change in class of service (feb 1995) (a) in the event of a change in the class of service, such service shall be provided at the contractor’s lowest available rate schedule applicable to the class of service furnished. (b) where the contractor does not have on file with the regulatory body approved rate schedules applicable to services provided, no clause in this contract shall preclude the parties from negotiating a rate schedule applicable to the class of service furnished. (end of clause) as prescribed in 41.501(c)(4), insert a clause substantially the same as the following: contractor’s facilities (feb 1995) (a) the contractor, at its expense, unless otherwise provided for in this contract, shall furnish, install, operate, and maintain all facilities required to furnish service hereunder, and measure such service at the point of delivery specified in the service specifications. titleto all such facilities shall remain with the contractor and the contractor shall be responsible for loss or damage to such facilities, except that the government shall be responsible to the extent that loss or damage has been caused by the government’s negligent acts or omissions. (b) notwithstanding any terms expressed in this clause, the contractor shall obtain approval from the contracting officer prior to any equipment installation, construction, or removal. the government hereby grants to the contractor, free of any rental or similar charge, but subject to the limitations specified in this contract, a revocable permit or license to enter the service location for any proper purpose under this contract. this permit or license includes use of the site or sites agreed upon by the parties hereto for the installation, operation, maintenance, and repair of the facilities of the contractor required to be located upon government premises. all applicable taxes and other charges in connection therewith, together with all liability of the contractor in construction, operation, maintenance and repair of such facilities, shall be the obligation of the contractor. (c) authorized representatives of the contractor will be allowed access to the facilities on government premises at reasonable times to perform the obligations of the contractor regarding such facilities. it is expressly understood that the government may limit or restrict the right of access herein granted in any manner considered necessary (e.g., national security, public safety). (d) unless otherwise specified in this contract, the contractor shall, at its expense, remove such facilities and restore government premises to their original condition as near as practicable within a reasonable time after the government terminates this contract. in the event such termination of this contract is due to the fault of the contractor, such facilities may be retained in place at the option of the government for a reasonable time while the government attempts to obtain service elsewhere comparable to that provided for hereunder. (end of clause) as prescribed in 41.501(c)(5), insert a clause substantially the same as the following: service provisions (feb 1995) (a) measurement of service. (1) all service furnished by the contractor shall be measured by suitable metering equipment of standard manufacture, to be furnished, installed, maintained, repaired, calibrated, and read by the contractor at its expense. when more than a single meter is installed at a service location, the readings thereof may be billed conjunctively, if appropriate. in the event any meter fails to register (or registers incorrectly) the service furnished, the parties shall agree upon the length of time of meter malfunction and the quantity of service delivered during such period of time. an appropriate adjustment shall be made to the next invoice for the purpose of correcting such errors. however, any meter which registers not more than ___ percent slow or fast shall be deemed correct. (2) the contractor shall read all meters at periodic intervals of approximately 30 days or in accordance with the policy of the cognizant regulatory body or applicable bylaws. all billings based on meter readings of less than ___ days shall be prorated accordingly. (b) meter test. (1) the contractor, at its expense, shall periodically inspect and test contractor installed meters at intervals not exceeding _____ year(s). the government has the right to have representation during the inspection and test. (2) at the written request of the contracting officer, the contractor shall make additional tests of any or all such meters in the presence of government representatives. the cost of such additional tests shall be borne by the government if the percentage of errors is found to be not more than ___ percent slow or fast. (3) no meter shall be placed in service or allowed to remain in service which has an error in registration in excess of ___ percent under normal operating conditions. (c) change in volume or character. reasonable notice shall be given by the contracting officer to the contractor regarding any material changes anticipated in the volume or characteristics of the utility service required at each location. (d) continuity of service and consumption. the contractor shall use reasonable diligence to provide a regular and uninterrupted supply of service at each service location, but shall not be liable for damages, breach of contract or otherwise, to the government for failure, suspension, diminution, or other variations of service occasioned by or in consequence of any cause beyond the control of the contractor, including but not limited to acts of god or of the public enemy, fires, floods, earthquakes, or other catastrophe, strikes, or failure or breakdown of transmission or other facilities. if any such failure, suspension, diminution, or other variation of service shall aggregate more than _______ hour(s) during any billing period hereunder, an equitable adjustment shall be made in the monthly billing specified in this contract (including the minimum monthly charge). (end of clause) as prescribed in 41.501(d)(1), insert a clause substantially the same as the following: change in rates or terms and conditions of service for regulated services (feb 1995) (a) this clause applies to the extent services furnished under this contract are subject to regulation by a regulatory body. the contractor agrees to give *________________ written notice of (1) the filing of an application for change in rates or terms and conditions of service concurrently with the filing of the application and (2) any changes pending with the regulatory body as of the date of contract award. such notice shall fully describe the proposed change. if, during the term of this contract, the regulatory body having jurisdiction approves any changes, the contractor shall forward to the contracting officer a copy of such changes within 15 days after the effective date thereof. the contractor agrees to continue furnishing service under this contract in accordance with the amended tariff, and the government agrees to pay for such service at the higher or lower rates as of the date when such rates are made effective. (b) the contractor agrees that throughout the life of this contract the applicable published and unpublished rate schedule(s) shall not be in excess of the lowest cost published and unpublished rate schedule(s) available to any other customers of the same class under similar conditions of use and service. (c) in the event that the regulatory body promulgates any regulation concerning matters other than rates which affects this contract, the contractor shall immediately provide a copy to the contracting officer. the government shall not be bound to accept any new regulation inconsistent with federal laws or regulations. (d) any changes to rates or terms and conditions of service shall be made a part of this contract by the issuance of a contract modification unless otherwise specified in the contract. the effective date of the change shall be the effective date by the regulatory body. any factors not governed by the regulatory body will have an effective date as agreed to by the parties. * note: insert language prescribed in 41.501(d)(1). (end of clause) as prescribed in 41.501(d)(2), insert a clause substantially the same as the following: change in rates or terms and conditions of service for unregulated services (feb 1995) (a) this clause applies to the extent that services furnished hereunder are not subject to regulation by a regulatory body. (b) after ___________ [insert date], either party may request a change in rates or terms and conditions of service, unless otherwise provided in this contract. both parties agree to enter in negotiations concerning such changes upon receipt of a written request detailing the proposed changes and specifying the reasons for the proposed changes. (c) the effective date of any change shall be as agreed to by the parties. the contractor agrees that throughout the life of this contract the rates so negotiated will not be in excess of published and unpublished rates charged to any other customer of the same class under similar terms and conditions of use and service. (d) the failure of the parties to agree upon any change after a reasonable period of time shall be a dispute under the disputes clause of this contract. (e) any changes to rates, terms, or conditions as a result of such negotiations shall be made a part of this contract by the issuance of a contract modification. (end of clause) as prescribed in 41.501(d)(3), insert a clause substantially the same as the following: connection charge (feb 1995) (a) charge. in consideration of the contractor furnishing and installing at its expense the new connection facilities described herein, the government shall pay the contractor a connection charge. the payment shall be in the form of progress payments, advance payments or as a lump sum, as agreed to by the parties and as permitted by applicable law. the total amount payable shall be either the estimated cost of $______ less the agreed to salvage value of $______, or the actual cost less the salvage value, whichever is less. as a condition precedent to final payment, the contractor shall execute a release of any claims against the government arising under or by the virtue of such installation. (b) ownership, operation, maintenance and repair of new facilities to be provided. the facilities to be supplied by the contractor under this clause, notwithstanding the payment by the government of a connection charge, shall be and remain the property of the contractor and shall, at all times during the life of this contract or any renewals thereof, be operated, maintained, and repaired by the contractor at its expense. all taxes and other charges in connection therewith, together with all liability arising out of the construction, operations, maintenance, or repair of such facilities, shall be the obligation of the contractor. (c) credits. (1) the contractor agrees to allow the government, on each monthly bill for service furnished under this contract to the service location, a credit of ______ percent of the amount of each such bill as rendered until the accumulation of credits shall equal the amount of such connection charge, provided that the contractor may at any time allow a credit up to 100 percent of the amount of each such bill. (2) in the event the contractor, before any termination of this contract but after completion of the facilities provided for in this clause, serves any customer other than the government (regardless of whether the government is being served simultaneously, intermittently, or not at all) by means of these facilities, the contractor shall promptly notify the government in writing. unless otherwise agreed by the parties in writing at that time, the contractor shall promptly accelerate the credits provided for under paragraph (c)(1) of this clause, up to 100 percent of each monthly bill until there is refunded the amount that reflects the government’s connection costs for that portion of the facilities used in serving others. (3) in the event the contractor terminates this contract, or defaults in performance, prior to full credit of any connection charge paid by the government, the contractor shall pay to the government an amount equal to the uncredited balance of the connection charge as of the date of the termination or default. (d) termination before completion of facilities. the government reserves the right to terminate this contract at any time before completion of the facilities with respect to which the government is to pay a connection charge. in the event the government exercises this right, the contractor shall be paid the cost of any work accomplished, including direct and indirect costs reasonably allocable to the completed work prior to the time of termination by the government, plus the cost of removal, less the salvage value. (e) termination after completion of facilities. in the event the government terminates this contract after completion of the facilities with respect to which the government has paid a connection charge, but before the crediting in full by the contractor of any connection charge in accordance with the terms of this contract, the contractor shall have the following options: (1) to retain in place for _________ months after the notice of termination by the government such facilities on condition that  (i) if, during such _______ month period, the contractor serves any other customer by means of such facilities, the contractor, shall, in lieu of allowing credits, pay the government during such period installments in like amount, manner, and extent as the credit provided for under paragraph (c) of this clause before such termination; and (ii) immediately after such ________ month period the contractor shall promptly pay in full to the government the uncredited balance of the connection charge. (2) to remove such facilities at the contractor’s own expense within _______ months after the effective date of the termination by the government. if the contractor elects to remove such facilities, the government shall then have the option of purchasing such facilities at the agreed salvage value set forth herein; and provided further, that the contractor shall, at the direction of the government, leave in place such facilities located on government property which the government elects to purchase at the agreed salvage value. (end of clause) alternate i (feb 1995). if the contracting officer determines that a nonrefundable charge is to be paid and no credits are due the government, delete paragraphs (c) and (e), renumber paragraph (d) as (c) and add the following as paragraph (d): (d) termination after completion of facilities. in the event the government terminates this contract after completion of the facilities with respect to which the government is to pay a connection charge, the contractor shall have the following options: (1) to retain in place for ________ months after the notice of termination by the government. if the contractor and the government have not agreed on terms for retention in place beyond ________ months, then the contractor must remove the facilities pursuant to the terms of paragraph (d)(2) of this clause. (2) to remove such facilities at the contractor's own expense within _______ months after the effective date of the termination by the government. if the contractor elects to remove such facilities, the government shall then have the option of purchasing such facilities at the agreed salvage value set forth herein; and provided further, that the contractor shall, at the direction of the government, leave in place such facilities located on government property which the government elects to purchase at the agreed salvage value. as prescribed in 41.501(d)(4), insert a clause substantially the same as the following: termination liability (feb 1995) (a) if the government discontinues utility service under this contract before completion of the facilities cost recovery period specified in paragraph (b) of this clause, in consideration of the contractor furnishing and installing at its expense, the new facility described herein, the government shall pay termination charges, calculated as set forth in this clause. (b) facility cost recovery period. the period of time, not exceeding the term of this contract, during which the net cost of the new facility shall be recovered by the contractor is ______ months.[insert negotiated duration.] (c) net facility cost. the cost of the new facility, less the agreed upon salvage value of such facility, is $_______. [insert appropriate dollar amount.] (d) monthly facility cost recovery rate. the monthly facility cost recovery rate which the government shall pay the contractor whether or not service is received is $_____.[divide the net facility cost in paragraph (c) of this clause by the facility’s cost recovery period in paragraph (b) of this clause and insert the resultant figure.] (e) termination charges. termination charges = $____.[multiply the remaining months of the facility's cost recovery period specified in paragraph (b) of this clause by the monthly facility cost recovery rate in paragraph (d) of this clause and insert the resultant figure.] (f) if the contractor has recovered its capital costs at the time of termination there will be no termination liability charge. (end of clause) as prescribed in 41.501(d)(5), insert a clause substantially the same as the following: multiple service locations (feb 1995) (a) at any time by written order, the contracting officer may designate any location within the service area of the contractor at which utility service shall commence or be discontinued. any changes to the service specifications shall be made a part of the contract by the issuance of a contract modification to include the name and location of the service, specifying any different rate, the point of delivery, different service specifications, and any other terms and conditions. (b) the applicable monthly charge specified in this contract shall be equitably prorated from the period in which commencement or discontinuance of service at any service location designated under the service specifications shall become effective. (end of clause) as prescribed in 41.501(d)(6), insert a clause substantially the same as the following: nonrefundable, nonrecurring service charge (feb 1995) as provided herein, the government will pay a nonrefundable, nonrecurring charge when the rules and regulations of a contractor require that a customer pay (1)a charge for the initiation of service, (2)a contribution in aid of construction, or (3)a nonrefundable membership fee. this charge may be in addition to or in lieu of a connection charge. therefore, there is hereby added to the contractor’s schedule a nonrefundable, nonrecurring charge for ___________ in the amount of $________ dollars payable .[specify dates or schedules] (end of clause) as prescribed in 41.501(d)(7), insert a clause substantially the same as the following: capital credits (feb 1995) (a) the government is a member of the ____________ [insert cooperative name], and as any other member, is entitled to capital credits consistent with the bylaws of the cooperative, which states the obligation of the contractor to pay capital credits and which specifies the method and time of payment. (b) the contractor shall furnish to the contracting officer, or the designated representative of the contracting officer, in writing, on an _________ basis [insert period of time] a list of accrued credits by contract number, year, and delivery point. (c) payment of capital credits will be made by check, payable to the _________ [insert agency name], and forwarded to the contracting officer at ________________ [insert agency address], unless otherwise directed in writing by the contracting officer. checks shall cite the current or last contract number and indicate whether the check is partial or final payment for all capital credits accrued. (end of clause) as prescribed in 42.802 , insert the following clause in solicitations and contracts when a cost reimbursement contract, a fixed price incentive contract, or a contract providing for price redetermination is contemplated: notice of intent to disallow costs (apr 1984) (a) notwithstanding any other clause of this contract  (1) the contracting officer may at any time issue to the contractor a written notice of intent to disallow specified costs incurred or planned for incurrence under this contract that have been determined not to be allowable under the contract terms; and (2) the contractor may, after receiving a notice under paragraph (a)(1) of this clause, submit a written response to the contracting officer, with justification for allowance of the costs. if the contractor does respond within 60 days, the contracting officer shall, within 60 days of receiving the response, either make a written withdrawal of the notice or issue a written decision. (b) failure to issue a notice under this notice of intent to disallow costs clause shall not affect the government’s rights to take exception to incurred costs. (end of clause) as prescribed in 42.1107(a), insert the following clause: production progress reports (apr 1991) (a) the contractor shall prepare and submit to the contracting officer the production progress reports specified in the contract schedule. (b) during any delay in furnishing a production progress report required under this contract, the contracting officer may withhold from payment an amount not exceeding $25,000 or 5 percent of the amount of this contract, whichever is less. (end of clause) as prescribed in 42.709 7, use the following clause: penalties for unallowable costs (dec 2022) (a) definition. proposal, as used in this clause, means either  (1) a final indirect cost rate proposal submitted by the contractor after the expiration of its fiscal year which  (i) relates to any payment made on the basis of billing rates; or (ii) will be used in negotiating the final contract price; or (2) the final statement of costs incurred and estimated to be incurred under the incentive price revision clause (if applicable), which is used to establish the final contract price. (b) contractors which include unallowable indirect costs in a proposal may be subject to penalties. the penalties are prescribed in 10 u.s.c. 3748 or 41 u.s.c. chapter 43, as applicable, which is implemented in section 42.709 of the federal acquisition regulation (far). (c) the contractor shall not include in any proposal any cost that is unallowable, as defined in subpart 2.1 of the far, or an executive agency supplement to the far. (d) if the contracting officer determines that a cost submitted by the contractor in its proposal is expressly unallowable under a cost principle in the far, or an executive agency supplement to the far, that defines the allowability of specific selected costs, the contractor shall be assessed a penalty equal to  (1) the amount of the disallowed cost allocated to this contract; plus (2) simple interest, to be computed  (i) on the amount the contractor was paid (whether as a progress or billing payment) in excess of the amount to which the contractor was entitled; and (ii) using the applicable rate effective for each six month interval prescribed by the secretary of the treasury pursuant to pub.l.92 41 (85 stat.97). (e) if the contracting officer determines that a cost submitted by the contractor in its proposal includes a cost previously determined to be unallowable for that contractor, then the contractor will be assessed a penalty in an amount equal to two times the amount of the disallowed cost allocated to this contract. (f) determinations under paragraphs (d) and (e) of this clause are final decisions within the meaning of 41 u.s.c. chapter 71, contract disputes. (g) pursuant to the criteria in far 42.709 6, the contracting officer may waive the penalties in paragraph (d) or (e) of this clause. (h) payment by the contractor of any penalty assessed under this clause does not constitute repayment to the government of any unallowable cost which has been paid by the government to the contractor. (end of clause) as prescribed in 42.703 2(f), insert the following clause: certification of final indirect costs (jan 1997) (a) the contractor shall  (1) certify any proposal to establish or modify final indirect cost rates; (2) use the format in paragraph (c) of this clause to certify; and (3) have the certificate signed by an individual of the contractor’s organization at a level no lower than a vice president or chief financial officer of the business segment of the contractor that submits the proposal. (b) failure by the contractor to submit a signed certificate, as described in this clause, may result in final indirect costs at rates unilaterally established by the contracting officer. (c) the certificate of final indirect costs shall read as follows: certificate of final indirect costs this is to certify that i have reviewed this proposal to establish final indirect cost rates and to the best of my knowledge and belief: 1. all costs included in this proposal (identify proposal and date) to establish final indirect cost rates for (identify period covered by rate) are allowable in accordance with the cost principles of the federal acquisition regulation (far) and its supplements applicable to the contracts to which the final indirect cost rates will apply; and 2. this proposal does not include any costs which are expressly unallowable under applicable cost principles of the far or its supplements. firm: _________________________________________ signature: _____________________________________ name of certifying official: ______________________ title: _________________________________________ date of execution: ______________________________ (end of clause) as prescribed in 42.1504 , insert the following clause: payments to small business subcontractors (jan 2017) (a) definitions. as used in this clause  reduced payment means a payment that is for less than the amount agreed upon in a subcontract in accordance with its terms and conditions, for supplies and services for which the government has paid the prime contractor. untimely payment means a payment that is more than 90 days past due under the terms and conditions of a subcontract, for supplies and services for which the government has paid the prime contractor. (b) notice. the contractor shall notify the contracting officer, in writing, not later than 14 days after  (1) a small business subcontractor was entitled to payment under the terms and conditions of the subcontract; and (2) the contractor  (i) made a reduced or untimely payment to the small business subcontractor; or (ii) failed to make a payment, which is now untimely. (c) content of notice. the contractor shall include the reason(s) for making the reduced or untimely payment in any notice required under paragraph (b) of this clause. (end of clause) as prescribed in 42.903 , insert the following clause: bankruptcy (july 1995) in the event the contractor enters into proceedings relating to bankruptcy, whether voluntary or involuntary, the contractor agrees to furnish, by certified mail or electronic commerce method authorized by the contract, written notification of the bankruptcy to the contracting officer responsible for administering the contract. this notification shall be furnished within fivedays of the initiation of the proceedings relating to bankruptcy filing. this notification shall include the date on which the bankruptcy petition was filed, the identity of the court in which the bankruptcy petition was filed, and a listing of government contract numbers and contracting offices for all government contracts against which final payment has not been made. this obligation remains in effect until final payment under this contract. (end of clause) as prescribed in 42.1305(a), insert the following clause in solicitations and contracts when a fixed price construction or architect engineer contract is contemplated: suspension of work (apr 1984) (a) the contracting officer may order the contractor, in writing, to suspend, delay, or interrupt all or any part of the work of this contract for the period of time that the contracting officer determines appropriate for the convenience of the government. (b) if the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or interrupted (1)by an act of the contracting officer in the administration of this contract, or (2)by the contracting officer’s failure to act within the time specified in this contract (or within a reasonable time if not specified), an adjustment shall be made for any increase in the cost of performance of this contract (excluding profit) necessarily caused by the unreasonable suspension, delay, or interruption, and the contract modified in writing accordingly. however, no adjustment shall be made under this clause for any suspension, delay, or interruption to the extent that performance would have been so suspended, delayed, or interrupted by any other cause, including the fault or negligence of the contractor, or for which an equitable adjustment is provided for or excluded under any other term or condition of this contract. (c) a claim under this clause shall not be allowed  (1) for any costs incurred more than 20 days before the contractor shall have notified the contracting officer in writing of the act or failure to act involved (but this requirement shall not apply as to a claim resulting from a suspension order); and (2) unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of the suspension, delay, or interruption, but not later than the date of final payment under the contract. (end of clause) as prescribed in 42.1305(b), insert the following clause. the "90 day" period stated in the clause may be reduced to less than 90 days. stop work order (aug 1989) (a) the contracting officer may, at any time, by written order to the contractor, require the contractor to stop all, or any part, of the work called for by this contract for a period of 90 days after the order is delivered to the contractor, and for any further period to which the parties may agree. the order shall be specifically identified as a stop work order issued under this clause. upon receipt of the order, the contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. within a period of 90 days after a stop work is delivered to the contractor, or within any extension of that period to which the parties shall have agreed, the contracting officer shall either  (1) cancel the stop work order; or (2) terminate the work covered by the order as provided in the default, or the termination for convenience of the government, clause of this contract. (b) if a stop work order issued under this clause is canceled or the period of the order or any extension thereof expires, the contractor shall resume work. the contracting officer shall make an equitable adjustment in the delivery schedule or contract price, or both, and the contract shall be modified, in writing, accordingly, if  (1) the stop work order results in an increase in the time required for, or in the contractor’s cost properly allocable to, the performance of any part of this contract; and (2) the contractor asserts its right to the adjustment within 30 days after the end of the period of work stoppage; provided, that, if the contracting officer decides the facts justify the action, the contracting officer may receive and act upon the claim submitted at any time before final payment under this contract. (c) if a stop work order is not canceled and the work covered by the order is terminated for the convenience of the government, the contracting officer shall allow reasonable costs resulting from the stop work order in arriving at the termination settlement. (d) if a stop work order is not canceled and the work covered by the order is terminated for default, the contracting officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop work order. (end of clause) alternate i (apr 1984). if this clause is inserted in a cost reimbursement contract, substitute in paragraph (a)(2) the words "the termination clause of this contract" for the words "the default, or the termination for convenience of the government clause of this contract." in paragraph (b) substitute the words "an equitable adjustment in the delivery schedule, the estimated cost, the fee, or a combination thereof, and in any other terms of the contract that may be affected" for the words "an equitable adjustment in the delivery schedule or contract price, or both." as prescribed in 42.1305(c), insert the following clause: government delay of work (apr 1984) (a) if the performance of all or any part of the work of this contract is delayed or interrupted (1)by an act of the contracting officer in the administration of this contract that is not expressly or impliedly authorized by this contract, or (2)by a failure of the contracting officer to act within the time specified in this contract, or within a reasonable time if not specified, an adjustment (excluding profit) shall be made for any increase in the cost of performance of this contract caused by the delay or interruption and the contract shall be modified in writing accordingly. adjustment shall also be made in the delivery or performance dates and any other contractual term or condition affected by the delay or interruption. however, no adjustment shall be made under this clause for any delay or interruption to the extent that performance would have been delayed or interrupted by any other cause, including the fault or negligence of the contractor, or for which an adjustment is provided or excluded under any other term or condition of this contract. (b) a claim under this clause shall not be allowed  (1) for any costs incurred more than 20 days before the contractor shall have notified the contracting officer in writing of the act or failure to act involved; and (2) unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of the delay or interruption, but not later than the day of final payment under the contract. (end of clause) as prescribed in 43.205(a)(1), insert the following clause. the 30 day period may be varied according to agency procedures. changes fixed price (aug 1987) (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following: (1) drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the government in accordance with the drawings, designs, or specifications. (2) method of shipment or packing. (3) place of delivery. (b) if any such change causes an increase or decrease in the cost of, or the time required for, performance of any part of the work under this contract, whether or not changed by the order, the contracting officer shall make an equitable adjustment in the contract price, the delivery schedule, or both, and shall modify the contract. (c) the contractor must assert its right to an adjustment under this clause within 30 days from the date of receipt of the written order. however, if the contracting officer decides that the facts justify it, the contracting officer may receive and act upon a proposal submitted before final payment of the contract. (d) if the contractor’s proposal includes the cost of property made obsolete or excess by the change, the contracting officer shall have the right to prescribe the manner of the disposition of the property. (e) failure to agree to any adjustment shall be a dispute under the disputes clause. however, nothing in this clause shall excuse the contractor from proceeding with the contract as changed. (end of clause) alternate i (apr 1984). if the requirement is for services, other than architect engineer or other professional services, and no supplies are to be furnished, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract 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. alternate ii (apr 1984). if the requirement is for services (other than architect engineer services, transportation, or research and development) and supplies are to be furnished, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract 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 government, in accordance with the drawings, designs, or specifications. (5) method of shipment or packing of supplies. (6) place of delivery. alternate iii (apr 1984). if the requirement is for architect engineer or other professional services, substitute the following paragraph (a) for paragraph (a) of the basic clause and add the following paragraph (f): (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in the services to be performed. (f) no services for which an additional cost or fee will be charged by the contractor shall be furnished without the prior written authorization of the contracting officer. alternate iv (apr 1984). if the requirement is for transportation services, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following: (1) specifications. (2) work or services. (3) place of origin. (4) place of delivery. (5) tonnage to be shipped. (6) amount of government furnished property. alternate v (apr 1984). if the requirement is for research and development and it is desired to include the clause, substitute the following paragraphs (a)(1) and (a)(3) and paragraph (b) for paragraphs (a)(1) and (a)(3) and paragraph (b) of the basic clause: (a) *** (1) drawings, designs, or specifications. (3) place of inspection, delivery, or acceptance. (b) if any such change causes an increase or decrease in the cost of, or time required for, performing this contract, whether or not changed by the order, the contracting officer shall make an equitable adjustment in  (1) the contract price, the time of performance, or both; and (2) other affected terms of the contract, and shall modify the contract accordingly. as prescribed in 43.205(b)(1), insert the following clause. the 30 day period may be varied according to agency procedures. changes cost reimbursement (aug 1987) (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in any one or more of the following: (1) drawings, designs, or specifications when the supplies to be furnished are to be specially manufactured for the government in accordance with the drawings, designs, or specifications. (2) method of shipment or packing. (3) place of delivery. (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 contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the contracting officer 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 contract accordingly. (c) the contractor must assert its right to an adjustment under this clause within 30 days from the date of receipt of the written order. however, if the contracting officer decides that the facts justify it, the contracting officer may receive and act upon a proposal submitted before final payment of the contract. (d) failure to agree to any adjustment shall be a dispute under the disputes clause. however, nothing in this clause shall excuse the contractor from proceeding with the contract as changed. (e) notwithstanding the terms and conditions of paragraphs (a) and (b) of this clause, the estimated cost of this contract and, if this contract is incrementally funded, the funds allotted for the performance of this contract, shall not be increased or considered to be increased except by specific written modification of the contract indicating the new contract estimated cost and, if this contract is incrementally funded, the new amount allotted to the contract. until this modification is made, the contractor shall not be obligated to continue performance or incur costs beyond the point established in the limitation of cost or limitation of funds clause of this contract. (end of clause) alternate i (apr 1984). if the requirement is for services and no supplies are to be furnished, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract 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. alternate ii (apr 1984). 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 contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract 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 government in accordance with the drawings, designs, or specifications. (5) method of shipment or packing of supplies. (6) place of delivery. alternate iii (apr 1984). if the requirement is for construction, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract in the plans and specifications or instructions incorporated in the contract. alternate iv [reserved] alternate v (apr 1984). if the requirement is for research and development, and it is desired to include the clause, substitute the following paragraphs (a)(1) and (a)(3) for paragraphs (a)(1) and (a)(3) of the basic clause: (a) *** (1) drawings, designs, or specifications. (3) place of inspection, delivery, or acceptance. as prescribed in 43.205(c), insert the following clause: changes time and materials or labor hours (sept 2000) (a) the contracting officer may at any time, by written order, and without notice to the sureties, if any, make changes within the general scope of this contract 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 government in accordance with the drawings, designs, or specifications. (5) method of shipment or packing of supplies. (6) place of delivery. (7) 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 contract, whether or not changed by the order, or otherwise affects any other terms and conditions of this contract, the contracting officer will make an equitable adjustment in any one or more of the following and will modify the contract accordingly: (1) ceiling price. (2) hourly rates. (3) delivery schedule. (4) other affected terms. (c) the contractor shall assert its right to an adjustment under this clause within 30 days from the date of receipt of the written order. however, if the contracting officer decides that the facts justify it, the contracting officer may receive and act upon a proposal submitted before final payment of the contract. (d) failure to agree to any adjustment will be a dispute under the disputes clause. however, nothing in this clause excuses the contractor from proceeding with the contract as changed. (end of clause) as prescribed in 43.205(d), insert the following clause: the 30 day period may be varied according to agency procedures. changes (june 2007) (a) the contracting officer may, at any time, without notice to the sureties, if any, by written order designated or indicated to be a change order, make changes in the work within the general scope of the contract, including changes  (1) in the specifications (including drawings and designs); (2) in the method or manner of performance of the work; (3) in the government furnished property or services; or (4) directing acceleration in the performance of the work. (b) any other written or oral order (which, as used in this paragraph (b), includes direction, instruction, interpretation, or determination) from the contracting officer that causes a change shall be treated as a change order under this clause; provided, that the contractor gives the contracting officer written notice stating  (1) the date, circumstances, and source of the order; and (2) that the contractor regards the order as a change order. (c) except as provided in this clause, no order, statement, or conduct of the contracting officer shall be treated as a change under this clause or entitle the contractor to an equitable adjustment. (d) if any change under this clause causes an increase or decrease in the contractor’s cost of, or the time required for, the performance of any part of the work under this contract, whether or not changed by any such order, the contracting officer shall make an equitable adjustment and modify the contract in writing. however, except for an adjustment based on defective specifications, no adjustment for any change under paragraph (b) of this clause shall be made for any costs incurred more than 20 days before the contractor gives written notice as required. in the case of defective specifications for which the government is responsible, the equitable adjustment shall include any increased cost reasonably incurred by the contractor in attempting to comply with the defective specifications. (e) the contractor must assert its right to an adjustment under this clause within 30 days after (1) receipt of a written change order under paragraph (a) of this clause or (2) the furnishing of a written notice under paragraph (b) of this clause, by submitting to the contracting officer a written statement describing the general nature and amount of the proposal, unless this period is extended by the government. the statement of proposal for adjustment may be included in the notice under paragraph (b) of this clause. (f) no proposal by the contractor for an equitable adjustment shall be allowed if asserted after final payment under this contract. (end of clause) as prescribed in 43.205(e), insert the following clause: changes and changed conditions (apr 1984) (a) the contracting officer may, in writing, order changes in the drawings and specifications within the general scope of the contract. (b) the contractor shall promptly notify the contracting officer, in writing, of subsurface or latent physical conditions differing materially from those indicated in this contract or unknown unusual physical conditions at the site before proceeding with the work. (c) if changes under paragraph (a) or conditions under paragraph (b) increase or decrease the cost of, or time required for performing the work, the contracting officer shall make an equitable adjustment (see paragraph (d)) upon submittal of a "proposal for adjustment" (hereafter referred to as proposal) by the contractor before final payment under the contract. (d) the contracting officer shall not make an equitable adjustment under paragraph (b) unless  (1) the contractor has submitted and the contracting officer has received the required written notice; or (2) the contracting officer waives the requirement for the written notice. (e) failure to agree to any adjustment shall be a dispute under the disputes clause. (end of clause) as prescribed in 43.205(f), the contracting officer may insert a clause, substantially the same as follows: change order accounting (apr 1984) the contracting officer may require change order accounting whenever the estimated cost of a change or series of related changes exceeds $100,000. the contractor, for each change or series of related changes, shall maintain separate accounts, by job order or other suitable accounting procedure, of all incurred segregable, direct costs (less allocable credits) of work, both changed and not changed, allocable to the change. the contractor shall maintain such accounts until the parties agree to an equitable adjustment for the changes ordered by the contracting officer or the matter is conclusively disposed of in accordance with the disputes clause. (end of clause) as prescribed in 43.107 , insert the following clause: notification of changes (jan 2017) (a) definitions. "contracting officer," as used in this clause, does not include any representative of the contracting officer. "specifically authorized representative (sar)," as used in this clause, means any person the contracting officer has so designated by written notice (a copy of which shall be provided to the contractor) which shall refer to this paragraph and shall be issued to the designated representative before the sar exercises such authority. (b) notice. the primary purpose of this clause is to obtain prompt reporting of government conduct that the contractor considers to constitute a change to this contract. except for changes identified as such in writing and signed by the contracting officer, the contractor shall notify the administrative contracting officer in writing promptly, within ______ (to be negotiated) calendar days from the date that the contractor identifies any government conduct (including actions, inactions, and written or oral communications) that the contractor regards as a change to the contract terms and conditions. on the basis of the most accurate information available to the contractor, the notice shall state  (1) the date, nature, and circumstances of the conduct regarded as a change; (2) the name, function, and activity of each government individual and contractor official or employee involved in or knowledgeable about such conduct; (3) the identification of any documents and the substance of any oral communication involved in such conduct; (4) in the instance of alleged acceleration of scheduled performance or delivery, the basis upon which it arose; (5) the particular elements of contract performance for which the contractor may seek an equitable adjustment under this clause, including  (i) what line items have been or may be affected by the alleged change; (ii) what labor or materials or both have been or may be added, deleted, or wasted by the alleged change; (iii) to the extent practicable, what delay and disruption in the manner and sequence of performance and effect on continued performance have been or may be caused by the alleged change; (iv) what adjustments to contract price, delivery schedule, and other provisions affected by the alleged change are estimated; and (6) the contractor’s estimate of the time by which the government must respond to the contractor’s notice to minimize cost, delay or disruption of performance. (c) continued performance. following submission of the notice required by paragraph (b) of this clause, the contractor shall diligently continue performance of this contract to the maximum extent possible in accordance with its terms and conditions as construed by the contractor, unless the notice reports a direction of the contracting officer or a communication from a sar of the contracting officer, in either of which events the contractor shall continue performance; provided, however, that if the contractor regards the direction or communication as a change as described in paragraph (b) of this clause, notice shall be given in the manner provided. all directions, communications, interpretations, orders and similar actions of the sar shall be reduced to writing promptly and copies furnished to the contractor and to the contracting officer. the contracting officer shall promptly countermand any action which exceeds the authority of the sar. (d) government response. the contracting officer shall promptly, within _____ (to be negotiated) calendar days after receipt of notice, respond to the notice in writing. in responding, the contracting officer shall either  (1) confirm that the conduct of which the contractor gave notice constitutes a change and when necessary direct the mode of further performance; (2) countermand any communication regarded as a change; (3) deny that the conduct of which the contractor gave notice constitutes a change and when necessary direct the mode of further performance; or (4) in the event the contractor’s notice information is inadequate to make a decision under paragraphs (d)(1), (2), or (3) of this clause, advise the contractor what additional information is required, and establish the date by which it should be furnished and the date thereafter by which the government will respond. (e) equitable adjustments. (1) if the contracting officer confirms that government conduct effected a change as alleged by the contractor, and the conduct causes an increase or decrease in the contractor’s cost of, or the time required for, performance of any part of the work under this contract, whether changed or not changed by such conduct, an equitable adjustment shall be made  (i) in the contract price or delivery schedule or both; and (ii) in such other provisions of the contract as may be affected. (2) the contract shall be modified in writing accordingly. in the case of drawings, designs or specifications which are defective and for which the government is responsible, the equitable adjustment shall include the cost and time extension for delay reasonably incurred by the contractor in attempting to comply with the defective drawings, designs or specifications before the contractor identified, or reasonably should have identified, such defect. when the cost of property made obsolete or excess as a result of a change confirmed by the contracting officer under this clause is included in the equitable adjustment, the contracting officer shall have the right to prescribe the manner of disposition of the property. the equitable adjustment shall not include increased costs or time extensions for delay resulting from the contractor’s failure to provide notice or to continue performance as provided, respectively, in paragraphs (b) and (c) of this clause. note: the phrases "contract price" and "cost" wherever they appear in the clause, may be appropriately modified to apply to cost reimbursement or incentive contracts, or to combinations thereof. (end of clause) as prescribed in 44.204(a)(1), insert the following clause: subcontracts (jun 2020) (a) definitions. as used in this clause  "approved purchasing system" means a contractor’s purchasing system that has been reviewed and approved in accordance with part 44 of the federal acquisition regulation (far). "consent to subcontract" means the contracting officer’s written consent for the contractor to enter into a particular subcontract. subcontract means any contract, as defined in far subpart 2.1, entered into by a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract. it includes, but is not limited to, purchase orders, and changes and modifications to purchase orders. (b) when this clause is included in a fixed price type contract, consent to subcontract is required only on unpriced contract actions (including unpriced modifications or unpriced delivery orders), and only if required in accordance with paragraph (c) or (d) of this clause. (c) if the contractor does not have an approved purchasing system, consent to subcontract is required for any subcontract that  (1) is of the cost reimbursement, time and materials, or labor hour type; or (2) is fixed price and exceeds  (i) for a contract awarded by the department of defense, the coast guard, or the national aeronautics and space administration, the greater of the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, or 5 percent of the total estimated cost of the contract; or (ii) for a contract awarded by a civilian agency other than the coast guard and the national aeronautics and space administration, either the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, or 5 percent of the total estimated cost of the contract. (d) if the contractor has an approved purchasing system, the contractor nevertheless shall obtain the contracting officer’s written consent before placing the following subcontracts: ________________________________________________________________________________ (e) (1) the contractor shall notify the contracting officer reasonably in advance of placing any subcontract or modification thereof for which consent is required under paragraph (b), (c), or (d) of this clause, including the following information: (i) a description of the supplies or services to be subcontracted. (ii) identification of the type of subcontract to be used. (iii) identification of the proposed subcontractor. (iv) the proposed subcontract price. (v) the subcontractor’s current, complete, and accurate certified cost or pricing data and certificate of current cost or pricing data, if required by other contract provisions. (vi) the subcontractor’s disclosure statement or certificate relating to cost accounting standards when such data are required by other provisions of this contract. (vii) a negotiation memorandum reflecting  (a) the principal elements of the subcontract price negotiations; (b) the most significant considerations controlling establishment of initial or revised prices; (c) the reason certified cost or pricing data were or were not required; (d) the extent, if any, to which the contractor did not rely on the subcontractor’s certified cost or pricing data in determining the price objective and in negotiating the final price; (e) the extent to which it was recognized in the negotiation that the subcontractor’s certified cost or pricing data were not accurate, complete, or current; the action taken by the contractor and the subcontractor; and the effect of any such defective data on the total price negotiated; (f) the reasons for any significant difference between the contractor’s price objective and the price negotiated; and (g) a complete explanation of the incentive fee or profit plan when incentives are used. the explanation shall identify each critical performance element, management decisions used to quantify each incentive element, reasons for the incentives, and a summary of all trade off possibilities considered. (2) the contractor is not required to notify the contracting officer in advance of entering into any subcontract for which consent is not required under paragraph (b), (c), or (d) of this clause. (f) unless the consent or approval specifically provides otherwise, neither consent by the contracting officer to any subcontract nor approval of the contractor’s purchasing system shall constitute a determination  (1) of the acceptability of any subcontract terms or conditions; (2) of the allowability of any cost under this contract; or (3) to relieve the contractor of any responsibility for performing this contract. (g) no subcontract or modification thereof placed under this contract shall provide for payment on a cost plus a percentage of cost basis, and any fee payable under cost reimbursement type subcontracts shall not exceed the fee limitations in far 15.404 4(c)(4)(i). (h) the contractor shall give the contracting officer immediate written notice of any action or suit filed and prompt notice of any claim made against the contractor by any subcontractor or vendor that, in the opinion of the contractor, may result in litigation related in any way to this contract, with respect to which the contractor may be entitled to reimbursement from the government. (i) the government reserves the right to review the contractor’s purchasing system as set forth in far subpart 44.3. (j) paragraphs (c) and (e) of this clause do not apply to the following subcontracts, which were evaluated during negotiations: _______________________________________________________________________________ (end of clause) alternate i (june 2020). as prescribed in 44.204 (a)(2), substitute the following paragraph (e)(2) for paragraph (e)(2) of the basic clause: (e)(2) if the contractor has an approved purchasing system and consent is not required under paragraph (c), or (d) of this clause, the contractor nevertheless shall notify the contracting officer reasonably in advance of entering into any (i) cost plus fixed fee subcontract, or (ii) fixed price subcontract that exceeds either the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, or 5 percent of the total estimated cost of this contract. the notification shall include the information required by paragraphs (e)(1)(i) through (iv) of this clause. as prescribed in 44.204(b), insert the following clause: subcontractors and outside associates and consultants (architect engineer services) (aug 1998) any subcontractors and outside associates or consultants required by the contractor in connection with the services covered by the contract will be limited to individuals or firms that were specifically identified and agreed to during negotiations. the contractor shall obtain the contracting officer’s written consent before making any substitution for these subcontractors, associates, or consultants. (end of clause) as prescribed in 44.204(c), insert the following clause: competition in subcontracting (aug 2024) (a) the contractor shall select subcontractors (including suppliers) on a competitive basis to the maximum practical extent consistent with the objectives and requirements of the contract. (b) if the contractor is an approved mentor under the dod mentor protégé program ( 10 u.s.c. 4902), the contractor may award subcontracts under this contract on a noncompetitive basis to its protégés. (end of clause) as prescribed in 44.403 , insert the following clause: subcontracts for commercial products and commercial services (jan 2025) (a) definitions. as used in this clause  commercial product, commercial service and commercially available off the shelf item have the meanings contained in federal acquisition regulation (far) 2.101. subcontract includes a transfer of commercial products or commercial services between divisions, subsidiaries, or affiliates of the contractor or subcontractor at any tier. (b) to the maximum extent practicable, the contractor shall incorporate, and require its subcontractors at all tiers to incorporate, commercial products, commercial services, or non developmental items as components of items to be supplied under this contract. (c) (1) the contractor shall insert the following clauses in subcontracts for commercial products or commercial services: (i) 52.203 13, contractor code of business ethics and conduct (nov 2021) (41 u.s.c. 3509), if the subcontract exceeds the threshold specified in far 3.1004(a) on the date of subcontract award, and has a performance period of more than 120 days. in altering this clause to identify the appropriate parties, all disclosures of violation of the civil false claims act or of federal criminal law shall be directed to the agency office of the inspector general, with a copy to the contracting officer. (ii) 52.203 15, whistleblower protections under the american recovery and reinvestment act of 2009 (jun 2010) (section 1553 of pub. l. 111 5), if the subcontract is funded under the recovery act. (iii) 52.203 17, contractor employee whistleblower rights (nov 2023) ( 41 u.s.c. 4712); this clause does not apply to contracts of dod, nasa, the coast guard, or applicable elements of the intelligence community see far 3.900(a). (iv) 52.203 19, prohibition on requiring certain internal confidentiality agreements or statements (jan 2017). (v) 52.204 21, basic safeguarding of covered contractor information systems (nov 2021) , other than subcontracts for commercially available off the shelf items, if flow down is required in accordance with paragraph (c) of far clause 52.204 21. (vi) 52.204 23, prohibition on contracting for hardware, software, and services developed or provided by kaspersky lab covered entities (dec 2023) (section 1634 of pub. l. 115 91). (vii) 52.204 25, prohibition on contracting for certain telecommunications and video surveillance services or equipment. (nov 2021) (section 889(a)(1)(a) of pub. l. 115 232). (viii) 52.204 27, prohibition on a bytedance covered application (jun 2023) (section 102 of division r of pub. l. 117 328). (ix) (a) 52.204 30, federal acquisition supply chain security act orders prohibition. (dec 2023) ( pub. l. 115 390, title ii). (b) alternate i (dec 2023) of 52.204 30. (x) 52.219 8, utilization of small business concerns (jan 2025) ( 15 u.s.c.637(d)(2) and (3)), if the subcontract offers further subcontracting opportunities. if the subcontract (except subcontracts to small business concerns) exceeds the applicable threshold specified in far 19.702(a) on the date of subcontract award, the subcontractor must include 52.219 8 in lower tier subcontracts that offer subcontracting opportunities. (xi) 52.222 21, prohibition of segregated facilities (apr 2015). (xii) 52.222 26, equal opportunity (sept 2016) (e.o.11246). (xiii) 52.222 35, equal opportunity for veterans (jun 2020) (38 u.s.c.4212(a)); (xiv) 52.222 36, equal opportunity for workers with disabilities (jun 2020)(29 u.s.c.793). (xv) 52.222 37, employment reports on veterans (jun 2020) (38 u.s.c.4212). (xvi) 52.222 40, notification of employee rights under the national labor relations act (dec 2010) (e.o. 13496), if flow down is required in accordance with paragraph (f) of far clause 52.222 40. (xvii) (a) 52.222 50, combating trafficking in persons (nov 2021) (22 u.s.c. chapter 78 and e.o. 13627). (b) alternate i (mar 2015) of 52.222 50(22 u.s.c. chapter 78 and e.o. 13627). (xviii) 52.222 55, minimum wages for contractor workers under executive order 14026 (jan 2022), if flow down is required in accordance with paragraph (k) of far clause 52.222 55. (xix) 52.222 62, paid sick leave under executive order 13706 (jan 2022) (e.o. 13706), if flow down is required in accordance with paragraph (m) of far clause 52.222 62. (xx) (a) 52.224 3, privacy training (jan 2017) ( 5 u.s.c. 552a) if flow down is required in accordance with 52.224 3(f). (b) alternate i (jan 2017) of 52.224 3, if flow down is required in accordance with 52.224 3(f) and the agency specifies that only its agency provided training is acceptable). (xxi) 52.225 26, contractors performing private security functions outside the united states (oct 2016) (section 862, as amended, of the national defense authorization act for fiscal year 2008; 10 u.s.c. subtitle a, part v, subpart g note). (xxii) 52.232 40, providing accelerated payments to small business subcontractors (mar 2023) , if flow down is required in accordance with paragraph (c) of far clause 52.232 40. (xxiii) 52.240 1, prohibition on unmanned aircraft systems manufactured or assembled by american security drone act covered foreign entities (nov 2024) (sections 1821 1826, pub. l. 118 31, 41 u.s.c. 3901 note prec.). (xxiv) 52.247 64, preference for privately owned u.s. flag commercial vessels (nov 2021) ( 46 u.s.c. 55305 and 10 u.s.c.2631), if flow down is required in accordance with paragraph (d) of far clause 52.247 64. (2) while not required, the contractor may flow down to subcontracts for commercial products or commercial services a minimal number of additional clauses necessary to satisfy its contractual obligations. (d) the contractor shall include the terms of this clause, including this paragraph (d), in subcontracts awarded under this contract. (end of clause) as prescribed in 45.107(a), insert the following clause: government property (sep 2021) (a) definitions. as used in this clause  cannibalizemeans to remove parts from government property for use or for installation on other government property. contractor acquired property means property acquired, fabricated, or otherwise provided by the contractor for performing a contract, and to which the government has title. contractor inventory means  (1) any property acquired by and in the possession of a contractor or subcontractor under a contract for which title is vested in the government and which exceeds the amounts needed to complete full performance under the entire contract; (2) any property that the government is obligated or has the option to take over under any type of contract, e.g., as a result either of any changes in the specifications or plans thereunder or of the termination of the contract (or subcontract thereunder), before completion of the work, for the convenience or at the option of the government; and (3) government furnished property that exceeds the amounts needed to complete full performance under the entire contract. contractor’s managerial personnel means the contractor’s directors, officers, managers, superintendents, or equivalent representativeswho have supervision or direction of  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operation at any one plant or separate location; or (3) a separate and complete major industrial operation. demilitarization means rendering a product unusable for, and not restorable to, the purpose for which it was designed or is customarily used. discrepancies incident to shipment means any differences (e.g., count or condition) between the items documented to have been shipped and items actually received. equipment means a tangible item that is functionally complete for its intended purpose, durable, nonexpendable, and needed for the performance of a contract. equipment is not intended for sale, and does not ordinarily lose its identity or become a component part of another article when put into use. equipment does not include material, real property, special test equipment or special tooling. government furnished property means property in the possession of, or directly acquired by, the government and subsequently furnished to the contractor for performance of a contract. government furnished property includes, but is not limited to, spares and property furnished for repair, maintenance, overhaul, or modification. government furnished property also includes contractor acquired property if the contractor acquired property is a deliverable under a cost contract when accepted by the government for continued use under the contract. government property means all property owned or leased by the government. government property includes both government  furnished and contractor acquired property. government property includes material, equipment, special tooling, special test equipment, and real property. government property does not include intellectual property and software. loss of government property means unintended, unforeseen or accidental loss, damage or destruction to government property that reduces the government’s expected economic benefits of the property. loss of government property does not include purposeful destructive testing, obsolescence, normal wear and tear or manufacturing defects. loss of government property includes, but is not limited to  (1) items that cannot be found after a reasonable search; (2) theft; (3) damage resulting in unexpected harm to property requiring repair to restore the item to usable condition; or (4) destruction resulting from incidents that render the item useless for its intended purpose or beyond economical repair. material means property that may be consumed or expended during the performance of a contract, component parts of a higher assembly, or items that lose their individual identity through incorporation into an end item. material does not include equipment, special tooling, special test equipment or real property. nonseverable means property that cannot be removed after construction or installation without substantial loss of value or damage to the installed property or to the premises where installed. precious metals means silver, gold, platinum, palladium, iridium, osmium, rhodium, and ruthenium. production scrap means unusable material resulting from production, engineering, operations and maintenance, repair, and research and development contract activities. production scrap may have value when re melted or reprocessed, e.g., textile and metal clippings, borings, and faulty castings and forgings. property means all tangible property, both real and personal. property administrator means an authorized representative of the contracting officer appointed in accordance with agency procedures, responsible for administering the contract requirements and obligations relating to government property in the possession of a contractor. property records means the records created and maintained by the contractor in support of its stewardship responsibilities for the management of government property. provide means to furnish, as in government furnished property, or to acquire, as in contractor acquired property. real property see federal management regulation 102 71.20 (41 cfr 102 71.20). sensitive property means property potentially dangerous to the public safety or security if stolen, lost, or misplaced, or that shall be subject to exceptional physical security, protection, control, and accountability. examples include weapons, ammunition, explosives, controlled substances, radioactive materials, hazardous materials or wastes, or precious metals. unit acquisition cost means  (1) for government furnished property, the dollar value assigned by the government and identified in the contract; and (2) for contractor acquired property, the cost derived from the contractor’s records that reflect consistently applied generally accepted accounting principles. (b) property management. (1) the contractor shall have a system of internal controls to manage (control, use, preserve, protect, repair, and maintain) government property in its possession. the system shall be adequate to satisfy the requirements of this clause. in doing so, the contractor shall initiate and maintain the processes, systems, procedures, records, and methodologies necessary for effective and efficient control of government property. the contractor shall disclose any significant changes to its property management system to the property administrator prior to implementation of the changes. the contractor may employ customary commercial practices, voluntary consensus standards, or industry leading practices and standards that provide effective and efficient government property management that are necessary and appropriate for the performance of this contract (except where inconsistent with law or regulation). (2) the contractor’s responsibility extends from the initial acquisition and receipt of property, through stewardship, custody, and use until formally relieved of responsibility by authorized means, including delivery, consumption, expending, sale (as surplus property), or other disposition, or via a completed investigation, evaluation, and final determination for lost property. this requirement applies to all government property under the contractor’s accountability, stewardship, possession or control, including its vendors or subcontractors (see paragraph (f)(1)(v) of this clause). (3) the contractor shall include the requirements of this clause in all subcontracts under which government property is acquired or furnished for subcontract performance. (4) the contractor shall establish and maintain procedures necessary to assess its property management system effectiveness and shall perform periodic internal reviews, surveillances, self assessments, or audits. significant findings or results of such reviews and audits pertaining to government property shall be made available to the property administrator. (c) use of government property. (1) the contractor shall use government property, either furnished or acquired under this contract, only for performing this contract, unless otherwise provided for in this contract or approved by the contracting officer. (2) modifications or alterations of government property are prohibited, unless they are  (i) reasonable and necessary due to the scope of work under this contract or its terms and conditions; (ii) required for normal maintenance; or (iii) otherwise authorized by the contracting officer. (3) the contractor shall not cannibalize government property unless otherwise provided for in this contract or approved by the contracting officer. (d) government furnished property. (1) the government shall deliver to the contractor the government furnished property described in this contract. the government shall furnish related data and information needed for the intended use of the property. the warranties of suitability of use and timely delivery of government furnished property do not apply to property acquired or fabricated by the contractor as contractor acquired property and subsequently transferred to another contract with this contractor. (2) the delivery and/or performance dates specified in this contract are based upon the expectation that the government furnished property will be suitable for contract performance and will be delivered to the contractor by the dates stated in the contract. (i) if the property is not delivered to the contractor by the dates stated in the contract, the contracting officer shall, upon the contractor’s timely written request, consider an equitable adjustment to the contract. (ii) in the event property is received by the contractor, or for government furnished property after receipt and installation, in a condition not suitable for its intended use, the contracting officer shall, upon the contractor’s timely written request, advise the contractor on a course of action to remedy the problem. such action may include repairing, replacing, modifying, returning, or otherwise disposing of the property at the government’s expense. upon completion of the required action(s), the contracting officer shall consider an equitable adjustment to the contract (see also paragraph (f)(1)(ii)(a) of this clause). (iii) the government may, at its option, furnish property in an "as is" condition. the contractor will be given the opportunity to inspect such property prior to the property being provided. in such cases, the government makes no warranty with respect to the serviceability and/or suitability of the property for contract performance. any repairs, replacement, and/or refurbishment shall be at the contractor’s expense. (3) (i) the contracting officer may by written notice, at any time  (a) increase or decrease the amount of government furnished property under this contract; (b) substitute other government furnished property for the property previously furnished, to be furnished, or to be acquired by the contractor for the government under this contract; or (c) withdraw authority to use property. (ii) upon completion of any action(s) under paragraph (d)(3)(i) of this clause, and the contractor’s timely written request, the contracting officer shall consider an equitable adjustment to the contract. (e) title to government property. (1) all government furnished property and all property acquired by the contractor, title to which vests in the government under this paragraph (collectively referred to as "government property"), is subject to the provisions of this clause. the government shall retain title to all government furnished property. title to government property shall not be affected by its incorporation into or attachment to any property not owned by the government, nor shall government property become a fixture or lose its identity as personal property by being attached to any real property. (2) title vests in the government for all property acquired or fabricated by the contractor in accordance with the financing provisions or other specific requirements for passage of title in the contract. under fixed price type contracts, in the absence of financing provisions or other specific requirements for passage of title in the contract, the contractor retains title to all property acquired by the contractor for use on the contract, except for property identified as a deliverable end item. if a deliverable item is to be retained by the contractor for use after inspection and acceptance by the government, it shall be made accountable to the contract through a contract modification listing the item as government furnished property. (3) title under cost reimbursement or time and material contracts or cost reimbursable line items under fixed price contracts. (i) title to all property purchased by the contractor for which the contractor is entitled to be reimbursed as a direct item of cost under this contract shall pass to and vest in the government upon the vendor’s delivery of such property. (ii) title to all other property, the cost of which is reimbursable to the contractor, shall pass to and vest in the government upon  (a) issuance of the property for use in contract performance; (b) commencement of processing of the property for use in contract performance; or (c) reimbursement of the cost of the property by the government, whichever occurs first. (f) contractor plans and systems. (1) contractors shall establish and implement property management plans, systems, and procedures at the contract, program, site or entity level to enable the following outcomes: (i) acquisition of property. the contractor shall document that all property was acquired consistent with its engineering, production planning, and property control operations. (ii) receipt of government property. the contractor shall receive government property and document the receipt, record the information necessary to meet the record requirements of paragraph (f)(1)(iii)(a)(1) through (5) of this clause, identify as government owned in a manner appropriate to the type of property (e.g., stamp, tag, mark, or other identification), and manage any discrepancies incident to shipment. (a) government furnished property. the contractor shall furnish a written statement to the property administrator containing all relevant facts, such as cause or condition and a recommended course(s) of action, if overages, shortages, or damages and/or other discrepancies are discovered upon receipt of government furnished property. (b) contractor acquired property. the contractor shall take all actions necessary to adjust for overages, shortages, damage and/or other discrepancies discovered upon receipt, in shipment of contractor acquired property from a vendor or supplier, so as to ensure the proper allocability and allowability of associated costs. (iii) records of government property. the contractor shall create and maintain records of all government property accountable to the contract, including government furnished and contractor acquired property. (a) property records shall enable a complete, current, auditable record of all transactions and shall, unless otherwise approved by the property administrator, contain the following: (1) the name, part number and description, national stock number (if needed for additional item identification tracking and/or disposition), and other data elements as necessary and required in accordance with the terms and conditions of the contract. (2) quantity received (or fabricated), issued, and balance on hand. (3) unit acquisition cost. (4) unique item identifier or equivalent (if available and necessary for individual item tracking). (5) unit of measure. (6) accountable contract number or equivalent code designation. (7) location. (8) disposition. (9) posting reference and date of transaction. (10) date placed in service (if required in accordance with the terms and conditions of the contract). (b) use of a receipt and issue system for government material. when approved by the property administrator, the contractor may maintain, in lieu of formal property records, a file of appropriately cross referenced documents evidencing receipt, issue, and use of material that is issued for immediate consumption. (iv) physical inventory. the contractor shall periodically perform, record, and disclose physical inventory results. a final physical inventory shall be performed upon contract completion or termination. the property administrator may waive this final inventory requirement, depending on the circumstances (e.g., overall reliability of the contractor’s system or the property is to be transferred to a follow on contract). (v) subcontractor control. (a) the contractor shall award subcontracts that clearly identify items to be provided and the extent of any restrictions or limitations on their use. the contractor shall ensure appropriate flow down of contract terms and conditions (e.g., extent of liability for loss of government property. (b) the contractor shall assure its subcontracts are properly administered and reviews are periodically performed to determine the adequacy of the subcontractor’s property management system. (vi) reports. the contractor shall have a process to create and provide reports of discrepancies, loss of government property, physical inventory results, audits and self assessments, corrective actions, and other property related reports as directed by the contracting officer. (vii) relief of stewardship responsibility and liability. the contractor shall have a process to enable the prompt recognition, investigation, disclosure and reporting of loss of government property, including losses that occur at subcontractor or alternate site locations. (a) this process shall include the corrective actions necessary to prevent recurrence. (b) unless otherwise directed by the property administrator, the contractor shall investigate and report to the government all incidents of property loss as soon as the facts become known. such reports shall, at a minimum, contain the following information: (1) date of incident (if known). (2) the data elements required under (f)(1)(iii)(a). (3) quantity. (4) accountable contract number. (5) a statement indicating current or future need. (6) unit acquisition cost, or if applicable, estimated sales proceeds, estimated repair or replacement costs. (7) all known interests in commingled material of which includes government material. (8) cause and corrective action taken or to be taken to prevent recurrence. (9) a statement that the government will receive compensation covering the loss of government property, in the event the contractor was or will be reimbursed or compensated. (10) copies of all supporting documentation. (11) last known location. (12) a statement that the property did or did not contain sensitive, export controlled, hazardous, or toxic material, and that the appropriate agencies and authorities were notified. (c) unless the contract provides otherwise, the contractor shall be relieved of stewardship responsibility and liability for property when  (1) such property is consumed or expended, reasonably and properly, or otherwise accounted for, in the performance of the contract, including reasonable inventory adjustments of material as determined by the property administrator; (2) property administrator grants relief of responsibility and liability for loss of government property; (3) property is delivered or shipped from the contractor's plant, under government instructions, except when shipment is to a subcontractor or other location of the contractor; or (4) property is disposed of in accordance with paragraphs (j) and (k) of this clause. (viii) utilizing government property. (a) the contractor shall utilize, consume, move, and store government property only as authorized under this contract. the contractor shall promptly disclose and report government property in its possession that is excess to contract performance. (b) unless otherwise authorized in this contract or by the property administrator the contractor shall not commingle government material with material not owned by the government. (ix) maintenance. the contractor shall properly maintain government property. the contractor’s maintenance program shall enable the identification, disclosure, and performance of normal and routine preventative maintenance and repair. the contractor shall disclose and report to the property administrator the need for replacement and/or capital rehabilitation. (x) property closeout. the contractor shall promptly perform and report to the property administrator contract property closeout, to include reporting, investigating and securing closure of all loss of government property cases; physically inventorying all property upon termination or completion of this contract; and disposing of items at the time they are determined to be excess to contractual needs. (2) the contractor shall establish and maintain government accounting source data, as may be required by this contract, particularly in the areas of recognition of acquisitions, loss of government property, and disposition of material and equipment. (g) systems analysis. (1) the government shall have access to the contractor’s premises and all government property, at reasonable times, for the purposes of reviewing, inspecting and evaluating the contractor’s property management plan(s), systems, procedures, records, and supporting documentation that pertains to government property. this access includes all site locations and, with the contractor’s consent, all subcontractor premises. (2) records of government property shall be readily available to authorized government personnel and shall be appropriately safeguarded. (3) should it be determined by the government that the contractor’s (or subcontractor’s) property management practices are inadequate or not acceptable for the effective management and control of government property under this contract, or present an undue risk to the government, the contractor shall prepare a corrective action plan when requested by the property administrator and take all necessary corrective actions as specified by the schedule within the corrective action plan. (h) contractor liability for government property. (1) unless otherwise provided for in the contract, the contractor shall not be liable for loss of government property furnished or acquired under this contract, except when any one of the following applies  (i) the risk is covered by insurance or the contractor is otherwise reimbursed (to the extent of such insurance or reimbursement). the allowability of insurance costs shall be determined in accordance with 31.205 19. (ii) loss of government property that is the result of willful misconduct or lack of good faith on the part of the contractor’s managerial personnel. (iii) the contracting officer has, in writing, revoked the government’s assumption of risk for loss of government property due to a determination under paragraph (g) of this clause that the contractor’s property management practices are inadequate, and/or present an undue risk to the government, and the contractor failed to take timely corrective action. if the contractor can establish by clear and convincing evidence that the loss of government property occurred while the contractor had adequate property management practices or the loss did not result from the contractor’s failure to maintain adequate property management practices, the contractor shall not be held liable. (2) the contractor shall take all reasonable actions necessary to protect the property from further loss. the contractor shall separate the damaged and undamaged property, place all the affected property in the best possible order, and take such other action as the property administrator directs. (3) the contractor shall do nothing to prejudice the government’s rights to recover against third parties for any loss of government property. (4) the contractor shall reimburse the government for loss of government property, to the extent that the contractor is financially liable for such loss, as directed by the contracting officer. (5) upon the request of the contracting officer, the contractor shall, at the government’s expense, furnish to the government all reasonable assistance and cooperation, including the prosecution of suit and the execution of instruments of assignment in favor of the government in obtaining recovery. (i) equitable adjustment. equitable adjustments under this clause shall be made in accordance with the procedures of the changes clause. however, the government shall not be liable for breach of contract for the following: (1) any delay in delivery of government furnished property. (2) delivery of government furnished property in a condition not suitable for its intended use. (3) an increase, decrease, or substitution of government furnished property. (4) failure to repair or replace government property for which the government is responsible. (j) contractor inventory disposal. except as otherwise provided for in this contract, the contractor shall not dispose of contractor inventory until authorized to do so by the plant clearance officer or authorizing official. (1) predisposal requirements. (i) if the contractor determines that the property has the potential to fulfill requirements under other contracts, the contractor, in consultation with the property administrator, shall request that the contracting officer transfer the property to the contract in question, or provide authorization for use, as appropriate. in lieu of transferring the property, the contracting officer may authorize the contractor to credit the costs of contractor acquired property (material only) to the losing contract, and debit the gaining contract with the corresponding cost, when such material is needed for use on another contract. property no longer needed shall be considered contractor inventory. (ii) for any remaining contractor acquired property, the contractor may purchase the property at the unit acquisition cost if desired or make reasonable efforts to return unused property to the appropriate supplier at fair market value (less, if applicable, a reasonable restocking fee that is consistent with the supplier’s customary practices.) (2) inventory disposal schedules. (i) absent separate contract terms and conditions for property disposition, and provided the property was not reutilized, transferred, or otherwise disposed of, the contractor, as directed by the plant clearance officer or authorizing official, shall use standard form 1428, inventory disposal schedule or electronic equivalent, to identify and report  (a) government furnished property that is no longer required for performance of this contract; (b) contractor acquired property, to which the government has obtained title under paragraph (e) of this clause, which is no longer required for performance of that contract; and (c) termination inventory. (ii) the contractor may annotate inventory disposal schedules to identify property the contractor wishes to purchase from the government, in the event that the property is offered for sale. (iii) separate inventory disposal schedules are required for aircraft in any condition, flight safety critical aircraft parts, and other items as directed by the plant clearance officer. (iv) the contractor shall provide the information required by far 52.245 1(f)(1)(iii) along with the following: (a) any additional information that may facilitate understanding of the property’s intended use. (b) for work in progress, the estimated percentage of completion. (c) for precious metals in raw or bulk form, the type of metal and estimated weight. (d) for hazardous material or property contaminated with hazardous material, the type of hazardous material. (e) for metals in mill product form, the form, shape, treatment, hardness, temper, specification (commercial or government) and dimensions (thickness, width and length). (v) property with the same description, condition code, and reporting location may be grouped in a single line item. (vi) scrap should be reported by "lot" along with metal content, estimated weight and estimated value. (3) submission requirements. (i) the contractor shall submit inventory disposal schedules to the plant clearance officer no later than  (a) 30 days following the contractor’s determination that a property item is no longer required for performance of this contract; (b) 60 days, or such longer period as may be approved by the plant clearance officer, following completion of contract deliveries or performance; or (c) 120 days, or such longer period as may be approved by the termination contracting officer, following contract termination in whole or in part. (ii) unless the plant clearance officer determines otherwise, the contractor need not identify or report production scrap on inventory disposal schedules, and may process and dispose of production scrap in accordance with its own internal scrap procedures. the processing and disposal of other types of government owned scrap will be conducted in accordance with the terms and conditions of the contract or plant clearance officer direction, as appropriate. (4) corrections. the plant clearance officer may  (i) reject a schedule for cause (e.g., contains errors, determined to be inaccurate); and (ii) require the contractor to correct an inventory disposal schedule. (5) postsubmission adjustments. the contractor shall notify the plant clearance officer at least 10 working days in advance of its intent to remove an item from an approved inventory disposal schedule. upon approval of the plant clearance officer, or upon expiration of the notice period, the contractor may make the necessary adjustments to the inventory schedule. (6) storage. (i) the contractor shall store the property identified on an inventory disposal schedule pending receipt of disposal instructions. the government’s failure to furnish disposal instructions within 120 days following acceptance of an inventory disposal schedule may entitle the contractor to an equitable adjustment for costs incurred to store such property on or after the 121 st day. (ii) the contractor shall obtain the plant clearance officer’s approval to remove property from the premises where the property is currently located prior to receipt of final disposition instructions. if approval is granted, any costs incurred by the contractor to transport or store the property shall not increase the price or fee of any government contract. the storage area shall be appropriate for assuring the property’s physical safety and suitability for use. approval does not relieve the contractor of any liability for such property under this contract. (7) disposition instructions. (i) the contractor shall prepare for shipment, deliver f.o.b. origin, or dispose of contractor inventory as directed by the plant clearance officer. unless otherwise directed by the contracting officer or by the plant clearance officer, the contractor shall remove and destroy any markings identifying the property as u.s. government owned property prior to its disposal. (ii) the contracting officer may require the contractor to demilitarize the property prior to shipment or disposal. in such cases, the contractor may be entitled to an equitable adjustment under paragraph (i) of this clause. (8) disposal proceeds. as directed by the contracting officer, the contractor shall credit the net proceeds from the disposal of contractor inventory to the contract, or to the treasury of the united states as miscellaneous receipts. (9) subcontractor inventory disposal schedules. the contractor shall require its subcontractors to submit inventory disposal schedules to the contractor in accordance with the requirements of paragraph (j)(3) of this clause. (k) abandonment of government property. (1) the government shall not abandon sensitive property or termination inventory without the contractor’s written consent. (2) the government, upon notice to the contractor, may abandon any nonsensitive property in place, at which time all obligations of the government regarding such property shall cease. (3) absent contract terms and conditions to the contrary, the government may abandon parts removed and replaced from property as a result of normal maintenance actions, or removed from property as a result of the repair, maintenance, overhaul, or modification process. (4) the government has no obligation to restore or rehabilitate the contractor’s premises under any circumstances; however, if government furnished property is withdrawn or is unsuitable for the intended use, or if other government property is substituted, then the equitable adjustment under paragraph (i) of this clause may properly include restoration or rehabilitation costs. (l) communication. all communications under this clause shall be in writing. (m) contracts outside the united states. if this contract is to be performed outside of the united states and its outlying areas, the words "government" and "government furnished" (wherever they appear in this clause) shall be construed as "united states government" and "united states government furnished," respectively. (end of clause) alternate i (apr 2012). as prescribed in 45.107 (a)(2), substitute the following for paragraph (h)(1) of the basic clause: (h)(1) the contractor assumes the risk of, and shall be responsible for, any loss of government property upon its delivery to the contractor as government furnished property. however, the contractor is not responsible for reasonable wear and tear to government property or for government property properly consumed in performing this contract. alternate ii (apr 2012). as prescribed in 45.107 (a)(3), substitute the following for paragraph (e)(3) of the basic clause: (e)(3) title to property (and other tangible personal property) purchased with funds available for research and having a unit acquisition cost of less than $5,000 shall vest in the contractor upon acquisition or as soon thereafter as feasible; provided that the contractor obtained the contracting officer’s approval before each acquisition. title to property purchased with funds available for research and having a unit acquisition cost of $5,000 or more shall vest as set forth in this contract. if title to property vests in the contractor under this paragraph, the contractor agrees that no costs shall be allowed for any depreciation, amortization, or use under any existing or future government contract or subcontract thereunder. the contractor shall furnish the contracting officer a list of all property to which title is vested in the contractor under this paragraph within 10 days following the end of the calendar quarter during which it was received. vesting title under this paragraph is subject to civil rights legislation, 42 u.s.c. 2000d. before title is vested and by signing this contract, the contractor accepts and agrees that  "no person in the united states or its outlying areas shall, on the ground of race, color, or national origin, be excluded from participation in, be denied the benefits of, or be otherwise subjected to discrimination under this contemplated financial assistance (title to property)." as prescribed in 45.107(b), insert the following clause: government property installation operation services (apr 2012) (a) this government property listed in paragraph (e) of this clause is furnished to the contractor in an "as is, where is" condition. the government makes no warranty regarding the suitability for use of the government property specified in this contract. the contractor shall be afforded the opportunity to inspect the government property as specified in the solicitation. (b) the government bears no responsibility for repair or replacement of any lost government property. if any or all of the government property is lost or becomes no longer usable, the contractor shall be responsible for replacement of the property at contractor expense. the contractor shall have title to all replacement property and shall continue to be responsible for contract performance. (c) unless the contracting officer determines otherwise, the government abandons all rights and title to unserviceable and scrap property resulting from contract performance. upon notification to the contracting officer, the contractor shall remove such property from the government premises and dispose of it at contractor expense. (d) except as provided in this clause, government property furnished under this contract shall be governed by the government property clause of this contract. (e) government property provided under this clause: _________________________________________________________________________________ (end of clause) as prescribed in 45.107(c), insert the following clause: use and charges (apr 2012) (a) definitions. definitions applicable to this contract are provided in the clause at 52.245 1, government property. additional definitions as used in this clause include: rental period means the calendar period during which government property is made available for nongovernmental purposes. rental time means the number of hours, to the nearest whole hour, rented property is actually used for nongovernmental purposes. it includes time to set up the property for such purposes, perform required maintenance, and restore the property to its condition prior to rental (less normal wear and tear). (b) use of government property. the contractor may use the government property without charge in the performance of  (1) contracts with the government that specifically authorize such use without charge; (2) subcontracts of any tier under government prime contracts if the contracting officer having cognizance of the prime contract  (i) approves a subcontract specifically authorizing such use; or (ii) otherwise authorizes such use in writing; and (3) other work, if the contracting officer specifically authorizes in writing use without charge for such work. (c) rental. if granted written permission by the contracting officer, or if it is specifically provided for in the schedule, the contractor may use the government property (except material) for a rental fee for work other than that provided in paragraph (b) of this clause. authorizing such use of the government property does not waive any rights of the government to terminate the contractor’s right to use the government property. the rental fee shall be determined in accordance with the following paragraphs. (d) general. (1) rental requests shall be submitted to the administrative contracting officer (aco), identify the property for which rental is requested, propose a rental period, and compute an estimated rental charge by using the contractor’s best estimate of rental time in the formulae described in paragraph (e) of this clause. (2) the contractor shall not use government property for nongovernmental purposes, including independent research and development, until a rental charge for real property, or estimated rental charge for other property, is agreed upon. rented property shall be used only on a non interference basis. (e) rental charge.  (1) real property and associated fixtures. (i) the contractor shall obtain, at its expense, a property appraisal from an independent licensed, accredited, or certified appraiser that computes a monthly, daily, or hourly rental rate for comparable commercial property. the appraisal may be used to compute rentals under this clause throughout its effective period or, if an effective period is not stated in the appraisal, for one year following the date the appraisal was performed. the contractor shall submit the appraisal to the aco at least 30 days prior to the date the property is needed for nongovernmental use. except as provided in paragraph (e)(1)(iii) of this clause, the aco shall use the appraisal rental rate to determine a reasonable rental charge. (ii) rental charges shall be determined by multiplying the rental time by the appraisal rental rate expressed as a rate per hour. monthly or daily appraisal rental rates shall be divided by 720 or 24, respectively, to determine an hourly rental rate. (iii) when the aco believes the appraisal rental rate is unreasonable, the aco shall promptly notify the contractor. the parties may agree on an alternative means for computing a reasonable rental charge. (iv) the contractor shall obtain, at its expense, additional property appraisals in the same manner as provided in paragraph (e)(1)(i) if the effective period has expired and the contractor desires the continued use of property for nongovernmental use. the contractor may obtain additional appraisals within the effective period of the current appraisal if the market prices decrease substantially. (2) other government property. the contractor may elect to compute the rental charge using the appraisal method described in paragraph (e)(1) of this clause subject to the constraints therein or the following formula in which rental time shall be expressed in increments of not less than one hour with portions of hours rounded to the next higher hour: the hourly rental charge is calculated by multiplying 2 percent of the acquisition cost by the hours of rental time, and dividing by 720. (3) alternative methodology. the contractor may request consideration of an alternative basis for computing the rental charge if it considers the monthly rental rate or a time based rental unreasonable or impractical. (f) rental payments. (1) rent is due 60 days following completion of the rental period or as otherwise specified in the contract. the contractor shall compute the rental due, and furnish records or other supporting data in sufficient detail to permit the aco to verify the rental time and computation. payment shall be made by check payable to the treasurer of the united states and sent to the contract administration office identified in this contract, unless otherwise specified by the contracting officer. (2) interest will be charged if payment is not made by the date specified in paragraph (f)(1) of this clause. interest will accrue at the "renegotiation board interest rate" (published in thefederal register semiannually on or about january 1 st and july 1 st) for the period in which the rent is due. (3) the government’s acceptance of any rental payment under this clause, in whole or in part, shall not be construed as a waiver or relinquishment of any rights it may have against the contractor stemming from the contractor’s unauthorized use of government property or any other failure to perform this contract according to its terms. (g) use revocation. at any time during the rental period, the government may revoke nongovernmental use authorization and require the contractor, at the contractor’s expense, to return the property to the government, restore the property to its prerental condition (less normal wear and tear), or both. (h) unauthorized use. the unauthorized use of government property can subject a person to fines, imprisonment, or both, under 18 u.s.c. 641. (end of clause) as prescribed in 46.301 , insert the following clause: contractor inspection requirements (apr 1984) the contractor is responsible for performing or having performed all inspections and tests necessary to substantiate that the supplies or services furnished under this contract conform to contract requirements, including any applicable technical requirements for specified manufacturers’ parts. this clause takes precedence over any government inspection and testing required in the contract’s specifications, except for specialized inspections or tests specified to be performed solely by the government. (end of clause) as prescribed in 46.302 , insert the following clause: inspection of supplies fixed price (aug 1996) (a) definition. "supplies," as used in this clause, includes but is not limited to raw materials, components, intermediate assemblies, end products, and lots of supplies. (b) the contractor shall provide and maintain an inspection system acceptable to the government covering supplies under this contract and shall tender to the government for acceptance only supplies that have been inspected in accordance with the inspection system and have been found by the contractor to be in conformity with contract requirements. as part of the system, the contractor shall prepare records evidencing all inspections made under the system and the outcome. these records shall be kept complete and made available to the government during contract performance and for as long afterwards as the contract requires. the government may perform reviews and evaluations as reasonably necessary to ascertain compliance with this paragraph. these reviews and evaluations shall be conducted in a manner that will not unduly delay the contract work. the right of review, whether exercised or not, does not relieve the contractor of the obligations under the contract. (c) the government has the right to inspect and test all supplies called for by the contract, to the extent practicable, at all places and times, including the period of manufacture, and in any event before acceptance. the government shall perform inspections and tests in a manner that will not unduly delay the work. the government assumes no contractual obligation to perform any inspection and test for the benefit of the contractor unless specifically set forth elsewhere in this contract. (d) if the government performs inspection or test on the premises of the contractor or a subcontractor, the contractor shall furnish, and shall require subcontractors to furnish, at no increase in contract price, all reasonable facilities and assistance for the safe and convenient performance of these duties. except as otherwise provided in the contract, the government shall bear the expense of government inspections or tests made at other than the contractor’s or subcontractor’s premises; provided, that in case of rejection, the government shall not be liable for any reduction in the value of inspection or test samples. (e) (1) when supplies are not ready at the time specified by the contractor for inspection or test, the contracting officer may charge to the contractor the additional cost of inspection or test. (2) the contracting officer may also charge the contractor for any additional cost of inspection or test when prior rejection makes reinspection or retest necessary. (f) the government has the right either to reject or to require correction of nonconforming supplies. supplies are nonconforming when they are defective in material or workmanship or are otherwise not in conformity with contract requirements. the government may reject nonconforming supplies with or without disposition instructions. (g) the contractor shall remove supplies rejected or required to be corrected. however, the contracting officer may require or permit correction in place, promptly after notice, by and at the expense of the contractor. the contractor shall not tender for acceptance corrected or rejected supplies without disclosing the former rejection or requirement for correction, and, when required, shall disclose the corrective action taken. (h) if the contractor fails to promptly remove, replace, or correct rejected supplies that are required to be removed or to be replaced or corrected, the government may either (1)by contract or otherwise, remove, replace, or correct the supplies and charge the cost to the contractor or (2) terminate the contract for default. unless the contractor corrects or replaces the supplies within the delivery schedule, the contracting officer may require their delivery and make an equitable price reduction. failure to agree to a price reduction shall be a dispute. (i) (1) if this contract provides for the performance of government quality assurance at source, and if requested by the government, the contractor shall furnish advance notification of the time  (i) when contractor inspection or tests will be performed in accordance with the terms and conditions of the contract; and (ii) when the supplies will be ready for government inspection. (2) the government’s request shall specify the period and method of the advance notification and the government representative to whom it shall be furnished. requests shall not require more than 2 workdays of advance notification if the government representative is in residence in the contractor’s plant, nor more than 7 workdays in other instances. (j) the government shall accept or reject supplies as promptly as practicable after delivery, unless otherwise provided in the contract. government failure to inspect and accept or reject the supplies shall not relieve the contractor from responsibility, nor impose liability on the government, for nonconforming supplies. (k) inspections and tests by the government do not relieve the contractor of responsibility for defects or other failures to meet contract requirements discovered before acceptance. acceptance shall be conclusive, except for latent defects, fraud, gross mistakes amounting to fraud, or as otherwise provided in the contract. (l) if acceptance is not conclusive for any of the reasons in paragraph (k) hereof, the government, in addition to any other rights and remedies provided by law, or under other provisions of this contract, shall have the right to require the contractor (1)at no increase in contract price, to correct or replace the defective or nonconforming supplies at the original point of delivery or at the contractor’s plant at the contracting officer’s election, and in accordance with a reasonable delivery schedule as may be agreed upon between the contractor and the contracting officer; provided, that the contracting officer may require a reduction in contract price if the contractor fails to meet such delivery schedule, or (2) within a reasonable time after receipt by the contractor of notice of defects or nonconformance, to repay such portion of the contract as is equitable under the circumstances if the contracting officer elects not to require correction or replacement. when supplies are returned to the contractor, the contractor shall bear the transportation cost from the original point of delivery to the contractor’s plant and return to the original point when that point is not the contractor’s plant. if the contractor fails to perform or act as required in paragraph (l)(1) or (l)(2) of this clause and does not cure such failure within a period of 10 days (or such longer period as the contracting officer may authorize in writing) after receipt of notice from the contracting officer specifying such failure, the government shall have the right by contract or otherwise to replace or correct such supplies and charge to the contractor the cost occasioned the government thereby. (end of clause) alternate i (july1985). if a fixed price incentive contract is contemplated, substitute paragraphs (g), (h), and (l) below for paragraphs (g), (h), and (l) of the basic clause. (g) the contractor shall remove supplies rejected or required to be corrected. however, the contracting officer may require or permit correction in place, promptly after notice. the contractor shall not tender for acceptance corrected or rejected supplies without disclosing the former rejection or requirement for correction, and when required shall disclose the corrective action taken. cost of removal, replacement, or correction shall be considered a cost incurred, or to be incurred, in the total final negotiated cost fixed under the incentive price revision clause. however, replacements or corrections by the contractor after the establishment of the total final price shall be at no increase in the total final price. (h) if the contractor fails to promptly remove, replace, or correct rejected supplies that are required to be removed or to be replaced or corrected, the government may either (1)by contract or otherwise, remove, replace, or correct the supplies and equitably reduce the target price or, if established, the total final price or (2) may terminate the contract for default. unless the contractor corrects or replaces the nonconforming supplies within the delivery schedule, the contracting officer may require their delivery and equitably reduce any target price or, if it is established, the total final contract price. failure to agree upon an equitable price reduction shall be a dispute. (l) if acceptance is not conclusive for any of the reasons in paragraph (k) hereof, the government, in addition to any other rights and remedies provided by law, or under other provisions of this contract, shall have the right to require the contractor (1)at no increase in any target price or, if it is established, the total final price of this contract, to correct or replace the defective or nonconforming supplies at the original point of delivery or at the contractor’s plant at the contracting officer’s election, and in accordance with a reasonable delivery schedule as may be agreed upon between the contractor and the contracting officer; provided, that the contracting officer may require a reduction in any target price, or, if it is established, the total final price of this contract, if the contractor fails to meet such delivery schedule; or (2) within a reasonable time after receipt by the contractor of notice of defects or nonconformance, to repay such portion of the total final price as is equitable under the circumstances if the contracting officer elects not to require correction or replacement. when supplies are returned to the contractor, the contractor shall bear the transportation costs from the original point of delivery to the contractor’s plant and return to the original point when that point is not the contractor’s plant. if the contractor fails to perform or act as required in paragraph (l)(1) or (l)(2) of this clause and does not cure such failure within a period of 10 days (or such longer period as the contracting officer may authorize in writing) after receipt of notice from the contracting officer specifying such failure, the government shall have the right by contract or otherwise to replace or correct such supplies and equitably reduce any target price or, if it is established, the total final price of this contract. alternate ii (july1985). if a fixed ceiling price contract with retroactive price redetermination is contemplated, substitute paragraphs (g), (h), and (l) below for paragraphs (g), (h), and (l) of the basic clause: (g) the contractor shall remove supplies rejected or required to be corrected. however, the contracting officer may require or permit correction in place, promptly after notice. the contractor shall not tender for acceptance corrected or rejected supplies without disclosing the former rejection or requirement for correction, and when required shall disclose the corrective action taken. cost of removal, replacement, or correction shall be considered a cost incurred, or to be incurred, when redetermining the prices under the price redetermination clause. however, replacements or corrections by the contractor after the establishment of the redetermined prices shall be at no increase in the redetermined price. (h) if the contractor fails to promptly remove, replace, or correct rejected supplies that are required to be removed or to be replaced or corrected, the government may either (1)by contract or otherwise, remove, replace, or correct the supplies and equitably reduce the initial contract prices or, if established, the redetermined contract prices or (2) terminate the contract for default. unless the contractor corrects or replaces the nonconforming supplies within the delivery schedule, the contracting officer may require their delivery and equitably reduce the initial contract price or, if it is established, the redetermined contract prices. failure to agree upon an equitable price reduction shall be a dispute. (l) if acceptance is not conclusive for any of the reasons in paragraph (k) hereof, the government, in addition to any other rights and remedies provided by law, or under other provisions of this contract, shall have the right to require the contractor (1)at no increase in the initial contract prices, or, if it is established, the redetermined prices of this contract, to correct or replace the defective or nonconforming supplies at the original point of delivery or at the contractor’s plant at the contracting officer’s election, and in accordance with a reasonable delivery schedule as may be agreed upon between the contractor and the contracting officer; provided, that the contracting officer may require a reduction in the initial contract prices, or, if it is established, the redetermined prices of this contract, if the contractor fails to meet such delivery schedule; or (2) within a reasonable time after receipt by the contractor of notice of defects or nonconformance, to repay such portion of the initial contract prices, or, if it is established, the redetermined prices of this contract, as is equitable under the circumstances if the contracting officer elects not to require correction or replacement. when supplies are returned to the contractor, the contractor shall bear the transportation costs from the original point of delivery to the contractor’s plant and return to the original point when that point is not the contractor’s plant. if the contractor fails to perform or act as required in paragraph (l)(1) or (l) (2) of this clause and does not cure such failure within a period of 10 days (or such longer period as the contracting officer may authorize in writing) after receipt of notice from the contracting officer specifying such failure, the government shall have the right by contract or otherwise to replace or correct such supplies and equitably reduce the initial contract prices, or, if it is established, the redetermined prices of this contract. as prescribed in 46.303 , insert the following clause in solicitations and contracts for supplies, or services that involve the furnishing of supplies, when a cost reimbursement contract is contemplated: inspection of supplies cost reimbursement (may 2001) (a) definitions. as used in this clause  contractor’s managerial personnel means any of the contractor’s directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operation at a plant or separate location where the contract is being performed; or (3) a separate and complete major industrial operation connected with performing this contract. supplies includes but is not limited to raw materials, components, intermediate assemblies, end products, lots of supplies, and, when the contract does not include the warranty of data clause, data. (b) the contractor shall provide and maintain an inspection system acceptable to the government covering the supplies, fabricating methods, and special tooling under this contract. complete records of all inspection work performed by the contractor shall be maintained and made available to the government during contract performance and for as long afterwards as the contract requires. (c) the government has the right to inspect and test the contract supplies, to the extent practicable at all places and times, including the period of manufacture, and in any event before acceptance. the government may also inspect the plant or plants of the contractor or any subcontractor engaged in the contract performance. the government shall perform inspections and tests in a manner that will not unduly delay the work. (d) if the government performs inspection or test on the premises of the contractor or a subcontractor, the contractor 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 contract, the government 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 contract performance, but no later than 6 months (or such other time as may be specified in the contract) after acceptance of the supplies to be delivered under the contract, the government may require the contractor 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 contract requirements. except as otherwise provided in paragraph (h) of this clause, the cost of replacement or correction shall be included in allowable cost, determined as provided in the allowable cost and payment clause, but no additional fee shall be paid. the contractor 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 contractor fails to proceed with reasonable promptness to perform required replacement or correction, the government may  (i) by contract or otherwise, perform the replacement or correction and charge to the contractor any increased cost or make an equitable reduction in any fixed fee paid or payable under the contract; (ii) require delivery of undelivered supplies at an equitable reduction in any fixed fee paid or payable under the contract; or (iii) terminate the contract for default. (2) failure to agree on the amount of increased cost to be charged to the contractor or to the reduction in the fixed fee shall be a dispute. (h) notwithstanding paragraphs (f) and (g) of this clause, the government may at any time require the contractor to correct or replace, without cost to the government, nonconforming supplies, if the nonconformances are due to  (1) fraud, lack of good faith, or willful misconduct on the part of the contractor’s managerial personnel; or (2) the conduct of one or more of the contractor’s employees selected or retained by the contractor after any of the contractor’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 contractor shall have no obligation or liability under this contract 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 contract. (k) except as otherwise specified in the contract, the contractor’s obligation to correct or replace government furnished property shall be governed by the clause pertaining to government property. (end of clause) as prescribed in 46.304 , insert the following clause: inspection of services fixed price (aug 1996) (a) definition."services," as used in this clause, includes services performed, workmanship, and material furnished or utilized in the performance of services. (b) the contractor shall provide and maintain an inspection system acceptable to the government covering the services under this contract. complete records of all inspection work performed by the contractor shall be maintained and made available to the government during contract performance and for as long afterwards as the contract requires. (c) the government has the right to inspect and test all services called for by the contract, to the extent practicable at all times and places during the term of the contract. the government shall perform inspections and tests in a manner that will not unduly delay the work. (d) if the government performs inspections or tests on the premises of the contractor or a subcontractor, the contractor shall furnish, and shall require subcontractors to furnish, at no increase in contract price, all reasonable facilities and assistance for the safe and convenient performance of these duties. (e) if any of the services do not conform with contract requirements, the government may require the contractor to perform the services again in conformity with contract requirements, at no increase in contract amount. when the defects in services cannot be corrected by reperformance, the government may  (1) require the contractor to take necessary action to ensure that future performance conforms to contract requirements; and (2) reduce the contract price to reflect the reduced value of the services performed. (f) if the contractor fails to promptly perform the services again or to take the necessary action to ensure future performance in conformity with contract requirements, the government may  (1) by contract or otherwise, perform the services and charge to the contractor any cost incurred by the government that is directly related to the performance of such service; or (2) terminate the contract for default. (end of clause) as prescribed in 46.305 , insert the following clause in solicitations and contracts for services, or supplies that involve the furnishing of services, when a cost reimbursement contract is contemplated: inspection of services cost reimbursement (apr 1984) (a) definition."services," as used in this clause, includes services performed, workmanship, and material furnished or used in performing services. (b) the contractor shall provide and maintain an inspection system acceptable to the government covering the services under this contract. complete records of all inspection work performed by the contractor shall be maintained and made available to the government during contract performance and for as long afterwards as the contract requires. (c) the government has the right to inspect and test all services called for by the contract, to the extent practicable at all places and times during the term of the contract. 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 contract requirements, the government may require the contractor to perform the services again in conformity with contract requirements, for no additional fee. when the defects in services cannot be corrected by reperformance, the government may  (1) require the contractor to take necessary action to ensure that future performance conforms to contract requirements; and (2) reduce any fee payable under the contract to reflect the reduced value of the services performed. (e) if the contractor fails to promptly perform the services again or take the action necessary to ensure future performance in conformity with contract requirements, the government may  (1) by contract or otherwise, perform the services and reduce any fee payable by an amount that is equitable under the circumstances; or (2) terminate the contract for default. (end of clause) as prescribed in 46.306 , insert the following clause: inspection time and material and labor hour (may 2001) (a) definitions. as used in this clause  contractor’s managerial personnel means any of the contractor’s directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operation at any one plant or separate location where the contract is being performed; or (3) a separate and complete major industrial operation connected with the performance of this contract. materials includes data when the contract does not include the warranty of data clause. (b) the contractor shall provide and maintain an inspection system acceptable to the government covering the material, fabricating methods, work, and services under this contract. complete records of all inspection work performed by the contractor shall be maintained and made available to the government during contract performance and for as long afterwards as the contract requires. (c) the government has the right to inspect and test all materials furnished and services performed under this contract, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance. the government may also inspect the plant or plants of the contractor or any subcontractor engaged in contract performance. the government shall perform inspections and tests in a manner that will not unduly delay the work. (d) if the government performs inspection or test on the premises of the contractor or a subcontractor, the contractor 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 contract, the government 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 contract performance, but not later than 6 months (or such other time as may be specified in the contract) after acceptance of the services or materials last delivered under this contract, the government may require the contractor to replace or correct services or materials that at time of delivery failed to meet contract requirements. except as otherwise specified in paragraph (h) of this clause, 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. the contractor 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 the contractor 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 government), the government may  (i) by contract or otherwise, perform the replacement or correction, charge to the contractor any increased cost, or deduct such increased cost from any amounts paid or due under this contract; or (ii) terminate this contract for default. (2) failure to agree to the amount of increased cost to be charged to the contractor shall be a dispute. (h) notwithstanding paragraphs (f) and (g) of this clause, the government may at any time require the contractor to remedy by correction or replacement, without cost to the government, any failure by the contractor to comply with the requirements of this contract, if the failure is due to  (1) fraud, lack of good faith, or willful misconduct on the part of the contractor’s managerial personnel; or (2) the conduct of one or more of the contractor’s employees selected or retained by the contractor after any of the contractor’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. (j) the contractor has no obligation or liability under this contract to correct or replace materials and services that at time of delivery do not meet contract requirements, except as provided in this clause or as may be otherwise specified in the contract. (k) unless otherwise specified in the contract, the contractor’s obligation to correct or replace government furnished property shall be governed by the clause pertaining to government property. (end of clause) alternate i (apr 1984). if government inspection and acceptance are to be performed at the contractor’s plant, paragraph (e) below may be substituted for paragraph (e) of the basic clause: (e) the government shall inspect for acceptance all items (other than aircraft to be flown away, if any) to be furnished under this contract at the contractor’s plant or plants specified in the contract, or at any other plant or plants approved for such purpose in writing by the contracting officer. the contractor shall inform the contract administration office or contracting officer when the work is ready for inspection. the government reserves the right to charge to the contractor any additional cost of government inspection and test when items are not ready at the time for which inspection and test is requested by the contractor. as prescribed in 46.307(a), insert the following clause: inspection of research and development fixed price (aug 1996) (a) the contractor shall provide and maintain an inspection system acceptable to the government covering the work under this contract. complete records of all inspection work performed by the contractor shall be maintained and made available to the government during contract performance and for as long afterwards as the contract requires. (b) the government has the right to inspect and test all work called for by the contract, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance. the government may also inspect the premises of the contractor or any subcontractor engaged in contract performance. the government shall perform inspections and tests in a manner that will not unduly delay the work. (c) if the government performs any inspection or test on the premises of the contractor or a subcontractor, the contractor shall furnish and shall require subcontractors to furnish, at no increase in contract price, all reasonable facilities and assistance for the safe and convenient performance of these duties. except as otherwise provided in the contract, the government shall bear the expense of government inspections or tests made at other than the contractor’s or subcontractor’s premises. (d) the government shall accept or reject the work as promptly as practicable after delivery, unless otherwise specified in the contract. government failure to inspect and accept or reject the work shall not relieve the contractor from responsibility, nor impose liability on the government, for nonconforming work. work is nonconforming when it is defective in material or workmanship or is otherwise not in conformity with contract requirements. (e) the government has the right to reject nonconforming work. if the contractor fails or is unable to correct or to replace nonconforming work within the delivery schedule (or such later time as the contracting officer may authorize), the contracting officer may accept the work and make an equitable price reduction. failure to agree on a price reduction shall be a dispute. (f) inspection and test by the government does not relieve the contractor from responsibility for defects or other failures to meet the contract requirements that may be discovered before acceptance. acceptance shall be conclusive, except for latent defects, fraud, gross mistakes amounting to fraud, or as otherwise specified in the contract. if acceptance is not conclusive for any of these causes, the government, in addition to any other rights and remedies provided by law, or under other provisions of this contract, shall have the right to require the contractor  (1) at no increase in contract price, to correct or replace the defective or nonconforming supplies (work) at the original point of delivery or at the contractor’s plant at the contracting officer’s election, and in accordance with a reasonable delivery schedule as may be agreed upon between the contractor and the contracting officer; provided, the contracting officer may require a reduction in contract price if the contractor fails to meet such delivery schedule; or (2) within a reasonable time after the contractor’s receipt of notice of defects or nonconformance, to repayment of such portion of the contract price as is equitable under the circumstances if the government elects not to require correction or replacement. when supplies (work) are (is) returned to the contractor, the contractor shall bear transportation costs from the original point of delivery to the contractor’s plant and return to the original point of delivery when that point is not the contractor’s plant. (end of clause) as prescribed in 46.308 , insert the following clause in solicitations and contracts for research and development when (a) the primary objective is the delivery of end items other than designs, drawings, or reports; and (b) cost reimbursement contract is contemplated; unless use of the clause is impractical and the clause prescribed in 46.309 is considered to be more appropriate: inspection of research and development cost reimbursement (may 2001) (a) definitions.as used in this clause  contractor's managerial personnel means the contractor's directors, officers, managers, superintendents, or equivalent representatives who have supervision or direction of (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operation at any one plant or separate location where the contract is being performed; or (3) a separate and complete major industrial operation connected with performing this contract."work" includes data when the contract does not include the warranty of data clause. (b) the contractor shall provide and maintain an inspection system acceptable to the government covering the work under this contract. complete records of all inspection work performed by the contractor shall be maintained and made available to the government during contract performance and for as long afterwards as the contract requires. (c) the government has the right to inspect and test all work called for by the contract, to the extent practicable at all places and times, including the period of performance, and in any event before acceptance. the government may also inspect the plant or plants of the contractor or its subcontractors engaged in the contract performance. the government shall perform inspections and tests in a manner that will not unduly delay the work. (d) if the government performs any inspection or test on the premises of the contractor or a subcontractor, the contractor 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 provided in the contract, the government shall accept work as promptly as practicable after delivery, and work shall be deemed accepted 90 days after delivery, unless accepted earlier. (f) at any time during contract performance, but no later than 6 months (or such other time as may be specified in the contract) after acceptance of all of the end items (other than designs, drawings, or reports) to be delivered under the contract, the government may require the contractor to replace or correct work not meeting contract requirements. time devoted to the replacement or correction of such work shall not be included in the computation of the above time period. except as otherwise provided in paragraph (h) of this clause, the cost of replacement or correction shall be determined as specified in the allowable cost and payment clause, but no additional fee shall be paid. the contractor shall not tender for acceptance work 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 contractor fails to proceed with reasonable promptness to perform required replacement or correction, the government may  (i) by contract or otherwise, perform the replacement or correction, charge to the contractor any increased cost, or make an equitable reduction in any fixed fee paid or payable under the contract; (ii) require delivery of any undelivered articles and shall have the right to make an equitable reduction in any fixed fee paid or payable under the contract; or (iii) terminate the contract for default. (2) failure to agree on the amount of increased cost to be charged the contractor or to the reduction in fixed fee shall be a dispute. (h) notwithstanding paragraphs (f) and (g) of this clause, the government may at any time require the contractor to remedy by correction or replacement, without cost to the government, any failure by the contractor to comply with the requirements of this contract, if the failure is due to  (1) fraud, lack of good faith, or willful misconduct on the part of the contractor’s managerial personnel; or (2) the conduct of one or more of the contractor’s employees selected or retained by the contractor after any of the contractor’s managerial personnel has reasonable grounds to believe that the employee is habitually careless or unqualified. (i) this clause shall apply in the same manner to a corrected or replacement end item or components as to work originally delivered. (j) the contractor has no obligation or liability under the contract to correct or replace articles not meeting contract requirements at time of delivery, except as provided in this clause or as may otherwise be specified in the contract. (k) unless otherwise provided in the contract, the contractor’s obligations to correct or replace government furnished property shall be governed by the clause pertaining to government property. (end of clause) alternate i (apr 1984). if it is contemplated that the contract will be on a no fee basis, substitute paragraphs (f) and (g) below for paragraphs (f) and (g) of the basic clause. (f) at any time during contract performance, but not later than 6 months (or such other time as may be specified in the contract) after acceptance of all of the end items (other than designs, drawings, or reports) to be delivered under the contract, the government may require the contractor to correct or replace work not meeting contract requirements. time devoted to the correction or replacement of such work shall not be included in the computation of the above time period. except as otherwise provided in paragraph (g) of this clause, the allowability of the cost of any such replacement or correction shall be determined as specified in the allowable cost and payment clause. the contractor shall not tender for acceptance corrected work without disclosing the former requirement for correction, and, when required, shall disclose the corrective action taken. (g) if the contractor fails to proceed with reasonable promptness to perform required replacement or correction, the government may  (1) by contract or otherwise, perform the replacement or correction and charge to the contractor any increased cost; (2) require delivery of any undelivered articles; or (3) terminate the contract for default. failure to agree on the amount of increased cost to be charged to the contractor shall be a dispute. as prescribed in 46.309 , insert the following clause: inspection of research and development (shortform) (apr 1984) the government has the right to inspect and evaluate the work performed or being performed under the contract, and the premises where the work is being performed, at all reasonable times and in a manner that will not unduly delay the work. if the government performs inspection or evaluation on the premises of the contractor or a subcontractor, the contractor shall furnish and shall require subcontractors to furnish all reasonable facilities and assistance for the safe and convenient performance of these duties. (end of clause) as prescribed in 46.311 , insert the following clause: higher level contract quality requirement (dec 2014) (a) the contractor shall comply with the higher level quality standard(s) listed below. ______________________________________________________[contracting officer insert the title, number (if any), date, and tailoring (if any) of the higher level quality standards.] (b) the contractor shall include applicable requirements of the higher level quality standard(s) listed in paragraph (a) of this clause and the requirement to flow down such standards, as applicable, to lower tier subcontracts, in  (1) any subcontract for critical and complex items (see 46.203(b) and (c)); or (2) when the technical requirements of a subcontract require  (i) control of such things as design, work operations, in process control, testing, and inspection; or (ii) attention to such factors as organization, planning, work instructions, documentation control, and advanced metrology. (end of clause) as prescribed in 46.312 , insert the following clause: inspection of construction (aug 1996) (a) definition."work" includes, but is not limited to, materials, workmanship, and manufacture and fabrication of components. (b) the contractor shall maintain an adequate inspection system and perform such inspections as will ensure that the work performed under the contract conforms to contract requirements. the contractor shall maintain complete inspection records and make them available to the government. all work shall be conducted under the general direction of the contracting officer and is subject to government inspection and test at all places and at all reasonable times before acceptance to ensure strict compliance with the terms of the contract. (c) government inspections and tests are for the sole benefit of the government and do not  (1) relieve the contractor of responsibility for providing adequate quality control measures; (2) relieve the contractor of responsibility for damage to or loss of the material before acceptance; (3) constitute or imply acceptance; or (4) affect the continuing rights of the government after acceptance of the completed work under paragraph (i) of this  section. (d) the presence or absence of a government inspector does not relieve the contractor from any contract requirement, nor is the inspector authorized to change any term or condition of the specification without the contracting officer’s written authorization. (e) the contractor shall promptly furnish, at no increase in contract price, all facilities, labor, and material reasonably needed for performing such safe and convenient inspections and tests as may be required by the contracting officer. the government may charge to the contractor any additional cost of inspection or test when work is not ready at the time specified by the contractor for inspection or test, or when prior rejection makes reinspection or retest necessary. the government shall perform all inspections and tests in a manner that will not unnecessarily delay the work. special, full size, and performance tests shall be performed as described in the contract. (f) the contractor shall, without charge, replace or correct work found by the government not to conform to contract requirements, unless in the public interest the government consents to accept the work with an appropriate adjustment in contract price. the contractor shall promptly segregate and remove rejected material from the premises. (g) if the contractor does not promptly replace or correct rejected work, the government may  (1) by contract or otherwise, replace or correct the work and charge the cost to the contractor; or (2) terminate for default the contractor’s right to proceed. (h) if, before acceptance of the entire work, the government decides to examine already completed work by removing it or tearing it out, the contractor, on request, shall promptly furnish all necessary facilities, labor, and material. if the work is found to be defective or nonconforming in any material respect due to the fault of the contractor or its subcontractors, the contractor shall defray the expenses of the examination and of satisfactory reconstruction. however, if the work is found to meet contract requirements, the contracting officer shall make an equitable adjustment for the additional services involved in the examination and reconstruction, including, if completion of the work was thereby delayed, an extension of time. (i) unless otherwise specified in the contract, the government shall accept, as promptly as practicable after completion and inspection, all work required by the contract or that portion of the work the contracting officer determines can be accepted separately. acceptance shall be final and conclusive except for latent defects, fraud, gross mistakes amounting to fraud, or the government’s rights under any warranty or guarantee. (end of clause) as prescribed in 46.313 , insert the following clause in solicitations and contracts for dismantling, demolition, or removal of improvements: inspection dismantling, demolition, or removal of improvements (aug 1996) (a) unless otherwise designated by the specifications, all workmanship performed under the contract is subject to government inspection at all times and places where dismantling or demolition work is being performed. the contractor shall furnish promptly, and at no increase in contract price, all reasonable facilities, labor, and materials necessary for safe and convenient inspection by the government. the government shall perform inspections in a manner that will not unduly delay the work. (b) the contractor is responsible for damage to property caused by defective workmanship. the contractor shall promptly segregate and remove from the premises any unsatisfactory facilities, materials, and equipment used in contract performance, and promptly replace them with satisfactory items. if the contractor fails to proceed at once in a workmanlike manner with performance of the work or with the correction of defective workmanship, the government may  (1) by contract or otherwise, replace the facilities, materials, and equipment or correct the workmanship and charge the cost to the contractor; and (2) terminate for default the contractor’s right to proceed. the contractor and any surety shall be liable, to the extent specified in the contract for any damage or cost of repair or replacement. (end of clause) as prescribed in 46.314 , insert the following clause in solicitations and contracts for freight transportation services (including local drayage) by rail, motor (including bus), domestic freight forwarder, and domestic water carriers (including inland, coastwise, and intercoastal). the contracting officer shall not use the clause for the acquisition of transportation services by domestic or international air carriers or by international ocean carriers, or to freight services provided under bills of lading or to those negotiated for reduced rates under 49 u.s.c.10721 or 1 3712 . (see part 47 , transportation.) inspection of transportation (apr 1984) the government has the right to inspect and test the contractor’s services, facilities, and equipment at all reasonable times. the contractor shall furnish government representatives with the free access and reasonable facilities and assistance required to accomplish their inspections and tests. (end of clause) as prescribed in 46.315 , insert the following clause in solicitations and contracts for supplies or services when the conditions in 46.504 apply: certificate of conformance (apr 1984) (a) when authorized in writing by the cognizant contract administration office (cao), the contractor shall ship with a certificate of conformance any supplies for which the contract would otherwise require inspection at source. in no case shall the government’s right to inspect supplies under the inspection provisions of this contract be prejudiced. shipments of such supplies will not be made under this contract until use of the certificate of conformance has been authorized in writing by the cao, or inspection and acceptance have occurred. (b) the contractor’s signed certificate shall be attached to or included on the top copy of the inspection or receiving report distributed to the payment office or attached to the cao copy when contract administration (block10 of the ddform250) is performed by the defense contract administration services. in addition, a copy of the signed certificate shall also be attached to or entered on copies of the inspection or receiving report accompanying the shipment. (c) the government has the right to reject defective supplies or services within a reasonable time after delivery by written notification to the contractor. the contractor shall in such event promptly replace, correct, or repair the rejected supplies or services at the contractor’s expense. (d) the certificate shall read as follows: i certify that on ______ [insert date], the ____ [insert contractor’s name] furnished the supplies or services called for by contract no._____ via ____ [carrier] on ________ [identify the bill of lading or shipping document] in accordance with all applicable requirements. i further certify that the supplies or services are of the quality specified and conform in all respects with the contract requirements, including specifications, drawings, preservation, packaging, packing, marking requirements, and physical item identification (part number), and are in the quantity shown on this or on the attached acceptance document. date of execution: ________________________________ signature: _______________________________________ title: ____________________________________________ (end of clause) as prescribed in 46.316 , insert the following clause: responsibility for supplies (apr 1984) (a) titleto supplies furnished under this contract shall pass to the government upon formal acceptance, regardless of when or where the government takes physical possession, unless the contract specifically provides for earlier passage of title. (b) unless the contract specifically provides otherwise, risk of loss of or damage to supplies shall remain with the contractor until, and shall pass to the government upon  (1) delivery of the supplies to a carrier, if transportation is f.o.b. origin; or (2) acceptance by the government or delivery of the supplies to the government at the destination specified in the contract, whichever is later, if transportation is f.o.b. destination. (c) paragraph (b) of this clause shall not apply to supplies that so fail to conform to contract requirements as to give a right of rejection. the risk of loss of or damage to such nonconforming supplies remains with the contractor until cure or acceptance. after cure or acceptance, paragraph (b) of this clause shall apply. (d) under paragraph (b) of this clause, the contractor shall not be liable for loss of or damage to supplies caused by the negligence of officers, agents, or employees of the government acting within the scope of their employment. (end of clause) as prescribed in 46.710(a)(1), insert a clause substantially as follows: warranty of supplies of a noncomplex nature (june 2003) (a) definitions. as used in this clause  acceptance means the act of an authorized representative of the government by which the government assumes for itself, or as an agent of another, ownership of existing supplies, or approves specific services as partial or complete performance of the contract. suppliesmeans the end items furnished by the contractor and related services required under this contract. the word does not include "data." (b) contractor’s obligations. (1) notwithstanding inspection and acceptance by the government of supplies furnished under this contract, or any condition of this contract concerning the conclusiveness thereof, the contractor warrants that for ________ [contracting officer shall state specific period of time after delivery, or the specified event whose occurrence will terminate the warranty period; e.g.,the number of miles or hours of use, or combinations of any applicable events or periods of time]  (i) all supplies furnished under this contract will be free from defects in material or workmanship and will conform with all requirements of this contract; and (ii) the preservation, packaging, packing, and marking, and the preparation for, and method of, shipment of such supplies will conform with the requirements of this contract. (2) when return, correction, or replacement is required, transportation charges and responsibility for the supplies while in transit shall be borne by the contractor. however, the contractor’s liability for the transportation charges shall not exceed an amount equal to the cost of transportation by the usual commercial method of shipment between the place of delivery specified in this contract and the contractor’s plant, and return. (3) any supplies or parts thereof, corrected or furnished in replacement under this clause, shall also be subject to the terms of this clause to the same extent as supplies initially delivered. the warranty, with respect to supplies or parts thereof, shall be equal in duration to that in paragraph (b)(1) of this clause and shall run from the date of delivery of the corrected or replaced supplies. (4) all implied warranties of merchantability and "fitness for a particular purpose" are excluded from any obligation contained in this contract. (c) remedies available to the government. (1) the contracting officer shall give written notice to the contractor of any breach of warranties in paragraph (b)(1) of this clause within ________ [contracting officer shall insert specific period of time; e.g.,"45days of the last delivery under this contract," or "45days after discovery of the defect"]. (2) within a reasonable time after the notice, the contracting officer may either  (i) require, by written notice, the prompt correction or replacement of any supplies or parts thereof (including preservation, packaging, packing, and marking) that do not conform with the requirements of this contract within the meaning of paragraph (b)(1) of this clause; or (ii) retain such supplies and reduce the contract price by an amount equitable under the circumstances. (3) (i) if the contract provides for inspection of supplies by sampling procedures, conformance of supplies or components subject to warranty action shall be determined by the applicable sampling procedures in the contract. the contracting officer  (a) may, for sampling purposes, group any supplies delivered under this contract; (b) shall require the size of the sample to be that required by sampling procedures specified in the contract for the quantity of supplies on which warranty action is proposed; (c) may project warranty sampling results over supplies in the same shipment or other supplies contained in other shipments even though all of such supplies are not present at the point of reinspection; provided, that the supplies remaining are reasonably representative of the quantity on which warranty action is proposed; and (d) need not use the same lot size as on original inspection or reconstitute the original inspection lots. (ii) within a reasonable time after notice of any breach of the warranties specified in paragraph (b)(1) of this clause, the contracting officer may exercise one or more of the following options: (a) require an equitable adjustment in the contract price for any group of supplies. (b) screen the supplies grouped for warranty action under this clause at the contractor’s expense and return all nonconforming supplies to the contractor for correction or replacement. (c) require the contractor to screen the supplies at locations designated by the government within the contiguous united states and to correct or replace all nonconforming supplies. (d) return the supplies grouped for warranty action under this clause to the contractor (irrespective of the f.o.b. point or the point of acceptance) for screening and correction or replacement. (4) (i) the contracting officer may, by contract or otherwise, correct or replace the nonconforming supplies with similar supplies from another source and charge to the contractor the cost occasioned to the government thereby if the contractor  (a) fails to make redelivery of the corrected or replaced supplies within the time established for their return; or (b) fails either to accept return of the nonconforming supplies or fails to make progress after their return to correct or replace them so as to endanger performance of the delivery schedule, and in either of these circumstances does not cure such failure within a period of 10 days (or such longer period as the contracting officer may authorize in writing) after receipt of notice from the contracting officer specifying such failure. (ii) instead of correction or replacement by the government, the contracting officer may require an equitable adjustment of the contract price. in addition, if the contractor fails to furnish timely disposition instructions, the contracting officer may dispose of the nonconforming supplies for the contractor’s account in a reasonable manner. the government is entitled to reimbursement from the contractor, or from the proceeds of such disposal, for the reasonable expenses of the care and disposition of the nonconforming supplies, as well as for excess costs incurred or to be incurred. (5) the rights and remedies of the government provided in this clause are in addition to and do not limit any rights afforded to the government by any other clause of this contract. (end of clause) alternate i [reserved] alternate ii (apr 1984). if it is desirable to specify that necessary transportation incident to correction or replacement will be at the government’s expense (as might be the case if, for example, the cost of a warranty would otherwise be prohibitive), substitute a paragraph substantially the same as the following paragraph (b)(2) for paragraph (b)(2) of the basic clause: (2) if correction or replacement is required and transportation of supplies in connection with correction or replacement is necessary, transportation charges and responsibility for the supplies while in transit shall be borne by the government. alternate iii (apr 1984). if the supplies cannot be obtained from another source, substitute a paragraph substantially the same as the following paragraph (c)(4) for paragraph (c)(4) of the basic clause: (4) if the contractor does not agree as to responsibility to correct or replace the supplies delivered, the contractor shall nevertheless proceed in accordance with the written request issued by the contracting officer under paragraph (c)(2) of this clause to correct or replace the defective or nonconforming supplies. in the event it is later determined that the supplies were not defective or nonconforming within the terms and conditions of this clause, the contract price will be equitably adjusted. alternate iv (apr 1984). if a fixed price incentive contract is contemplated, add a paragraph substantially the same as the following paragraph (c)(6) to the basic clause: (6) all costs incurred or estimated to be incurred by the contractor in complying with this clause shall be considered when negotiating the total final price under the incentive price revision clause of this contract. after establishment of the total final price, contractor compliance with this clause shall be at no increase in the total final price. any equitable adjustment made under paragraph (c)(2) of this clause shall be governed by the paragraph entitled "equitable adjustments under other clauses" in the incentive price revision clause of this contract. alternate v (apr 1984). if it is anticipated that recovery of the warranted item will involve considerable government expense for disassembly and/or reassembly of larger items, add a paragraph substantially the same as the following paragraph (c)(6) to the basic clause. redesignate the additional paragraph as "(c)(7)" if alternate iv is also being used. (6) the contractor shall be liable for the reasonable costs of disassembly and/or reassembly of larger items when it is necessary to remove the supplies to be inspected and/or returned for correction or replacement. as prescribed in 46.710(b)(1), insert a clause substantially as follows: warranty of supplies of a complex nature (may 2001) (a) definitions. as used in this clause  acceptance means the act of an authorized representative of the government by which the government assumes for itself, or as an agent of another, ownership of existing and identified supplies, or approves specific services rendered, as partial or complete performance of the contract. supplies means the end items furnished by the contractor and related services required under this contract. the word does not include "data." (b) contractor’s obligations. (1) the contractor warrants that for ________ [contracting officer shall state the specific warranty period after delivery, or the specified event whose occurrence will terminate the warranty period; e.g.,the number of miles or hours of use, or combinations of any applicable events or periods of time] all supplies furnished under this contract will be free from defects in material and workmanship and will conform with all requirements of this contract; provided, however, that with respect to government furnished property, the contractor’s warranty shall extend only to its proper installation, unless the contractor performs some modification or other work on the property, in which case the contractor’s warranty shall extend to the modification or other work. (2) any supplies or parts thereof corrected or furnished in replacement shall be subject to the conditions of this clause to the same extent as supplies initially delivered. this warranty shall be equal in duration to that set forth in paragraph (b)(1) of this clause and shall run from the date of delivery of the corrected or replaced supplies. (3) the contractor shall not be obligated to correct or replace supplies if the facilities, tooling, drawings, or other equipment or supplies necessary to accomplish the correction or replacement have been made unavailable to the contractor by action of the government. in the event that correction or replacement has been directed, the contractor shall promptly notify the contracting officer, in writing, of the nonavailability. (4) the contractor shall also prepare and furnish to the government data and reports applicable to any correction required (including revision and updating of all affected data called for under this contract) at no increase in the contract price. (5) when supplies are returned to the contractor, the contractor shall bear the transportation costs from the place of delivery specified in the contract (irrespective of the f.o.b. point or the point of acceptance) to the contractor’s plant and return. (6) all implied warranties of merchantability and "fitness for a particular purpose" are excluded from any obligation contained in this contract. (c) remedies available to the government. (1) in the event of a breach of the contractor’s warranty in paragraph (b)(1) of this clause, the government may, at no increase in contract price  (i) require the contractor, at the place of delivery specified in the contract (irrespective of the f.o.b. point or the point of acceptance) or at the contractor’s plant, to repair or replace, at the contractor’s election, defective or nonconforming supplies; or (ii) require the contractor to furnish at the contractor’s plant the materials or parts and installation instructions required to successfully accomplish the correction. (2) if the contracting officer does not require correction or replacement of defective or nonconforming supplies or the contractor is not obligated to correct or replace under paragraph (b)(3) of this clause, the government shall be entitled to an equitable reduction in the contract price. (3) the contracting officer shall notify the contractor in writing of any breach of the warranty in paragraph (b) of this clause within _____. [contracting officer shall insert specific period of time in which notice shall be given to the contractor; e.g.,"45days after delivery of the nonconforming supplies."; "45days of the last delivery under this contract."; or "45days after discovery of the defect."] the contractor shall submit to the contracting officer a written recommendation within _______ [contracting officer shall insert period of time] as to the corrective action required to remedy the breach. after the notice of breach, but not later than _________ [contracting officer shall insert period within which the warranty remedies should be exercised] after receipt of the contractor’s recommendation for corrective action, the contracting officer may, in writing, direct correction or replacement as in paragraph (c)(1) of this clause, and the contractor shall, notwithstanding any disagreement regarding the existence of a breach of warranty, comply with this direction. if it is later determined that the contractor did not breach the warranty in paragraph (b)(1) of this clause, the contract price will be equitably adjusted. (4) if supplies are corrected or replaced, the period for notification of a breach of the contractor’s warranty in paragraph (c)(3) of this clause shall be _________ [contracting officer shall insert period within which the contractor must be notified of a breach as to corrected or replaced supplies] from the furnishing or return by the contractor to the government of the corrected or replaced supplies or parts thereof, or, if correction or replacement is effected by the contractor at a government or other activity, for ______ [contracting officer shall insert period within which the contractor must be notified of a breach of warranty as to corrected or replaced supplies] thereafter. (5) the rights and remedies of the government provided in this clause are in addition to and do not limit any rights afforded to the government by any other clause of the contract. (end of clause) alternate i [reserved] alternate ii (apr 1984). if it is desirable to specify that necessary transportation incident to correction or replacement will be at the government’s expense (as might be the case if, for example, the cost of a warranty would otherwise be prohibitive), substitute a paragraph substantially the same as the following paragraph (b)(5) for paragraph (b)(5) of the basic clause: (5) if correction or replacement is required and transportation of supplies in connection with correction or replacement is necessary, transportation charges and responsibility for the supplies while in transit shall be borne by the government. alternate iii (apr 1984). if a fixed price incentive contract is contemplated, add a paragraph substantially the same as the following paragraph (c)(6) to the basic clause: (6) all costs incurred or estimated to be incurred by the contractor in complying with this clause shall be considered when negotiating the total final price under the incentive price revision clause of this contract. after establishment of the total final price, contractor compliance with this clause shall be at no increase in the total final price. any equitable adjustments made under paragraph (c)(2) of this clause shall be governed by the paragraph entitled "equitable adjustments under other clauses" in the incentive price revision clause of this contract. alternate iv (apr 1984). if it is anticipated that recovery of the warranted item will involve considerable government expense for disassembly and/or reassembly of larger items, add a paragraph substantially the same as the following paragraph (c)(6) to the basic clause. redesignate the additional paragraph as "(c)(7)" if alternate iii is also used: (6) the contractor shall be liable for the reasonable costs of disassembly and/or reassembly of larger items when it is necessary to remove the supplies to be inspected and/or returned for correction or replacement. as prescribed in 46.710(c)(1), the contracting officer may insert a clause substantially as follows: warranty of systems and equipment under performance specifications or design criteria (may 2001) (a) definitions. as used in this clause  acceptance means the act of an authorized representative of the government by which the government assumes for itself, or as an agent of another, ownership of existing and identified supplies, or approves specific services rendered, as partial or complete performance of the contract. defect means any condition or characteristic in any supplies or services furnished by the contractor under the contract that is not in compliance with the requirements of the contract. supplies means the end items furnished by the contractor and related services required under this contract. except when this contract includes the clause entitled warranty of data, supplies also mean "data." (b) contractor’s obligations. (1) the contractor’s warranties under this clause shall apply only to those defects discovered by either the government or the contractor __________ [contracting officer shall state the warranty period; e.g.,"at the time of delivery;" "within 45 days after delivery," or the specified event whose occurrence will terminate the warranty period; e.g.,the number of miles or hours of use, or combination of any applicable events or periods of time.]. (2) if the contractor becomes aware at any time before acceptance by the government (whether before or after tender to the government) that a defect exists in any supplies or services, the contractor shall  (i) promptly correct the defect; or (ii) promptly notify the contracting officer, in writing, of the defect, using the same procedures prescribed in paragraph (b)(3) of this clause. (3) if the contracting officer determines that a defect exists in any of the supplies or services accepted by the government under this contract, the contracting officer shall promptly notify the contractor of the defect, in writing, within _____ [contracting officer shall insert the specific period of time in which notice shall be given to the contractor; e.g.,"30days after delivery of the nonconforming supplies;" "90days of the last delivery under this contract;" or "90days after discovery of the defect."]. upon timely notification of the existence of a defect, or if the contractor independently discovers a defect in accepted supplies or services, the contractor shall submit to the contracting officer, in writing, within _____ [contracting officer shall insert period of time] a recommendation for corrective actions, together with supporting information in sufficient detail for the contracting officer to determine what corrective action, if any, shall be undertaken. (4) the contractor shall promptly comply with any timely written direction from the contracting officer to correct or partially correct a defect, at no increase in the contract price. (5) the contractor shall also prepare and furnish to the contracting officer data and reports applicable to any correction required under this clause (including revision and updating of all other affected data called for under this contract) at no increase in the contract price. (6) in the event of timely notice of a decision not to correct or only to partially correct, the contractor shall submit a technical and cost proposal within _______. [contracting officer shall insert period of time] to amend the contract to permit acceptance of the affected supplies or services in accordance with the revised requirement, and an equitable reduction in the contract price shall promptly be negotiated by the parties and be reflected in a supplemental agreement to this contract. (7) any supplies or parts thereof corrected or furnished in replacement and any services reperformed shall also be subject to the conditions of this clause to the same extent as supplies or services initially accepted. the warranty, with respect to these supplies, parts, or services, shall be equal in duration to that set forth in paragraph (b)(1) of this clause, and shall run from the date of delivery of the corrected or replaced supplies. (8) the contractor shall not be responsible under this clause for the correction of defects in government furnished property, except for defects in installation, unless the contractor performs, or is obligated to perform, any modifications or other work on such property. in that event, the contractor shall be responsible for correction of defects that result from the modifications or other work. (9) if the government returns supplies to the contractor for correction or replacement under this clause, the contractor shall be liable for transportation charges up to an amount equal to the cost of transportation by the usual commercial method of shipment from the place of delivery specified in this contract (irrespective of the f.o.b. point or the point of acceptance) to the contractor’s plant and return to the place of delivery specified in this contract. the contractor shall also bear the responsibility for the supplies while in transit. (10) all implied warranties of merchantability and "fitness for a particular purpose" are excluded from any obligation under this contract. (c) remedies available to the government. (1) the rights and remedies of the government provided in this clause  (i) shall not be affected in any way by any terms or conditions of this contract concerning the conclusiveness of inspection and acceptance; and (ii) are in addition to, and do not limit, any rights afforded to the government by any other clause of this contract. (2) within ____________ [contracting officer shall insert period of time] after receipt of the contractor’s recommendations for corrective action and adequate supporting information, the contracting officer, using sole discretion, shall give the contractor written notice not to correct any defect, or to correct or partially correct any defect within a reasonable time at ________ [contracting officer shall insert locations where corrections may be performed]. (3) in no event shall the government be responsible for any extension or delays in the scheduled deliveries or periods of performance under this contract as a result of the contractor’s obligations to correct defects, nor shall there be any adjustment of the delivery schedule or period of performance as a result of the correction of defects unless provided by a supplemental agreement with adequate consideration. (4) this clause shall not be construed as obligating the government to increase the contract price. (5) (i) the contracting officer shall give the contractor a written notice specifying any failure or refusal of the contractor to  (a) present a detailed recommendation for corrective action as required by paragraph (b)(3) of this clause; (b) correct defects as directed under paragraph (b)(4) of this clause; or (c) prepare and furnish data and reports as required by paragraph (b)(5) of this clause. (ii) the notice shall specify a period of time following receipt of the notice by the contractor in which the contractor must remedy the failure or refusal specified in the notice. (6) if the contractor does not comply with the contracting officer’s written notice in paragraph (c)(5)(i) of this clause, the contracting officer may by contract or other wise  (i) obtain detailed recommendations for corrective action and either  (a) correct the supplies or services; or (b) replace the supplies or services, and if the contractor fails to furnish timely disposition instructions, the contracting officer may dispose of the nonconforming supplies for the contractor’s account in a reasonable manner, in which case the government is entitled to reimbursement from the contractor, or from the proceeds, for the reasonable expenses of care and disposition, as well as for excess costs incurred or to be incurred; (ii) obtain applicable data and reports; and (iii) charge the contractor for the costs incurred by the government. (end of clause) alternate i (apr 1984). if it is desirable to specify that necessary transportation incident to correction or replacement will be at the government’s expense (as might be the case if, for example, the cost of a warranty would otherwise be prohibitive), substitute a paragraph substantially the same as the following paragraph (b)(9) for paragraph (b)(9) of the basic clause: alternate ii (apr 1984). if a fixed price incentive contract is contemplated, add a paragraph substantially the same as the following paragraph (c)(7) to the basic clause: (7) all costs incurred or estimated to be incurred by the contractor in complying with this clause shall be considered when negotiating the total final price under the incentive price revision clause of this contract. after establishment of the total final price, contractor compliance with this clause shall be at no increase in the total final price. any equitable adjustments made under paragraph (b)(6) of this clause shall be governed by the paragraph entitled "equitable adjustments under other clauses" in the incentive price revision clause of this contract. alternate iii (apr 1984). if it is anticipated that recovery of the warranted item will involve considerable government expense for disassembly and/or reassembly of larger items, add a paragraph substantially the same as the following paragraph (c)(7) to the basic clause. redesignate the additional paragraph as "(c)(8)" if alternate ii is also being used: (7) the contractor shall be liable for the reasonable costs of disassembly and/or reassembly of larger items when it is necessary to remove the supplies to be inspected and/or returned for correction or replacement. as prescribed in 46.710(d), insert a clause substantially as follows: warranty of services (may 2001) (a) definition."acceptance," as used in this clause, means the act of an authorized representative of the government by which the government 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 contract. (b) notwithstanding inspection and acceptance by the government or any provision concerning the conclusiveness thereof, the contractor warrants that all services performed under this contract will, at the time of acceptance, be free from defects in workmanship and conform to the requirements of this contract. the contracting officer shall give written notice of any defect or nonconformance to the contractor ____________ [contracting officer shall insert the specific period of time in which notice shall be given to the contractor; e.g.,"within 30 days from the date of acceptance by the government,"; within 1000 hours of use by the government;" or other specified event whose occurrence will terminate the period of notice, or combination of any applicable events or period of time]. this notice shall state either  (1) that the contractor shall correct or reperform any defective or nonconforming services; or (2) that the government does not require correction or reperformance. (c) if the contractor is required to correct or reperform, it shall be at no cost to the government, and any services corrected or reperformed by the contractor shall be subject to this clause to the same extent as work initially performed. if the contractor fails or refuses to correct or reperform, the contracting officer may, by contract or otherwise, correct or replace with similar services and charge to the contractor the cost occasioned to the government thereby, or make an equitable adjustment in the contract price. (d) if the government does not require correction or reperformance, the contracting officer shall make an equitable adjustment in the contract price. (end of clause) as prescribed in 46.710(e)(1), the contracting officer may insert a clause substantially as follows in solicitations and contracts when a fixed price construction contract (see 46.705 (c)) is contemplated, and the use of a warranty clause has been approved under agency procedures: warranty of construction (mar 1994) (a) in addition to any other warranties in this contract, the contractor warrants, except as provided in paragraph (i) of this clause, that work performed under this contract conforms to the contract requirements and is free of any defect in equipment, material, or design furnished, or workmanship performed by the contractor or any subcontractor or supplier at any tier. (b) this warranty shall continue for a period of 1 year from the date of final acceptance of the work. if the government takes possession of any part of the work before final acceptance, this warranty shall continue for a period of 1 year from the date the government takes possession. (c) the contractor shall remedy at the contractor’s expense any failure to conform, or any defect. in addition, the contractor shall remedy at the contractor’s expense any damage to government owned or controlled real or personal property, when that damage is the result of  (1) the contractor’s failure to conform to contract requirements; or (2) any defect of equipment, material, workmanship, or design furnished. (d) the contractor shall restore any work damaged in fulfilling the terms and conditions of this clause. the contractor’s warranty with respect to work repaired or replaced will run for 1 year from the date of repair or replacement. (e) the contracting officer shall notify the contractor, in writing, within a reasonable time after the discovery of any failure, defect, or damage. (f) if the contractor fails to remedy any failure, defect, or damage within a reasonable time after receipt of notice, the government shall have the right to replace, repair, or otherwise remedy the failure, defect, or damage at the contractor’s expense. (g) with respect to all warranties, express or implied, from subcontractors, manufacturers, or suppliers for work performed and materials furnished under this contract, the contractor shall  (1) obtain all warranties that would be given in normal commercial practice; (2) require all warranties to be executed, in writing, for the benefit of the government, if directed by the contracting officer; and (3) enforce all warranties for the benefit of the government, if directed by the contracting officer. (h) in the event the contractor’s warranty under paragraph (b) of this clause has expired, the government may bring suit at its expense to enforce a subcontractor’s, manufacturer’s, or supplier’s warranty. (i) unless a defect is caused by the negligence of the contractor or subcontractor or supplier at any tier, the contractor shall not be liable for the repair of any defects of material or design furnished by the government nor for the repair of any damage that results from any defect in government furnished material or design. (j) this warranty shall not limit the government’s rights under the inspection and acceptance clause of this contract with respect to latent defects, gross mistakes, or fraud. (end of clause) alternate i (apr 1984). if the government specifies in the contract the use of any equipment by "brand name and model," the contracting officer may add a paragraph substantially the same as the following paragraph (k) to the basic clause: (k) defects in design or manufacture of equipment specified by the government on a "brand name and model" basis, shall not be included in this warranty. in this event, the contractor shall require any subcontractors, manufacturers, or suppliers thereof to execute their warranties, in writing, directly to the government. as prescribed in 46.805 , insert the following clause: limitation of liability (feb 1997) (a) except as provided in paragraphs (b) and (c) of this clause, and except for remedies expressly provided elsewhere in this contract, the contractor shall not be liable for loss of or damage to property of the government (excluding the supplies delivered under this contract) that  (1) occurs after government acceptance of the supplies delivered under this contract; and (2) results from any defects or deficiencies in the supplies. (b) the limitation of liability under paragraph (a) of this clause shall not apply when a defect or deficiency in, or the government’s acceptance of, the supplies results from willful misconduct or lack of good faith on the part of any of the contractor’s managerial personnel. the term "contractor’s managerial personnel," as used in this clause, means the contractor’s directors, officers, and any of the contractor’s managers, superintendents, or equivalent representatives who have supervision or direction of  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operations at any one plant, laboratory, or separate location at which the contract is being performed; or (3) a separate and complete major industrial operation connected with the performance of this contract. (c) if the contractor carries insurance, or has established a reserve for self insurance, covering liability for loss or damage suffered by the government through purchase or use of the supplies required to be delivered under this contract, the contractor shall be liable to the government, to the extent of such insurance or reserve, for loss of or damage to property of the government occurring after government acceptance of, and resulting from any defects or deficiencies in, the supplies delivered under this contract. (end of clause) as prescribed in 46.805 , insert the following clause: limitation of liability high value items (feb 1997) (a) except as provided in paragraphs (b) through (e) of this clause, and notwithstanding any other provision of this contract, the contractor shall not be liable for loss of or damage to property of the government (including the supplies delivered under this contract) that  (1) occurs after government acceptance of the supplies delivered under this contract; and (2) results from any defects or deficiencies in the sup plies. (b) the limitation of liability under paragraph (a) of this clause shall not apply when a defect or deficiency in, or the government’s acceptance of, the supplies results from willful misconduct or lack of good faith on the part of any of the contractor’s managerial personnel. the term "contractor’s managerial personnel," as used in this clause, means the contractor’s directors, officers, and any of the contractor’s managers, superintendents, or equivalent representatives who have supervision or direction of  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operations at any one plant, laboratory, or separate location at which the contract is being performed; or (3) a separate and complete major industrial operation connected with the performance of this contract. (c) if the contractor carries insurance, or has established a reserve for self insurance, covering liability for loss or damage suffered by the government through purchase or use of the supplies required to be delivered under this contract, the contractor shall be liable to the government, to the extent of such insurance or reserve, for loss of or damage to property of the government occurring after government acceptance of, and resulting from any defects or deficiencies in, the supplies delivered under this contract. (d) (1) this clause does not diminish the contractor’s obligations, to the extent that they arise otherwise under this contract, relating to correction, repair, replacement, or other relief for any defect or deficiency in supplies delivered under this contract. (2) unless this is a cost reimbursement contract, if loss or damage occurs and correction, repair, or replacement is not feasible or desired by the government, the contractor shall, as determined by the contracting officer  (i) pay the government the amount it would have cost the contractor to make correction, repair, or replacement before the loss or damage occurred; (ii) provide other equitable relief. (e) this clause shall not limit or otherwise affect the government’s rights under clauses, if included in this contract, that cover  (1) warranty of technical data; (2) ground and flight risks or aircraft flight risks; or (3) government property. (end of clause) alternate i (apr 1984). if the contract is for both high value items and other end items, the contracting officer shall identify the high value items by line item and insert the following preamble before paragraph (a): (this clause shall apply only to those items identified in this contract as being subject to this clause.) as prescribed in 46.805 , insert the following clause: limitation of liability services (feb 1997) (a) except as provided in paragraphs (b) and (c) of this clause, and except to the extent that the contractor is expressly responsible under this contract for deficiencies in the services required to be performed under it (including any materials furnished in conjunction with those services), the contractor shall not be liable for loss of or damage to property of the government that  (1) occurs after government acceptance of services performed under this contract; and (2) results from any defects or deficiencies in the services performed or materials furnished. (b) the limitation of liability under paragraph (a) of this clause shall not apply when a defect or deficiency in, or the government’s acceptance of, services performed or materials furnished results from willful misconduct or lack of good faith on the part of any of the contractor’s managerial personnel. the term "contractor’s managerial personnel," as used in this clause, means the contractor’s directors, officers, and any of the contractor’s managers, superintendents, or equivalent representatives who have supervision or direction of  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operations at any one plant, laboratory, or separate location at which the contract is being performed; or (3) a separate and complete major industrial operation connected with the performance of this contract. (c) if the contractor carries insurance, or has established a reserve for self insurance, covering liability for loss or damage suffered by the government through the contractor’s performance of services or furnishing of materials under this contract, the contractor shall be liable to the government, to the extent of such insurance or reserve, for loss of or damage to property of the government occurring after government acceptance of, and resulting from any defects and deficiencies in, services performed or materials furnished under this contract. (end of clause) as prescribed in 46.317 , insert the following clause reporting nonconforming items (aug 2024) (a) definitions. as used in this clause  common item means an item that has multiple applications versus a single or peculiar application. counterfeit item means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified item from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. unlawful or unauthorized substitution includes used items represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics. critical item means an item, the failure of which is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the item; or is likely to prevent performance of a vital agency mission. critical nonconformance means a nonconformance that is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the supplies or services; or is likely to prevent performance of a vital agency mission. design activity means an organization, government or contractor, that has responsibility for the design and configuration of an item, including the preparation or maintenance of design documents. design activity could be the original organization, or an organization to which design responsibility has been transferred. major nonconformance means a nonconformance, other than critical, that is likely to result in failure of the supplies or services, or to materially reduce the usability of the supplies or services for their intended purpose. suspect counterfeit item means an item for which credible evidence (including but not limited to, visual inspection or testing) provides reasonable doubt that the item is authentic. (b) the contractor shall  (1) screen government industry data exchange program (gidep) reports, available at www.gidep.org, as a part of the contractor's inspection system or program for the control of quality, to avoid the use and delivery of counterfeit or suspect counterfeit items or delivery of items that contain a major or critical nonconformance. this requirement does not apply if the contractor is a foreign corporation or partnership that does not have an office, place of business, or fiscal paying agent in the united states; (2) provide written notification to the contracting officer within 60 days of becoming aware or having reason to suspect, such as through inspection, testing, record review, or notification from another source (e.g., seller, customer, third party) that any end item, component, subassembly, part, or material contained in supplies purchased by the contractor for delivery to, or for, the government is counterfeit or suspect counterfeit; (3) retain counterfeit or suspect counterfeit items in its possession at the time of discovery until disposition instructions have been provided by the contracting officer; and (4) except as provided in paragraph (c) of this clause, submit a report to gidep at www.gidep.org within 60 days of becoming aware or having reason to suspect, such as through inspection, testing, record review, or notification from another source (e.g., seller, customer, third party) that an item purchased by the contractor for delivery to, or for, the government is  (i) a counterfeit or suspect counterfeit item; or (ii) a common item that has a major or critical nonconformance. (c) the contractor shall not submit a report as required by paragraph (b)(4) of this clause, if  (1) the contractor is a foreign corporation or partnership that does not have an office, place of business, or fiscal paying agent in the united states; (2) the contractor is aware that the counterfeit, suspect counterfeit, or nonconforming item is the subject of an on going criminal investigation, unless the report is approved by the cognizant law enforcement agency; or (3) for nonconforming items other than counterfeit or suspect counterfeit items, it can be confirmed that the organization where the defect was generated (e.g., original component manufacturer, original equipment manufacturer, aftermarket manufacturer, or distributor that alters item properties or configuration) has not released the item to more than one customer. (d) reports submitted in accordance with paragraph (b)(4) of this clause shall not include  (1) trade secrets or confidential commercial or financial information protected under the trade secrets act ( 18 u.s.c. 1905); or (2) any other information prohibited from disclosure by statute or regulation. (e) additional guidance on the use of gidep is provided at https://www.gidep.org/login?returnurl=%2fdashboard. (f) if this is a contract with the department of defense, as provided in paragraph (c)(5) of section 818 of the national defense authorization act for fiscal year 2012 (pub. l. 112 81), the contractor or subcontractor that provides a written report or notification under this clause that the end item, component, part, or material contained electronic parts (i.e., an integrated circuit, a discrete electronic component (including, but not limited to, a transistor, capacitor, resistor, or diode), or a circuit assembly)) that are counterfeit electronic parts or suspect counterfeit electronic parts shall not be subject to civil liability on the basis of such reporting, provided that the contractor or any subcontractor made a reasonable effort to determine that the report was factual. (g) subcontracts. (1) except as provided in paragraph (g)(2) of this clause, the contractor shall insert this clause, including this paragraph (g), in subcontracts that are for  (i) items subject to higher level quality standards in accordance with the clause at federal acquisition regulation (far) 52.246 11, higher level contract quality requirement; (ii) items that the contractor determines to be critical items for which use of the clause is appropriate; (iii) electronic parts or end items, components, parts, or materials containing electronic parts, whether or not covered in paragraph (g)(1)(i) or (ii) of this clause, if the subcontract exceeds the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award,and this contract is by, or for, the department of defense (as required by paragraph (c)(4) of section 818 of the national defense authorization act for fiscal year 2012 (pub. l. 112 81)); or (iv) for the acquisition of services, if the subcontractor will furnish, as part of the service, any items that meet the criteria specified in paragraphs (g)(1)(i) through (g)(1)(iii) of this clause. (2) the contractor shall not insert the clause in subcontracts for  (i) commercial products and commercial services; or (ii) medical devices that are subject to the food and drug administration reporting requirements at 21 cfr 803. (3) the contractor shall not alter the clause other than to identify the appropriate parties. (end of clause) as prescribed in 47.104 4 , insert the following clause: commercial bill of lading notations (feb 2006) when the contracting officer authorizes supplies to be shipped on a commercial bill of lading and the contractor will be reimbursed these transportation costs as direct allowable costs, the contractor shall ensure before shipment is made that the commercial shipping documents are annotated with either of the following notations, as appropriate: (a) if the government is shown as the consignor or the consignee, the annotation shall be: transportation is for the ______ [name the specific agency] and the actual total transportation charges paid to the carrier(s) by the consignor or consignee are assignable to, and shall be reimbursed by, the government. (b) if the government is not shown as the consignor or the consignee, the annotation shall be: transportation is for the ______ [name the specific agency] and the actual total transportation charges paid to the carrier(s) by the consignor or consignee shall be reimbursed by the government, pursuant to cost reimbursement contract no. ________________. this may be confirmed by contacting __________________ [name and address of the contract administration office listed in the contract]. (end of clause) as prescribed in 47.207 1(a), insert the following clause: permits, authorities, or franchises (jan 1997) (a) the offeror does □, does not □, hold authorization from the federal highway administration (fhwa) or other cognizant regulatory body. if authorization is held, it is as follows: __________________________________________________ (name of regulatory body) __________________________________________________ (authorization no.) (b) the offeror shall furnish to the government, if requested, copies of the authorization before moving the material under any contract awarded. in addition, the offeror shall, at the offeror’s expense, obtain and maintain any permits, franchises, licenses, and other authorities issued by state and local governments. (end of clause) as prescribed in 47.207 1(b), insert the following clause in solicitations and contracts for transportation or for transportation related services when a federal office is relocated, to ensure that offerors are capable to perform interstate or intrastate moving contracts involving the relocation of federal offices: capability to perform a contract for the relocation of a federal office (feb 2006) (a) if the move specified in this contract is to be performed by the contractor as a carrier within the borders of more than one state, including the district of columbia, (i.e., an interstate move), the contractor shall have obtained and hold appropriate and current operating authority from the federal motor carrier safety administration. (b) (1) if the move specified in this contract is to be performed by the contractor as a carrier wholly within the borders of one state or the district of columbia (i.e., an intrastate move), the contractor shall, when required by the state, or the district of columbia, in which the move is to take place, have obtained and hold appropriate and current operating authority from that jurisdiction in the form of a certificate, permit, or equivalent license to operate. (2) if no authority to operate is required by the state or the district of columbia, the contractor as carrier shall maintain facilities, equipment, and a business address within the jurisdiction in which the move is to take place. however, if the move is to originate and/or terminate within an area of one state, or the district of columbia, that comprises a part of a recognized commercial zone (see subpart b of 49 cfr part 372) the boundaries of which encompass portions of more than one state or the district of columbia, it shall be sufficient if the contractor as carrier maintains facilities, equipment, and a business address within the commercial zone and holds appropriate operating authority, if required, from the jurisdiction within which the contractor maintains the facilities, equipment, and business address. (c) if the move specified in this contract will not be performed by the contractor as carrier, it must be performed for the contractor by a carrier operating under a subcontract with the contractor. in this case, the contractor shall not be subject to the requirements of paragraphs (a) and (b) of this clause, but shall be responsible for requiring and ensuring that the subcontractor carrier complies with those requirements in every respect. (d) the contractor shall be in compliance with the applicable requirements of this clause at least 14 days before the date on which performance of the contract shall commence under the terms specified; except that, if the period from the date of award of the contract to the date that performance shall commence is less than 28 days, the contractor shall comply with the applicable requirements of this clause midway between the time of award and the time of commencement of performance. (end of clause) alternate i (apr 1984). if a federal office move is intrastate and the contracting officer determines that it is in the government’s interest not to apply the requirements for holding or obtaining state authority to operate within the state, and to maintain a facility within the state or commercial zone, delete paragraph (b) of the basic clause and redesignate the remaining paragraphs"(b) and (c)." in the 6 th line of the new paragraph (b), delete the words "paragraphs(a) and (b) above" and replace them with "paragraph (a) of this clause." as prescribed in 47.207 1(c), insert the following provision in solicitations for transportation or for transportation related services when it is desired for offerors to inspect the shipping, receiving, or other sites to ensure realistic bids: inspection of shipping and receiving facilities (apr 1984) (a) offerors are urged to inspect the shipping and receiving facilities where services are to be performed and to satisfy themselves regarding all general and local conditions that may affect the cost of contract performance. (b) site visits have been scheduled as follows: __________________________________________________ (locations) __________________________________________________ (dates) __________________________________________________ (times) (c) for further information offerors may contact: __________________________________________________ (name) __________________________________________________ (telephone) (end of clause) as prescribed in 47.207 1(d), insert the following clause in solicitations and contracts for transportation or for transportation related services to ensure that offerors become familiar with conditions under which and where the services will be performed: familiarization with conditions (apr 1984) the offeror shall become familiar with all available information regarding difficulties that may be encountered and the conditions, including safety precautions, under which the work must be accomplished under the contract. the offeror shall not be relieved from assuming all responsibility for properly estimating the difficulties and the cost of performing the services required in this contract because the offeror failed to investigate the conditions or to become acquainted with all information concerning the services to be performed. (end of clause) as prescribed in 47.207 1(e), insert the following provision in solicitations for transportation or for transportation related services to ensure that offerors are prepared to furnish financial statements: financial statement (apr 1984) the offeror shall, upon request, promptly furnish the government with a current certified statement of the offeror’s financial condition and such data as the government may request with respect to the offeror’s operations. the government will use this information to determine the offeror’s financial responsibility and ability to perform under the contract. failure of an offeror to comply with a request for information will subject the offer to possible rejection on responsibility grounds. (end of clause) as prescribed in 47.207 3(d)(2), insert a clause substantially as follows in solicitations and contracts for transportation or for transportation related services when any commodities or types of shipments have been identified for exclusion: freight excluded (apr 1984) excluded from the scope of this contract are shipments that can be more advantageously or economically moved via parcel post or small package carrier; shipments of unusual value, explosives and other dangerous articles, household goods, commodities in bulk, commodities injurious or contaminating to other freight; and shipments that the government may elect to move in government vehicles. (end of clause) as prescribed in 47.207 3(e)(2), insert the following clause in solicitations and contracts for transportation or for transportation related services when weights or quantities are estimates: estimated weights or quantities not guaranteed (apr 1984) the estimated weights or quantities are not a guarantee of actual weights or quantities, as the government does not guarantee any particular volume of traffic described in this contract. however, to the extent services are required as described in this contract and in accordance with the terms of this contract, orders for these services will be placed with the contractor. (end of clause) as prescribed in 47.207 4(a)(1), insert the following clause in solicitations and contracts for transportation or for transportation related services when the shipping activity determines the weight of shipments of freight other than household goods or office furniture: agreed weight general freight (apr 1984) the shipping activity shall determine the weight of each shipment. the weight shall be shown on the covering shipping document and shall be accepted by the contractor as the agreed weight. (end of clause) as prescribed in 47.207 4(a)(2), insert the following clause in solicitations and contracts for transportation or for transportation related services when the weight of shipments of freight other than household goods or office furniture is not known at the time of shipment and the contractor is responsible for determining the net weight of the shipments: net weight general freight (apr 1984) (a) the net weight of the shipment shall be determined by deducting the tare weight of the vehicle (determined by having the empty vehicle with a full tank of fuel weighed by a certified weighmaster on a certified scale) from the gross weight of the vehicle (determined by having the loaded vehicle with a full tank of fuel weighed by a certified weighmaster on a certified scale). (b) the contractor shall attach the original copies of the empty and loaded weight certificates to the invoice for services. (end of clause) as prescribed in 47.207 4(b), insert the following clause in contracts for transportation or for transportation related services when movements of government employees’ household goods or relocations of government offices are involved: net weight household goods or office furniture (apr 1984) (a) net weight full loads. the net weight of the shipment shall be determined by deducting the tare weight of the vehicle (determined by having a certified weighmaster weigh on a certified scale the empty vehicle with all blankets, pads, chains, dollies, hand trucks, and all other necessary equipment inside the vehicle) from the gross weight of the vehicle (determined by having a certified weighmaster weigh on a certified scale the fully loaded vehicle before arrival at destination). (b) net weight part loads. the net weight of the first part load shall be determined in the same manner as specified for a full load. the net weight of the second part load shall be determined by using as the tare weight of the vehicle the gross weight of the vehicle containing the first part load and deducting this weight from the new gross weight (determined by having the loaded vehicle weighed again, in the same manner as specified for the full load). the same procedure shall apply for each succeeding part load. (c) weight certificates. the contractor shall attach the original copy of each weight certificate to the invoice for services. (end of clause) as prescribed in 47.207 5(b), insert a clause substantially as follows in solicitations and contracts for transportation or for transportation related services when the contractor is required to furnish supervision, labor, or materials: supervision, labor, or materials (apr 1984) the contractor shall furnish adequate supervision, labor, materials, supplies, and equipment necessary to perform all the services contemplated under this contract in an orderly, timely, and efficient manner. (end of clause) as prescribed in 47.207 5(c), insert a clause substantially as follows in solicitations and contracts for the transportation of household goods or office furniture: accessorial services moving contracts (apr 1984) (a) packing and/or crating and padding. the contractor shall  (1) perform all of the packing and/or crating and padding necessary for the protection of the goods to be trans ported; (2) furnish packing containers, including, but not limited to, barrels, boxes, wardrobes, and cartons; all crating materials; and all padding materials and equipment; (3) furnish or cause to be furnished, when necessary, padding or other protective material for the interior of the buildings, including elevators, from and to which the property will be moved under this contract; and (4) ensure that all containers and materials are clean and of quality sufficient for protection of the goods. (b) disassembling and reassembling of property and servicing appliances. the disassembling of property;e.g., beds and sectional bookcases, and the preparing of appliances; e.g., washers, driers, and record players, for shipment shall be performed by the contractor. the contractor shall reassemble the property and service the appliances upon delivery at the new location. (c) unpacking and/or uncrating and placement of property. the contractor shall unpack and/or uncrate all property that was packed and/or crated for movement under this contract. the contractor shall also place the property in the new location as instructed by the owner of the property or authorized representative, and shall remove all packing and similar or related material from the premises as requested by the  owner. (end of clause) as prescribed in 47.207 5(d), insert the following clause in solicitations and contracts for transportation or for transportation related services: contractor responsibility for receipt of shipment (apr 1984) the contractor shall diligently count and examine all goods tendered for shipment, receipt for them, and make appropriate written exception for any goods not in apparent good order. (end of clause) as prescribed in 47.207 5(e), insert the following clause in solicitations and contracts for transportation or for transportation related services when the contractor is responsible for loading and unloading shipments: contractor responsibility for loading and unloading (apr 1984) (a) (1) unless otherwise specified in this contract to cover store door or inside delivery, the contractor shall load and unload shipments at no additional expense to the government. (2) the government or its agent will place or receive freight at the tailgate of the contractor’s vehicle. tailgate delivery, for purposes of this contract, is defined as that which enables a forklift truck or similar equipment, with operator only, to place or remove cargo from the tailgate of the contractor’s vehicle. (b) if loading is the responsibility of the contractor, the contractor shall perform all shoring, blocking, and bracing. the contractor shall provide dunnage at the contractor’s expense. (end of clause) as prescribed in 47.207 5(f), insert the following clause in solicitations and contracts for transportation or for transportation related services when the contractor is responsible for returning undelivered freight: contractor responsibility for returning undelivered freight (apr 1984) (a) when, through no fault of the contractor, a shipment cannot be delivered, the contractor shall contact the shipper for disposition instructions. if the shipment is ordered returned to the origin point, the charges assessed for the return trip shall be the same as the charges assessed for the outbound trip. the shipper shall maintain a record of the goods that, through no fault of the contractor, could not be delivered and are returned to the shipper. if, at a future date, the returned goods are determined to be related to a claim against the contractor, the claim will be adjusted accordingly. (b) when, through the fault of the contractor, a shipment cannot be delivered, the contractor shall return the shipment to the origin point at no charge to the government. any charges incurred for redelivery, which are in excess of the charges that would have been incurred under this contract, shall be for the contractor’s account in accordance with the default clause of the contract. (end of clause) as prescribed in 47.207 6(a)(2), insert the following clause in solicitations and contracts for transportation or for transportation related services: charges (apr 1984) in no event shall charges under this contract be in excess of charges based on the contractor’s lowest rate available to the general public, or be in excess of charges based on rates otherwise tendered to the government by the contractor for the same type of service. (end of clause) as prescribed in 47.207 6 (c)(5)(i), insert the following clause in solicitations and contracts for transportation or for transportation related services when multiple shipments are tendered at one time to the contractor for transportation from one origin to two or more consignees at the same destination: multiple shipments (apr 1984) when multiple shipments are tendered at one time to the contractor for movement from one origin to multiple consignees at the same destination, the rate charged for each shipment shall be the rate applicable to the aggregate weight. (end of clause) as prescribed in 47.207 6 (c)(5)(ii), insert the following clause in solicitations and contracts for transportation or for transportation related services when multiple shipments are tendered at one time to the contractor for transportation from one origin to two or more consignees along the route between origin and last destination: stopping in transit for partial unloading (apr 1984) when multiple shipments are tendered at one time to the contractor for movement from one origin to two or more consignees along the route between the origin and the last destination, the rate charged shall be the rate applicable to the aggregate weight, plus a charge of $______ for each shipment unloaded at an intermediate point en route to the last destination. (end of clause) as prescribed in 47.207 6(c)(6), insert the following provision in solicitations for transportation or for transportation related services when quantities or weights of shipments between each origin and destination are not known, stating estimated quantity or weight for each origin/destination pair: estimated quantities or weights for evaluation of offers (apr 1984) for the purpose of evaluating offers, and for no other purpose, the following estimated quantities or weights will be considered as the quantities or weights to be shipped between each origin and destination listed: ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ ____________ (end of clause) as prescribed in 47.207 7(c), insert the following clause in solicitations and contracts for transportation or for transportation related services: contractor liability for personal injury and/or property damage (apr 1984) (a) the contractor assumes responsibility for all damage or injury to persons or property occasioned through the use, maintenance, and operation of the contractor’s vehicles or other equipment by, or the action of, the contractor or the contractor’s employees and agents. (b) the contractor, at the contractor’s expense, shall maintain adequate public liability and property damage insurance during the continuance of this contract, insuring the contractor against all claims for injury or damage. (c) the contractor shall maintain workers’ compensation and other legally required insurance with respect to the contractor’s own employees and agents. (d) the government shall in no event be liable or responsible for damage or injury to any person or property occasioned through the use, maintenance, or operation of any vehicle or other equipment by, or the action of, the contractor or the contractor’s employees and agents in performing under this contract, and the government shall be indemnified and saved harmless against claims for damage or injury in such cases. (end of clause) as prescribed in 47.207 7(d), insert the following clause in solicitations and contracts for the transportation of freight other than household goods: contractor liability for loss of and/or damage to freight other than household goods (apr 1984) except when loss and/or damage arises out of causes beyond the control and without the fault or negligence of the contractor, the contractor shall assume full liability for any and all goods lost and/or damaged in the movement covered by this contract. (end of clause) as prescribed in 47.207 7(e), insert the following clause: contractor liability for loss of and/or damage to household goods (jan 1991) (a) except when loss and/or damage arise out of causes beyond the control and without the fault or negligence of the contractor, the contractor shall be liable to the owner for the loss of and/or damage to any article while being  (1) packed, picked up, loaded, transported, delivered, unloaded, or unpacked; (2) stored in transit; or (3) serviced (appliances, etc.) by a third person hired by the contractor to perform the servicing. (b) the contractor shall be liable for loss and/or damage discovered by the owner if written notice of such loss and/or damage is dispatched to the contractor not later than 75 days following the date of delivery. (c) the contractor shall indemnify the owner of the goods at a rate of ___ cents per pound per article. (end of clause) as prescribed in 47.207 8(a)(1), insert the following clause in solicitations and contracts for transportation or for transportation related services when the government is responsible for notifying the contractor of specific service times or unusual shipments: advance notification by the government (apr 1984) the government will notify the contractor ___ hours in advance of the number of pieces and weight of all normal shipments and the time the shipment will be available for pickup. on other than normal shipments, the government will furnish additional information; e.g., dimension of oversized pieces, as necessary to determine the amount of equipment and/or manpower needed to perform the required services. (end of clause) as prescribed in 47.207 8 (a)(2)(i), insert the following clause in solicitations and contracts for transportation or for transportation related services when the government furnishes equipment with or without operators: government furnished equipment with or without operators (apr 1984) the government will provide ____ [insert equipment; e.g.,forklifts] with or without operators at ____ [strike out "with" or "without," as applicable, and insert origin, destination, or both] to assist in ____ [insert loading, unloading, or both], when required. (end of clause) as prescribed in 47.207 8(a)(3), insert the following clause in solicitations and contracts for transportation or for transportation related services when office relocations are involved: government direction and marking (apr 1984) the agency being relocated shall tag or mark property, showing floor, room number, and location where property is to be placed in the new building. the agency shall provide sufficient personnel to direct the contractor’s personnel in the placement of the property at destination. (end of clause) as prescribed in 47.207 8(b), insert the following clause in solicitations and contracts for transportation or for transportation related services: contract not affected by oral agreement (apr 1984) no oral statement of any person shall modify or otherwise affect the terms, conditions, or specifications stated in this contract. all modifications to the contract must be made in writing by the contracting officer or an authorized representative. (end of clause) as prescribed in 47.207 9(c), insert the following clause in solicitations and contracts for drayage or other term con  tracts for transportation or for transportation related services: contractor’s invoices (apr 1984) the contractor shall submit itemized invoices as instructed by the agency ordering services under this contract. the contractor shall annotate each invoice with the contract number and other ordering office document identification. (end of clause) as prescribed in 47.303 1(c), insert the following clause: f.o.b. origin (feb 2006) (a) the term "f.o.b. origin," as used in this clause, means free of expense to the government delivered  (1) on board the indicated type of conveyance of the carrier (or of the government, if specified) at a designated point in the city, county, and state from which the shipment will be made and from which line haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (2) to, and placed on, the carrier’s wharf (at shipside, within reach of the ship’s loading tackle, when the shipping point is within a port area having water transportation service) or the carrier’s freight station; (3) to a u.s. postal service facility; or (4) if stated in the solicitation, to any government designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract (the federal motor carrier safety administration prescribes commercial zones at subpart b of 49 cfr part 372). (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) order specified carrier equipment when requested by the government; or (ii) if not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (3) deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the contractor) on or in the carrier’s conveyance as required by carrier rules and regulations; (4) be responsible for any loss of and/or damage to the goods  (i) occurring before delivery to the carrier; (ii) resulting from improper packing and marking; or (iii) resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the contractor on or in the carrier’s conveyance; (5) complete the government bill of lading supplied by the ordering agency or, when a government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. the bill of lading shall show  (i) a description of the shipment in terms of the governing freight classification or tariff (or government rate tender) under which lowest freight rates are applicable; (ii) the seals affixed to the conveyance with their serial numbers or other identification; (iii) lengths and capacities of cars or trucks ordered and furnished; (iv) other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and zip code of consignee, routing, etc.; (v) special instructions or annotations requested by the ordering agency for commercial bills of lading; e.g., "this shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the government";and (vi) the signature of the carrier’s agent and the date the shipment is received by the carrier; and (6) distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency. (c) these contractor responsibilities are specified for performance at the plant or plants at which the supplies are to be finally inspected and accepted, unless the facilities for shipment by carrier’s equipment are not available at the contractor’s plant, in which case the responsibilities shall be performed f.o.b. the point or points in the same or nearest city where the specified carrier’s facilities are available; subject, however, to the following qualifications: (1) if the contractor’s shipping plant is located in the state of alaska or hawaii, the contractor shall deliver the supplies listed for shipment outside alaska or hawaii to the port of loading in alaska or hawaii, respectively, as specified in the contract, at contractor’s expense, and to that extent the contract shall be "f.o.b. destination." (2) notwithstanding paragraph (c)(1) of this clause, if the contractor’s shipping plant is located in the state of hawaii, and the contract requires delivery to be made by container service, the contractor shall deliver the supplies, at the contractor’s expense, to the container yard in the same or nearest city where seavan container service is available. (end of clause) as prescribed in 47.303 2(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. origin, contractor’s facility: f.o.b. origin, contractor’s facility (feb 2006) (a) the term "f.o.b. origin, contractor’s facility," as used in this clause, means free of expense to the government delivered on board the indicated type of conveyance of the carrier (or of the government, if specified) at the designated facility, on the named street or highway, in the city, county, and state from which the shipment will be made. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) order specified carrier equipment when requested by the government; or (ii) if not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (3) deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the contractor) on or in the carrier’s conveyance as required by carrier rules and regulations; (4) be responsible for any loss of and/or damage to the goods  (i) occurring before delivery to the carrier; (ii) resulting from improper packing and marking; or (iii) resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the contractor on or in the carrier’s conveyance; (5) complete the government bill of lading supplied by the ordering agency or, when a government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. the bill of lading shall show  (i) a description of the shipment in terms of the governing freight classification or tariff (or government rate tender) under which lowest freight rates are applicable; (ii) the seals affixed to the conveyance with their serial numbers or other identification; (iii) lengths and capacities of cars or trucks ordered and furnished; (iv) other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and zip code of consignee, routing, etc.; (v) special instructions or annotations requested by the ordering agency for bills of lading; e.g.,"this shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the government"; and (vi) the signature of the carrier’s agent and the date the shipment is received by the carrier; and (6) distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency. (end of clause) as prescribed in 47.303 3(c), insert the following clause: f.o.b. origin, freight allowed (feb 2006) (a) the term "f.o.b. origin, freight allowed," as used in this clause, means  (1) free of expense to the government delivered  (i) on board the indicated type of conveyance of the carrier (or of the government, if specified) at a designated point in the city, county, and state from which the shipments will be made and from which line haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (ii) to, and placed on, the carrier’s wharf (at shipside within reach of the ship’s loading tackle when the shipping point is within a port area having water transportation service) or the carrier’s freight station; (iii) to a u.s. postal service facility; or (iv) if stated in the solicitation, to any government designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract the federal motor carrier safety administration prescribes commercial zones at subpart b of 49 cfr part 372; and (2) an allowance for freight, based on applicable published tariff rates (or government rate tenders) between the points specified in the contract, is deducted from the contract price. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) order specified carrier equipment when requested by the government; or (ii) if not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (3) deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the contractor) on or in the carrier’s conveyance as required by carrier rules and regulations; (4) be responsible for any loss of and/or damage to the goods  (i) occurring before delivery to the carrier; (ii) resulting from improper packing and marking; or (iii) resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the contractor on or in the carrier’s conveyance; (5) complete the government bill of lading supplied by the ordering agency, or when a government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. the bill of lading shall show  (i) a description of the shipment in terms of the governing freight classification or tariff (or government rate tender) under which lowest freight rates are applicable; (ii) the seals affixed to the conveyance with their serial numbers or other identification; (iii) lengths and capacities of cars or trucks ordered and furnished; (iv) other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and zip code of consignee, routing, etc.; (v) special instructions or annotations requested by the ordering agency for commercial bills of lading;e.g., "this shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the government"; and (vi) the signature of the carrier’s agent and the date the shipment is received by the carrier; and (6) distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency. (c) these contractor responsibilities are specified for performance at the plant or plants at which the supplies are to be finally inspected and accepted, unless the facilities for shipment by carrier’s equipment are not available at the contractor’s plant, in which case the responsibilities shall be performed f.o.b. the point or points in the same or nearest city where the specified carrier’s facilities are available; subject, however, to the following qualifications: (1) if the contractor’s shipping plant is located in the state of alaska or hawaii, the contractor shall deliver the supplies listed for shipment outside alaska or hawaii to the port of loading in alaska or hawaii, respectively, as specified in the contract, at contractor’s expense, and to that extent the contract shall be "f.o.b. destination." (2) notwithstanding paragraph (c)(1) of this clause, if the contractor’s shipping plant is located in the state of hawaii, and the contract requires delivery to be made by container service, the contractor shall deliver the supplies, at the contractor’s expense, to the container yard in the same or nearest city where seavan container service is available. (end of clause) as prescribed in 47.303 4(c), insert the following clause: f.o.b. origin, freight prepaid (feb 2006) (a) the term "f.o.b. origin, freight prepaid," as used in this clause, means  (1) free of expense to the government delivered  (i) on board the indicated type of conveyance of the carrier (or of the government, if specified) at a designated point in the city, county, and state from which the shipments will be made and from which line haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (ii) to, and placed on, the carrier’s wharf (at shipside, within reach of the ship’s loading tackle, when the shipping point is within a port area having water transportation service) or the carrier’s freight station; (iii) to a u.s. postal service facility; or (iv) if stated in the solicitation, to any government designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract (the federal motor carrier safety administration prescribes commercial zones at subpart b of 49 cfr part 372); and (2) the cost of transportation, ultimately the government’s obligation, is prepaid by the contractor to the point specified in the contract. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) order specified carrier equipment when requested by the government; or (ii) if not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (3) deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the contractor) on or in the carrier’s conveyance as required by carrier rules and regulations; (4) be responsible for any loss of and/or damage to the goods  (i) occurring before delivery to the carrier; (ii) resulting from improper packing or marking; or (iii) resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the contractor on or in the carrier’s conveyance; (5) prepare a bill of lading or other transportation receipt. the bill of lading shall show  (i) a description of the shipment in terms of the governing freight classification or tariff (or government rate tender) under which lowest freight rates are applicable; (ii) the seals affixed to the conveyance with their serial numbers or other identification; (iii) lengths and capacities of cars or trucks ordered and furnished; (iv) other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and zip code of consignee, routing, etc.; (v) special instructions or annotations requested by the ordering agency for bills of lading; e.g., "this shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the government"; and (vi) the signature of the carrier’s agent and the date the shipment is received by the carrier; (6) distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency; and (7) prepay all freight charges to the extent specified in the contract. (c) these contractor responsibilities are specified for performance at the plant or plants at which these supplies are to be finally inspected and accepted, unless the facilities for shipment by carrier’s equipment are not available at the contractor’s plant, in which case the responsibilities shall be performed f.o.b. the point or points in the same or nearest city where the specified carrier’s facilities are available; subject, however, to the following qualifications: (1) if the contractor’s shipping plant is located in the state of alaska or hawaii, the contractor shall deliver the supplies listed for shipment outside alaska or hawaii to the port of loading in alaska or hawaii, respectively, as specified in the contract, at contractor’s expense, and to that extent the contract shall be "f.o.b. destination." (2) notwithstanding paragraph (c)(1) of this clause, if the contractor’s shipping plant is located in the state of hawaii, and the contract requires delivery to be made by container service, the contractor shall deliver the supplies, at the contractor’s expense, to the container yard in the same or nearest city where seavan container service is available. (end of clause) as prescribed in 47.303 5(c), insert the following clause: f.o.b. origin, with differentials (feb 2006) (a) the term "f.o.b. origin, with differentials," as used in this clause, means  (1) free of expense to the government delivered  (i) on board the indicated type of conveyance of the carrier (or of the government, if specified) at a designated point in the city, county, and state from which the shipments will be made and from which line haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (ii) to, and placed on, the carrier’s wharf (at shipside, within reach of the ship’s loading tackle, when the shipping point is within a port area having water transportation service) or the carrier’s freight station; (iii) to a u.s. postal service facility; or (iv) if stated in the solicitation, to any government designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract (the federal motor carrier safety administration prescribes commercial zones at subpart b of 49 cfr part 372); and (2) differentials for mode of transportation, type of vehicle, or place of delivery as indicated in contractor’s offer may be added to the contract price. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specification; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) order specified carrier equipment when requested by the government; or (ii) if not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (3) deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the contractor) on or in the carrier’s conveyance as required by carrier rules and regulations; (4) be responsible for any loss of and/or damage to the goods  (i) occurring before delivery to the carrier; (ii) resulting from improper packing and marking; or (iii) resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the contractor on or in the carrier’s conveyance; (5) complete the government bill of lading supplied by the ordering agency or, when a government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. the bill of lading shall show  (i) a description of the shipment in terms of the governing freight classification or tariff (or government rate tender) under which lowest freight rates are applicable; (ii) the seals affixed to the conveyance with their serial numbers or other identification; (iii) lengths and capacities of cars or trucks ordered and furnished; (iv) other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and zip code of consignee, routing, etc.; (v) special instructions or annotations requested by the ordering agency for bills of lading; e.g., "this shipment is the property of, and the freight charges paid to the carrier will be reimbursed by, the government"; and (vi) the signature of the carrier’s agent and the date the shipment is received by the carrier; and (6) distribute the copies of the bill of lading, or other transportation receipts, as directed by the ordering agency. (c) (1) it may be advantageous to the offeror to submit f.o.b. origin prices that include only the lowest cost to the contractor for loading of shipment at the contractor’s plant or most favorable shipping point. the cost beyond that plant or point of bringing the supplies to the place of delivery and the cost of loading, blocking, and bracing on the type vehicle specified by the government at the time of shipment may exceed the offeror’s lowest cost when the offeror ships for the offeror’s account. accordingly, the offeror may indicate differentials that may be added to the offered price. these differentials shall be expressed as a rate in cents for each 100 pounds (cwt) of the supplies for one or more of the options under this clause that the government may specify at the time of shipment. (2) these differential(s) will be considered in the evaluation of offers to determine the lowest overall cost to the government. if, at the time of shipment, the government specifies a mode of transportation, type of vehicle, or place of delivery for which the offeror has set forth a differential, the contractor shall include the total of such differential costs (the applicable differential multiplied by the actual weight) as a separate reimbursable item on the contractor’s invoice for the supplies. (3) the government shall have the option of performing or arranging at its own expense any transportation from contractor’s shipping plant or point to carrier’s facility at the time of shipment and, whenever this option is exercised, the government shall make no reimbursement based on a quoted differential. (4) offeror’s differentials in cents for each 100 pounds for optional mode of transportation, types of vehicle, transportation within a mode, or place of delivery, specified by the government at the time of shipment and not included in the f.o.b. origin price indicated in the schedule by the offeror, are as follows: _______ (carload, truckload, less load, _______ wharf, flatcar, driveaway, etc.) (end of clause) as prescribed in 47.303 6(c), insert the following clause: f.o.b. destination (jan 1991) (a) the term "f.o.b. destination," as used in this clause, means  (1) free of expense to the government, on board the carrier’s conveyance, at a specified delivery point where the consignee’s facility (plant, warehouse, store, lot, or other location to which shipment can be made) is located; and (2) supplies shall be delivered to the destination consignee’s wharf (if destination is a port city and supplies are for export), warehouse unloading platform, or receiving dock, at the expense of the contractor. the government shall not be liable for any delivery, storage, demurrage, accessorial, or other charges involved before the actual delivery (or "constructive placement" as defined in carrier tariffs) of the supplies to the destination, unless such charges are caused by an act or order of the government acting in its contractual capacity. if rail carrier is used, supplies shall be delivered to the specified unloading platform of the consignee. if motor carrier (including "piggyback") is used, supplies shall be delivered to truck tailgate at the unloading platform of the consignee, except when the supplies delivered meet the requirements of item568 of the national motor freight classification for "heavy or bulky freight." when supplies meeting the requirements of the referenced item568 are delivered, unloading (including movement to the tailgate) shall be performed by the consignee, with assistance from the truck driver, if requested. if the contractor uses rail carrier or freight forwarded for less than carload shipments, the contractor shall ensure that the carrier will furnish tailgate delivery, when required, if transfer to truck is required to complete delivery to consignee. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements; (2) prepare and distribute commercial bills of lading; (3) deliver the shipment in good order and condition to the point of delivery specified in the contract; (4) be responsible for any loss of and/or damage to the goods occurring before receipt of the shipment by the consignee at the delivery point specified in the contract; (5) furnish a delivery schedule and designate the mode of delivering carrier; and (6) pay and bear all charges to the specified point of delivery. (end of clause) as prescribed in 47.303 7(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. destination, within consignee’s premises: f.o.b. destination, within consignee’s premises (apr 1984) (a) the term "f.o.b. destination, within consignee’s premises," as used in this clause, means free of expense to the government delivered and laid down within the doors of the consignee’s premises, including delivery to specific rooms within a building if so specified. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment in conformance with carrier requirements; (2) prepare and distribute commercial bills of lading; (3) deliver the shipment in good order and condition to the point of delivery specified in the contract; (4) be responsible for any loss of and/or damage to the goods occurring before receipt of the shipment by the consignee at the delivery point specified in the contract; (5) furnish a delivery schedule and designate the mode of delivering carrier; and (6) pay and bear all charges to the specified point of delivery. (end of clause) as prescribed in 47.303 8(c), insert the following clause in solicitations and contracts when the delivery term is f.a.s. vessel, port of shipment: f.a.s. vessel, port of shipment (apr 1984) (a) the term "f.a.s. vessel, port of shipment," as used in this clause, means free of expense to the government delivered alongside the ocean vessel and within reach of its loading tackle at the specified port of shipment. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) deliver the shipment in good order and condition alongside the ocean vessel and within reach of its loading tackle, at the point of delivery and on the date or within the period specified in the contract; and (ii) pay and bear all applicable charges, including transportation costs, wharfage, handling, and heavy lift charges, if necessary, up to this point; (3) provide a clean dock or ship’s receipt; (4) be responsible for any loss of and/or damage to the goods occurring before delivery of the shipment to the point specified in the contract; and (5) at the government’s request and expense, assist obtaining the documents required for  (i) exportation; or (ii) importation at destination. (end of clause) as prescribed in 47.303 9(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. vessel, port of shipment: f.o.b. vessel, port of shipment (apr 1984) (a) the term "f.o.b. vessel, port of shipment," as used in this clause, means free of expense to the government loaded, stowed, and trimmed on board the ocean vessel at the specified port of shipment. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) deliver the shipment on board the ocean vessel in good order and condition on the date or within the period fixed; and (ii) pay and bear all charges incurred in placing the shipment actually on board; (3) provide a clean ship’s receipt or on board ocean bill of lading; (4) be responsible for any loss of and/or damage to the goods occurring before delivery of the shipment on board the ocean vessel; and (5) at the government’s request and expense, assist in obtaining the documents required for  (i) exportation; or (ii) importation at destination. (end of clause) as prescribed in 47.303 10(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. inland carrier, point of exportation: f.o.b. inland carrier, point of exportation (feb 2006) (a) the term "f.o.b. inland carrier, point of exportation," as used in this clause, means free of expense to the government, on board the conveyance of the inland carrier, delivered to the specified point of exportation. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) prepare and distribute commercial bills of lading or other transportation receipt; (3) (i) deliver the shipment in good order and condition in or on the conveyance of the carrier on the date or within the period specified; and (ii) pay and bear all applicable charges, including transportation costs, to the point of delivery specified in the contract; (4) be responsible for any loss of and/or damage to the goods occurring before delivery of the shipment to the point of delivery in the contract; and (5) at the government’s request and expense, assist in obtaining the documents required for  (i) exportation; or (ii) importation at destination. (end of clause) as prescribed in 47.303 11(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. inland point, country of importation: f.o.b. inland point, country of importation (apr 1984) (a) the term "f.o.b. inland point, country of importation," as used in this clause, means free of expense to the government, on board the indicated type of conveyance of the carrier, delivered to the specified inland point where the consignee’s facility is located. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements to protect the goods; (2) (i) deliver, in or on the inland carrier’s conveyance, the shipment in good order and condition to the specified inland point where the consignee’s facility is located; and (ii) pay and bear all applicable charges incurred up to the point of delivery, including transportation costs; export, import, or other fees or taxes; costs of landing; wharfage costs; customs duties and costs of certificates of origin; consular invoices; and other documents that may be required for importation; and (3) be responsible for any loss of and/or damage to the goods until their arrival on or in the carrier’s conveyance at the specified inland point. (end of clause) as prescribed in 47.303 12(c), insert the following clause in solicitations and contracts when the delivery term is ex dock, pier, or warehouse, port of importation: ex dock, pier, or warehouse, port of importation (apr 1984) (a) the term "ex dock, pier, or warehouse, port of importation," as used in this clause, means free of expense to the government delivered on the designated dock or pier or in the warehouse at the specified port of importation. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements to protect the goods; (2) (i) deliver shipment in good order and condition; and (ii) pay and bear all charges up to the point of delivery specified in the contract, including transportation costs; export, import, or other fees or taxes; costs of wharfage and landing, if any; customs duties; and costs of certificates of origin, consular invoices, or other documents that may be required for exportation or importation; and (3) be responsible for any loss of and/or damage to the goods occurring before delivery of the shipment to the point of delivery specified in the contract. (end of clause) as prescribed in 47.303 13(c), insert the following clause in solicitations and contracts when the delivery term is c.& f. destination: c.&f. destination (apr 1984) (a) the term "c.& f. destination," as used in this clause, means free of expense to the government delivered on board the ocean vessel to the specified point of destination, with the cost of transportation paid by the contractor. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements; (2) (i) deliver the shipment in good order and condition; and (ii) pay and bear all applicable charges to the point of destination specified in the contract, including transportation costs and export taxes or other fees or charges levied because of exportation; (3) obtain and dispatch promptly to the government clean on board ocean bills of lading to the specified point of destination; (4) be responsible for any loss of and/or damage to the goods occurring before delivery; and (5) at the government’s request and expense, provide certificates of origin, consular invoices, or any other documents issued in the country of origin or of shipment, or both, that may be required for importation into the country of destination. (end of clause) as prescribed in 47.303 14(c), insert the following clause in solicitations and contracts when the delivery term is c.i.f. destination: c.i.f. destination (apr 1984) (a) the term "c.i.f. destination," as used in this clause, means free of expense to the government delivered on board the ocean vessel to the specified point of destination, with the cost of transportation and marine insurance paid by the contractor. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for ocean transportation in conformance with carrier requirements; (2) (i) deliver the shipment in good order and condition; and (ii) pay and bear all applicable charges to the point of destination specified in the contract, including transportation costs and export taxes or other fees or charges levied because of exportation; (3) obtain and dispatch promptly to the government clean on board ocean bills of lading to the specified point of destination; (4) be responsible for any loss of and/or damage to the goods occurring before delivery; (5) at the government’s request and expense, provide certificates of origin, consular invoices, or any other documents issued in the country of origin or of shipment, or both, that may be required for importation into the country of destination; and (6) obtain and dispatch to the government an insurance policy or certificate providing the amount and extent of marine insurance coverage specified in the contract or agreed upon by the government contracting officer. (end of clause) as prescribed in 47.303 15(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. designated air carrier’s terminal, point of exportation: f.o.b. designated air carrier’s terminal, point of exportation (feb 2006) (a) the term "f.o.b. designated air carrier’s terminal, point of exportation," as used in this clause, means free of expense to the government loaded aboard the aircraft, or delivered to the custody of the air carrier (if only the air carrier performs the loading), at the air carrier’s terminal specified in the contract. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for air transportation in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) deliver the shipment in good order and condition into the conveyance of the carrier, or to the custody of the carrier (if only the carrier performs the loading), at the point of delivery and on the date or within the period specified in the contract; and (ii) pay and bear all applicable charges up to this point; (3) provide a clean bill of lading and/or air waybill; (4) be responsible for any loss of and/or damage to the goods occurring before delivery of the goods to the point specified in the contract; and (5) at the government’s request and expense, assist in obtaining the documents required for the purpose of exportation. (end of clause) as prescribed in 47.303 16(c), insert the following clause in solicitations and contracts when the delivery term is f.o.b. designated air carrier’s terminal, point of importation: f.o.b. designated air carrier’s terminal, point of importation (apr 1984) (a) the term "f.o.b. designated air carrier’s terminal, point of importation," as used in this clause, means free of expense to the government delivered to the air carrier’s terminal at the point of importation specified in the contract. (b) the contractor shall  (1) (i) pack and mark the shipment to comply with contract specifications; or (ii) in the absence of specifications, prepare the shipment for air transportation in conformance with carrier requirements to protect the goods; (2) prepare and distribute bills of lading or air waybills; (3) (i) deliver the shipment in good order and condition to the point of delivery specified in the contract; and (ii) pay and bear all charges incurred up to the point of delivery specified in the contract, including transportation costs; export, import, or other fees or taxes; cost of landing, if any; customs duties; and costs of certificates of origin, consular invoices, or other documents that may be required for exportation or importation; and (4) be responsible for any loss of and/or damage to the goods until delivery of the goods to the government at the designated air carrier’s terminal. (end of clause) as prescribed in 47.305 2(b), insert the following provision in solicitations when offers are solicited on the basis of both f.o.b. origin and f.o.b. destination: f.o.b. origin and/or f.o.b. destination evaluation (apr 1984) offers are invited on the basis of both f.o.b. origin and f.o.b. destination, and the government will award on the basis the contracting officer determines to be most advantageous to the government. an offer on the basis of f.o.b. origin only or f.o.b. destination only is acceptable, but will be evaluated only on the basis submitted. (end of clause) as prescribed in 47.305 3 (b)(4)(ii), insert the following provision in f.o.b. origin solicitations when price evaluation for shipments from various shipping points is contemplated: shipping point(s) used in evaluation of f.o.b. origin offers (apr 1984) (a) if more than one shipping point or plant is designated by the offeror and the offeror fails to indicate the quantity per shipping point or plant before bid opening, the government will evaluate the offer on the basis of delivery of the entire quantity from the point or plant where cost of transportation is most favorable to the government. (b) if the offeror, before bid opening (or the closing date specified for receipt of offers) fails to indicate any shipping point or plant, the government will evaluate the offer on the basis of delivery from the plant at which the contract will be performed, as indicated in the offer. if no plant is indicated in the offer, the offer will be evaluated on the basis of delivery from the contractor’s business address indicated in the offer. (c) if the offeror uses a shipping point other than that which has been used by the government as a basis for the evaluation of offers, any increase of transportation costs shall be borne by the contractor and any savings shall revert to the government. (end of clause) as prescribed in 47.305 3(f)(2), insert the following provision. when it is appropriate to use methods other than land transportation in evaluating offers; e.g.,air, pipeline, barge, or ocean tanker, modify the provision accordingly. evaluation f.o.b. origin (june 2003) (a) the government normally uses land methods of transportation by regulated common carrier for shipment within the contiguous united states. (b) to evaluate offers, the government will consider only these methods to establish the cost of transportation between offeror’s shipping point and destination (tentative or firm, whichever is applicable) in the contiguous united states. (c) this transportation cost will be added to the offer price to determine the government’s overall cost. (d) when tentative destinations are indicated, the government will use them only for evaluation purposes. the government has the right to use any other means of transportation or any other destination at the time of shipment. (end of clause) as prescribed in 47.305 4(c), insert the following clause: f.o.b. destination evidence of shipment (feb 1999) (a) if this contract is awarded on a free on board (f.o.b.) destination basis, the contractor  (1) shall not submit an invoice for payment until the supplies covered by the invoice have been shipped to the destination; and (2) shall retain, and make available to the government for review as necessary, the following evidence of shipment documentation for a period of 3 years after final payment under the contract: (i) if transportation is accomplished by common carrier, a signed copy of the commercial bill of lading for the supplies covered by the contractor’s invoice, indicating the carrier’s intent to ship the supplies to the destination specified in the contract. (ii) if transportation is accomplished by parcel post, a copy of the certificate of mailing. (iii) if transportation is accomplished by other than common carrier or parcel post, a copy of the delivery document showing receipt at the destination specified in the contract. (b) the contractor is not required to submit evidence of shipment documentation with its invoice. (end of clause) as prescribed in 47.305 5(b)(2), insert the following provision in solicitations when destinations are tentative and only for the purpose of evaluating offers: destination unknown (apr 1984) for the purpose of evaluating offers and for no other purpose, the final destination(s) for the supplies will be considered to be as follows: __________________________ (end of clause) as prescribed in 47.305 5(c)(1), insert the following provision in solicitations when exact destinations are not known and it is impractical to establish tentative or general delivery places for the purpose of evaluating transportation costs: no evaluation of transportation costs (apr 1984) costs of transporting supplies to be delivered under this contract will not be an evaluation factor for award. (end of clause) as prescribed in 47.305 6(e), insert the following provision: evaluation of export offers (jan 2001) (a) port handling and ocean charges other than dod water terminals. port handling and ocean charges in tariffs on file with the bureau of domestic regulation, federal maritime commission, or other appropriate regulatory authorities as of the date of bid opening (or the closing date specified for receipt of offers) and which will be effective for the date of the expected initial shipment will be used in the evaluation of offers. (b) f.o.b. origin, transportation under government bill of lading. (1) offers shall be evaluated and awards made on the basis of the lowest laid down cost to the government at the overseas port of discharge, via methods and ports compatible with required delivery dates and conditions affecting transportation known at the time of evaluation. included in this evaluation, in addition to the f.o.b. origin price of the item, shall be the inland transportation costs from the point of origin in the united states to the port of loading, port handling charges at the port of loading, and ocean shipping costs from the united states port of loading (see paragraph (d) of this clause) to the overseas port of discharge. the government may designate the mode of routing of shipment and may load from other than those ports specified for evaluation purposes. (2) offers shall be evaluated on the basis of shipment through one of the ports set forth in paragraph (d) of this clause to the overseas port of discharge. evaluation shall be made on the basis of shipment through the port that will result in the lowest cost to the government. (3) ports of loading shall be considered as destinations within the meaning of the term "f.o.b. destination" as that term is used in the f.o.b. origin clause of this contract. (c) f.o.b. port of loading with inspection and acceptance at origin. (1) offers shall be evaluated on the basis of the lowest laid down cost to the government at the overseas port of discharge via methods compatible with required delivery dates and conditions affecting transportation known at the time of evaluation. included in this evaluation, in addition to the price to the united states port of loading (see paragraph (c)(2) of this clause), shall be the port handling charges at the port of loading and the ocean shipping cost from the port of loading (see paragraph (d) of this clause) to the overseas port of dis charge. (2) unless offers are applicable only to f.o.b. origin delivery under government bills of lading (see paragraph (b) of this provision), offerors shall designate below at least one of the ports of loading listed in paragraph (d) of this clause as their place of delivery. failure to designate at least one of the ports as the point to which delivery will be made by the contractor may render the offer nonresponsive. place of delivery: ________________________________ [offerors insert at least one of the ports listed in paragraph (d) of this clause.] (d) ports of loading for evaluation of offers. terminals to be used by the government in evaluating offers are as follows: (for the information of the offerors, ocean and port handling charges are set forth if the terminal named is a dod water terminal.) _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ _____________ (e) ports of loading nominated by offeror. the ports of loading named in paragraph (d) of this clause are considered by the government to be appropriate for this solicitation due to their compatibility with methods and facilities required to handle the cargo and types of vessels and to meet the required overseas delivery dates. notwithstanding the foregoing, offerors may nominate additional ports of loading that the offeror considers to be more favorable to the government. the government may disregard such nominated ports if, after considering the quantity and nature of the supplies concerned, the requisite cargo handling capability, the available sailings on u.s. flag vessels, and other pertinent transportation factors, it determines that use of the nominated ports is not compatible with the required overseas delivery date. united states great lakes ports of loading may be considered in the evaluation of offers only for those items scheduled in this provision for delivery during the ice free or navigable period as proclaimed by the authorities of the st. lawrence seaway (normal period is between april 15 and november 30 annually). all ports named, including those nominated by offerors and determined to be eligible as provided in this provision, shall be considered in evaluating all offers received in order to establish the lowest laid down cost to the government at the overseas port of discharge. all determinations shall be based on availability of ocean services by u.s. flag vessels only. additional u.s. port(s) of loading nominated by offeror, if any: ________________________________________________ (f) price basis. offeror shall indicate whether prices are based on  □ paragraph (b), f.o.b. origin, transportation by gbl to port listed in paragraph (d); □ paragraph (c), f.o.b. destination (i.e.,a port listed in paragraph (d)); □ paragraph (e), f.o.b. origin, transportation by gbl to port nominated in paragraph (e); and/or □ paragraph (e), f.o.b. destination (i.e.,a port nominated in paragraph (e)). (end of provision) alternate i (feb 2006). when the conus ports of export are dod water terminals, delete paragraph (a) from the basic provision and substitute for it the following paragraph (a): (a)port handling and ocean charges dod water terminals. the port handling and ocean charges are set forth in paragraph (d) of this provision for the information of offerors and are current as of the time of issuance of the solicitation. for evaluation of offers, the government will use the port handling and ocean charges made available by the directorate of international traffic, military surface deployment and distribution command (sddc) rate information letters, on file as of the date of bid opening (or the closing date specified for receipt of offers) and which will be effective for the date of the expected initial shipment. alternate ii (apr 1984). when offers are solicited on an f.o.b. origin only basis, delete paragraphs (c) and (f) from the basic provision, but do not redesignate the ensuing paragraphs. add the following basic paragraph (g) to the provision: (g) paragraphs (c) and (f) have been deleted but ensuing paragraphs have not been redesignated. alternate iii (apr 1984). when offers are solicited on an f.o.b. destination only basis, delete paragraph (b) from the basic provision but do not redesignate the ensuing paragraphs. delete paragraph (c)(2) and paragraph (f) from the provision and substitute the following paragraph (c)(2) and paragraph (f). add paragraph (g) below. (c)(2) offerors shall designate below at least one of the ports of loading listed in paragraph (d) below as their place of delivery. failure to designate at least one of the ports as the point to which delivery will be made by the contractor may render the offer nonresponsive. place of delivery: ________________________________ [offerors insert at least one of the ports listed in paragraph (d)  below.] (f) price basis. offerors shall indicate whether prices are based on  □ paragraph (c), f.o.b. destination (i.e.,a port listed in paragraph (d)); or □ paragraph (e), f.o.b. destination (i.e.,a port nominated in paragraph (e)). (g) paragraph (b) has been deleted, but ensuing paragraphs have not been redesignated. as prescribed in 47.305 6(f)(2), insert the following clause in solicitations and contracts when shipments will be consigned to dod air or water terminal transshipment points: clearance and documentation requirements shipments to dod air or water terminal transshipment points (feb 2006) all shipments to water or air ports for transshipment to overseas destinations are subject to the following requirements unless clearance and documentation requirements have been expressly delegated to the contractor: (a) at least 10 days before shipping cargo to a water port, the contractor shall obtain an export release from the government transportation office for  (1) each shipment weighing 10,000 pounds or more; and (2) each shipment weighing less than 10,000 pounds; if the cargo either  (i) is classified top secret, secret, or confidential; (ii) will require exclusive use of a motor vehicle; (iii) will occupy full visible capacity of a railway car or motor vehicle; (iv) is less than a carload or truckload, but will be tendered as a carload or truckload; or (v) is to be shipped to an ammunition outloading port for water shipment; or (3) each shipment weighing less than 10,000 pounds if the cargo consists of  (i) narcotics; (ii) perishable biological material; (iii) vehicles to be offered for driveaway service; (iv) explosives, ammunition, poisons or other dangerous articles classified as class 1, division 1.1, 1.2, 1.3, 1.4; class 2, division 2.3; and class 6, division 6.1; or (v) radioactive material, as defined in 49 cfr 173.403, class 7. (b) the contractor is cautioned not to order railway cars or motor vehicles for loading until an export release has been received. (c) if the contracting officer directs delivery within a shorter period than 10 days, the contractor shall advise the transportation office of the date on which the cargo will be ready for shipment. (d) at least 5 days before shipping cargo to either a water port or an airport (regardless of the weight, security classification, or the commodity description), the contractor shall provide the government transportation office the information shown in paragraph (e) of this clause to permit preparation of a transportation control and movement document (tcmd). (e) when applying for the export release in paragraph (a) of this clause or when providing information for preparation of the tcmd in accordance with paragraph (d) of this clause, the contractor shall furnish the  (1) proposed date or dates of shipment; (2) number and type of containers; (3) gross weight and cube of the shipment; (4) number of cars or trucks that will be involved; (5) transportation control number(s) (tcn) as required for marking under mil std 129 or federal standard 123; and (6) proper shipping name as specified in 46 cfr 146.05 for all items classified as dangerous substances as required for marking under mil std 129. (f) all movement documents (government or commercial bills of lading or other delivery documents) shall be annotated by the contractor with the  (1) transportation control number, consignor code of activity directing the shipment; i.e., cognizant contract administration office, purchasing office when contract administration has been retained, or a contractor specifically delegated transportation responsibilities under dod 4500.9 r, defense transportation regulation, responsibilities in the contract, whichever is appropriate, consignee code, and transportation priority for each shipment unit; (2) export release number and valid shipping period, if stated (if expired, the contractor shall request a renewal); and (3) cubic foot measurement of each shipment unit. (g) all annotations on the movement documents shall be made in the "description of articles" space except, on government bills of lading the export release number and shipping period shall be entered in the space entitled "route order/release no." (h) the contractor shall  (1) mail a copy of the bill of lading or other movement document to the transshipment point; and (2) give a copy of the bill of lading or other movement document to the carrier for presentation to the transshipment point with delivery of the shipment. (end of clause) as prescribed in 47.305 9(b)(1), insert the following provision in solicitations when the supplies being acquired are new to the supply system, nonstandard, or modifications of previously shipped items, and different freight classifications may apply: freight classification description (apr 1984) offerors are requested to indicate below the full uniform freight classification (rail) description, or the national motor freight classification description applicable to the supplies, the same as offeror uses for commercial shipment. this description should include the packing of the commodity (box, crate, bundle, loose, setup, knocked down, compressed, unwrapped, etc.), the container material (fiberboard, wooden, etc.), unusual shipping dimensions, and other conditions affecting traffic descriptions. the government will use these descriptions as well as other information available to determine the classification description most appropriate and advantageous to the government. offeror understands that shipments on any f.o.b. origin contract awarded, as a result of this solicitation, will be made in conformity with the shipping classification description specified by the government, which may be different from the classification description furnished below. for freight classification purposes, offeror describes this commodity as ___________. (end of clause) as prescribed in 47.305 12(a)(2), insert the following clause: f.o.b. point for delivery of government furnished property (june 2003) (a) unless otherwise specified in this solicitation, the government will deliver any government furnished property for use within the contiguous united states or canada to a point specified by the contractor in the offer. if the government makes delivery by railroad, the f.o.b. point will be private siding, contractor’s plant. if the contractor’s plant is not served by rail, the f.o.b. point will be railroad cars in the same or nearest city having rail service. the government may choose the mode of transportation and the carriers and will bear the cost of all line haul transportation to the specified destination. (b) if the destination of the government furnished property is a contractor’s plant located outside the contiguous united states or canada, the f.o.b. point for government delivery of government furnished property will be a contractor specified location in the contiguous united states. if the contractor fails to name a point, the government will select as the f.o.b. point the port city in the contiguous united states nearest to the government furnished property that has regular commercial water transportation services to the offshore port nearest the contractor’s plant. (c) unless otherwise directed by the contracting officer or provided in the contract, the contractor shall return all government furnished equipment, supplies, and property, including all property not returned in the form of acceptable end items, to the point at which the government property was originally furnished to the contractor under the contract. notwithstanding the fact that the government may have furnished the property at the contractor’s plant, the contracting officer may direct the contractor to deliver the government property being returned to, and load, block, and brace it in, railway cars in the city in which the contractor’s plant is located, or, if the contractor’s city is not served by rail service, in the nearest city having rail service. unless otherwise specified in the contract, all property shall be packed in containers conforming with the rules of common carrier published tariffs so as to be free of penalty charges by the carrier designated for shipment by the government. (end of clause) as prescribed in 47.305 13 (a)(3)(ii), insert the following provision in solicitations when benefits may accrue to the government because transit arrangements may apply: transit arrangements (apr 1984) the lowest appropriate common carrier transportation costs, including offeror’s through transit rates and charges when applicable, from offeror’s shipping points, via the transit point, to the ultimate destination will be used in evaluating offers. _______________ _______________ _______________ _______________ (end of clause) as prescribed in 47.305 13(b)(4), insert the following clause in solicitations and contracts when supplies are of such a nature, or when it is the custom of the trade, that offerors may have potential transit credits available and the government may reduce transportation costs through the use of transit credits: transportation transit privilege credits (apr 1984) (a) if the offeror has established with regulated common carriers transit privileges that can be applied to the supplies when shipped from the original source, the offeror is invited to propose to use these credits for shipping the supplies to the designated government destinations. the offeror will ship these supplies under commercial bills of lading, paying all remaining transportation charges connected with the shipment, subject to reimbursement by the government in an amount equal to the remaining charges but not exceeding the amount quoted by the offeror. (b) after loading on the carrier’s equipment and acceptance by the carrier, these shipments under paid commercial bills of lading will move for the account of and at the risk of the government (unless, pursuant to the changes clause, the office administering the contract directs use of government bills of lading). (c) the amount quoted below by the offeror represents the transportation costs in cents per 100 pounds (freight rate) for full carload/truckload shipments of the supplies from offeror’s original source, via offeror’s transit plant or point, to the government destination(s) including the carrier’s transit privilege charge, less the applicable transit credit (i.e., the amount (rate) initially paid to the carrier for shipment from original source to offeror’s transit plant or point). (d) the rate per cwt quoted will be used by the government to evaluate the offered f.o.b. origin price unless a lower rate is applicable on the date of bid opening (or closing date specified for receipt of offers). to have the offer evaluated on this basis, the offeror must insert below the remaining transportation charges that the offeror agrees to pay, including any transit charges, subject to reimbursement by the government, as explained in this clause, to destinations listed in the schedule as follows: rate per cwt in cents: ________________ to destination: _______________________ (end of clause) as prescribed in 47.305 15(a)(2), insert the following clause in solicitations and contracts when supplies may be shipped in carload lots by rail: loading, blocking, and bracing of freight car shipments (apr 1984) (a) upon receipt of shipping instructions, as provided in this contract, the supplies to be included in any carload shipment by rail shall be loaded, blocked, and braced by the contractor in accordance with the standards published by the association of american railroads and effective at the time of shipment. (b) shipments, for which the association of american railroads has published no such standards, shall be loaded, blocked, and braced in accordance with standards established by the shipper as evidenced by written acceptance of an authorized representative of the carrier. (c) the contractor shall be liable for payment of any damage to any supplies caused by the failure to load, block, and brace in accordance with acceptable standards set forth herein. (d) a copy of the appropriate pamphlet of the association of american railroads may be obtained from that association. (end of clause) as prescribed in 47.305 16(a), insert the following clause in solicitations and contracts when it is contemplated that they may result in f.o.b. origin contracts with shipments in carloads or truckloads. this will facilitate realistic freight cost evaluations of offers and ensure that contractors produce economical shipments of agreed size. f.o.b. origin carload and truckload shipments (apr 1984) (a) the contractor agrees that shipment shall be made in carload or truckload lots when the quantity to be delivered to any one destination in any delivery period pursuant to the contract schedule of deliveries is sufficient to constitute a carload or truckload shipment, except as may otherwise be permitted or directed, in writing, by the contracting officer. (b) for evaluation purposes, the agreed weight of a carload or truckload shall be the highest applicable minimum weight that will result in the lowest freight rate (or per car charge) on file or published in common carrier tariffs or tenders as of the date of bid opening (or the closing date specified for receipt of proposals). (c) for purposes of actual delivery, the agreed weight of a carload or truckload will be the highest applicable minimum weight that will result in the lowest possible freight rate (or per car charge) on file or published as of date of shipment. (d) if the total weight of any scheduled quantity to a destination is less than the highest carload/truckload minimum weight used for evaluation of offers, the contractor agrees to ship such scheduled quantity in one shipment. (e) the contractor shall be liable to the government for any increased costs to the government resulting from failure to comply with the above requirements. (end of clause) as prescribed in 47.305 16(b)(1), insert the following clause: guaranteed shipping characteristics (jan 2017) (a) the offeror is requested to complete paragraph (a)(1) of this clause, for each part or component which is packed or packaged separately. this information will be used to determine transportation costs for evaluation purposes. if the offeror does not furnish sufficient data in paragraph (a)(1) of this clause, to permit determination by the government of the item shipping costs, evaluation will be based on the shipping characteristics submitted by the offeror whose offer produces the highest transportation costs or in the absence thereof, by the contracting officer’s best estimate of the actual transportation costs. if the item shipping costs, based on the actual shipping characteristics, exceed the item shipping costs used for evaluation purposes, the contractor agrees that the contract price shall be reduced by an amount equal to the difference between the transportation costs actually incurred, and the costs which would have been incurred if the evaluated shipping characteristics had been accurate. (1) to be completed by the offeror: (i) type of container: wood box □, fiber box □, barrel □, reel □, drum □, other (specify) _____; (ii) shipping configuration: knocked down □, set up □, nested □, other (specify) _____; (iii) size of container: _____" (length), x_____" (width), x_____" (height) = _____ cubic ft; (iv) number of items per container _____ each; (v) gross weight of container and contents _____ lbs; (vi) palletized/skidded □ yes, □ no; (vii) number of containers per pallet/skid _____; (viii) weight of empty pallet bottom/skid and sides _____ lbs; (ix) size of pallet/skid and contents _____ lbs cube _____; (x) number of containers or pallets/skids per railcar _____ * (a) size of railcar _____ (b) type of railcar _____ (xi) number of containers or pallets/skids per trailer _____* (a) size of trailer _____ ft (b) type of trailer _____ * number of complete units (line item) to be shipped in carrier’s equipment. (2) to be completed by the government after evaluation but before contract award: (i) rate used in evaluation _____; (ii) tender/tariff _____; (iii) item _____. (b) the guaranteed shipping characteristics requested in paragraph (a)(1) of this clause do not establish actual transportation requirements, which are specified elsewhere in this solicitation. the guaranteed shipping characteristics will be used only for the purpose of evaluating offers and establishing any liability of the successful offeror for increased transportation costs resulting from actual shipping characteristics which differ from those used for evaluation in accordance with paragraph (a) of this clause. (end of clause) as prescribed in 47.305 16(c), insert the following clause in solicitations and contracts when volume rates may apply: f.o.b. origin minimum size of shipments (apr 1984) the contractor agrees that shipment will be made in carload and truckload lots when the quantity to be delivered to any one destination in any delivery period pursuant to the contract schedule of deliveries is sufficient to constitute a carload or truckload shipment, except as may otherwise be permitted or directed in writing by the contracting officer. the agreed weight of a carload or truckload will be the highest applicable minimum weight which will result in the lowest freight rate (or per car charge) on file or published in common carrier tariffs or tenders as of date of shipment. in the event the total weight of any scheduled quantity to a destination is less than the highest carload/truckload minimum weight, the contractor agrees to ship such scheduled quantity in one shipment. the contractor shall be liable to the government for any increased costs to the government resulting from failure to comply with the above requirements. this liability shall not attach if supplies are outsized or of such nature that they cannot be loaded at the highest minimum weight bracket. (end of clause) as prescribed in 47.305 16(d)(2), insert the following clause in solicitations and contracts when total requirements and destinations to which shipments will be made are known, but the specific quantity to be shipped to each destination cannot be predetermined. this clause protects the interests of both the government and the contractor during the course of the performance of the contract., insert the following clause in solicitations and contracts when total requirements and destinations to which shipments will be made are known, but the specific quantity to be shipped to each destination cannot be predetermined. this clause protects the interests of both the government and the contractor during the course of the performance of the contract. specific quantities unknown (apr 1984) (a) for the purpose of evaluating "f.o.b. destination" offers, the government estimates that the quantity specified will be shipped to the destinations indicated: _______________ _______________ _______________ _______________ (b) if the quantity shipped to each destination varies from the quantity estimated, and if the variation results in a change in the transportation costs, appropriate adjustment shall be  made. (end of clause) as prescribed in 47.405(a) , insert the following clause: preference for u.s. flag air carriers (jan 2025) (a) definitions. as used in this clause  "international air transportation" means transportation by air between a place in the united states and a place outside the united states or between two places both of which are outside the united states. united states means the 50 states, the district of columbia, and outlying areas. u.s. flag air carrier means an entity granted authority to provide air transportation in the form of a certificate of public convenience and necessity under 49 u.s.c. 41102. (b) u.s. government financed international air transportation. 49 u.s.c. 40118, government financed air transportation (commonly referred to as the fly america act), requires that all federal agencies and government contractors and subcontractors use u.s. flag air carriers for u.s. government financed international air transportation of personnel (and their personal effects) or property, to the extent that service by those carriers is available. it requires the general services administration to issue regulations that, in the absence of satisfactory proof of the necessity for foreign flag air transportation, disallow expenditures from funds, appropriated or otherwise established for the account of the united states, for international air transportation secured aboard a foreign flag air carrier if a u.s. flag air carrier is available to provide such services. (c) use of u.s. flag carriers for international air transportation. if available, the contractor, in performing work under this contract, shall use u.s. flag carriers for international air transportation of personnel (and their personal effects) or property. (d) statement of unavailability of u.s. flag air carriers. use of u.s. flag carriers for international air transportation. in the event that the contractor selects a carrier other than a u.s. flag air carrier for international air transportation, the contractor shall include a statement on vouchers involving such transportation essentially as follows: statement of unavailability of u.s. flag air carriers international air transportation of persons (and their personal effects) or property by u.s. flag air carrier was not available or it was necessary to use foreign flag air carrier service for the following reasons (see section 47.403 of the federal acquisition regulation): [state reasons]:__________________________________________________ (end of statement) (e) subcontracts. the contractor shall include the substance of this clause, including this paragraph (e), in each subcontract or purchase under this contract that may involve international air transportation. (end of clause) as prescribed in 47.507(a), insert the following clause: preference for privately owned u.s. flag commercial vessels (nov 2021) (a) except as provided in paragraph (e) of this clause, the cargo preference act of1954 (46 u.s.c.app.1241(b)) requires that federal departments and agencies shall transport in privately owned u.s. flag commercial vessels at least 50 percent of the gross tonnage of equipment, materials, or commodities that may be transported in ocean vessels (computed separately for dry bulk carriers, dry cargo liners, and tankers). such transportation shall be accomplished when any equipment, materials, or commodities, located within or outside the united states, that may be transported by ocean vessel are  (1) acquired for a u.s. government agency account; (2) furnished to, or for the account of, any foreign nation without provision for reimbursement; (3) furnished for the account of a foreign nation in connection with which the united states advances funds or credits, or guarantees the convertibility of foreign currencies; or (4) acquired with advance of funds, loans, or guaranties made by or on behalf of the united states. (b) the contractor shall use privately owned u.s. flag commercial vessels to ship at least 50 percent of the gross tonnage involved under this contract (computed separately for dry bulk carriers, dry cargo liners, and tankers) whenever shipping any equipment, materials, or commodities under the conditions set forth in paragraph (a) of this clause, to the extent that such vessels are available at rates that are fair and reasonable for privately owned u.s. flag commercial vessels. (c) (1) the contractor shall submit one legible copy of a rated on board ocean bill of lading for each shipment to both  (i) the contracting officer, and (ii) the: office of cargo preference maritime administration (mar 590) 400 seventh street, sw washington dc 20590. subcontractor bills of lading shall be submitted through the prime contractor. (2) the contractor shall furnish these bill of lading copies (i) within 20 working days of the date of loading for shipments originating in the united states, or (ii) within 30 working days for shipments originating outside the united states. each bill of lading copy shall contain the following information: (a) sponsoring u.s. government agency. (b) name of vessel. (c) vessel flag of registry. (d) date of loading. (e) port of loading. (f) port of final discharge. (g) description of commodity. (h) gross weight in pounds and cubic feet if available. (i) total ocean freight revenue in u.s. dollars. (d) the contractor shall insert the substance of this clause, including this paragraph (d), in all subcontracts or purchase orders under this contract, except those described in paragraph (e)(4). (e) the requirement in paragraph (a) does not apply to  (1) cargoes carried in vessels as required or authorized by law or treaty; (2) ocean transportation between foreign countries of supplies purchased with foreign currencies made available, or derived from funds that are made available, under the foreign assistance act of1961 ( 22 u.s.c. 2353); (3) shipments of classified supplies when the classification prohibits the use of non government vessels; and (4) subcontracts or purchase orders for the acquisition of commercial products or commercial services unless  (i) this contract is  (a) a contract or agreement for ocean transportation services; or (b) a construction contract; or (ii) the supplies being transported are  (a) items the contractor is reselling or distributing to the government without adding value. (generally, the contractor does not add value to the items when it subcontracts items for f.o.b. destination shipment); or (b) shipped in direct support of u.s. military  (1) contingency operations; (2) exercises; or (3) forces deployed in connection with united nations or north atlantic treaty organization humanitarian or peacekeeping operations. (f) guidance regarding fair and reasonable rates for privately owned u.s. flag commercial vessels may be obtained from the: office of costs and rates maritime administration 400 seventh street, sw washington dc 20590 phone: (202) 366 4610. (end of clause) alternate i (apr 2003). as prescribed in 47.507 (a)(2), substitute the following paragraphs (a) and (b) for paragraphs (a) and (b) of the basic clause: (a) except as provided in paragraphs (b) and (e) of this clause, the contractor shall use privately owned u.s. flag commercial vessels, and no others, in the ocean transportation of any supplies to be furnished under this contract. (b) if such vessels are not available for timely shipment at rates that are fair and reasonable for privately owned u.s. flag commercial vessels, the contractor shall notify the contracting officer and request (1) authorization to ship in foreign flag vessels or (2) designation of available u.s. flag vessels. if the contractor is authorized in writing by the contracting officer to ship the supplies in foreign flag vessels, the contract price shall be equitably adjusted to reflect the difference in costs of shipping the supplies in privately owned u.s. flag commercial vessels and in foreign flag vessels. alternate ii (nov 2021) . as prescribed in 47.507 (a)(3), substitute the following paragraph (e) for paragraph (e) of the basic clause: (e) the requirement in paragraph (a) does not apply to  (1) cargoes carried in vessels as required or authorized by law or treaty; (2) ocean transportation between foreign countries of supplies purchased with foreign currencies made available, or derived from funds that are made available, under the foreign assistance act of1961 ( 22 u.s.c. 2353); and (3) shipments of classified supplies when the classification prohibits the use of non government vessels. (4) subcontracts or purchase orders under this contract for the acquisition of commercial products or commercial services unless the supplies being transported are  (i) items the contractor is reselling or distributing to the government without adding value. (generally, the contractor does not add value to the items when it subcontracts items for f.o.b. destination shipment); or (ii) shipments in direct support of u.s. military  (a) contingency operations; (b) exercises; or (c) forces deployed in connection with united nations or north atlantic treaty organization humanitarian or peacekeeping operations. (note: this contract requires shipment of commercial products in direct support of u.s. military contingency operations, exercises, or forces deployed in connection with united nations or north atlantic treaty organization humanitarian or peacekeeping operations.) as prescribed in 47.303 17(f), insert the following clause: f.o.b. origin, prepaid freight small package shipments (jan 1991) (a) when authorized by the contracting officer, f.o.b. origin freight shipments which do not have a security classification shall move on prepaid commercial bills of lading or other shipping documents to domestic destinations, including air and water terminals. weight of individual shipments shall be governed by carrier restrictions but shall not exceed 150 pounds by any form of commercial air or 1,000 pounds by other commercial carriers. the government will reimburse the contractor for reasonable freight charges. (b) the contractor shall annotate the commercial bill of lading as required by the clause of this contract entitled "commercial bill of lading notations." (c) the contractor shall consolidate prepaid shipments in accordance with procedures established by the cognizant transportation office. the contractor is authorized to combine government prepaid shipments with the contractor’s commercial shipments for delivery to one or more consignees and the government will reimburse its pro rata share of the total freight costs. the contractor shall provide a copy of the commercial bill of lading promptly to each consignee. quantities shall not be divided into mailable lots for the purpose of avoiding movement by other modes of transportation. (d) transportation charges will be billed as a separate item on the invoice for each shipment made. a copy of the pertinent bill of lading, shipment receipt, or freight bill shall accompany the invoice unless otherwise specified in the contract. (e) loss and damage claims will be processed by the government. (end of clause) as prescribed in 47.305 17 , insert the following clause: returnable cylinders (may 1994) (a) cylinder, referred to in this clause, is a pressure vessel designed for pressures higher than 40 psia and having a circular cross section excluding a portable tank, multi tank car tank, cargo tank or tank car. (b) returnable cylinders shall remain the contractor’s property but shall be loaned without charge to the government for a period of ____ days [contracting officer shall insert number of days] (hereafter referred to as loan period) following the day of delivery to the f.o.b. point specified in the contract. any cylinder not returned within the loan period shall be charged a daily rental beginning with the firstday after the loan period expires, to and including the day the cylinders are delivered to the contractor (if the original delivery was f.o.b. origin) or are delivered or made available for delivery to the contractor’s designated carrier (if the original delivery was f.o.b. destination). the government shall pay the contractor a rental of $____________ [contracting officer shall insert dollar amount for rental, after evaluation of offers] per cylinder, perday, computed separately for cylinders by type, size, and capacity and for each point of delivery named in the contract. no rental shall accrue to the contractor in excess of replacement value per cylinder specified in paragraph (c) of this clause. (c) for each cylinder lost or damaged beyond repair while in the government’s possession, the government shall pay to the contractor the replacement value, less the allocable rental paid for that cylinder as follows: ________________________________________________ ________________________________________________ ________________________________________________ [contracting officer shall insert the cylinder types, sizes, capacities, and associated replacement values.] these cylinders shall become government property. (d) if any lost cylinder is located within ___________ [contracting officer shall insert number of days] calendar days after payment by the government, it may be returned to the contractor by the government, and the contractor shall pay to the government an amount equal to the replacement value, less rental computed in accordance with paragraph (b) of this clause, beginning at the expiration of the loan period specified in paragraph (b) of this clause, and continuing to the date on which the cylinder was delivered to the contractor. (end of clause) as prescribed in 47.103 2 , insert the following clause: submission of transportation documents for audit (feb 2006) (a) the contractor shall submit to the address identified below, for prepayment audit, transportation documents on which the united states will assume freight charges that were paid  (1) by the contractor under a cost reimbursement contract; and (2) by a first tier subcontractor under a cost reimbursement subcontract thereunder. (b) cost reimbursement contractors shall only submit for audit those bills of lading with freight shipment charges exceeding $100. bills under $100 shall be retained on site by the contractor and made available for on site audits. this exception only applies to freight shipment bills and is not intended to apply to bills and invoices for any other transportation services. (c) contractors shall submit the above referenced transportation documents to  ________________________________________________ ________________________________________________ ________________________________________________ [to be filled in by contracting officer] (end of clause) as prescribed in 47.208 2 , insert the following clause: report of shipment (repship) (feb 2006) (a) definition. "domestic destination", as used in this clause, means  (1) a destination within the contiguous united states; or (2) if shipment originates in alaska or hawaii, a destination in alaska or hawaii, respectively. (b) unless otherwise directed by the contracting officer, the contractor shall  (1) send a prepaid notice of shipment to the consignee transportation officer  (i) for all shipments of  (a) classified material, protected sensitive, and protected controlled material; (b) explosives and poisons, class 1, division 1.1, 1.2 and 1.3; class 2, division 2.3 and class 6, division 6.1; (c) radioactive materials requiring the use of a iii bar label; or (ii) when a truckload/carload shipment of supplies weighing 20,000 pounds or more, or a shipment of less weight that occupies the full visible capacity of a railway car or motor vehicle, is given to any carrier (common, contract, or private) for transportation to a domestic destination (other than a port for export); (2) transmits the notice by rapid means to be received by the consignee transportation officer at least 24 hours before the arrival of the shipment; and (3) send, to the receiving transportation officer, the bill of lading or letter or other document containing the following information and prominently identified as a "report of shipment"or "repship for t.o." repship for t.o. 81 jun 01 transportation officer defense depot, memphis, tn. shipped your depot 1981 jun 1 540 ctns mens cotton trousers, 30,240 lb, 1782 cube, via xx yy* in car no. xx 123456** bl*** c98000031**** contract dla_____eta***** june 5 jones & co., jersey city, n.j. *name of rail carrier, trucker, or other carrier. **vehicle identification. ***bill of lading. ****if not shipped by bl, identify lading document and state whether paid by contractor. *****estimated time of arrival. (end of clause) as prescribed in 47.405(b), insert the following clause: reporting requirement for u.s. flag air carriers regarding training to prevent human trafficking. (jan 2025) (a) definitions. as used in this clause  human trafficking means “severe forms of trafficking in persons” or “sex trafficking.” severe forms of trafficking in persons means  (1) sex trafficking in which a commercial sex act is induced by force, fraud, or coercion, or in which the person induced to perform such act has not attained 18 years of age; or (2) the recruitment, harboring, transportation, provision, or obtaining of a person for labor or services, through the use of force, fraud, or coercion for the purpose of subjection to involuntary servitude, peonage, debt bondage, or slavery. sex trafficking means the recruitment, harboring, transportation, provision, or obtaining of a person for the purpose of a commercial sex act. (b) annual reporting requirement. (1) in accordance with 49 u.s.c. 40118(g), the contractor shall provide the annual report described in paragraph (b)(2) of this clause by october 30th, via email, to the following agencies: (i) general services administration: traffickingpreventionreport@gsa.gov; (ii) u.s. department of transportation: trafficking@dot.gov; (iii) department of labor: aircarrier htreports@dol.gov; (iv) transportation security administration: ics cchtfams@tsa.dhs.gov; (v) u.s. customs and border protection: clp@cbp.dhs.gov; and (vi) dhs center for countering human trafficking: info@ccht.dhs.gov. (2) the annual report shall include information from the preceding government fiscal year (october 1 through september 30) regarding  (i) the number of personnel trained in the detection and reporting of potential human trafficking, including the training required under 49 u.s.c. 44734(a)(4); (ii) the number of notifications of potential human trafficking victims received from staff or other passengers; and (iii) (a)whether the contractor notified the global human trafficking hotline, another comparable hotline, or law enforcement at the relevant airport of the potential human trafficking victim for each such notification of potential human trafficking; and (b) if the contractor made a notification, the date the notification was made and the method of notification (e.g., text to hotline, call to law enforcement). (c) training. in accordance with 49 u.s.c. 44734 and 44738, personnel trained in the detection and reporting of potential human trafficking should include the following: (1) flight attendants; (2) ticket counter agents; (3) gate agents; and (4) other air carrier workers whose jobs require regular interaction with passengers. (end of clause) as prescribed in 48.201 , insert the following clause: value engineering (jun 2020) (a) general. the contractor is encouraged to develop, prepare, and submit value engineering change proposals (vecp’s) voluntarily. the contractor shall share in any net acquisition savings realized from accepted vecp’s, in accordance with the incentive sharing rates in paragraph (f) of this clause. (b) definitions. acquisition savings, as used in this clause, means savings resulting from the application of a vecp to contracts awarded by the same contracting office or its successor for essentially the same unit. acquisition savings include  (1) instant contract savings, which are the net cost reductions on this, the instant contract, and which are equal to the instant unit cost reduction multiplied by the number of instant contract units affected by the vecp, less the contractor’s allowable development and implementation costs; (2) concurrent contract savings, which are net reductions in the prices of other contracts that are definitized and ongoing at the time the vecp is accepted; and (3) future contract savings, which are the product of the future unit cost reduction multiplied by the number of future contract units in the sharing base. on an instant contract, future contract savings include savings on increases in quantities after vecp acceptance that are due to contract modifications, exercise of options, additional orders, and funding of subsequent year requirements on a multiyear contract. collateral savings, as used in this clause, means those measurable net reductions resulting from a vecp in the agency’s overall projected collateral costs, exclusive of acquisition savings, whether or not the acquisition cost changes. contracting office includes any contracting office that the acquisition is transferred to, such as another branch of the agency or another agency’s office that is performing a joint acquisition action. contractor’s development and implementation costs, as used in this clause, means those costs the contractor incurs on a vecp specifically in developing, testing, preparing, and submitting the vecp, as well as those costs the contractor incurs to make the contractual changes required by government acceptance of a vecp. future unit cost reduction, as used in this clause, means the instant unit cost reduction adjusted as the contracting officer considers necessary for projected learning or changes in quantity during the sharing period. it is calculated at the time the vecp is accepted and applies either  (1) throughout the sharing period, unless the contracting officer decides that recalculation is necessary because conditions are significantly different from those previously anticipated; or (2) to the calculation of a lump sum payment, which cannot later be revised. government costs, as used in this clause, means those agency costs that result directly from developing and implementing the vecp, such as any net increases in the cost of testing, operations, maintenance, and logistics support. the term does not include the normal administrative costs of processing the vecp or any increase in this contract’s cost or price resulting from negative instant contract savings. instant contract, as used in this clause, means this contract, under which the vecp is submitted. it does not include increases in quantities after acceptance of the vecp that are due to contract modifications, exercise of options, or additional orders. if this is a multiyear contract, the term does not include quantities funded after vecp acceptance. if this contract is a fixed price contract with prospective price redetermination, the term refers to the period for which firm prices have been established. instant unit cost reduction means the amount of the decrease in unit cost of performance (without deducting any contractor’s development or implementation costs) resulting from using the vecp on this, the instant contract. if this is a service contract, the instant unit cost reduction is normally equal to the number of hours per line item task saved by using the vecp on this contract, multiplied by the appropriate contract labor rate. negative instant contract savings means the increase in the cost or price of this contract when the acceptance of a vecp results in an excess of the contractor’s allowable development and implementation costs over the product of the instant unit cost reduction multiplied by the number of instant contract units affected. net acquisition savings means total acquisition savings, including instant, concurrent, and future contract savings, less government costs. sharing base, as used in this clause, means the number of affected end items on contracts of the contracting office accepting the vecp. sharing period, as used in this clause, means the period beginning with acceptance of the first unit incorporating the vecp and ending at a calendar date or event determined by the contracting officer for each vecp. unit, as used in this clause, means the item or task to which the contracting officer and the contractor agree the vecp applies. value engineering change proposal (vecp) means a proposal that  (1) requires a change to this, the instant contract, to implement; and (2) results in reducing the overall projected cost to the agency without impairing essential functions or characteristics;provided, that it does not involve a change  (i) in deliverable end item quantities only; (ii) in research and development (r&d) end items or r&d test quantities that is due solely to results of previous testing under this contract; or (iii) to the contract type only. (c) vecp preparation. as a minimum, the contractor shall include in each vecp the information described in paragraphs (c)(1) through (8) of this clause. if the proposed change is affected by contractually required configuration management or similar procedures, the instructions in those procedures relating to format, identification, and priority assignment shall govern vecp preparation. the vecp shall include the following: (1) a description of the difference between the existing contract requirement and the proposed requirement, the comparative advantages and disadvantages of each, a justification when an item’s function or characteristics are being altered, the effect of the change on the end item’s performance, and any pertinent objective test data. (2) a list and analysis of the contract requirements that must be changed if the vecp is accepted, including any suggested specification revisions. (3) identification of the unit to which the vecp applies. (4) a separate, detailed cost estimate for (i) the affected portions of the existing contract requirement and (ii) the vecp. the cost reduction associated with the vecp shall take into account the contractor’s allowable development and implementation costs, including any amount attributable to subcontracts under the subcontracts paragraph of this clause. (5) a description and estimate of costs the government may incur in implementing the vecp, such as test and evaluation and operating and support costs. (6) a prediction of any effects the proposed change would have on collateral costs to the agency. (7) a statement of the time by which a contract modification accepting the vecp must be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule. (8) identification of any previous submissions of the vecp, including the dates submitted, the agencies and contract numbers involved, and previous government actions, if known. (d) submission. the contractor shall submit vecp’s to the contracting officer, unless this contract states otherwise. if this contract is administered by other than the contracting office, the contractor shall submit a copy of the vecp simultaneously to the contracting officer and to the administrative contracting officer. (e) government action. (1) the contracting officer will notify the contractor of the status of the vecp within 45 calendar days after the contracting office receives it. if additional time is required, the contracting officer will notify the contractor within the 45 day period and provide the reason for the delay and the expected date of the decision. the government will process vecp’s expeditiously; however, it will not be liable for any delay in acting upon a vecp. (2) if the vecp is not accepted, the contracting officer will notify the contractor in writing, explaining the reasons for rejection. the contractor may withdraw any vecp, in whole or in part, at any time before it is accepted by the government. the contracting officer may require that the contractor provide written notification before undertaking significant expenditures for vecp effort. (3) any vecp may be accepted, in whole or in part, by the contracting officer’s award of a modification to this contract citing this clause and made either before or within a reasonable time after contract performance is completed. until such a contract modification applies a vecp to this contract, the contractor shall perform in accordance with the existing contract. the decision to accept or reject all or part of any vecp is a unilateral decision made solely at the discretion of the contracting officer. (f) sharing rates. if a vecp is accepted, the contractor shall share in net acquisition savings according to the percentages shown in the table below. the percentage paid the contractor depends upon  (1) this contract’s type (fixed price, incentive, or cost reimbursement); (2) the sharing arrangement specified in paragraph (a) of this clause (incentive, program requirement, or a combination as delineated in the schedule); and (3) the source of the savings (the instant contract, or concurrent and future contracts), as follows: contractor’s share of net acquisition savings (figure in percent) contract type incentive (voluntary) program requirement (mandatory) (g) calculating net acquisition savings. (1) acquisition savings are realized when (i) the cost or price is reduced on the instant contract, (ii) reductions are negotiated in concurrent contracts, (iii) future contracts are awarded, or (iv) agreement is reached on a lump sum payment for future contract savings (see paragraph (i)(4) of this clause). net acquisition savings are first realized, and the contractor shall be paid a share, when government costs and any negative instant contract savings have been fully offset against acquisition savings. (2) except in incentive contracts, government costs and any price or cost increases resulting from negative instant contract savings shall be offset against acquisition savings each time such savings are realized until they are fully offset. then, the contractor’s share is calculated by multiplying net acquisition savings by the appropriate contractor’s percentage sharing rate (see paragraph (f) of this clause). additional contractor shares of net acquisition savings shall be paid to the contractor at the time realized. (3) if this is an incentive contract, recovery of government costs on the instant contract shall be deferred and offset against concurrent and future contract savings. the contractor shall share through the contract incentive structure in savings on the instant contract items affected. any negative instant contract savings shall be added to the target cost or to the target price and ceiling price, and the amount shall be offset against concurrent and future contract savings. (4) if the government does not receive and accept all items on which it paid the contractor’s share, the contractor shall reimburse the government for the proportionate share of these payments. (h) contract adjustment. the modification accepting the vecp (or a subsequent modification issued as soon as possible after any negotiations are completed) shall  (1) reduce the contract price or estimated cost by the amount of instant contract savings, unless this is an incentive contract; (2) when the amount of instant contract savings is negative, increase the contract price, target price and ceiling price, target cost, or estimated cost by that amount; (3) specify the contractor’s dollar share per unit on future contracts, or provide the lump sum payment; (4) specify the amount of any government costs or negative instant contract savings to be offset in determining net acquisition savings realized from concurrent or future contract savings; and (5) provide the contractor’s share of any net acquisition savings under the instant contract in accordance with the following: (i) fixed price contracts add to contract price. (ii) cost reimbursement contracts add to contract fee. (i) concurrent and future contract savings. (1) payments of the contractor’s share of concurrent and future contract savings shall be made by a modification to the instant contract in accordance with paragraph (h)(5) of this clause. for incentive contracts, shares shall be added as a separate firm fixed price line item on the instant contract. the contractor shall maintain records adequate to identify the first delivered unit for 3 years after final payment under this contract. (2) the contracting officer shall calculate the contractor’s share of concurrent contract savings by  (i) subtracting from the reduction in price negotiated on the concurrent contract any government costs or negative instant contract savings not yet offset; and (ii) multiplying the result by the contractor’s sharing rate. (3) the contracting officer shall calculate the contractor’s share of future contract savings by  (i) multiplying the future unit cost reduction by the number of future contract units scheduled for delivery during the sharing period; (ii) subtracting any government costs or negative instant contract savings not yet offset; and (iii) multiplying the result by the contractor’s sharing rate. (4) when the government wishes and the contractor agrees, the contractor’s share of future contract savings may be paid in a single lump sum rather than in a series of payments over time as future contracts are awarded. under this alternate procedure, the future contract savings may be calculated when the vecp is accepted, on the basis of the contracting officer’s forecast of the number of units that will be delivered during the sharing period. the contractor’s share shall be included in a modification to this contract (see paragraph (h)(3) of this clause) and shall not be subject to subsequent adjustment. (5) alternate no cost settlement method. when, in accordance with section 48.104 4 of the federal acquisition regulation (far), the government and the contractor mutually agree to use the no cost settlement method, the following applies: (i) the contractor will keep all the savings on the instant contract and on its concurrent contracts only. (ii) the government will keep all the savings resulting from concurrent contracts placed on other sources, savings from all future contracts, and all collateral savings. (j) collateral savings. if a vecp is accepted, the contracting officer will increase the instant contract amount, as specified in paragraph (h)(5) of this clause, by a rate from 20 to 100 percent, as determined by the contracting officer, of any projected collateral savings determined to be realized in a typical year of use after subtracting any government costs not previously offset. however, the contractor’s share of collateral savings will not exceed the contract’s firm fixed price, target price, target cost, or estimated cost, at the time the vecp is accepted, or $100,000, whichever is greater. the contracting officer will be the sole determiner of the amount of collateral savings. (k) relationship to other incentives. only those benefits of an accepted vecp not rewardable under performance, design to cost (production unit cost, operating and support costs, reliability and maintainability), or similar incentives shall be rewarded under this clause. however, the targets of such incentives affected by the vecp shall not be adjusted because of vecp acceptance. if this contract specifies targets but provides no incentive to surpass them, the value engineering sharing shall apply only to the amount of achievement better than target. (l) subcontracts. the contractor shall include an appropriate value engineering clause in any subcontract valued at or above the simplified acquisition threshold, as defined in far 2.101 on the date of subcontract award, and may include one in subcontracts of lesser value. in calculating any adjustment in this contract’s price for instant contract savings (or negative instant contract savings), the contractor’s allowable development and implementation costs shall include any subcontractor’s allowable development and implementation costs, and any value engineering incentive payments to a subcontractor, clearly resulting from a vecp accepted by the government under this contract. the contractor may choose any arrangement for subcontractor value engineering incentive payments, provided, that the payments shall not reduce the government’s share of concurrent or future contract savings or collateral savings. (m) data. the contractor may restrict the government’s right to use any part of a vecp or the supporting data by marking the following legend on the affected parts: these data, furnished under the value engineering clause of contract _____, shall not be disclosed outside the government or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. this restriction does not limit the government’s right to use information contained in these data if it has been obtained or is otherwise available from the contractor or from another source without limitations. if a vecp is accepted, the contractor hereby grants the government unlimited rights in the vecp and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the government shall have the rights specified in the contract modification implementing the vecp and shall appropriately mark the data. (the terms "unlimited rights" and "limited rights" are defined in part 27 of the federal acquisition regulation.) (end of clause) alternate i (apr 1984). if the contracting officer selects a mandatory value engineering program requirement, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) general. the contractor shall (1) engage in a value engineering program, and submit value engineering progress reports, as specified in the schedule and (2) submit to the contracting officer any resulting value engineering change proposals (vecp’s). in addition to being paid as the schedule specifies for this mandatory program, the contractor shall share in any net acquisition savings realized from accepted vecp’s, in accordance with the program requirement sharing rates in paragraph (f) of this clause. alternate ii (jan 2015). if the contracting officer selects both a value engineering incentive and mandatory value engineering program requirement, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a) general. for those line items designated in the schedule as subject to the value engineering program requirement, the contractor shall (1) engage in a value engineering program, and submit value engineering progress reports, as specified in the schedule and (2) submit to the contracting officer any resulting vecp’s. in addition to being paid as the schedule specifies for this mandatory program, the contractor shall share in any net acquisition savings realized from vecp’s accepted under the program, in accordance with the program requirement sharing rates in paragraph (f) of this clause. for remaining areas of the contract, the contractor is encouraged to develop, prepare, and submit vecp’s voluntarily; for vecp’s accepted under these remaining areas, the incentive sharing rates apply. the decision on which rate applies is a unilateral decision made solely at the discretion of the government. alternate iii (apr 1984). when the head of the contracting activity determines that the cost of calculating and tracking collateral savings will exceed the benefits to be derived in a contract calling for a value engineering incentive, delete paragraph (j) from the basic clause and redesignate the remaining paragraphs accordingly. as prescribed in 48.201(f), insert the following clause: value engineering architect engineer (mar 1990) (a) general. the contractor shall (1) perform value engineering (ve) services and submit progress reports as specified in the schedule; and (2) submit to the contracting officer any resulting value engineering proposals (vep’s). value engineering activities shall be performed concurrently with, and without delay to, the schedule set forth in the contract. the services shall include ve evaluation and review and study of design documents immediately following completion of the 35 percent design state or at such stages as the contracting officer may direct. each separately priced line item for ve services shall define specifically the scope of work to be accomplished and may include ve studies of items other than design documents. the contractor shall be paid as the contract specifies for this effort, but shall not share in savings which may result from acceptance and use of vep’s by the government. (b) definitions. "life cycle cost," as used in this clause, is the sum of all costs over the useful life of a building, system or product. it includes the cost of design, construction, acquisition, operation, maintenance, and salvage (resale) value, if any. value engineering, as used in this clause, means an organized effort to analyze the functions of systems, equipment, facilities, services, and supplies for the purpose of achieving the essential functions at the lowest life cycle cost consistent with required performance, reliability, quality, and safety. value engineering proposal, as used in this clause, means, in connection with an a e contract, a change proposal developed by employees of the federal government or contractor value engineering personnel under contract to an agency to provide value engineering services for the contract or program. (c) submissions. after award of an architect engineering contract the contractor shall  (1) provide the government with a fee breakdown schedule for the ve services (such as criteria review, task team review, and bid package review) included in the contract schedule; (2) submit, for approval by the contracting officer, a list of team members and their respective resumes representing the engineering disciplines required to complete the study effort, and evidence of the team leader’s qualifications and engineering discipline. subsequent changes or substitutions to the approved ve team shall be submitted in writing to the contracting officer for approval; and (3) the team leader shall be responsible for pre study work assembly and shall edit, reproduce, and sign the final report and each vep. all vep’s, even if submitted earlier as an individual submission, shall be contained in the final report. (d) vep preparation. as a minimum, the contractor shall include the following information in each vep: (1) a description of the difference between the existing and proposed design, the comparative advantages and disadvantages of each, a justification when an item’s function is being altered, the effect of the change on system or facility performance, and any pertinent objective test data. (2) a list and analysis of design criteria or specifications that must be changed if the vep is accepted. (3) a separate detailed estimate of the impact on project cost of each vep, if accepted and implemented by the government. (4) a description and estimate of costs the government may incur in implementing the vep, such as design change cost and test and evaluation cost. (5) a prediction of any effects the proposed change may have on life cycle cost. (6) the effect the vep will have on design or construction schedules. (e) vep acceptance. approved vep’s shall be implemented by bilateral modification to this contract. (end of clause) as prescribed in 48.202 , insert the following clause: value engineering construction (oct 2020) (a) general. the contractor is encouraged to develop, prepare, and submit value engineering change proposals (vecp’s) voluntarily. the contractor shall share in any instant contract savings realized from accepted vecp’s, in accordance with paragraph (f) of this clause. (b) definitions. "collateral costs," as used in this clause, means agency costs of operation, maintenance, logistic support, or government furnished property. collateral savings, as used in this clause, means those measurable net reductions resulting from a vecp in the agency’s overall projected collateral costs, exclusive of acquisition savings, whether or not the acquisition cost changes. contractor’s development and implementation costs, as used in this clause, means those costs the contractor incurs on a vecp specifically in developing, testing, preparing, and submitting the vecp, as well as those costs the contractor incurs to make the contractual changes required by government acceptance of a vecp. government costs, as used in this clause, means those agency costs that result directly from developing and implementing the vecp, such as any net increases in the cost of testing, operations, maintenance, and logistic support. the term does not include the normal administrative costs of processing the vecp. instant contract savings, as used in this clause, means the estimated reduction in contractor cost of performance resulting from acceptance of the vecp, minus allowable contractor’s development and implementation costs, including subcontractors’ development and implementation costs (see paragraph (h) of this clause). value engineering change proposal (vecp) means a proposal that  (1) requires a change to this, the instant contract, to implement; and (2) results in reducing the contract price or estimated cost without impairing essential functions or characteristics; provided, that it does not involve a change  (i) in deliverable end item quantities only; or (ii) to the contract type only. (c) vecp preparation. as a minimum, the contractor shall include in each vecp the information described in paragraphs (c)(1) through (7) of this clause. if the proposed change is affected by contractually required configuration management or similar procedures, the instructions in those procedures relating to format, identification, and priority assignment shall govern vecp preparation. the vecp shall include the following: (1) a description of the difference between the existing contract requirement and that proposed, the comparative advantages and disadvantages of each, a justification when an item’s function or characteristics are being altered, and the effect of the change on the end item’s performance. (2) a list and analysis of the contract requirements that must be changed if the vecp is accepted, including any suggested specification revisions. (3) a separate, detailed cost estimate for (i) the affected portions of the existing contract requirement and (ii) the vecp. the cost reduction associated with the vecp shall take into account the contractor’s allowable development and implementation costs, including any amount attributable to subcontracts under paragraph (h) of this clause. (4) a description and estimate of costs the government may incur in implementing the vecp, such as test and evaluation and operating and support costs. (5) a prediction of any effects the proposed change would have on collateral costs to the agency. (6) a statement of the time by which a contract modification accepting the vecp must be issued in order to achieve the maximum cost reduction, noting any effect on the contract completion time or delivery schedule. (7) identification of any previous submissions of the vecp, including the dates submitted, the agencies and contract numbers involved, and previous government actions, if known. (d) submission. the contractor shall submit vecp’s to the resident engineer at the worksite, with a copy to the contracting officer. (e) government action. (1) the contracting officer will notify the contractor of the status of the vecp within 45 calendar days after the contracting office receives it. if additional time is required, the contracting officer will notify the contractor within the 45 day period and provide the reason for the delay and the expected date of the decision. the government will process vecp’s expeditiously; however, it will not be liable for any delay in acting upon a vecp. (2) if the vecp is not accepted, the contracting officer will notify the contractor in writing, explaining the reasons for rejection. the contractor may withdraw any vecp, in whole or in part, at any time before it is accepted by the government. the contracting officer may require that the contractor provide written notification before undertaking significant expenditures for vecp effort. (3) any vecp may be accepted, in whole or in part, by the contracting officer’s award of a modification to this contract citing this clause. the contracting officer may accept the vecp, even though an agreement on price reduction has not been reached, by issuing the contractor a notice to proceed with the change. until a notice to proceed is issued or a contract modification applies a vecp to this contract, the contractor shall perform in accordance with the existing contract. the decision to accept or reject all or part of any vecp is a unilateral decision made solely at the discretion of the contracting officer. (f) sharing  (1) rates. the government’s share of savings is determined by subtracting government costs from instant contract savings and multiplying the result by  (i) 45 percent for fixed price contracts; or (ii) 75 percent for cost reimbursement contracts. (2) payment. payment of any share due the contractor for use of a vecp on this contract shall be authorized by a modification to this contract to  (i) accept the vecp; (ii) reduce the contract price or estimated cost by the amount of instant contract savings; and (iii) provide the contractor’s share of savings by adding the amount calculated to the contract price or fee. (g) collateral savings. if a vecp is accepted, the contracting officer will increase the instant contract amount by 20 percent of any projected collateral savings determined to be realized in a typical year of use after subtracting any government costs not previously offset. however, the contractor’s share of collateral savings will not exceed the contract’s firm fixed price or estimated cost, at the time the vecp is accepted, or $100,000, whichever is greater. the contracting officer is the sole determiner of the amount of collateral savings. (h) subcontracts. the contractor shall include an appropriate value engineering clause in any subcontract of $75,000 or more and may include one in subcontracts of lesser value. in computing any adjustment in this contract’s price under paragraph (f) of this clause, the contractor’s allowable development and implementation costs shall include any subcontractor’s allowable development and implementation costs clearly resulting from a vecp accepted by the government under this contract, but shall exclude any value engineering incentive payments to a subcontractor. the contractor may choose any arrangement for subcontractor value engineering incentive payments; provided, that these payments shall not reduce the government’s share of the savings resulting from the vecp. (i) data. the contractor may restrict the government’s right to use any part of a vecp or the supporting data by marking the following legend on the affected parts: these data, furnished under the value engineering construction clause of contract _____, shall not be disclosed outside the government or duplicated, used, or disclosed, in whole or in part, for any purpose other than to evaluate a value engineering change proposal submitted under the clause. this restriction does not limit the government’s right to use information contained in these data if it has been obtained or is otherwise available from the contractor or from another source without limitations. if a vecp is accepted, the contractor hereby grants the government unlimited rights in the vecp and supporting data, except that, with respect to data qualifying and submitted as limited rights technical data, the government shall have the rights specified in the contract modification implementing the vecp and shall appropriately mark the data. (the terms "unlimited rights" and "limited rights" are defined in part 27 of the federal acquisition regulation.) (end of clause) alternate i (apr 1984). when the head of the contracting activity determines that the cost of calculating and tracking collateral savings will exceed the benefits to be derived in a construction contract, delete paragraph (g) from the basic clause and redesignate the remaining paragraphs accordingly. as prescribed in 49.502(a)(1), insert the following clause: termination for convenience of the government (fixed price) (short form) (apr 1984) the contracting officer, by written notice, may terminate this contract, in whole or in part, when it is in the government’s interest. if this contract is terminated, the rights, duties, and obligations of the parties, including compensation to the contractor, shall be in accordance with part 49 of the federal acquisition regulation in effect on the date of this contract. (end of clause) alternate i (apr 1984). if the contract is for dismantling, demolition, or removal of improvements, designate the basic clause as paragraph (a) and add the following paragraph (b): (b) upon receipt of the termination notice, if title to property is vested in the contractor under this contract, it shall revest in the government regardless of any other clause of the contract, except for property that the contractor (a) disposed of by bona fide sale or (b) removed from the site. as prescribed in 49.502 (b)(1)(i), insert the following clause: termination for convenience of the government (fixed price) (apr 2012) (a) the government may terminate performance of work under this contract in whole or, from time to time, in part if the contracting officer determines that a termination is in the government’s interest. the contracting officer shall terminate by delivering to the contractor a notice of termination specifying the extent of termination and the effective date. (b) after receipt of a notice of termination, and except as directed by the contracting officer, the contractor 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) for materials, services, or facilities, except as necessary to complete the continued portion of the contract. (3) terminate all subcontracts to the extent they relate to the work terminated. (4) assign to the government, as directed by the contracting officer, all right, title, and interest of the contractor under the subcontracts terminated, in which case the government 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 the contracting officer, settle all outstanding liabilities and termination settlement proposals arising from the termination of subcontracts; the approval or ratification will be final for purposes of this clause. (6) as directed by the contracting officer, transfer title and deliver to the government  (i) the fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the work terminated; and (ii) 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 the government. (7) complete performance of the work not terminated. (8) take any action that may be necessary, or that the contracting officer may direct, for the protection and preservation of the property related to this contract that is in the possession of the contractor and in which the government has or may acquire an interest. (9) use its best efforts to sell, as directed or authorized by the contracting officer, any property of the types referred to in paragraph (b)(6) of this clause; provided, however, that the contractor (i)is not required to extend credit to any purchaser and (ii) may acquire the property under the conditions prescribed by, and at prices approved by, the contracting officer. the proceeds of any transfer or disposition will be applied to reduce any payments to be made by the government under this contract, credited to the price or cost of the work, or paid in any other manner directed by the contracting officer. (c) the contractor shall submit complete termination inventory schedules no later than 120 days from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 120 day period. (d) after expiration of the plant clearance period as defined in subpart 49.001 of the federal acquisition regulation, the contractor may submit to the contracting officer a list, certified as to quantity and quality, of termination inventory not previously disposed of, excluding items authorized for disposition by the contracting officer. the contractor may request the government to remove those items or enter into an agreement for their storage. within 15 days, the government will accept title to those items and remove them or enter into a storage agreement. the contracting officer 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 contractor shall submit a final termination settlement proposal to the contracting officer in the form and with the certification prescribed by the contracting officer. the contractor shall submit the proposal promptly, but no later than 1 year from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 1 year period. however, if the contracting officer determines that the facts justify it, a termination settlement proposal may be received and acted on after 1 year or any extension. if the contractor fails to submit the proposal within the time allowed, the contracting officer may determine, on the basis of information available, the amount, if any, due the contractor because of the termination and shall pay the amount determined. (f) subject to paragraph (e) of this clause, the contractor and the contracting officer may agree upon the whole or any part of the amount to be paid or remaining to be paid because of the termination. the amount may include a reasonable allowance for profit on work done. however, the agreed amount, whether under this paragraph (f) or paragraph (g) of this clause, exclusive of costs shown in paragraph (g)(3) of this clause, may not exceed the total contract price as reduced by (1) the amount of payments previously made and (2) the contract price of work not terminated. the contract shall be modified, and the contractor paid the agreed amount. paragraph (g) of this clause shall not limit, restrict, or affect the amount that may be agreed upon to be paid under this paragraph. (g) if the contractor and the contracting officer fail to agree on the whole amount to be paid because of the termination of work, the contracting officer shall pay the contractor the amounts determined by the contracting officer as follows, but without duplication of any amounts agreed on under paragraph (f) of this clause: (1) the contract price for completed supplies or services accepted by the government (or sold or acquired under paragraph (b)(9) of this clause) not previously paid for, adjusted for any saving of freight and other charges. (2) the total of  (i) the costs incurred in the performance of the work terminated, including initial costs and preparatory expense allocable thereto, but excluding any costs attributable to supplies or services paid or to be paid under paragraph (g)(1) of this clause; (ii) the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract if not included in subdivision (g)(2)(i) of this clause; and (iii) a sum, as profit on subdivision (g)(2)(i) of this clause, determined by the contracting officer under 49.202 of the federal acquisition regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the contractor would have sustained a loss on the entire contract had it been completed, the contracting officer shall allow no profit under this subdivision (g)(2)(iii) and shall reduce the settlement to reflect the indicated rate of loss. (3) the reasonable costs of settlement of the 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 settlements); and (iii) storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection, or disposition of the termination inventory. (h) except for normal spoilage, and except to the extent that the government expressly assumed the risk of loss, the contracting officer shall exclude from the amounts payable to the contractor under paragraph (g) of this clause, the fair value as determined by the contracting officer, for the loss of the government property. (i) the cost principles and procedures of part 31 of the federal acquisition regulation, in effect on the date of this contract, shall govern all costs claimed, agreed to, or determined under this clause. (j) the contractor shall have the right of appeal, under the disputes clause, from any determination made by the contracting officer under paragraph (e), (g), or (l) of this clause, except that if the contractor failed to submit the termination settlement proposal or request for equitable adjustment within the time provided in paragraph (e) or (l), respectively, and failed to request a time extension, there is no right of appeal. (k) in arriving at the amount due the contractor under this clause, there shall be deducted  (1) all unliquidated advance or other payments to the contractor under the terminated portion of this contract; (2) any claim which the government has against the contractor under this contract; and (3) the agreed price for, or the proceeds of sale of, materials, supplies, or other things acquired by the contractor or sold under the provisions of this clause and not recovered by or credited to the government. (l) if the termination is partial, the contractor may file a proposal with the contracting officer for an equitable adjustment of the price(s) of the continued portion of the contract. the contracting officer shall make any equitable adjustment agreed upon. any proposal by the contractor for an equitable adjustment under this clause shall be requested within 90 days from the effective date of termination unless extended in writing by the contracting officer. (m) (1) the government may, under the terms and conditions it prescribes, make partial payments and payments against costs incurred by the contractor for the terminated portion of the contract, if the contracting officer believes the total of these payments will not exceed the amount to which the contractor will be entitled. (2) if the total payments exceed the amount finally determined to be due, the contractor shall repay the excess to the government 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 contractor to the date the excess is repaid. interest shall not be charged on any excess payment due to a reduction in the contractor’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 the contracting officer because of the circumstances. (n) unless otherwise provided in this contract or by statute, the contractor shall maintain all records and documents relating to the terminated portion of this contract for 3 years after final settlement. this includes all books and other evidence bearing on the contractor’s costs and expenses under this contract. the contractor shall make these records and documents available to the government, at the contractor’s office, at all reasonable times, without any direct charge. if approved by the contracting officer, photographs, microphotographs, or other authentic reproductions may be maintained instead of original records and documents. (end of clause) alternate i (sept 1996). if the contract is for construction, substitute the following paragraph (g) for paragraph (g) of the basic clause: (g) if the contractor and contracting officer fail to agree on the whole amount to be paid the contractor because of the termination of work, the contracting officer shall pay the contractor the amounts determined as follows, but without duplication of any amounts agreed upon under paragraph (f) of this clause: (1) for contract work performed before the effective date of termination, the total (without duplication of any items) of  (i) the cost of this work; (ii) the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract if not included in subdivision (g)(1)(i) of this clause; and (iii) a sum, as profit on subdivision (g)(1)(i) of this clause, determined by the contracting officer under 49.202 of the federal acquisition regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the contractor would have sustained a loss on the entire contract had it been completed, the contracting officer shall allow no profit under this subdivision (g)(1)(iii) and shall reduce the settlement to reflect the indicated rate of loss. (2) the reasonable costs of settlement of the 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 settlements); and (iii) storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection, or disposition of the termination inventory. alternate ii (sept 1996). if the contract is with an agency of the u.s. government or with state, local, or foreign governments or their agencies, and if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate, delete paragraph (m)(2) of the basic clause. alternate iii (sept 1996). if the contract is for construction and with an agency of the u.s. government or with state, local, or foreign governments or their agencies, substitute the following paragraph (g) for paragraph (g) of the basic clause. paragraph (m)(2) may be deleted from the basic clause if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate. (g) if the contractor and contracting officer fail to agree on the whole amount to be paid the contractor because of the termination of work, the contracting officer shall pay the contractor the amounts determined as follows, but without duplication of any amounts agreed upon under paragraph (f) of this clause: (1) for contract work performed before the effective date of termination, the total (without duplication of any items) of  (i) the cost of this work; (ii) the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract if not included in subdivision (g)(1)(i) of this clause; and (iii) a sum, as profit on subdivision (g)(1)(i) of this clause, determined by the contracting officer under 49.202 of the federal acquisition regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the contractor would have sustained a loss on the entire contract had it been completed, the contracting officer shall allow no profit under this subdivision(iii) and shall reduce the settlement to reflect the indicated rate of loss. (2) the reasonable costs of settlement of the 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 settlements); and (iii) storage, transportation, and other costs incurred, reasonably necessary for the preservation, protection, or disposition of the termination inventory. as prescribed in 49.502(b)(2), insert the following clause: termination for convenience of the government (dismantling, demolition, or removal of improvements) (apr 2012) (a) the government may terminate performance of work under this contract, in whole or, from time to time, in part if the contracting officer determines that a termination is in the government’s interest. the contracting officer shall terminate by delivering to the contractor a notice of termination specifying the extent of termination and the effective date. upon receipt of the notice, if title to property is vested in the contractor under this contract, it shall revest in the government regardless of any other clause of this contract, except for property that the contractor disposed of by bona fide sale or removed from the site. (b) after receipt of a notice of termination, and except as directed by the contracting officer, the contractor shall immediately proceed with the following obligations, regardless of 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) for materials, services, or facilities, except as necessary to complete the continued portion of the contract. (3) terminate all subcontracts to the extent they relate to the work terminated. (4) assign to the government, as directed by the contracting officer, all right, title, and interest of the contractor under the subcontracts terminated, in which case the government 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 the contracting officer, settle all outstanding liabilities and termination settlement proposals arising from the termination of subcontracts; the approval or ratification will be final for purposes of this clause. (6) as directed by the contracting officer, transfer title and deliver to the government  (i) the fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the work terminated; and (ii) the completed or partially completed plans, drawings, information, and other property that, if the contract has been completed, would be required to be furnished to the government. (7) complete performance of the work not terminated. (8) take any action that may be necessary, or that the contracting officer may direct, for the protection and preservation of the property related to this contract that is in the possession of the contractor and in which the government has or may acquire an interest. (9) use its best efforts to sell, as directed or authorized by the contracting officer, any property of the types referred to in paragraph (b)(6) of this clause; provided, however, that the contractor (i)is not required to extend credit to any purchaser and (ii) may acquire the property under the conditions prescribed by, and at prices approved by, the contracting officer. the proceeds of any transfer or disposition will be applied to reduce any payments to be made by the government under this contract, credited to the price or cost of the work, or paid in any other manner directed by the contracting officer. (c) the contractor shall submit complete termination inventory schedules no later than 120 days from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 120 day period. (d) after expiration of the plant clearance period as defined in subpart 49.001 of the federal acquisition regulation, the contractor may submit to the contracting officer a list, certified as to quantity and quality, of termination inventory not previously disposed of, excluding items authorized for disposition by the contracting officer. the contractor may request the government to remove those items or enter into an agreement for their storage. within 15 days, the government will accept title to those items and remove them or enter into a storage agreement. the contracting officer 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 contractor shall submit a final termination settlement proposal to the contracting officer in the form and with the certification prescribed by the contracting officer. the contractor shall submit the proposal promptly, but no later than 1 year from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 1 year period. however, if the contracting officer determines that the facts justify it, a termination settlement proposal may be received and acted on after 1 year or any extension. if the contractor fails to submit the proposal within the time allowed, the contracting officer may determine, on the basis of information available, the amount, if any, due the contractor because of the termination and shall pay the amount determined. (f) subject to paragraph (e) of this clause, the contractor and the contracting officer may agree upon the whole or any part of the amount to be paid because of the termination. the amount may include a reasonable allowance for profit on work done. however, the agreed amount, whether under this paragraph (f) or paragraph (g) of this clause, exclusive of settlement costs, may not exceed the total contract price as reduced by (1) the amount of payments previously made and (2) the contract price of work not terminated. the contract shall be amended and the contractor paid the agreed amount. paragraph (g) of this clause shall not limit, restrict, or affect the amount that may be agreed upon to be paid under this paragraph. (g) if the contractor and the contracting officer fail to agree on the whole amount to be paid because of the termination of work, the contracting officer shall pay the contractor the amounts determined by the contracting officer as follows, but without duplication of any amounts agreed on under paragraph (f) of this clause: (1) for contract work performed before the effective date of termination, the total (without duplication of any items) of  (i) the cost of this work; (ii) the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract, if not included in subdivision (g)(1)(i) of this clause; and (iii) a sum, as profit on subdivision (g)(1)(i) of this clause, determined by the contracting officer under section 49.202 of the federal acquisition regulation, in effect on the date of this contract, to be fair and reasonable; however, if it appears that the contractor would have sustained a loss on the entire contract had it been completed, the contracting officer shall allow no profit under this subdivision(iii) and shall reduce the amount of the settlement to reflect the indicated rate of loss. (2) the reasonable costs of settlement of the 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 settlements); and (iii) preservation and protection of property under paragraph (b)(8) of this clause. (h) except for normal spoilage, and except to the extent that the government expressly assumed the risk of loss, the contracting officer shall exclude from the amounts payable to the contractor under paragraph (g) of this clause, the fair value, as determined by the contracting officer, for the loss of the government property. (i) the cost principles and procedures of part 31 of the federal acquisition regulation, in effect on the date of this contract, shall govern all costs claimed, agreed to, or determined under this clause. (j) the contractor shall have the right of appeal, under the disputes clause, from any determination made by the contracting officer under paragraph (e), (g), or (l) of this clause, except that if the contractor failed to submit the termination settlement proposal within the time provided in paragraph (e) or (l) and failed to request a time extension, there is no right of appeal. if the contracting officer has made a determination of the amount due under paragraph (e), (g), or (l) of this clause, the government shall pay the contractor  (1) the amount determined by the contracting officer, if there is no right of appeal or if no timely appeal has been taken; or (2) the amount finally determined on an appeal. (k) in arriving at the amount due the contractor under this clause, there shall be deducted  (1) all unliquidated advance or other payments to the contractor under the terminated portion of this contract; (2) any claim which the government has against the contractor under this contract; and (3) the agreed price for, or the proceeds of sale of, materials, supplies, or other things acquired by the contractor or sold under the provisions of this clause and not recovered by or credited to the government. (l) if the termination is partial, the contractor may file a proposal with the contracting officer for an equitable adjustment of the price(s) of the continued portion of the contract. the contracting officer shall make any equitable adjustment agreed upon. any proposal by the contractor for an equitable adjustment under this clause shall be requested within 90 days from the effective date of termination unless extended in writing by the contracting officer. (m) (1) the government may, under the terms and conditions it prescribes, make partial payments and payments against cost incurred by the contractor for the terminated portion of the contract, if the contracting officer believes the total of these payments will not exceed the amount to which the contractor will be entitled. (2) if the total payments exceed the amount finally determined to be due, the contractor shall repay the excess to the government 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 contractor to the date the excess is repaid. interest shall not be charged on any excess payment due to a reduction in the contractor’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 the contracting officer because of the circumstances. (n) unless otherwise provided in this contract or by statute, the contractor shall maintain all records and documents relating to the terminated portion of this contract for 3 years after final settlement. this includes all books and other evidence bearing on the contractor’s costs and expenses under this contract. the contractor shall make these records and documents available to the government, at the contractor’s office, at all reasonable times, without any direct charge. if approved by the contracting officer, photographs, microphotographs, or other authentic reproductions may be maintained instead of original records and documents. (end of clause) alternate i (sept1996). if the contract is with an agency of the u.s. government or with state, local, or foreign governments or their agencies, and if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate, delete paragraph (m)(2) from the basic clause. as prescribed in 49.502(c), insert the following clause in solicitations and contracts for services, regardless of value, when a fixed price contract is contemplated and the contracting officer determines that because of the kind of services required, the successful offeror will not incur substantial charges in preparation for and in carrying out the contract, and would, if terminated for the convenience of the government, limit termination settlement charges to services rendered before the date of termination: termination for convenience of the government (services) (short form) (apr 1984) the contracting officer, by written notice, may terminate this contract, in whole or in part, when it is in the government’s interest. if this contract is terminated, the government shall be liable only for payment under the payment provisions of this contract for services rendered before the effective date of termination. (end of clause) as prescribed in 49.502(d), insert the following clause: termination for convenience of the government (educational and other nonprofit institutions) (aug 2016) (a) the government may terminate performance of work under this contract in whole or, from time to time, in part if the contracting officer determines that a termination is in the government’s interest. the contracting officer shall terminate by delivering to the contractor a notice of termination specifying the extent of termination and the effective date. (b) after receipt of a notice of termination and except as directed by the contracting officer, the contractor shall immediately proceed with the following obligations: (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 contract. (3) terminate all applicable subcontracts and cancel or divert applicable commitments covering personal services that extend beyond the effective date of termination. (4) assign to the government, as directed by the contracting officer, all right, title, and interest of the contractor under the subcontracts terminated, in which case the government shall have the right to settle or pay any termination settlement proposal arising out of those terminations. (5) with approval or ratification to the extent required by the contracting officer, settle all outstanding liabilities and termination settlement proposals arising from the termination of subcontracts; approval or ratification will be final for purposes of this clause. (6) transfer title (if not already transferred) and, as directed by the contracting officer, deliver to the government any information and items that, if the contract had been completed, would have been required to be furnished, including  (i) materials or equipment produced, in process, or acquired for the work terminated; and (ii) completed or partially completed plans, drawings, and information. (7) complete performance of the work not terminated. (8) take any action that may be necessary, or that the contracting officer may direct, for the protection and preservation of the property related to this contract that is in the possession of the contractor and in which the government has or may acquire an interest. (9) use its best efforts to sell, as directed or authorized by the contracting officer, termination inventory other than that retained by the government under paragraph (b)(6) of this clause; provided, however, that the contractor (i)is not required to extend credit to any purchaser and (ii) may acquire the property under the conditions prescribed by, and at prices approved by, the contracting officer. the proceeds of any transfer or disposition will be applied to reduce any payments to be made by the government under this contract, credited to the price or cost of the work, or paid in any other manner directed by the contracting officer. (c) the contractor shall submit complete termination inventory schedules no later than 120 days from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 120 day period. (d) after termination, the contractor shall submit a final termination settlement proposal to the contracting officer in the form and with the certification prescribed by the contracting officer. the contractor shall submit the proposal promptly but no later than 1 year from the effective date of termination unless extended in writing by the contracting officer upon written request of the contractor within this 1 year period. if the contractor fails to submit the termination settlement proposal within the time allowed, the contracting officer may determine, on the basis of information available, the amount, if any, due the contractor because of the termination and shall pay the amount determined. (e) subject to paragraph (d) of this clause, the contractor and the contracting officer may agree upon the whole or any part of the amount to be paid because of the termination. this amount may include reasonable cancellation charges incurred by the contractor and any reasonable loss on outstanding commitments for personal services that the contractor is unable to cancel; provided, that the contractor exercised reasonable diligence in diverting such commitments to other operations. the contract shall be amended and the contractor paid the agreed amount. (f) the cost principles and procedures in subpart 31.3 of the federal acquisition regulation (far), contracts with educational institutions (defined as institutions of higher education in the omb uniform guidance in 2 cfr part 200, subpart a, and 20 u.s.c. 1001), as in effect on the date of the contract, shall govern all costs claimed, agreed to, or determined under this clause; however, if the contractor is not an educational institution and is a nonprofit organization (as defined in the omb uniform guidance at 2 cfr part 200), the cost principles and procedures in subpart 31.7 of the far, contracts with nonprofit organizations, shall apply; unless the contractor is a nonprofit institution listed in the omb uniform guidance at 2 cfr part 200, appendix viii, as exempted from the cost principles in subpart e, in which case the cost principles at far 31.2 for commercial organizations shall apply to such contractor. (g) the government may, under the terms and conditions it prescribes, make partial payments against costs incurred by the contractor for the terminated portion of this contract, if the contracting officer believes the total of these payments will not exceed the amount to which the contractor will be entitled. (h) the contractor has the right of appeal as provided under the disputes clause, except that if the contractor failed to submit the termination settlement proposal within the time provided in paragraph (d) of this clause and failed to request a time extension, there is no right of appeal. (end of clause) as prescribed in 49.503(a)(1), insert the following clause: termination (cost reimbursement) (may 2004) (a) the government may terminate performance of work under this contract in whole or, from time to time, in part, if  (1) the contracting officer determines that a termination is in the government’s interest; or (2) the contractor defaults in performing this contract and fails to cure the default within 10 days (unless extended by the contracting officer) after receiving a notice specifying the default. "default" includes failure to make progress in the work so as to endanger performance. (b) the contracting officer shall terminate by delivering to the contractor a notice of termination specifying whether termination is for default of the contractor or for convenience of the government, the extent of termination, and the effective date. if, after termination for default, it is determined that the contractor was not in default or that the contractor’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 contractor 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 the government. (c) after receipt of a notice of termination, and except as directed by the contracting officer, the contractor 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 contract. (3) terminate all subcontracts to the extent they relate to the work terminated. (4) assign to the government, as directed by the contracting officer, all right, title, and interest of the contractor under the subcontracts terminated, in which case the government 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 the contracting officer, 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 contract; approval or ratification will be final for purposes of this clause. (6) transfer title (if not already transferred) and, as directed by the contracting officer, deliver to the government  (i) the fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced or acquired for the work terminated; (ii) 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 the government; and (iii) the jigs, dies, fixtures, and other special tools and tooling acquired or manufactured for this contract, the cost of which the contractor has been or will be reimbursed under this contract. (7) complete performance of the work not terminated. (8) take any action that may be necessary, or that the contracting officer may direct, for the protection and preservation of the property related to this contract that is in the possession of the contractor and in which the government has or may acquire an interest. (9) use its best efforts to sell, as directed or authorized by the contracting officer, any property of the types referred to in paragraph (c)(6) of this clause; provided, however, that the contractor (i)is not required to extend credit to any purchaser and (ii) may acquire the property under the conditions prescribed by, and at prices approved by, the contracting officer. the proceeds of any transfer or disposition will be applied to reduce any payments to be made by the government under this contract, credited to the price or cost of the work, or paid in any other manner directed by the contracting officer. (d) the contractor shall submit complete termination inventory schedules no later than 120 days from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 120 day period. (e) after expiration of the plant clearance period as defined in subpart 49.001 of the federal acquisition regulation, the contractor may submit to the contracting officer a list, certified as to quantity and quality, of termination inventory not previously disposed of, excluding items authorized for disposition by the contracting officer. the contractor may request the government to remove those items or enter into an agreement for their storage. within 15 days, the government will accept the items and remove them or enter into a storage agreement. the contracting officer 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. (f) after termination, the contractor shall submit a final termination settlement proposal to the contracting officer in the form and with the certification prescribed by the contracting officer. the contractor shall submit the proposal promptly, but no later than 1 year from the effective date of termination, unless extended in writing by the contracting officer upon written request of the contractor within this 1 year period. however, if the contracting officer determines that the facts justify it, a termination settlement proposal may be received and acted on after 1 year or any extension. if the contractor fails to submit the proposal within the time allowed, the contracting officer may determine, on the basis of information available, the amount, if any, due the contractor because of the termination and shall pay the amount determined. (g) subject to paragraph (f) of this clause, the contractor and the contracting officer may agree on the whole or any part of the amount to be paid (including an allowance for fee) because of the termination. the contract shall be amended, and the contractor paid the agreed amount. (h) if the contractor and the contracting officer 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, the contracting officer shall determine, on the basis of information available, the amount, if any, due the contractor, and shall pay that amount, which shall include the following: (1) all costs reimbursable under this contract, not previously paid, for the performance of this contract 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 the contracting officer; however, the contractor 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 contract if not included in paragraph (h)(1) of this clause. (3) the reasonable costs of settlement of the 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 settlements); and (iii) 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 contractor’s termination settlement proposal may be included. (4) a portion of the fee payable under the contract, determined as follows: (i) if the contract 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 contract, but excluding subcontract effort included in subcontractors’ termination proposals, less previous payments for fee. (ii) if the contract 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 the government is to the total number of articles (or amount of services) of a like kind required by the contract. (5) if the settlement includes only fee, it will be determined under paragraph (h)(4) of this clause. (i) the cost principles and procedures in part 31 of the federal acquisition regulation, in effect on the date of this contract, shall govern all costs claimed, agreed to, or determined under this clause. (j) the contractor shall have the right of appeal, under the disputes clause, from any determination made by the contracting officer under paragraph (f), (h), or (l) of this clause, except that if the contractor failed to submit the termination settlement proposal within the time provided in paragraph (f) and failed to request a time extension, there is no right of appeal. if the contracting officer has made a determination of the amount due under paragraph (f), (h) or (l) of this clause, the government shall pay the contractor  (1) the amount determined by the contracting officer if there is no right of appeal or if no timely appeal has been taken; or (2) the amount finally determined on an appeal. (k) in arriving at the amount due the contractor under this clause, there shall be deducted  (1) all unliquidated advance or other payments to the contractor, under the terminated portion of this contract; (2) any claim which the government has against the contractor under this contract; and (3) the agreed price for, or the proceeds of sale of materials, supplies, or other things acquired by the contractor or sold under this clause and not recovered by or credited to the government. (l) the contractor and contracting officer must agree to any equitable adjustment in fee for the continued portion of the contract when there is a partial termination. the contracting officer shall amend the contract to reflect the agreement. (m) (1) the government may, under the terms and conditions it prescribes, make partial payments and payments against costs incurred by the contractor for the terminated portion of the contract, if the contracting officer believes the total of these payments will not exceed the amount to which the contractor will be entitled. (2) if the total payments exceed the amount finally determined to be due, the contractor shall repay the excess to the government 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 contractor to the date the excess is repaid. interest shall not be charged on any excess payment due to a reduction in the contractor’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 the contracting officer because of the circumstances. (n) the provisions of this clause relating to fee are inapplicable if this contract does not include a fee. (end of clause) alternate i (sept1996). if the contract is for construction, substitute the following paragraph (h)(4) for paragraph (h)(4) of the basic clause: (4) a portion of the fee payable under the contract determined as follows: (i) if the contract 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 contract, but excluding subcontract effort included in subcontractors’ termination settlement proposals, less previous payments for fee. (ii) if the contract is terminated for default, the total fee payable shall be such proportionate part of the fee as the actual work in place is to the total work in place required by the contract. alternate ii (sept1996). if the contract is with an agency of the u.s. government or with state, local, or foreign governments or their agencies, and if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate, delete paragraph (m)(2) from the basic clause. alternate iii (sept1996). if the contract is for construction with an agency of the u.s. government or with state, local, or foreign governments or their agencies, the following paragraph (h)(4) shall be substituted for paragraph (h)(4) of the basic clause. paragraph (m)(2) may be deleted from the basic clause if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate. (4) a portion of the fee payable under the contract determined as follows: (i) if the contract 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 contract, but excluding subcontract effort included in subcontractors’ termination settlement proposals, less previous payments for fee. (ii) if the contract is terminated for default, the total fee payable shall be such proportionate part of the fee as the actual work in place is to the total work in place required by the contract. alternate iv (sept1996). if the contract is a time and material or labor hour contract, substitute the following paragraphs (h) and (l) for paragraphs (h) and (l) of the basic clause: (h) if the contractor and the contracting officer fail to agree in whole or in part on the amount to be paid because of the termination of work, the contracting officer shall determine, on the basis of information available, the amount, if any, due the contractor and shall pay the amount determined as follows: (1) if the termination is for the convenience of the government, include  (i) an amount for direct labor hours (as defined in the schedule of the contract) 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 the contractor; (ii) an amount (computed under the provisions for payment of materials) for material expenses incurred before the effective date of termination, not previously paid to the contractor; (iii) an amount for labor and material expenses computed 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 the contracting officer; however, the contractor shall discontinue these expenses as rapidly as practicable; (iv) if not included in subdivision (h)(1)(i), (ii), or (iii) of this clause, the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract; and (v) 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 protection or disposition of the termination inventory. (2) if the termination is for default of the contractor, include the amounts computed under paragraph (h)(1) of this clause but omit  (i) any amount for preparation of the contractor’s termination settlement proposal; and (ii) 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 the government. (l) if the termination is partial, the contractor may file with the contracting officer a proposal for an equitable adjustment of price(s) for the continued portion of the contract. the contracting officer shall make any equitable adjustment agreed upon. any proposal by the contractor for an equitable adjustment under this clause shall be requested within 90 days from the effective date of termination, unless extended in writing by the contracting officer. alternate v (sept1996). if the contract is a time and material or labor hour contract with an agency of the u.s. government or with state, local or foreign governments or their agencies, substitute the following paragraphs (h) and (l) for paragraphs (h) and (l) of the basic clause. paragraph (m)(2) may be deleted from the basic clause if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate. (h) if the contractor and the contracting officer fail to agree in whole or in part on the amount to be paid because of the termination of work, the contracting officer shall determine, on the basis of information available, the amount, if any, due the contractor and shall pay the amount determined as follows: (1) if the termination is for the convenience of the government, include  (i) an amount for direct labor hours (as defined in the schedule of the contract) 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 the contractor; (ii) an amount (computed under the provisions for payment of materials) for material expenses incurred before the effective date of termination, not previously paid to the contractor; (iii) an amount for labor and material expenses computed 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 the contracting officer; however, the contractor shall discontinue these expenses as rapidly as practicable; (iv) if not included in subdivision (h)(1)(i), (ii), or (iii) of this clause, the cost of settling and paying termination settlement proposals under terminated subcontracts that are properly chargeable to the terminated portion of the contract; and (v) 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 protection or disposition of the termination inventory. (2) if the termination is for default of the contractor, include the amounts computed under paragraph (h)(1) of this clause but omit  (i) any amount for preparation of the contractor’s termination settlement proposal; and (ii) 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 the government. (l) if the termination is partial, the contractor may file with the contracting officer a proposal for an equitable adjustment of the price(s) for the continued portion of the contract. the contracting officer shall make any equitable adjustment agreed upon. any proposal by the contractor for an equitable adjustment under this clause shall be requested within 90 days from the effective date of termination, unless extended in writing by the contracting officer. as prescribed in 49.503(b), insert the following clause in solicitations and contracts for architect engineer services when a fixed price contract is contemplated: termination (fixed price architect engineer) (apr 1984) (a) the government may terminate this contract in whole or, from time to time, in part, for the government’s convenience or because of the failure of the contractor to fulfill the contract obligations. the contracting officer shall terminate by delivering to the contractor a notice of termination specifying the nature, extent, and effective date of the termination. upon receipt of the notice, the contractor shall  (1) immediately discontinue all services affected (unless the notice directs otherwise); and (2) deliver to the contracting officer all data, drawings, specifications, reports, estimates, summaries, and other information and materials accumulated in performing this contract, whether completed or in process. (b) if the termination is for the convenience of the government, the contracting officer shall make an equitable adjustment in the contract price but shall allow no anticipated profit on unperformed services. (c) if the termination is for failure of the contractor to fulfill the contract obligations, the government may complete the work by contract or otherwise and the contractor shall be liable for any additional cost incurred by the government. (d) if, after termination for failure to fulfill contract obligations, it is determined that the contractor had not failed, the rights and obligations of the parties shall be the same as if the termination had been issued for the convenience of the government. (e) the rights and remedies of the government provided in this clause are in addition to any other rights and remedies provided by law or under this contract. (end of clause) as prescribed in 49.504(a)(1), insert the following clause: default (fixed price supply and service) (apr 1984) (a) (1) the government may, subject to paragraphs (c) and (d) of this clause, by written notice of default to the contractor, terminate this contract in whole or in part if the contractor fails to  (i) deliver the supplies or to perform the services within the time specified in this contract or any extension; (ii) make progress, so as to endanger performance of this contract (but see paragraph (a)(2) of this clause); or (iii) perform any of the other provisions of this contract (but see paragraph (a)(2) of this clause). (2) the government’s right to terminate this contract under subdivisions (a)(1)(ii) and (1)(iii) of this clause, may be exercised if the contractor does not cure such failure within 10 days (or more if authorized in writing by the contracting officer) after receipt of the notice from the contracting officer specifying the failure. (b) if the government terminates this contract in whole or in part, it may acquire, under the terms and in the manner the contracting officer considers appropriate, supplies or services similar to those terminated, and the contractor will be liable to the government for any excess costs for those supplies or services. however, the contractor shall continue the work not terminated. (c) except for defaults of subcontractors at any tier, the contractor shall not be liable for any excess costs if the failure to perform the contract arises from causes beyond the control and without the fault or negligence of the contractor. examples of such causes include (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 contractor. (d) if the failure to perform is caused by the default of a subcontractor at any tier, and if the cause of the default is beyond the control of both the contractor and subcontractor, and without the fault or negligence of either, the contractor shall not be liable for any excess costs for failure to perform, unless the subcontracted supplies or services were obtainable from other sources in sufficient time for the contractor to meet the required delivery schedule. (e) if this contract is terminated for default, the government may require the contractor to transfer title and deliver to the government, as directed by the contracting officer, any (1) completed supplies, and (2) partially completed supplies and materials, parts, tools, dies, jigs, fixtures, plans, drawings, information, and contract rights (collectively referred to as "manufacturing materials" in this clause) that the contractor has specifically produced or acquired for the terminated portion of this contract. upon direction of the contracting officer, the contractor shall also protect and preserve property in its possession in which the government has an interest. (f) the government shall pay contract price for completed supplies delivered and accepted. the contractor and contracting officer shall agree on the amount of payment for manufacturing materials delivered and accepted and for the protection and preservation of the property. failure to agree will be a dispute under the disputes clause. the government may withhold from these amounts any sum the contracting officer determines to be necessary to protect the government against loss because of outstanding liens or claims of former lien holders. (g) if, after termination, it is determined that the contractor was not in default, or that the default was excusable, the rights and obligations of the parties shall be the same as if the termination had been issued for the convenience of the government. (h) the rights and remedies of the government in this clause are in addition to any other rights and remedies provided by law or under this contract. (end of clause) alternate i (apr 1984). if the contract is for transportation or transportation related services, delete paragraph (f) of the basic clause, redesignate the remaining paragraphs accordingly, and substitute the following paragraphs (a) and (e) for paragraphs (a) and (e) of the basic clause: (a)(1) the government may, subject to paragraphs (c) and (d) of this clause, by written notice of default to the contractor, terminate this contract in whole or in part if the contractor fails to  (i) pick up the commodities or to perform the services, including delivery services, within the time specified in this contract or any extension; (ii) make progress, so as to endanger performance of this contract (but see paragraph (a)(2) of this clause); or (iii) perform any of the other provisions of this contract (but see paragraph (a)(2) of this clause). (2) the government’s right to terminate this contract under subdivisions (a)(1)(ii) and (iii) of this clause, may be exercised if the contractor does not cure such failure within 10 days (or more if authorized in writing by the contracting officer) after receipt of the notice from the contracting officer specifying the failure. (e) if this contract is terminated while the contractor has possession of government goods, the contractor shall, upon direction of the contracting officer, protect and preserve the goods until surrendered to the government or its agent. the contractor and contracting officer shall agree on payment for the preservation and protection of goods. failure to agree on an amount will be a dispute under the disputes clause. as prescribed in 49.504(b), insert the following clause: default (fixed price research and development) (apr 1984) (a) (1) the government may, subject to paragraphs (c) and (d) of this clause, by written notice of default to the contractor, terminate this contract in whole or in part if the contractor fails to  (i) perform the work under the contract within the time specified in this contract or any extension; (ii) prosecute the work so as to endanger performance of this contract (but see paragraph (a)(2) of this clause); or (iii) perform any of the other provisions of this contract (but see paragraph (a)(2) of this clause). (2) the government’s right to terminate this contract under subdivisions (a)(1)(ii) and (iii) of this clause may be exercised if the contractor does not cure such failure within 10 days (or more, if authorized in writing by the contracting officer) after receipt of the notice from the contracting officer specifying the failure. (b) if the government terminates this contract in whole or in part, it may acquire, under the terms and in the manner the contracting officer considers appropriate, work similar to the work terminated, and the contractor will be liable to the government for any excess costs for the similar work. however, the contractor shall continue the work not terminated. (c) except for defaults of subcontractors at any tier, the contractor shall not be liable for any excess costs if the failure to perform the contract arises from causes beyond the control and without the fault or negligence of the contractor. examples of such causes include (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 contractor. (d) if the failure to perform is caused by the default of a subcontractor at any tier, and if the cause of the default is beyond the control of both the contractor and subcontractor, and without the fault or negligence of either, the contractor shall not be liable for any excess costs for failure to perform, unless the subcontracted supplies or services were obtainable from other sources in sufficient time for the contractor to meet the required delivery schedule or other performance requirements. (e) if this contract is terminated for default, the government may require the contractor to transfer title and deliver to the government, as directed by the contracting officer, any (1) completed or partially completed work not previously delivered to, and accepted by, the government and (2) other property, including contract rights, specifically produced or acquired for the terminated portion of this contract. upon direction of the contracting officer, the contractor shall also protect and preserve property in its possession in which the government has an interest. (f) the government shall pay the contract price, if separately stated, for completed work it has accepted and the amount agreed upon by the contractor and the contracting officer for (1) completed work for which no separate price is stated, (2) partially completed work, (3) other property described above that it accepts, and (4) the protection and preservation of the property. failure to agree will be a dispute under the disputes clause. the government may withhold from these amounts any sum the contracting officer determines to be necessary to protect the government against loss from outstanding liens or claims of former lien holders. (g) if, after termination, it is determined that the contractor was not in default, or that the default was excusable, the rights and obligations of the parties shall be the same as if the termination had been issued for the convenience of the government. (h) the rights and remedies of the government in this clause are in addition to any other rights and remedies provided by law or under this contract. (end of clause) as prescribed in 49.504(c)(1), insert the following clause: default (fixed price construction) (apr 1984) (a) if the contractor refuses or fails to prosecute the work or any separable part, with the diligence that will insure its completion within the time specified in this contract including any extension, or fails to complete the work within this time, the government may, by written notice to the contractor, terminate the right to proceed with the work (or the separable part of the work) that has been delayed. in this event, the government may take over the work and complete it by contract or otherwise, and may take possession of and use any materials, appliances, and plant on the work site necessary for completing the work. the contractor and its sureties shall be liable for any damage to the government resulting from the contractor’s refusal or failure to complete the work within the specified time, whether or not the contractor’s right to proceed with the work is terminated. this liability includes any increased costs incurred by the government in completing the  work. (b) the contractor’s right to proceed shall not be terminated nor the contractor charged with damages under this clause, if  (1) the delay in completing the work arises from unforeseeable causes beyond the control and without the fault or negligence of the contractor. examples of such causes include  (i) acts of god or of the public enemy, (ii) acts of the government in either its sovereign or contractual capacity, (iii) acts of another contractor in the performance of a contract with the government, (iv) fires, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising from unforeseeable causes beyond the control and without the fault or negligence of both the contractor and the subcontractors or suppliers; and (2) the contractor, within 10 days from the beginning of any delay (unless extended by the contracting officer), notifies the contracting officer in writing of the causes of delay. the contracting officer shall ascertain the facts and the extent of delay. if, in the judgment of the contracting officer, the findings of fact warrant such action, the time for completing the work shall be extended. the findings of the contracting officer shall be final and conclusive on the parties, but subject to appeal under the disputes clause. (c) if, after termination of the contractor’s right to proceed, it is determined that the contractor was not in default, or that the delay was excusable, the rights and obligations of the parties will be the same as if the termination had been issued for the convenience of the government. (d) the rights and remedies of the government in this clause are in addition to any other rights and remedies provided by law or under this contract. (end of clause) alternate i (apr 1984). if the contract is for dismantling, demolition, or removal of improvements, substitute the following paragraph (a) for paragraph (a) of the basic clause: (a)(1) if the contractor refuses or fails to prosecute the work, or any separable part, with the diligence that will insure its completion within the time specified in this contract, including any extension, or fails to complete the work within this time, the government may, by written notice to the contractor, terminate the right to proceed with the work or the part of the work that has been delayed. in this event, the government may take over the work and complete it by contract or otherwise, and may take possession of and use any materials, appliances, and plant on the work site necessary for completing the work. (2) if title to property is vested in the contractor under this contract, it shall revest in the government regardless of any other clause of this contract, except for property that the contractor has disposed of by bona fide sale or removed from the site. (3) the contractor and its sureties shall be liable for any damage to the government resulting from the contractor’s refusal or failure to complete the work within the specified time, whether or not the contractor’s right to proceed with the work is terminated. this liability includes any increased costs incurred by the government in completing the work. alternate ii (apr 1984). if the contract is to be awarded during a period of national emergency, paragraph (b)(1) below may be substituted for paragraph (b)(1) of the basic clause: (1) the delay in completing the work arises from causes other than normal weather beyond the control and without the fault or negligence of the contractor. examples of such causes include  (i) acts of god or of the public enemy, (ii) acts of the government in either its sovereign or contractual capacity, (iii) acts of another contractor in the performance of a contract with the government, (iv) fires, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising from causes other than normal weather beyond the control and without the fault or negligence of both the contractor and the subcontractors or suppliers; and alternate iii (apr 1984). if the contract is for dismantling, demolition, or removal of improvements and is to be awarded during a period of national emergency, substitute the following paragraph (a) for paragraph (a) of the basic clause. the following paragraph (b)(1) may be substituted for paragraph (b)(1) of the basic clause: (a)(1) if the contractor refuses or fails to prosecute the work, or any separable part, with the diligence that will insure its completion within the time specified in this contract, including any extension, or fails to complete the work within this time, the government may, by written notice to the contractor, terminate the right to proceed with the work or the part of the work that has been delayed. in this event, the government may take over the work and complete it by contract or otherwise, and may take possession of and use any materials, appliances, and plant on the work site necessary for completing the work. (2) if title to property is vested in the contractor under this contract, it shall revest in the government regardless of any other clause of this contract, except for property that the contractor has disposed of by bona fide sale or removed from the site. (3) the contractor and its sureties shall be liable for any damage to the government resulting from the contractor’s refusal or failure to complete the work within the specified time, whether or not the contractor’s right to proceed with the work is terminated. this liability includes any increased costs incurred by the government in completing the work. (b) the contractor’s right to proceed shall not be terminated nor the contractor charged with damages under this clause, if  (1) the delay in completing the work arises from causes other than normal weather beyond the control and without the fault or negligence of the contractor. examples of such causes include  (i) acts of god or of the public enemy, (ii) acts of the government in either its sovereign or contractual capacity, (iii) acts of another contractor in the performance of a contract with the government, (iv) fires, (v) floods, (vi) epidemics, (vii) quarantine restrictions, (viii) strikes, (ix) freight embargoes, (x) unusually severe weather, or (xi) delays of subcontractors or suppliers at any tier arising from causes other than normal weather beyond the control and without the fault or negligence of both the contractor and the subcontractors or suppliers; and as prescribed in 49.505(a), insert the following clause in solicitations and contracts for personal services (see part 37 ): termination (personal services) (apr 1984) the government may terminate this contract at any time upon at least 15 days’ written notice by the contracting officer to the contractor. the contractor, with the written consent of the contracting officer, may terminate this contract upon at least 15 days’ written notice to the contracting officer. (end of clause) as prescribed in 49.505(b), insert the following clause in solicitations and contracts for supplies, services, construction, and research and development on a fee basis whenever a cost reimbursement contract is contemplated. also insert the clause in time and material contracts, and labor hour contracts. when used in construction contracts, substitute the words "completion time" for "delivery schedule" in the last sentence of the clause. excusable delays (apr 1984) (a) except for defaults of subcontractors at any tier, the contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the contractor. 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 contractor. "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 contractor and subcontractor, and without the fault or negligence of either, the contractor shall not be deemed to be in default,  unless  (1) the subcontracted supplies or services were obtainable from other sources; (2) the contracting officer ordered the contractor in writing to purchase these supplies or services from the other source; and (3) the contractor failed to comply reasonably with this order. (c) upon request of the contractor, the contracting officer shall ascertain the facts and extent of the failure. if the contracting officer 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 the government under the termination clause of this contract. (end of clause) as prescribed in 50.104 4 , insert the following clause: indemnification under public law 85 804 (apr 1984) (a) "contractor’s principal officials," as used in this clause, means directors, officers, managers, superintendents, or other representatives supervising or directing  (1) all or substantially all of the contractor’s business; (2) all or substantially all of the contractor’s operations at any one plant or separate location in which this contract is being performed; or (3) a separate and complete major industrial operation in connection with the performance of this contract. (b) under public law85 804 ( 50 u.s.c. 1431  1435) and executive order10789, as amended, and regardless of any other provisions of this contract, the government shall, subject to the limitations contained in the other paragraphs of this clause, indemnify the contractor against  (1) claims (including reasonable expenses of litigation or settlement) by third persons (including employees of the contractor) for death; personal injury; or loss of, damage to, or loss of use of property; (2) loss of, damage to, or loss of use of contractor property, excluding loss of profit; and (3) loss of, damage to, or loss of use of government property, excluding loss of profit. (c) this indemnification applies only to the extent that the claim, loss, or damage (1) arises out of or results from a risk defined in this contract as unusually hazardous or nuclear and (2)is not compensated for by insurance or otherwise. any such claim, loss, or damage, to the extent that it is within the deductible amounts of the contractor’s insurance, is not covered under this clause. if insurance coverage or other financial protection in effect on the date the approving official authorizes use of this clause is reduced, the government’s liability under this clause shall not increase as a result. (d) when the claim, loss, or damage is caused by willful misconduct or lack of good faith on the part of any of the contractor’s principal officials, the contractor shall not be indemnified for  (1) government claims against the contractor (other than those arising through subrogation); or (2) loss or damage affecting the contractor’s property. (e) with the contracting officer’s prior written approval, the contractor may, in any subcontract under this contract, indemnify the subcontractor against any risk defined in this contract as unusually hazardous or nuclear. this indemnification shall provide, between the contractor and the subcontractor, the same rights and duties, and the same provisions for notice, furnishing of evidence or proof, and government settlement or defense of claims as this clause provides. the contracting officer may also approve indemnification of subcontractors at any lower tier, under the same terms and conditions. the government shall indemnify the contractor against liability to subcontractors incurred under subcontract provisions approved by the contracting officer. (f) the rights and obligations of the parties under this clause shall survive this contract’s termination, expiration, or completion. the government shall make no payment under this clause unless the agency head determines that the amount is just and reasonable. the government may pay the contractor or subcontractors, or may directly pay parties to whom the contractor or subcontractors may be liable. (g) the contractor shall  (1) promptly notify the contracting officer of any claim or action against, or any loss by, the contractor or any subcontractors that may be reasonably be expected to involve indemnification under this clause; (2) immediately furnish to the government copies of all pertinent papers the contractor receives; (3) furnish evidence or proof of any claim, loss, or damage covered by this clause in the manner and form the government requires; and (4) comply with the government’s directions and execute any authorizations required in connection with settlement or defense of claims or actions. (h) the government may direct, control, or assist in settling or defending any claim or action that may involve indemnification under this clause. (end of clause) alternate i (apr 1984). in cost reimbursement contracts, add the following paragraph (i) to the basic clause: (i) the cost of insurance (including self insurance programs) covering a risk defined in this contract as unusually hazardous or nuclear shall not be reimbursed except to the extent that the contracting officer has required or approved this insurance. the government’s obligations under this clause are  (1) excepted from the release required under this contract’s clause relating to allowable cost; and (2) not affected by this contract’s limitation of cost or limitation of funds clause. as prescribed in 50.206(a), insert the following provision: safety act coverage not applicable (feb 2009) the government has determined that for purposes of this solicitation the product(s) or service(s) being acquired by this action are neither presumptively nor actually entitled to a pre determination that the products or services are qualified anti terrorism technologies as that term is defined by the support anti terrorism by fostering effective technologies act of 2002 (safety act), 6 u.s.c. 441  444. this determination does not prevent sellers of technologies from applying for safety act protections in other contexts. proposals in which either acceptance or pricing is made contingent upon safety act designation as a qualified anti terrorism technology or safety act certification as an approved product for homeland security of the proposed product or service will not be considered for award. see federal acquisition regulation subpart 50.2. (end of provision) as prescribed in 50.206(b)(1), insert the following provision: safety act block designation/certification (feb 2009) (a) definitions. as used in this provision  act of terrorism means any act determined to have met the following requirements or such other requirements as defined and specified by the secretary of homeland security: (1) is unlawful. (2) causes harm, including financial harm, to a person, property, or entity, in the united states, or in the case of a domestic united states air carrier or a united states flag vessel (or a vessel based principally in the united states on which united states income tax is paid and whose insurance coverage is subject to regulation in the united states), in or outside the united states. (3) uses or attempts to use instrumentalities, weapons or other methods designed or intended to cause mass destruction, injury or other loss to citizens or institutions of the united states. block certification means safety act certification of a technology class that the department of homeland security (dhs) has determined to be an approved class of approved products for homeland security. block designation means safety act designation of a technology class that the dhs has determined to be a qualified anti terrorism technology (qatt). qualified anti terrorism technology (qatt) means any technology designed, developed, modified, procured, or sold for the purpose of preventing, detecting, identifying, or deterring acts of terrorism or limiting the harm such acts might otherwise cause, for which a safety act designation has been issued. for purposes of defining a qatt, technology means any product, equipment, service (including support services), device, or technology (including information technology) or any combination of the foregoing. design services, consulting services, engineering services, software development services, software integration services, threat assessments, vulnerability studies, and other analyses relevant to homeland security may be deemed a technology. safety act certification means a determination by dhs pursuant to 6 u.s.c. 442(d), as further delineated in 6 cfr 25.9, that a qatt for which a safety act designation has been issued is an approved product for homeland security, i.e., it will perform as intended, conforms to the seller’s specifications, and is safe for use as intended. safety act designation means a determination by dhs pursuant to 6 u.s.c. 441(b) and 6 u.s.c. 443(a), as further delineated in 6 cfr 25.4, that a particular anti terrorism technology constitutes a qatt under the safety act. (b) the support anti terrorism by fostering effective technologies act of 2002 (safety act), 6 u.s.c. 441  444, creates certain liability limitations for claims arising out of, relating to, or resulting from an act of terrorism where qatts have been deployed. it also confers other important benefits. safety act designation and safety act certification are designed to support effective technologies aimed at preventing, detecting, identifying, or deterring acts of terrorism, or limiting the harm that such acts might otherwise cause, and which also meet other prescribed criteria. for some classes of technologies, dhs may issue a block designation/certification in order to lessen the burdens for filing for safety act designation or safety act certifications by not requiring applicants to provide certain information otherwise required and in order to offer expedited review of any application submitted pursuant to a block designation/certification. block designations/certifications will be issued only for technologies that rely on established performance standards or defined technical characteristics. (c) (1) dhs has issued a block designation or block certification for the technology to be acquired under this solicitation. (2) this block designation or block certification is attached to this solicitation and contains essential information, including  (i) a detailed description of and specification for the technology covered by the block designation or block certification; (ii) a listing of those portions of the safety act application kit that must be completed and submitted by applicants; (iii) the date of its expiration; and (iv) any other terms and conditions. (3) offerors should read this block designation or block certification carefully to make sure they comply with its terms if they plan to take advantage of safety act coverage for their technology(ies). (d) all determinations by dhs are based on factors set forth in the safety act and its implementing regulations. a determination by dhs to issue a safety act designation, or not to issue a safety act designation for a particular technology as a qatt is not a determination that the technology meets, or fails to meet, the requirements of any solicitation issued by any federal, state, local or tribal governments. determinations by dhs with respect to whether to issue a safety act designation for technologies submitted for dhs review are based on the factors identified in 6 cfr 25.4(b). (e) neither safety act designation nor certification is in any way a requirement of this action. whether to seek the benefits of the safety act for a proposed product or service is entirely up to the offeror. additional information about the safety act and this block designation/certification may be found at the safety act website at http://www.safetyact.gov or requests may be mailed to: directorate of science and technology safety act/room 4320 department of homeland security washington, dc 20528 (f) proposals in which pricing or any other terms or conditions are offered contingent upon safety act designation or safety act certification of the proposed product(s) or service(s) will not be considered for award. (end of provision) alternate i (feb 2009). as prescribed in 50.206 (b)(2), substitute the following paragraph (f): (f)(1) offerors are authorized to submit proposals made contingent upon safety act designation (or safety act certification, if a block certification exists) before award. when an offer is made contingent upon safety act designation or certification, the offeror also may submit an alternate offer without the contingency. (2) if an offer is submitted contingent upon receipt of safety act designation (or safety act certification, if a block certification exists) prior to contract award, then the government may not award a contract based on such offer unless the offeror demonstrates prior to award that dhs has issued a safety act designation (or safety act certification, if a block certification exists) for the offeror’s technology. (3) the government reserves the right to award the contract based on a noncontingent offer, prior to dhs resolution of the offeror’s application for safety act designation (or safety act certification, if a block certification exists). alternate ii ( feb 2009). as prescribed in 50.206 (b)(3), substitute the following paragraph (f): (f)(1) offerors are authorized to submit offers presuming that safety act designation (or safety act certification, if a block certification exists) will be obtained before or after award. (2) an offeror is eligible for award only if the offeror  (i) files a safety act designation (or safety act certification) application, limited to the scope of the applicable block designation (or block certification), within 15 days after submission of the proposal; (ii) pursues its safety act designation (or safety act certification) application in good faith; and (iii) agrees to obtain the amount of insurance dhs requires for issuing the offeror’s safety act designation (or safety act certification). (3) if dhs has not issued a safety act designation (or safety act certification) to the successful offeror before contract award, the contracting officer will include the clause at 52.250 5 in the resulting contract. as prescribed in 50.206(c)(1), insert the following provision: safety act pre qualification designation notice (feb 2009) (a) definitions. as used in this provision  act of terrorism means any act determined to have met the following requirements or such other requirements as defined and specified by the secretary of homeland security: (1) is unlawful. (2) causes harm, including financial harm, to a person, property, or entity, in the united states, or in the case of a domestic united states air carrier or a united states flag vessel (or a vessel based principally in the united states on which united states income tax is paid and whose insurance coverage is subject to regulation in the united states), in or outside the united states. (3) uses or attempts to use instrumentalities, weapons or other methods designed or intended to cause mass destruction, injury or other loss to citizens or institutions of the united states. block certification means safety act certification of a technology class that the department of homeland security (dhs) has determined to be an approved class of approved products for homeland security. block designation means safety act designation of a technology class that the dhs has determined to be a qualified anti terrorism technology (qatt). pre qualification designation notice means a notice in a procurement solicitation or other publication by the government stating that the technology to be procured either affirmatively or presumptively satisfies the technical criteria necessary to be deemed a qualified anti terrorism technology. a pre qualification designation notice authorizes offeror(s) to submit streamlined safety act applications for safety act designation and receive expedited processing of those applications. qualified anti terrorism technology (qatt) means any technology designed, developed, modified, procured, or sold for the purpose of preventing, detecting, identifying, or deterring acts of terrorism or limiting the harm such acts might otherwise cause, for which a safety act designation has been issued. for purposes of defining a qatt, technology means any product, equipment, service (including support services), device, or technology (including information technology) or any combination of the foregoing. design services, consulting services, engineering services, software development services, software integration services, threat assessments, vulnerability studies, and other analyses relevant to homeland security may be deemed a technology. safety act certification means a determination by dhs pursuant to 6 u.s.c. 442(d), as further delineated in 6 cfr 25.9, that a qatt for which a safety act designation has been issued is an approved product for homeland security,i.e., it will perform as intended, conforms to the seller’s specifications, and is safe for use as intended. safety act designation means a determination by dhs pursuant to 6 u.s.c. 441(b) and 6 u.s.c. 443(a), as further delineated in 6 cfr 25.4, that a particular anti terrorism technology constitutes a qatt under the safety act. (b) the support anti terrorism by fostering effective technologies act of 2002 (safety act), 6 u.s.c. 441  444, creates certain liability limitations for claims arising out of, relating to, or resulting from an act of terrorism where qatts have been deployed. it also confers other important benefits. safety act designation and safety act certification are designed to support effective technologies aimed at preventing, detecting, identifying, or deterring acts of terrorism, or limiting the harm that such acts might otherwise cause, and which also meet other prescribed criteria. (c) (1) dhs has issued a safety act pre qualification designation notice for the technology to be acquired under this solicitation. (2) this notice is attached to this solicitation and contains essential information, including  (i) a detailed description of and specification for the technology covered by the notice; (ii) a statement that the technology described and specified in the notice satisfies the technical criteria to be deemed a qatt and the offeror’s proposed technology either may presumptively or will qualify for the issuance of a designation provided the offeror complies with terms and conditions in the notice and its application is approved; (iii) the period of time within which dhs will take action upon submission of a safety act application submitted pursuant to the notice; (iv) a listing of those portions of the application that must be completed and submitted by selected awardees and the time periods for such submissions; (v) the date of expiration of the notice; and (vi) any other terms and conditions concerning the notice. (3) offerors should read this notice carefully to make sure they comply with the terms of the notice if they plan on taking advantage of safety act coverage for their technologies. (d) all determinations by dhs are based on factors set forth in the safety act and its implementing regulations. a determination by dhs to issue a safety act designation, or not to issue a safety act designation for a particular technology as a qatt is not a determination that the technology meets, or fails to meet, the requirements of any solicitation issued by any federal, state, local or tribal governments. determinations by dhs with respect to whether to issue a safety act designation for technologies submitted for dhs review are based on the factors identified in 6 cfr 25.4(b). (e) neither safety act designation nor certification is in any way a requirement of this action. whether to seek the benefits of the safety act for a proposed product or service is entirely up to the offeror. additional information about the safety act may be found at the safety act website at http://www.safetyact.gov. (f) proposals in which pricing or any other terms or conditions are offered contingent upon safety act designation or certification of the proposed product(s) or service(s) will not be considered for award. (end of provision) alternate i (feb 2009). as prescribed in 50.206 (c)(2), substitute the following paragraph (f): (f)(1) offerors are authorized to submit proposals made contingent upon safety act designation before award. when an offer is made contingent upon safety act designation, the offeror also may submit an alternate offer without the contingency. (2) if an offer is submitted contingent upon receipt of safety act designation prior to contract award, then the government may not award a contract based on such offer unless the offeror demonstrates prior to award that dhs has issued a safety act designation for the offeror’s technology. (3) the government reserves the right to award the contract based on a noncontingent offer, prior to dhs resolution of the offeror’s application for safety act designation. alternate ii (feb 2009). as prescribed in 50.206 (c)(3), substitute the following paragraph (f): (f)(1) offerors are authorized to submit proposals presuming safety act designation before or after award. (2) an offeror is eligible for award only if the offeror  (i) files a safety act designation application, limited to the scope of the applicable prequalification designation notice, within 15 days after submission of the proposal; (ii) pursues its safety act designation application in good faith; and (iii) agrees to obtain the amount of insurance dhs requires for issuing the offeror’s safety act designation. (3) if dhs has not issued a safety act designation to the successful offeror before contract award, the contracting officer will include the clause at 52.250 5 in the resulting contract. as prescribed in 50.206(d), insert the following clause: safety act equitable adjustment (feb 2009) (a) definitions. as used in this clause  act of terrorism means any act determined to have met the following requirements or such other requirements as defined and specified by the secretary of homeland security: (1) is unlawful. (2) causes harm, including financial harm, to a person, property, or entity, in the united states, or in the case of a domestic united states air carrier or a united states flag vessel (or a vessel based principally in the united states on which united states income tax is paid and whose insurance coverage is subject to regulation in the united states), in or outside the united states. (3) uses or attempts to use instrumentalities, weapons or other methods designed or intended to cause mass destruction, injury or other loss to citizens or institutions of the united states. block certification means safety act certification of a technology class that the department of homeland security (dhs) has determined to be an approved class of approved products for homeland security. block designation means safety act designation of a technology class that the dhs has determined to be a qualified anti terrorism technology (qatt). qualified anti terrorism technology (qatt) means any technology designed, developed, modified, procured, or sold for the purpose of preventing, detecting, identifying, or deterring acts of terrorism or limiting the harm such acts might otherwise cause, for which a safety act designation has been issued. for purposes of defining a qatt, technology means any product, equipment, service (including support services), device, or technology (including information technology) or any combination of the foregoing. design services, consulting services, engineering services, software development services, software integration services, threat assessments, vulnerability studies, and other analyses relevant to homeland security may be deemed a technology. safety act certification means a determination by dhs pursuant to 6 u.s.c. 442(d), as further delineated in 6 cfr 25.9, that a qatt for which a safety act designation has been issued is an approved product for homeland security, i.e., it will perform as intended, conforms to the seller's specifications, and is safe for use as intended. safety act designation means a determination by dhs pursuant to 6 u.s.c. 441(b) and 6 u.s.c. 443(a), as further delineated in 6 cfr 25.4, that a particular anti terrorism technology constitutes a qatt under the safety act. (b) prices for the items covered by the pre qualification designation notice, block designation, or block certification in the contract were established presuming dhs will issue a safety act designation (or safety act certification) for those items. (c) in order to qualify for an equitable adjustment in accordance with paragraph (d) of this clause the contractor shall in good faith pursue obtaining  (1) safety act designation (or safety act certification); and (2) the amount of insurance dhs requires for issuing any safety act designation (or safety act certification). (d) (1) if dhs denies the contractor’s safety act designation (or certification) application, the contractor may submit a request for an equitable adjustment within 30 days of dhs’s notification of denial. (2) the contracting officer shall either  (i) make an equitable adjustment to the contract price based on evidence of the resulting increase or decrease in the contractor’s costs and/or an equitable adjustment to other terms and conditions based on lack of safety act designation (or certification); or (ii) at the sole option of the government, terminate this contract for the convenience of the government in place of an equitable adjustment. (3) a failure of the parties to agree on the equitable adjustment will be considered to be a dispute in accordance with the "disputes" clause of this contract. (4) unless first terminated, the contractor shall continue contract performance during establishment of any equitable adjustment. (end of clause) as prescribed in 51.107 , insert the following clause: government supply sources (apr 2012) the contracting officer may issue the contractor an authorization to use government supply sources in the performance of this contract. title to all property acquired by the contractor under such an authorization shall vest in the government unless otherwise specified in the contract. the provisions of the clause at far 52.245 1, government property, apply to all property acquired under such authorization (end of clause) as prescribed in 51.205 , insert the following clause: interagency fleet management system vehicles and related services (jan 1991) the contracting officer may issue the contractor an authorization to obtain interagency fleet management system (ifms) vehicles and related services for use in the performance of this contract. the use, service, and maintenance of interagency fleet management system vehicles and the use of related services by the contractor shall be in accordance with 41 cfr 101 39 and 41 cfr 101 38.301 1. (end of clause) as prescribed in 52.107(a), insert the following provision: solicitation provisions incorporated by reference (feb 1998) this solicitation incorporates one or more solicitation provisions by reference, with the same force and effect as if they were given in full text. upon request, the contracting officer will make their full text available. the offeror is cautioned that the listed provisions may include blocks that must be completed by the offeror and submitted with its quotation or offer. in lieu of submitting the full text of those provisions, the offeror may identify the provision by paragraph identifier and provide the appropriate information with its quotation or offer. also, the full text of a solicitation provision may be accessed electronically at this/these address(es): _____________________________________________ _____________________________________________ _____________________________________________ [insert one or more internet addresses] (end of provision) as prescribed in 52.107(b), insert the following clause: clauses incorporated by reference (feb 1998) this contract incorporates one or more clauses by reference, with the same force and effect as if they were given in full text. upon request, the contracting officer will make their full text available. also, the full text of a clause may be accessed electronically at this/these address(es): _____________________________________________ _____________________________________________ _____________________________________________ [insert one or more internet addresses] (end of clause) as prescribed in 52.107(c), insert the following provision in solicitations in order to revise or supplement, as necessary, other parts of the solicitation that apply to the solicitation phase only, except for any provision authorized for use with a deviation. include clear identification of what is being  altered. alterations in solicitation (apr 1984) portions of this solicitation are altered as follows: _____________________________________________ _____________________________________________ _____________________________________________ (end of clause) as prescribed in 52.107(d), insert the following clause in solicitations and contracts in order to revise or supplement, as necessary, other parts of the contract, or parts of the solicitation that apply after contract award, except for any clause authorized for use with a deviation. include clear identification of what is being altered. alterations in contract (apr 1984) portions of this contract are altered as follows: _____________________________________________ _____________________________________________ _____________________________________________ (end of clause) as prescribed in 52.107(e), insert the following provision in solicitations that include any far or supplemental provision with an authorized deviation. whenever any far or supplemental provision is used with an authorized deviation, the contracting officer shall identify it by the same number, title, and date assigned to the provision when it is used without deviation, include regulation name for any supplemental provision, except that the contracting officer shall insert "(deviation)" after the date of the provision. authorized deviations in provisions (nov 2020) (a) the use in this solicitation of any federal acquisition regulation (48 cfr chapter 1) provision with an authorized deviation is indicated by the addition of "(deviation)" after the date of the provision. (b) the use in this solicitation of any ______________ [insert regulation name](48 cfr chapter______) provision with an authorized deviation is indicated by the addition of "(deviation)" after the name of the regulation. (end of provision) as prescribed in 52.107(f), insert the following clause in solicitations and contracts that include any far or supplemental clause with an authorized deviation. whenever any far or supplemental clause is used with an authorized deviation, the contracting officer shall identify it by the same number, title, and date assigned to the clause when it is used without deviation, include regulation name for any supplemental clause, except that the contracting officer shall insert "(deviation)" after the date of the clause. authorized deviations in clauses (nov 2020) (a) the use in this solicitation or contract of any federal acquisition regulation (48 cfr chapter 1) clause with an authorized deviation is indicated by the addition of "(deviation)" after the date of the clause. (b) the use in this solicitation or contract of any _____ [insert regulation name] (48 cfr _____) clause with an authorized deviation is indicated by the addition of "(deviation)" after the name of the regulation. (end of clause) as prescribed in far 53.111 , insert the following clause: computer generated forms (jan 1991) (a) any data required to be submitted on a standard or optional form prescribed by the federal acquisition regulation (far) may be submitted on a computer generated version of the form, provided there is no change to the name, content, or sequence of the data elements on the form, and provided the form carries the standard or optional form number and edition date. (b) unless prohibited by agency regulations, any data required to be submitted on an agency unique form prescribed by an agency supplement to the far may be submitted on a computer generated version of the form provided there is no change to the name, content, or sequence of the data elements on the form and provided the form carries the agency form number and edition date. (c) if the contractor submits a computer generated version of a form that is different than the required form, then the rights and obligations of the parties will be determined based on the content of the required form. (end of clause) the matrix in this subpart contains a column for each principal type and/or purpose of contract (see 52.101(e)). key: type of contract: p or c = provision or clause ddr = dismantling, demolition, or removal of improvements ibr = is incorporation by reference authorized? (see far 52.102) a&e = architect engineering ucf = uniform contract format section, when applicable fac = facilities fp sup = fixed price supply ind del = indefinite delivery cr sup = cost reimbursement supply trn = transportation fp r&d = fixed price research & development sap = simplified acquisition procedures (excluding micro purchase) cr r&d = cost reimbursement research & development utl svc = utility services fp svc = fixed price service cp/cs = commercial products/commercial services cr svc = cost reimbursement service fp con = fixed price construction contract purpose: cr con = cost reimbursement construction r = required t&m lh = time & material/labor hours a = required when applicable lmv = leasing of motor vehicles o = optional com svc = communication services https://www.acquisition.gov/far smart matrix note 1: the following clauses are prescribed for use in letter contracts: 52.216 23, execution and commencement of work. 52.216 26, payments of allowable costs before definitization. 52.216 24, limitation of government liability. 52.232 16, progress payments, alternate ii. 52.216 25, contract definitization. 52.244 2, subcontracts. 52.216 25, contract definitization, alternate i. further instructions concerning provisions and clauses for letter contracts are set forth in 16.603 4(a). note 2: the following clauses are prescribed for use in small business administration 8(a) contracts: 52.219 11, special 8(a) contract conditions. 52.219 18, notification of competition limited to eligible 8(a) concerns. 52.219 12, special 8(a) subcontract conditions. 52.219 18, alternate i 52.219 14, limitations on subcontracting. 52.219 17, section 8(a) award. note 3: far provisions and clauses not identified on the matrix may be used in contracts for commercial items consistent with the procedures and limitations in far 12.302 note 4: the following clause is prescribed for use in information technology management reform act (itmra) contracts: 52.239 1, privacy or security safeguards. "a". definitions toggle changes toggle style formatter toggle acquisition.gov an official website of the general services administration buy american and trade agreements decision tools for supplies clause and provision selection tool evaluating foreign offers tool buy american and balance of payments program course con 0270 buy american and balance of payments program dod decision tool for buy american caac consultation to issue a class deviation from the federal acquisition regulation (far) regarding certification of service disabled veteran owned small business concerns department of commerce (doc) department of energy (doe) department of housing and urban development (hud) department of treasury department of education department of transportation (dot) general services administration (gsa) u.s. agency for international development (usaid) class deviation from the far regarding customary progress payment rates based on costs. department of commerce (doc) department of health & human services (hhs) department of interior (doi) united states agency for international development (usaid) caac consultation to issue a class deviation from the federal acquisition regulation (far) to eliminate hard copy original documents, signatures, notarization, seals on bonds and other seals for certain contract requirements department of commerce (doc) department of education department of homeland security (dhs) department of interior (doi) department of health & human services (hhs) caac consultation to issue a class deviation from the federal acquisition regulation (far) to eliminate hard copy original documents, signatures, notarization, seals on bonds and other seals for certain contract requirements department of commerce (doc) department of energy (doe) department of homeland security (dhs) securities exchange commission (sec) caac consultation to issue a class deviation from the federal acquisition regulation (far) regarding legal challenges to executive order 14026, increasing the minimum wage for federal contractors department of the treasury department of state (dos) social security administration (ssa) department of interior (doi)

insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. it is a form of risk management, primarily used to protect against the risk of a contingent or uncertain loss. an entity which provides insurance is known as an insurer, insurance company, insurance carrier, or underwriter. a person or entity who buys insurance is known as a policyholder, while a person or entity covered under the policy is called an insured. the insurance transaction involves the policyholder assuming a guaranteed, known, and relatively small loss in the form of a payment to the insurer (a premium) in exchange for the insurer's promise to compensate the insured in the event of a covered loss. the loss may or may not be financial, but it must be reducible to financial terms. furthermore, it usually involves something in which the insured has an insurable interest established by ownership, possession, or pre existing relationship. the insured receives a contract, called the insurance policy, which details the conditions and circumstances under which the insurer will compensate the insured, or their designated beneficiary or assignee. the amount of money charged by the insurer to the policyholder for the coverage set forth in the insurance policy is called the premium. if the insured experiences a loss which is potentially covered by the insurance policy, the insured submits a claim to the insurer for processing by a claims adjuster. a mandatory out of pocket expense required by an insurance policy before an insurer will pay a claim is called a deductible (or if required by a health insurance policy, a copayment). the insurer may hedge its own risk by taking out reinsurance, whereby another insurance company agrees to carry some of the risks, especially if the primary insurer deems the risk too large for it to carry. methods for transferring or distributing risk were practiced by chinese and indian traders as long ago as the 3rd and 2nd millennia bc, respectively.[1][2] chinese merchants travelling treacherous river rapids would redistribute their wares across many vessels to limit the loss due to any single vessel capsizing. codex hammurabi law 238 (c. 1755 1750 bc) stipulated that a sea captain, ship manager, or ship charterer that saved a ship from total loss was only required to pay one half the value of the ship to the ship owner.[3][4][5] in the digesta seu pandectae (533), the second volume of the codification of laws ordered by justinian i (527 565), a legal opinion written by the roman jurist paulus in 235 ad was included about the lex rhodia ("rhodian law"). it articulates the general average principle of marine insurance established on the island of rhodes in approximately 1000 to 800 bc, plausibly by the phoenicians during the proposed dorian invasion and emergence of the purported sea peoples during the greek dark ages (c. 1100 c. 750).[6][7][8] the law of general average is the fundamental principle that underlies all insurance.[7] in 1816, an archeological excavation in minya, egypt produced a nerva antonine dynasty era tablet from the ruins of the temple of antinous in antinoöpolis, aegyptus. the tablet prescribed the rules and membership dues of a burial society collegium established in lanuvium, italia in approximately 133 ad during the reign of hadrian (117 138) of the roman empire.[7] in 1851 ad, future u.s. supreme court associate justice joseph p. bradley (1870 1892 ad), once employed as an actuary for the mutual benefit life insurance company, submitted an article to the journal of the institute of actuaries. his article detailed an historical account of a severan dynasty era life table compiled by the roman jurist ulpian in approximately 220 ad that was also included in the digesta.[9] concepts of insurance has been also found in 3rd century bc hindu scriptures such as dharmasastra, arthashastra and manusmriti.[10] the ancient greeks had marine loans. money was advanced on a ship or cargo, to be repaid with large interest if the voyage prospers. however, the money would not be repaid at all if the ship were lost, thus making the rate of interest high enough to pay for not only for the use of the capital but also for the risk of losing it (fully described by demosthenes). loans of this character have ever since been common in maritime lands under the name of bottomry and respondentia bonds.[11] the direct insurance of sea risks for a premium paid independently of loans began in belgium about 1300 ad.[11] separate insurance contracts (i.e., insurance policies not bundled with loans or other kinds of contracts) were invented in genoa in the 14th century, as were insurance pools backed by pledges of landed estates. the first known insurance contract dates from genoa in 1347. in the next century, maritime insurance developed widely, and premiums were varied with risks.[12] these new insurance contracts allowed insurance to be separated from investment, a separation of roles that first proved useful in marine insurance. the earliest known policy of life insurance was made in the royal exchange, london, on 18 june 1583, for £383, 6s. 8d. for twelve months on the life of william gibbons.[11] insurance became far more sophisticated in enlightenment era europe, where specialized varieties developed. property insurance as we know it today can be traced to the great fire of london, which in 1666 devoured more than 13,000 houses. the devastating effects of the fire converted the development of insurance "from a matter of convenience into one of urgency, a change of opinion reflected in sir christopher wren's inclusion of a site for "the insurance office" in his new plan for london in 1667."[13] a number of attempted fire insurance schemes came to nothing, but in 1681, economist nicholas barbon and eleven associates established the first fire insurance company, the "insurance office for houses", at the back of the royal exchange to insure brick and frame homes. initially, 5,000 homes were insured by his insurance office.[14] at the same time, the first insurance schemes for the underwriting of business ventures became available. by the end of the seventeenth century, london's growth as a centre for trade was increasing due to the demand for marine insurance. in the late 1680s, edward lloyd opened a coffee house, which became the meeting place for parties in the shipping industry wishing to insure cargoes and ships, including those willing to underwrite such ventures. these informal beginnings led to the establishment of the insurance market lloyd's of london and several related shipping and insurance businesses.[15] life insurance policies were taken out in the early 18th century. the first company to offer life insurance was the amicable society for a perpetual assurance office, founded in london in 1706 by william talbot and sir thomas allen.[16][17] upon the same principle, edward rowe mores established the society for equitable assurances on lives and survivorship in 1762. it was the world's first mutual insurer and it pioneered age based premiums based on mortality rate laying "the framework for scientific insurance practice and development" and "the basis of modern life assurance upon which all life assurance schemes were subsequently based."[18] in the late 19th century "accident insurance" began to become available.[19] the first company to offer accident insurance was the railway passengers assurance company, formed in 1848 in england to insure against the rising number of fatalities on the nascent railway system. the first international insurance rule was the york antwerp rules (yar) for the distribution of costs between ship and cargo in the event of general average. in 1873 the "association for the reform and codification of the law of nations", the forerunner of the international law association (ila), was founded in brussels. it published the first yar in 1890, before switching to the present title of the "international law association" in 1895.[20][21] by the late 19th century governments began to initiate national insurance programs against sickness and old age. germany built on a tradition of welfare programs in prussia and saxony that began as early as in the 1840s. in the 1880s chancellor otto von bismarck introduced old age pensions, accident insurance and medical care that formed the basis for germany's welfare state.[22][23] in britain more extensive legislation was introduced by the liberal government in the national insurance act 1911. this gave the british working classes the first contributory system of insurance against illness and unemployment.[24] this system was greatly expanded after the second world war under the influence of the beveridge report, to form the first modern welfare state.[22][25] in 2008, the international network of insurance associations (inia), then an informal network, became active and it has been succeeded by the global federation of insurance associations (gfia), which was formally founded in 2012 to aim to increase insurance industry effectiveness in providing input to international regulatory bodies and to contribute more effectively to the international dialogue on issues of common interest. it consists of its 40 member associations and 1 observer association in 67 countries, which companies account for around 89% of total insurance premiums worldwide.[26] insurance involves pooling funds from many insured entities (known as exposures) to pay for the losses that only some insureds may incur. the insured entities are therefore protected from risk for a fee, with the fee being dependent upon the frequency and severity of the event occurring. in order to be an insurable risk, the risk insured against must meet certain characteristics. insurance as a financial intermediary is a commercial enterprise and a major part of the financial services industry, but individual entities can also self insure through saving money for possible future losses.[27] risk which can be insured by private companies typically share seven common characteristics:[28] when a company insures an individual entity, there are basic legal requirements and regulations. several commonly cited legal principles of insurance include:[29] to "indemnify" means to make whole again, or to be reinstated to the position that one was in, to the extent possible, prior to the happening of a specified event or peril. accordingly, life insurance is generally not considered to be indemnity insurance, but rather "contingent" insurance (i.e., a claim arises on the occurrence of a specified event). there are generally three types of insurance contracts that seek to indemnify an insured: from an insured's standpoint, the result is usually the same: the insurer pays the loss and claims expenses. if the insured has a "reimbursement" policy, the insured can be required to pay for a loss and then be "reimbursed" by the insurance carrier for the loss and out of pocket costs including, with the permission of the insurer, claim expenses.[30][note 1] under a "pay on behalf" policy, the insurance carrier would defend and pay a claim on behalf of the insured who would not be out of pocket for anything. most modern liability insurance is written on the basis of "pay on behalf" language, which enables the insurance carrier to manage and control the claim. under an "indemnification" policy, the insurance carrier can generally either "reimburse" or "pay on behalf of", whichever is more beneficial to it and the insured in the claim handling process. an entity seeking to transfer risk (an individual, corporation, or association of any type, etc.) becomes the "insured" party once risk is assumed by an "insurer", the insuring party, by means of a contract, called an insurance policy. generally, an insurance contract includes, at a minimum, the following elements: identification of participating parties (the insurer, the insured, the beneficiaries), the premium, the period of coverage, the particular loss event covered, the amount of coverage (i.e., the amount to be paid to the insured or beneficiary in the event of a loss), and exclusions (events not covered). an insured is thus said to be "indemnified" against the loss covered in the policy. when insured parties experience a loss for a specified peril, the coverage entitles the policyholder to make a claim against the insurer for the covered amount of loss as specified by the policy. the fee paid by the insured to the insurer for assuming the risk is called the premium. insurance premiums from many insureds are used to fund accounts reserved for later payment of claims   in theory for a relatively few claimants   and for overhead costs. so long as an insurer maintains adequate funds set aside for anticipated losses (called reserves), the remaining margin is an insurer's profit. policies typically include a number of exclusions, for example: insurers may prohibit certain activities which are considered dangerous and therefore excluded from coverage. one system for classifying activities according to whether they are authorised by insurers refers to "green light" approved activities and events, "yellow light" activities and events which require insurer consultation and/or waivers of liability, and "red light" activities and events which are prohibited and outside the scope of insurance cover.[33] insurance can have various effects on society through the way that it changes who bears the cost of losses and damage. on one hand it can increase fraud; on the other it can help societies and individuals prepare for catastrophes and mitigate the effects of catastrophes on both households and societies. insurance can influence the probability of losses through moral hazard, insurance fraud, and preventive steps by the insurance company. insurance scholars have typically used moral hazard to refer to the increased loss due to unintentional carelessness and insurance fraud to refer to increased risk due to intentional carelessness or indifference.[34] insurers attempt to address carelessness through inspections, policy provisions requiring certain types of maintenance, and possible discounts for loss mitigation efforts. while in theory insurers could encourage investment in loss reduction, some commentators have argued that in practice insurers had historically not aggressively pursued loss control measures particularly to prevent disaster losses such as hurricanes because of concerns over rate reductions and legal battles. however, since about 1996 insurers have begun to take a more active role in loss mitigation, such as through building codes.[35] according to the study books of the chartered insurance institute, there are variant methods of insurance as follows: insurers may use the subscription business model, collecting premium payments periodically in return for on going and/or compounding benefits offered to policyholders. insurers' business model aims to collect more in premium and investment income than is paid out in losses, and to also offer a competitive price which consumers will accept. profit can be reduced to a simple equation: insurers make money in two ways: the most complicated aspect of insuring is the actuarial science of ratemaking (price setting) of policies, which uses statistics and probability to approximate the rate of future claims based on a given risk. after producing rates, the insurer will use discretion to reject or accept risks through the underwriting process. at the most basic level, initial rate making involves looking at the frequency and severity of insured perils and the expected average payout resulting from these perils. thereafter an insurance company will collect historical loss data, bring the loss data to present value, and compare these prior losses to the premium collected in order to assess rate adequacy.[36] loss ratios and expense loads are also used. rating for different risk characteristics involves at the most basic level comparing the losses with "loss relativities" a policy with twice as many losses would, therefore, be charged twice as much. more complex multivariate analyses are sometimes used when multiple characteristics are involved and a univariate analysis could produce confounded results. other statistical methods may be used in assessing the probability of future losses. upon termination of a given policy, the amount of premium collected minus the amount paid out in claims is the insurer's underwriting profit on that policy. underwriting performance is measured by something called the "combined ratio", which is the ratio of expenses/losses to premiums.[37] a combined ratio of less than 100% indicates an underwriting profit, while anything over 100 indicates an underwriting loss. a company with a combined ratio over 100% may nevertheless remain profitable due to investment earnings. insurance companies earn investment profits on "float". float, or available reserve, is the amount of money on hand at any given moment that an insurer has collected in insurance premiums but has not paid out in claims. insurers start investing insurance premiums as soon as they are collected and continue to earn interest or other income on them until claims are paid out. the association of british insurers (grouping together 400 insurance companies and 94% of uk insurance services) has almost 20% of the investments in the london stock exchange.[38] in 2007, u.s. industry profits from float totaled $58 billion. in a 2009 letter to investors, warren buffett wrote, "we were paid $2.8 billion to hold our float in 2008".[39] in the united states, the underwriting loss of property and casualty insurance companies was $142.3 billion in the five years ending 2003. but overall profit for the same period was $68.4 billion, as the result of float. some insurance industry insiders, most notably hank greenberg, do not believe that it is possible to sustain a profit from float forever without an underwriting profit as well, but this opinion is not universally held. reliance on float for profit has led some industry experts to call insurance companies "investment companies that raise the money for their investments by selling insurance".[40] naturally, the float method is difficult to carry out in an economically depressed period. bear markets do cause insurers to shift away from investments and to toughen up their underwriting standards, so a poor economy generally means high insurance premiums. this tendency to swing between profitable and unprofitable periods over time is commonly known as the underwriting, or insurance, cycle.[41] claims and loss handling is the materialized utility of insurance; it is the actual "product" paid for. claims may be filed by insureds directly with the insurer or through brokers or agents. the insurer may require that the claim be filed on its own proprietary forms, or may accept claims on a standard industry form, such as those produced by acord. insurance company claims departments employ a large number of claims adjusters, supported by a staff of records management and data entry clerks. incoming claims are classified based on severity and are assigned to adjusters, whose settlement authority varies with their knowledge and experience. an adjuster undertakes an investigation of each claim, usually in close cooperation with the insured, determines if coverage is available under the terms of the insurance contract (and if so, the reasonable monetary value of the claim), and authorizes payment. policyholders may hire their own public adjusters to negotiate settlements with the insurance company on their behalf. for policies that are complicated, where claims may be complex, the insured may take out a separate insurance policy add on, called loss recovery insurance, which covers the cost of a public adjuster in the case of a claim. adjusting liability insurance claims is particularly difficult because they involve a third party, the plaintiff, who is under no contractual obligation to cooperate with the insurer and may in fact regard the insurer as a deep pocket. the adjuster must obtain legal counsel for the insured either inside ("house") counsel or outside ("panel") counsel, monitor litigation that may take years to complete, and appear in person or over the telephone with settlement authority at a mandatory settlement conference when requested by a judge. if a claims adjuster suspects underinsurance, the condition of average may come into play to limit the insurance company's exposure. in managing the claims handling function, insurers seek to balance the elements of customer satisfaction, administrative handling expenses, and claims overpayment leakages. in addition to this balancing act, fraudulent insurance practices are a major business risk that insurers must manage and overcome. disputes between insurers and insureds over the validity of claims or claims handling practices occasionally escalate into litigation (see insurance bad faith). insurers will often use insurance agents to initially market or underwrite their customers. agents can be captive, meaning they write only for one company, or independent, meaning that they can issue policies from several companies. the existence and success of companies using insurance agents is likely due to the availability of improved and personalised services. companies also use broking firms, banks and other corporate entities (like self help groups, microfinance institutions, ngos, etc.) to market their products.[42] any risk that can be quantified can potentially be insured. specific kinds of risk that may give rise to claims are known as perils. an insurance policy will set out in detail which perils are covered by the policy and which are not. below are non exhaustive lists of the many different types of insurance that exist. a single policy may cover risks in one or more of the categories set out below. for example, vehicle insurance would typically cover both the property risk (theft or damage to the vehicle) and the liability risk (legal claims arising from an accident). a home insurance policy in the united states typically includes coverage for damage to the home and the owner's belongings, certain legal claims against the owner, and even a small amount of coverage for medical expenses of guests who are injured on the owner's property. business insurance can take a number of different forms, such as the various kinds of professional liability insurance, also called professional indemnity (pi), which are discussed below under that name; and the business owner's policy (bop), which packages into one policy many of the kinds of coverage that a business owner needs, in a way analogous to how homeowners' insurance packages the coverages that a homeowner needs.[43] vehicle insurance protects the policyholder against financial loss in the event of an incident involving a vehicle they own, such as in a traffic collision. coverage typically includes: gap insurance covers the excess amount on an auto loan in an instance where the policyholder's insurance company does not cover the entire loan. depending on the company's specific policies it might or might not cover the deductible as well. this coverage is marketed for those who put low down payments, have high interest rates on their loans, and those with 60 month or longer terms. gap insurance is typically offered by a finance company when the vehicle owner purchases their vehicle, but many auto insurance companies offer this coverage to consumers as well. health insurance policies cover the cost of medical treatments. dental insurance, like medical insurance, protects policyholders for dental costs. in most developed countries, all citizens receive some health coverage from their governments, paid through taxation. in most countries, health insurance is often part of an employer's benefits. casualty insurance insures against accidents, not necessarily tied to any specific property. it is a broad spectrum of insurance that a number of other types of insurance could be classified, such as auto, workers compensation, and some liability insurances. life insurance provides a monetary benefit to a decedent's family or other designated beneficiary, and may specifically provide for income to an insured person's family, burial, funeral and other final expenses. life insurance policies often allow the option of having the proceeds paid to the beneficiary either in a lump sum cash payment or an annuity. in most states, a person cannot purchase a policy on another person without their knowledge. annuities provide a stream of payments and are generally classified as insurance because they are issued by insurance companies, are regulated as insurance, and require the same kinds of actuarial and investment management expertise that life insurance requires. annuities and pensions that pay a benefit for life are sometimes regarded as insurance against the possibility that a retiree will outlive his or her financial resources. in that sense, they are the complement of life insurance and, from an underwriting perspective, are the mirror image of life insurance. certain life insurance contracts accumulate cash values, which may be taken by the insured if the policy is surrendered or which may be borrowed against. some policies, such as annuities and endowment policies, are financial instruments to accumulate or liquidate wealth when it is needed. in many countries, such as the united states and the uk, the tax law provides that the interest on this cash value is not taxable under certain circumstances. this leads to widespread use of life insurance as a tax efficient method of saving as well as protection in the event of early death. in the united states, the tax on interest income on life insurance policies and annuities is generally deferred. however, in some cases the benefit derived from tax deferral may be offset by a low return. this depends upon the insuring company, the type of policy and other variables (mortality, market return, etc.). moreover, other income tax saving vehicles (e.g., iras, 401(k) plans, roth iras) may be better alternatives for value accumulation. burial insurance is an old type of life insurance which is paid out upon death to cover final expenses, such as the cost of a funeral. the greeks and romans introduced burial insurance c. 600 ce when they organized guilds called "benevolent societies" which cared for the surviving families and paid funeral expenses of members upon death. guilds in the middle ages served a similar purpose, as did friendly societies during victorian times. property insurance provides protection against risks to property, such as fire, theft or weather damage. this may include specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, inland marine insurance or boiler insurance. the term property insurance may, like casualty insurance, be used as a broad category of various subtypes of insurance, some of which are listed below: liability insurance is a broad superset that covers legal claims against the insured. many types of insurance include an aspect of liability coverage. for example, a homeowner's insurance policy will normally include liability coverage which protects the insured in the event of a claim brought by someone who slips and falls on the property; automobile insurance also includes an aspect of liability insurance that indemnifies against the harm that a crashing car can cause to others' lives, health, or property. the protection offered by a liability insurance policy is twofold: a legal defense in the event of a lawsuit commenced against the policyholder and indemnification (payment on behalf of the insured) with respect to a settlement or court verdict. liability policies typically cover only the negligence of the insured, and will not apply to results of wilful or intentional acts by the insured. often a commercial insured's liability insurance program consists of several layers. the first layer of insurance generally consists of primary insurance, which provides first dollar indemnity for judgments and settlements up to the limits of liability of the primary policy. generally, primary insurance is subject to a deductible and obligates the insurer to defend the insured against lawsuits, which is normally accomplished by assigning counsel to defend the insured. in many instances, a commercial insured may elect to self insure. above the primary insurance or self insured retention, the insured may have one or more layers of excess insurance to provide coverage additional limits of indemnity protection. there are a variety of types of excess insurance, including "stand alone" excess policies (policies that contain their own terms, conditions, and exclusions), "follow form" excess insurance (policies that follow the terms of the underlying policy except as specifically provided), and "umbrella" insurance policies (excess insurance that in some circumstances could provide coverage that is broader than the underlying insurance).[50] credit insurance repays some or all of a loan when the borrower is insolvent. cyber insurance is a business lines insurance product intended to provide coverage to corporations from internet based risks, and more generally from risks relating to information technology infrastructure, information privacy, information governance liability, and activities related thereto. some communities prefer to create virtual insurance among themselves by other means than contractual risk transfer, which assigns explicit numerical values to risk. a number of religious groups, including the amish and some muslim groups, depend on support provided by their communities when disasters strike. the risk presented by any given person is assumed collectively by the community who all bear the cost of rebuilding lost property and supporting people whose needs are suddenly greater after a loss of some kind. in supportive communities where others can be trusted to follow community leaders, this tacit form of insurance can work. in this manner the community can even out the extreme differences in insurability that exist among its members. some further justification is also provided by invoking the moral hazard of explicit insurance contracts. in the united kingdom, the crown (which, for practical purposes, meant the civil service) did not insure property such as government buildings. if a government building was damaged, the cost of repair would be met from public funds because, in the long run, this was cheaper than paying insurance premiums. since many uk government buildings have been sold to property companies and rented back, this arrangement is now less common. in the united states, the most prevalent form of self insurance is governmental risk management pools. they are self funded cooperatives, operating as carriers of coverage for the majority of governmental entities today, such as county governments, municipalities, and school districts. rather than these entities independently self insure and risk bankruptcy from a large judgment or catastrophic loss, such governmental entities form a risk pool. such pools begin their operations by capitalization through member deposits or bond issuance. coverage (such as general liability, auto liability, professional liability, workers compensation, and property) is offered by the pool to its members, similar to coverage offered by insurance companies. however, self insured pools offer members lower rates (due to not needing insurance brokers), increased benefits (such as loss prevention services) and subject matter expertise. of approximately 91,000 distinct governmental entities operating in the united states, 75,000 are members of self insured pools in various lines of coverage, forming approximately 500 pools. although a relatively small corner of the insurance market, the annual contributions (self insured premiums) to such pools have been estimated up to 17 billion dollars annually.[57] insurance companies may provide any combination of insurance types, but are often classified into three groups:[58] general insurance companies can be further divided into these sub categories. in most countries, life and non life insurers are subject to different regulatory regimes and different tax and accounting rules. the main reason for the distinction between the two types of company is that life, annuity, and pension business is long term in nature   coverage for life assurance or a pension can cover risks over many decades. by contrast, non life insurance cover usually covers a shorter period, such as one year. insurance companies are commonly classified as either mutual or proprietary companies.[59] mutual companies are owned by the policyholders, while shareholders (who may or may not own policies) own proprietary insurance companies. demutualization of mutual insurers to form stock companies, as well as the formation of a hybrid known as a mutual holding company, became common in some countries, such as the united states, in the late 20th century. however, not all states permit mutual holding companies. reinsurance companies are insurance companies that provide policies to other insurance companies, allowing them to reduce their risks and protect themselves from substantial losses.[60] the reinsurance market is dominated by a few large companies with huge reserves. a reinsurer may also be a direct writer of insurance risks as well. captive insurance companies can be defined as limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups. this definition can sometimes be extended to include some of the risks of the parent company's customers. in short, it is an in house self insurance vehicle. captives may take the form of a "pure" entity, which is a 100% subsidiary of the self insured parent company; of a "mutual" captive, which insures the collective risks of members of an industry; and of an "association" captive, which self insures individual risks of the members of a professional, commercial or industrial association. captives represent commercial, economic and tax advantages to their sponsors because of the reductions in costs they help create and for the ease of insurance risk management and the flexibility for cash flows they generate. additionally, they may provide coverage of risks which is neither available nor offered in the traditional insurance market at reasonable prices. the types of risk that a captive can underwrite for their parents include property damage, public and product liability, professional indemnity, employee benefits, employers' liability, motor and medical aid expenses. the captive's exposure to such risks may be limited by the use of reinsurance. captives are becoming an increasingly important component of the risk management and risk financing strategy of their parent. this can be understood against the following background: other possible forms for an insurance company include reciprocals, in which policyholders reciprocate in sharing risks, and lloyd's organizations.[61] admitted insurance companies are those in the united states that have been admitted or licensed by the state licensing agency. the insurance they provide is called admitted insurance. non admitted companies have not been approved by the state licensing agency, but are allowed to provide insurance under special circumstances when they meet an insurance need that admitted companies cannot or will not meet.[62] there are also companies known as "insurance consultants". like a mortgage broker, these companies are paid a fee by the customer to shop around for the best insurance policy among many companies. similar to an insurance consultant, an "insurance broker" also shops around for the best insurance policy among many companies. however, with insurance brokers, the fee is usually paid in the form of commission from the insurer that is selected rather than directly from the client. neither insurance consultants nor insurance brokers are insurance companies and no risks are transferred to them in insurance transactions. third party administrators are companies that perform underwriting and sometimes claims handling services for insurance companies. these companies often have special expertise that the insurance companies do not have. the financial stability and strength of an insurance company is a consideration when buying an insurance contract. an insurance premium paid currently provides coverage for losses that might arise many years in the future. for that reason, a more financially stable insurance carrier reduces the risk of the insurance company becoming insolvent, leaving their policyholders with no coverage (or coverage only from a government backed insurance pool or other arrangements with less attractive payouts for losses). a number of independent rating agencies provide information and rate the financial viability of insurance companies. insurance companies are rated by various agencies such as am best. the ratings include the company's financial strength, which measures its ability to pay claims. it also rates financial instruments issued by the insurance company, such as bonds, notes, and securitization products. advanced economies account for the bulk of the global insurance industry. according to swiss re, the global insurance market wrote $6.782 trillion in direct premiums in 2022.[63] ("direct premiums" means premiums written directly by insurers before accounting for ceding of risk to reinsurers.) as usual, the united states was the country with the largest insurance market with $2.959 trillion (43.6%) of direct premiums written, with the people's republic of china coming in second at only $697 billion (10.3%), japan coming in third at $337 billion (5.0%), and the united kingdom coming in fourth at $363 billion (5.4%).[63] however, the european union's single market is the actual second largest market, with 17 percent market share.[63] in the united states, insurance is regulated by the states under the mccarran ferguson act, with "periodic proposals for federal intervention", and a nonprofit coalition of state insurance agencies called the national association of insurance commissioners works to harmonize the country's different laws and regulations.[64] the national conference of insurance legislators (ncoil) also works to harmonize the different state laws.[65] 1988 california proposition 103 is claimed to reduce home insurance rates,[66] while it is blamed by some for reduced availability of home insurance in wildfire distressed neighborhoods.[67] in the european union, the third non life directive and the third life directive, both passed in 1992 and effective 1994, created a single insurance market in europe and allowed insurance companies to offer insurance anywhere in the eu (subject to permission from authority in the head office) and allowed insurance consumers to purchase insurance from any insurer in the eu.[68] as far as insurance in the united kingdom, the financial services authority took over insurance regulation from the general insurance standards council in 2005;[69] laws passed include the insurance companies act 1973 and another in 1982,[70] and reforms to warranty and other aspects under discussion as of 2012[update].[71] the insurance industry in china was nationalized in 1949 and thereafter offered by only a single state owned company, the people's insurance company of china, which was eventually suspended as demand declined in a communist environment. in 1978, market reforms led to an increase in the market and by 1995 a comprehensive insurance law of the people's republic of china[72] was passed, followed in 1998 by the formation of china insurance regulatory commission (circ), which has broad regulatory authority over the insurance market of china.[73] in india irda is insurance regulatory authority. as per the section 4 of irda act 1999, insurance regulatory and development authority (irda), which was constituted by an act of parliament. national insurance academy, pune is apex insurance capacity builder institute promoted with support from ministry of finance and by lic, life & general insurance companies. in 2017, within the framework of the joint project of the bank of russia and yandex, a special check mark (a green circle with a tick and 'реестр цб рф' (unified state register of insurance entities) text box) appeared in the search for yandex system, informing the consumer that the company's financial services are offered on the marked website, which has the status of an insurance company, a broker or a mutual insurance association.[74] insurance is just a risk transfer mechanism wherein the financial burden which may arise due to some fortuitous event is transferred to a bigger entity (i.e., an insurance company) by way of paying premiums. this only reduces the financial burden and not the actual chances of happening of an event. insurance is a risk for both the insurance company and the insured. the insurance company understands the risk involved and will perform a risk assessment when writing the policy. as a result, the premiums may go up if they determine that the policyholder will file a claim. however, premiums might reduce if the policyholder commits to a risk management program as recommended by the insurer.[75] it is therefore important that insurers view risk management as a joint initiative between policyholder and insurer since a robust risk management plan minimizes the possibility of a large claim for the insurer while stabilizing or reducing premiums for the policyholder. university of tennessee research published in 2014 found that all company staff in the businesses they surveyed recognised the importance of insurance but largely they were too distant within their organization from the provision or cost of insurance to be able to relate to company insurance needs.[76] if a person is financially stable and plans for life's unexpected events, they may be able to go without insurance. however, they must have enough to cover a total and complete loss of employment and of their possessions. some states will accept a surety bond, a government bond, or even making a cash deposit with the state.[citation needed] an insurance company may inadvertently find that its insureds may not be as risk averse as they might otherwise be (since, by definition, the insured has transferred the risk to the insurer), a concept known as moral hazard. this 'insulates' many from the true costs of living with risk, negating measures that can mitigate or adapt to risk and leading some to describe insurance schemes as potentially maladaptive.[77] insurance policies can be complex and some policyholders may not understand all the fees and coverages included in a policy. as a result, people may buy policies on unfavorable terms. in response to these issues, many countries have enacted detailed statutory and regulatory regimes governing every aspect of the insurance business, including minimum standards for policies and the ways in which they may be advertised and sold. for example, most insurance policies in the english language today have been carefully drafted in plain english; the industry learned the hard way that many courts will not enforce policies against insureds when the judges themselves cannot understand what the policies are saying. typically, courts construe ambiguities in insurance policies against the insurance company and in favor of coverage under the policy. many institutional insurance purchasers buy insurance through an insurance broker. while on the surface it appears the broker represents the buyer (not the insurance company), and typically counsels the buyer on appropriate coverage and policy limitations, in the vast majority of cases a broker's compensation comes in the form of a commission as a percentage of the insurance premium, creating a conflict of interest in that the broker's financial interest is tilted toward encouraging an insured to purchase more insurance than might be necessary at a higher price. a broker generally holds contracts with many insurers, thereby allowing the broker to "shop" the market for the best rates and coverage possible. insurance may also be purchased through an agent. a tied agent, working exclusively with one insurer, represents the insurance company from whom the policyholder buys (while a free agent sells policies of various insurance companies). just as there is a potential conflict of interest with a broker, an agent has a different type of conflict. because agents work directly for the insurance company, if there is a claim the agent may advise the client to the benefit of the insurance company. agents generally cannot offer as broad a range of selection compared to an insurance broker. an independent insurance consultant advises insureds on a fee for service retainer, similar to an attorney, and thus offers completely independent advice, free of the financial conflict of interest of brokers or agents. however, such a consultant must still work through brokers or agents in order to secure coverage for their clients. in the united states, economists and consumer advocates generally consider insurance to be worthwhile for low probability, catastrophic losses, but not for high probability, small losses. because of this, consumers are advised to select high deductibles and to not insure losses which would not cause a disruption in their life. however, consumers have shown a tendency to prefer low deductibles and to prefer to insure relatively high probability, small losses over low probability, perhaps due to not understanding or ignoring the low probability risk. this is associated with reduced purchasing of insurance against low probability losses, and may result in increased inefficiencies from moral hazard.[78] redlining is the practice of denying insurance coverage in specific geographic areas, supposedly because of a high likelihood of loss, while the alleged motivation is unlawful discrimination. racial profiling or redlining has a long history in the property insurance industry in the united states. from a review of industry underwriting and marketing materials, court documents, and research by government agencies, industry and community groups, and academics, it is clear that race has long affected and continues to affect the policies and practices of the insurance industry.[79] in july 2007, the us federal trade commission (ftc) released a report presenting the results of a study concerning credit based insurance scores in automobile insurance. the study found that these scores are effective predictors of risk. it also showed that african americans and hispanics are substantially overrepresented in the lowest credit scores, and substantially underrepresented in the highest, while caucasians and asians are more evenly spread across the scores. the credit scores were also found to predict risk within each of the ethnic groups, leading the ftc to conclude that the scoring models are not solely proxies for redlining. the ftc indicated little data was available to evaluate benefit of insurance scores to consumers.[80] the report was disputed by representatives of the consumer federation of america, the national fair housing alliance, the national consumer law center, and the center for economic justice, for relying on data provided by the insurance industry.[81] all states have provisions in their rate regulation laws or in their fair trade practice acts that prohibit unfair discrimination, often called redlining, in setting rates and making insurance available.[82] in determining premiums and premium rate structures, insurers consider quantifiable factors, including location, credit scores, gender, occupation, marital status, and education level. however, the use of such factors is often considered to be unfair or unlawfully discriminatory, and the reaction against this practice has in some instances led to political disputes about the ways in which insurers determine premiums and regulatory intervention to limit the factors used. an insurance underwriter's job is to evaluate a given risk as to the likelihood that a loss will occur. any factor that causes a greater likelihood of loss should theoretically be charged a higher rate. this basic principle of insurance must be followed if insurance companies are to remain solvent.[citation needed] thus, "discrimination" against (i.e., negative differential treatment of) potential insureds in the risk evaluation and premium setting process is a necessary by product of the fundamentals of insurance underwriting.[citation needed] for instance, insurers charge older people significantly higher premiums than they charge younger people for term life insurance. older people are thus treated differently from younger people (i.e., a distinction is made, discrimination occurs). the rationale for the differential treatment goes to the heart of the risk a life insurer takes: older people are likely to die sooner than young people, so the risk of loss (the insured's death) is greater in any given period of time and therefore the risk premium must be higher to cover the greater risk.[citation needed] however, treating insureds differently when there is no actuarially sound reason for doing so is unlawful discrimination. new assurance products can now[when?] be protected from copying with a business method patent in the united states. a recent example of a new insurance product that is patented is usage based auto insurance. early versions were independently invented and patented by a major us auto insurance company, progressive auto insurance (u.s. patent 5,797,134) and a spanish independent inventor, salvador minguijon perez.[83] many independent inventors are in favor of patenting new insurance products since it gives them protection from big companies when they bring their new insurance products to market. independent inventors account for 70% of the new u.s. patent applications in this area.[citation needed] patenting new insurance products can be risky, as it is practically impossible for insurance companies to determine if their product will infringe on a pre existing patent.[84] for example, in 2004, the hartford insurance company had to pay $80 million to an independent inventor, bancorp services, in order to settle a patent infringement and theft of trade secret lawsuit for a type of corporate owned life insurance product invented and patented by bancorp.[85] there are currently about 150 new patent applications on insurance inventions filed per year in the united states. the rate at which patents have been issued has steadily risen from 15 in 2002 to 44 in 2006.[86] the first us insurance patent was granted in 2005, which concerned coverage of data transferred over the internet.[87] another example of an application posted was posted in 2009.[88][dead link‍] this patent application describes a method for increasing the ease of changing insurance companies.[89] insurance on demand (also iod) is an insurance service that provides clients with coverage for a specific occasion or event when needed; i.e. only episodic rather than on a 24/7 basis as is typically provided by traditional policies. for example, air travelers can purchase a policy for one single plane flight, rather than a longer lasting travel insurance plan).[citation needed] certain insurance products and practices have been described as rent seeking by critics.[citation needed] that is, some insurance products or practices are useful primarily because of legal benefits, such as reducing taxes, as opposed to providing protection against risks of adverse events.[citation needed] muslim scholars have varying opinions about life insurance. life insurance policies that earn interest (or guaranteed bonus/nav) are generally considered to be a form of riba (usury) and some consider even policies that do not earn interest to be a form of gharar (speculation). some argue that gharar is not present due to the actuarial science behind the underwriting.[citation needed] jewish rabbinical scholars also have expressed reservations regarding insurance as an avoidance of god's will but most find it acceptable in moderation.[90] some christians believe insurance represents a lack of faith.[91][92] there is a long history of resistance to commercial insurance in anabaptist communities (mennonites, amish, hutterites, brethren in christ), but many participate in community based self insurance programs that spread risk within their communities.[93][94][95] country specific articles:

this site displays a prototype of a “web 2.0” version of the daily federal register. it is not an official legal edition of the federal register, and does not replace the official print version or the official electronic version on gpo’s govinfo.gov. the documents posted on this site are xml renditions of published federal register documents. each document posted on the site includes a link to the corresponding official pdf file on govinfo.gov. this prototype edition of the daily federal register on federalregister.gov will remain an unofficial informational resource until the administrative committee of the federal register (acfr) issues a regulation granting it official legal status. for complete information about, and access to, our official publications and services, go to about the federal register on nara's archives.gov. the ofr/gpo partnership is committed to presenting accurate and reliable regulatory information on federalregister.gov with the objective of establishing the xml based federal register as an acfr sanctioned publication in the future. while every effort has been made to ensure that the material on federalregister.gov is accurately displayed, consistent with the official sgml based pdf version on govinfo.gov, those relying on it for legal research should verify their results against an official edition of the federal register. until the acfr grants it official status, the xml rendition of the daily federal register on federalregister.gov does not provide legal notice to the public or judicial notice to the courts. enter a search term or fr citation e.g. 88 fr 382 30 fr 7878 2024 13208 usda 09/05/24 rule 0503 aa39 sorn choosing an item from full text search results will bring you to those results. pressing enter in the search box will also bring you to search results. choosing an item from suggestions will bring you directly to the content. background and more details are available in the search & navigation guide. a rule by the wage and hour division on 01/10/2024 this document has been published in the federal register. use the pdf linked in the document sidebar for the official electronic format. this table of contents is a navigational tool, processed from the headings within the legal text of federal register documents. this repetition of headings to form internal navigation links has no substantive legal effect. comments are no longer being accepted. see dates for details. federalregister.gov retrieves relevant information about this document from regulations.gov to provide users with additional context. this information is not part of the official federal register document. document page views are updated periodically throughout the day and are cumulative counts for this document. counts are subject to sampling, reprocessing and revision (up or down) throughout the day. this document is also available in the following formats: more information and documentation can be found in our developer tools pages. this pdf is the current document as it appeared on public inspection on 01/09/2024 at 8:45 am. it was viewed 8510 times while on public inspection. if you are using public inspection listings for legal research, you should verify the contents of the documents against a final, official edition of the federal register. only official editions of the federal register provide legal notice of publication to the public and judicial notice to the courts under 44 u.s.c. 1503 & 1507. learn more here. this document has been published in the federal register. use the pdf linked in the document sidebar for the official electronic format. document headings vary by document type but may contain the following: see the document drafting handbook for more details. wage and hour division, department of labor. final rule. the u.s. department of labor (the department) is modifying wage and hour division regulations to replace its analysis for determining employee or independent contractor classification under the fair labor standards act (flsa or act) with an analysis that is more consistent with judicial precedent and the act's text and purpose. this final rule is effective on march 11, 2024. amy debisschop, division of regulations, legislation, and interpretation, wage and hour division (whd), u.s. department of labor, room s 3502, 200 constitution avenue nw, washington, dc 20210; telephone: (202) 693 0406 (this is not a toll free number). alternative formats are available upon request by calling 1 866 487 9243. if you are deaf, hard of hearing, or have a speech disability, please dial 7 1 1 to access telecommunications relay services. questions of interpretation and/or enforcement of the agency's regulations may be directed to the nearest whd district office. locate the nearest office by calling whd's toll free help line at (866) 4us wage ((866) 487 9243) between 8 a.m. and 5 p.m. in your local time zone, or logging onto whd's website for a nationwide listing of whd district and area offices at https://www.dol.gov/​whd/​america2.htm. this final rule addresses how to determine whether a worker is properly classified as an employee or independent contractor under the fair labor standards act (flsa or act). congress enacted the flsa in 1938 to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well being of workers.” [1] to this end, the flsa generally requires covered employers to pay nonexempt employees at least the federal minimum wage for all hours worked and at least one and one half times the employee's regular rate of pay for every hour worked over 40 in a workweek. the act also requires covered employers to maintain certain records regarding employees and prohibits retaliation against employees who are discharged or discriminated against after, for example, filing a complaint regarding their pay. however, the flsa's protections do not apply to independent contractors. as used in this rule, the term “independent contractor” refers to workers who, as a matter of economic reality, are not economically dependent on an employer for work and are in business for themselves. such workers play an important role in the economy and are commonly referred to by different names, including independent contractor, self employed, and freelancer. this rule is not intended to disrupt the businesses of independent contractors who are, as a matter of economic reality, in business for themselves. determining whether an employment relationship exists under the flsa begins with the act's definitions. although the flsa does not define the term “independent contractor,” it contains expansive definitions of “employer,” “employee,” and “employ.” “employer” is defined to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee,” “employee” is defined as “any individual employed by an employer,” and “employ” is defined to “include[ ] to suffer or permit to work.” [2] as detailed below, courts have developed an analysis that recognizes that independent contractors are not encompassed within these definitions. since the 1940s, the department and courts have applied an economic reality test to determine whether a worker is an employee or an independent contractor under the flsa, grounded in the act's broad understanding of employment. the ultimate inquiry is whether, as a matter of economic reality, the worker is economically dependent on the employer for work (and is thus an employee) or is in business for themself (and is thus an independent contractor). in assessing economic dependence, courts and the department have historically conducted a totality of the circumstances analysis, considering multiple factors to determine whether a worker is an employee or an independent contractor, with no factor or factors having predetermined weight. there is significant and widespread uniformity among federal courts of appeals in the adoption and application of the economic reality test, although there is slight variation as to the number of factors considered or how the factors are framed. these factors generally include the opportunity for profit or loss, investment, permanency, control, whether the work is an integral part of the employer's business, and skill and initiative. in january 2021, the department published a rule titled “independent contractor status under the fair labor standards act” (2021 ic rule), providing guidance on the classification of independent contractors under the flsa applicable to workers and businesses in any industry.[3] the 2021 ic rule marked a departure from the consistent, longstanding adoption and application of the economic reality test by courts and the department of how to determine whether a worker is an employee or an independent contractor under the flsa. it identified five economic reality factors to guide the inquiry into a worker's status as an employee or independent contractor.[4] two of the five identified factors the nature and degree of control over the work and the worker's opportunity for profit or loss were designated as “core factors” that were the most probative and carried greater weight in the analysis. the 2021 ic rule stated that if these two core factors pointed towards the same classification, there was a substantial likelihood that it was the worker's accurate classification.[5] the 2021 ic rule also identified three less probative non core factors: the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the potential employer, and whether the work is part of an integrated unit of production.[6] the 2021 ic rule stated that it was “highly unlikely” that these three non core factors could outweigh the combined probative value of the two core factors.[7] the 2021 ic rule also ( print page 1639) limited consideration of investment and initiative to the opportunity for profit or loss factor in a way that narrowed, in at least some circumstances, the extent to which investment and initiative are considered. the facts to be considered under other factors (such as control) were also narrowed, and the factor that considers whether the work is integral to the employer's business was limited to whether the work was part of an integrated unit of production.[8] finally, the 2021 ic rule provided that the actual practice of the parties involved was more relevant than what may be contractually or theoretically possible.[9] the effective date of the 2021 ic rule was march 8, 2021. on march 4, 2021, the department published a rule delaying the effective date of the 2021 ic rule (delay rule) and on may 6, 2021, it published a rule withdrawing the 2021 ic rule (withdrawal rule). on march 14, 2022, in a lawsuit challenging the department's delay and withdrawal of the 2021 ic rule, a federal district court in the eastern district of texas issued a decision vacating the delay and withdrawal rules.[10] the district court concluded that the 2021 ic rule became effective on the original effective date of march 8, 2021. on october 13, 2022, the department published a notice of proposed rulemaking (nprm) regarding employee or independent contractor classification under the flsa, proposing to rescind and replace the 2021 ic rule.[11] the department explained in its proposal that upon further consideration, the department believed that the 2021 ic rule did not fully comport with the flsa's text and purpose as interpreted by courts and departed from decades of case law applying the economic reality test. the nprm identified provisions of the 2021 ic rule that were in tension with this case law such as designating two “core factors” as most probative and predetermining that they carry greater weight in the analysis, considering investment and initiative only in the opportunity for profit or loss factor, and excluding consideration of whether the work performed is central or important to the employer's business. the nprm stated that these provisions narrowed the economic reality test by limiting the facts that may be considered as part of the test, facts which the department believes are relevant in determining whether a worker is economically dependent on the employer for work or in business for themself. after careful consideration, the department decided it was appropriate to move forward with a proposed rescission of the 2021 ic rule and a replacement regulation. as explained in the nprm, the department believed that retaining the 2021 ic rule would have a confusing and disruptive effect on workers and businesses alike due to its departure from case law describing and applying the multifactor economic reality test as a totality of the circumstances test. further, because the 2021 ic rule departed from legal precedent, it was not clear whether courts would adopt its analysis a question that could take years of appellate litigation in different federal courts of appeals to sort out, resulting in more uncertainty as to the applicable test. the department also explained in the nprm that it believed the 2021 ic rule's departure from the longstanding test applied by the courts could result in greater confusion among employers in applying the new analysis, which could place workers at greater risk of misclassification as independent contractors due to the new analysis being applied improperly, and thus could negatively affect both the workers and competing businesses that correctly classify their employees. the initial deadline for interested parties to submit comments on the nprm was november 28, 2022. in response to requests for an extension of the time period for filing written comments, the department lengthened the comment period an additional 15 days to december 13, 2022, resulting in a total comment period of 61 days.[12] the department received approximately 55,400 comments on the proposed rule. as described below, after considering the views expressed by commenters, the department is finalizing its proposal with some modifications. for the reasons explained in the nprm and detailed in section iii, the department concludes that it is appropriate to rescind the 2021 ic rule and set forth an analysis for determining employee or independent contractor status under the act that is more consistent with existing judicial precedent and the department's longstanding guidance prior to the 2021 ic rule. in addition to rescinding the 2021 ic rule, the department is adding part 795. specifically, this final rule modifies the regulatory text published on january 7, 2021, at 86 fr 1246 through 1248, addressing whether workers are employees or independent contractors under the flsa. instead of using the “core factors” set forth in the 2021 ic rule, this final rule returns to a totality of the circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. in addition to this critical reversion to the longstanding analysis that preceded the 2021 ic rule, this final rule returns to the longstanding framing of investment as its own separate factor, and the integral factor as one that looks to whether the work performed is an integral part of a potential employer's business rather than part of an integrated unit of production. the final rule also provides broader discussion of how scheduling, remote supervision, price setting, and the ability to work for others should be considered under the control factor, and it allows for consideration of reserved rights while removing the provision in the 2021 ic rule that minimized the relevance of retained rights. further, the final rule discusses exclusivity in the context of the permanency factor, and initiative in the context of the skill factor. while the above modifications from the 2021 ic rule were all proposed in the nprm, the department also made several adjustments to the proposed regulations after consideration of the comments received. notably, as discussed further below, the portion of the department's proposal for the control factor stating that control implemented for purposes of complying with legal obligations may be indicative of control generated many comments. the department is modifying the proposed language to address confusion and concern regarding potential unintended consequences. additionally, the department received many comments regarding the investment factor. in response to a number of comments concerning the department's proposal to consider the relative investments of the worker and the potential employer, the department is clarifying in the final rule that consideration of the relative investments of the worker and the potential employer should be compared not only in terms of dollar value or size of the investments, but should focus on whether the worker is making similar types of investments as the employer (albeit on a smaller scale) that would suggest that the worker is operating independently. further, in response to ( print page 1640) comments regarding the unilateral nature of some costs imposed by potential employers on workers, which could appear to be capital or entrepreneurial in nature, the department is including language recognizing that costs that are unilaterally imposed are not indicative of a worker's capital or entrepreneurial investment. further clarifications and adjustments to the regulatory text that reflect a range of comments made by employers; workers; those who view themselves as independent contractors, self employed, or freelancers; labor unions; legal services providers; policy and research organizations; and counsel for both businesses and employees have been made as well and are discussed under the section by section analysis that follows. the final rule reiterates that part 795 contains the department's general interpretations for determining whether workers are employees or independent contractors under the flsa. further, it reiterates that economic dependence is the ultimate inquiry, meaning that a worker is an independent contractor as opposed to an employee under the act if the worker is, as a matter of economic reality, in business for themself. the final rule explains that the economic reality test is comprised of multiple factors that are tools or guides to conduct the totality of the circumstances analysis to determine economic dependence. the six factors described in the regulatory text should guide an assessment of the economic realities of the working relationship, but no one factor or subset of factors is necessarily dispositive. the final rule provides guidance on how six economic reality factors should be considered opportunity for profit or loss depending on managerial skill, investments by the worker and the potential employer, the degree of permanence of the work relationship, the nature and degree of control, the extent to which the work performed is an integral part of the potential employer's business, and skill and initiative. just as under the 2021 ic rule, and in accordance with longstanding precedent and guidance, additional factors may also be considered if they are relevant to the overall question of economic dependence. the department recognizes that this return to a totality of the circumstances analysis in which the economic reality factors are not assigned a predetermined weight and each factor is given full consideration represents a change from the 2021 ic rule. however, the department believes that this approach is the most beneficial because it is aligned with the department's decades long approach (prior to the 2021 ic rule) as well as with federal appellate case law, and is more consistent with the act's text and purpose as interpreted by the courts. the department believes that this final rule will provide more consistent guidance to employers as they determine whether workers are economically dependent on the employer for work or are in business for themselves, as well as useful guidance to workers on whether they are correctly classified as employees or independent contractors. accordingly, the department believes that the guidance provided in this final rule will help protect employees from misclassification. moreover, this final rule recognizes that independent contractors serve an important role in our economy and provides a consistent approach for those businesses that engage (or wish to engage) independent contractors as well as for those who wish to work as independent contractors. enacted in 1938, the flsa generally requires that covered employers pay nonexempt employees at least the federal minimum wage (presently $7.25 per hour) for every hour worked, and at least one and one half times the employee's regular rate of pay for all hours worked beyond 40 in a workweek.[13] among other protections, the flsa also regulates the employment of children,[14] prohibits employers from keeping employee tips,[15] and requires employers to provide reasonable break time and a place for covered nursing employees to express breast milk at work.[16] finally, the flsa requires covered employers to “make, keep, and preserve” certain records regarding employees, and prohibits retaliation against employees who engaged in protected activity, such as filing a complaint regarding their pay.[17] the flsa's wage and hour protections apply to employees. in relevant part, section 3(e) of the act defines the term “employee” as “any individual employed by an employer.” [18] section 3(d) defines the term “employer” to “includ[e] any person acting directly or indirectly in the interest of an employer in relation to an employee.” [19] finally, section 3(g) provides that the term “ `[e]mploy' includes to suffer or permit to work.” [20] interpreting these provisions, the u.s. supreme court has stated that “[a] broader or more comprehensive coverage of employees within the stated categories would be difficult to frame,” and that “the term `employee' under the flsa had been given `the broadest definition that has ever been included in any one act.' ” [21] in particular, the court has noted the “striking breadth” of section 3(g)'s “suffer or permit” language, observing that it “stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.” [22] thus, the court has repeatedly observed that the flsa's scope of employment is broader than the common law standard often applied to determine employment status under other federal laws.[23] at the same time, the supreme court has recognized that the act was “not intended to stamp all persons as employees.” [24] among other categories of workers excluded from flsa coverage, the court has recognized that “independent contractors” fall outside the act's broad understanding of employment.[25] accordingly, the flsa does not require covered employers to pay an independent contractor the minimum wage or overtime pay under sections 6(a) and 7(a) of the act, or to keep records regarding an independent contractor's work under section 11(c). however, merely “putting on an `independent contractor' label does not take [a] worker from the protection of the [flsa].” [26] courts have thus recognized a need to delineate between ( print page 1641) employees, who fall under the protections of the flsa, and independent contractors, who do not. the flsa does not define the term “independent contractor.” while it is clear that section 3(g)'s “suffer or permit” language contemplates a broader coverage of workers compared to what exists under the common law, “there is in the [flsa] no definition that solves problems as to the limits of the employer employee relationship under the act.” [27] therefore, in articulating the distinction between flsa covered employees and independent contractors, courts rely on a broad, multifactor “economic reality” analysis derived from judicial precedent.[28] unlike the control focused analysis for independent contractors applied under the common law,[29] the economic reality test focuses more broadly on a worker's economic dependence on an employer, considering the totality of the circumstances. in a series of cases from 1944 to 1947, the u.s. supreme court considered employee or independent contractor status under three different federal statutes that were enacted during the 1930s new deal era the flsa, the national labor relations act (nlra), and the social security act (ssa) and applied an economic reality test under all three laws. in the first of these cases, nlrb v. hearst publications, inc., 322 u.s. 111 (1944), the court considered the meaning of “employee” under the nlra, which defined the term to “include any employee.” [30] in relevant part, the hearst court rejected application of the common law standard, noting that “the broad language of the [nlra's] definitions . . . leaves no doubt that its applicability is to be determined broadly, in doubtful situations, by underlying economic facts rather than technically and exclusively by previously established legal classifications.” [31] on june 16, 1947, the supreme court decided united states v. silk, 331 u.s. 704 (1947), addressing the distinction between employees and independent contractors under the ssa. the court favorably summarized hearst as setting forth “economic reality,” as opposed to “technical concepts” of the common law standard alone, as the framework for determining workers' classification, but acknowledged that not “all who render service to an industry are employees.” [32] although the court found it to be “quite impossible to extract from the [ssa] a rule of thumb to define the limits of the employer employe[e] relationship,” the court identified five factors as “important for decision”: “degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation[,] and skill required in the claimed independent operation.” [33] the court added that “[n]o one [factor] is controlling nor is the list complete.” [34] the court went on to note that the workers in that case were “from one standpoint an integral part of the businesses” of the employer, supporting a conclusion that some of the workers in that case were employees.[35] the same day that the supreme court issued its decision in silk, it also issued rutherford food corp. v. mccomb, 331 u.s. 722 (1947), in which it affirmed a federal court of appeals decision that analyzed an flsa employment relationship based on its economic realities.[36] describing the flsa as “a part of the social legislation of the 1930s of the same general character as the [nlra] and the [ssa],” the court opined that “[d]ecisions that define the coverage of the employer employee relationship under the labor and social security acts are persuasive in the consideration of a similar coverage under the [flsa].” [37] accordingly, the court rejected an approach based on “isolated factors” and again considered “the circumstances of the whole activity.” [38] the court considered several of the factors that it listed in silk as they related to meat boners on a slaughterhouse's production line, ultimately determining that the boners were employees.[39] the court noted, among other things, that the boners did a specialty job on the production line, had no business organization that could shift to a different slaughter house, and were best characterized as “part of the integrated unit of production under such circumstances that the workers performing the task were employees of the establishment.” [40] on june 23, 1947, one week after the silk and rutherford decisions, the court decided bartels v. birmingham, 332 u.s. 126 (1947), another case involving employee or independent contractor status under the ssa. here again, the court rejected application of the common law control test, explaining that, under the ssa, employee status “was not to be determined solely by the idea of control which an alleged employer may or could exercise over the details of the service rendered to his business by the worker.” [41] rather, employees under “social legislation” such as the ssa are “those who as a matter of economic reality are dependent upon the business to which they render service.” [42] thus, in addition to control, “permanency of the relation, the skill required, the investment [in] the facilities for work and opportunities for profit or loss from the activities were also factors” to consider.[43] although the court identified these specific factors as relevant to the analysis, it explained that “[i]t is the total situation that controls” the worker's classification under the ssa.[44] following these supreme court decisions, congress responded with separate legislation to amend the nlra and ssa's employment definitions. first, in 1947, congress amended the nlra's definition of “employee” to clarify that the term “shall not include any individual having the status of an independent contractor.” [45] the ( print page 1642) following year, congress similarly amended the ssa to exclude from employment “any individual who, under the usual common law rules applicable in determining the employer employee relationship, has the status of an independent contractor.” [46] the supreme court interpreted the amendments to the nlra as having the same effect as the explicit definition included in the ssa, which was to ensure that employment status would be determined by common law agency principles, rather than an economic reality test.[47] despite its amendments to the nlra and ssa in response to hearst and silk, congress did not similarly amend the flsa following the rutherford decision. thus, when the supreme court revisited independent contractor status under the flsa several years later in goldberg v. whitaker house co op., inc., 366 u.s. 28 (1961), the court affirmed that “ `economic reality' rather than `technical concepts' ” remained “the test of employment” under the flsa,[48] quoting from its earlier decisions in silk and rutherford. the court in whitaker house found that certain homeworkers were “not self employed . . . [or] independent, selling their products on the market for whatever price they can command,” but instead were “regimented under one organization, manufacturing what the organization desires and receiving the compensation the organization dictates.” [49] such facts, among others, established that the homeworkers at issue were flsa covered employees. subsequently, in nationwide mutual insurance co. v. darden, 503 u.s. 318 (1992), the court again endorsed application of the economic reality test to evaluate independent contractor status under the flsa, citing to rutherford and emphasizing the broad “suffer or permit” language codified in section 3(g) of the act.[50] since rutherford, federal courts of appeals have applied the economic reality test to distinguish independent contractors from employees who are entitled to the flsa's protections. recognizing that the “suffer or permit” language in section 3(g) of the flsa provides a more expansive scope of employment than that which exists at common law, courts of appeals have followed the supreme court's instruction that “ `employees are those who as a matter of economic realities are dependent upon the business to which they render service.' ” [51] when determining whether a worker is an employee under the flsa or an independent contractor, federal courts of appeals apply an economic reality test using the factors identified in silk.[52] no court of appeals considers any one factor or combination of factors to invariably predominate over the others.[53] for example, the eleventh circuit has explained that some of the factors “which many courts have used as guides in applying the economic reality test” are: (1) the degree of the alleged employer's right to control the manner in which the work is to be performed; (2) the worker's opportunity for profit or loss depending upon their managerial skill; (3) the worker's investment in equipment or materials required for their task, or their employment of helpers; (4) whether the service rendered requires a special skill; (5) the degree of permanence of the working relationship; and (6) the extent to which the service rendered is an integral part of the alleged employer's business.[54] like other federal courts of appeals, the eleventh circuit repeats the supreme court's explanation from silk that no one factor is controlling, nor is the list exhaustive.[55] some courts of appeals have applied the factors with some variations. for example, the fifth circuit typically does not list the “integral part” factor as one of the considerations that guides its analysis.[56] however, recognizing that its list of enumerated factors is not exhaustive, the fifth circuit has considered the extent to which a worker's function is integral to a business as part of its economic realities analysis.[57] similarly, the second and d.c. circuits vary in that they describe the employee's opportunity for profit or loss and the employee's investment as a single factor, but they still use the same considerations as the other circuits to inform their economic realities analysis.[58] in sum, since the 1940s, federal courts have analyzed the question of employee or independent contractor status under the flsa using a multifactor, totality of the circumstances economic reality test, with no factor or factors being dispositive. the courts have examined the economic realities of the employment relationship to determine whether the worker is economically dependent on the employer for work or is in business for themself, even if they have varied slightly in their articulations of the factors. despite such variation, all courts have looked to the factors first articulated in silk as useful guideposts while acknowledging that those factors are not exhaustive and should not be applied mechanically. the department has applied a multifactor economic reality test since the supreme court's opinions in rutherford and silk. for example, on june 23, 1949, the wage and hour division (whd) issued an opinion letter ( print page 1643) distilling six “primary factors which the court considered significant” in rutherford and silk: “(1) the extent to which the services in question are an integral part of the `employer[']s' business; (2) the amount of the so called `contractor's' investment in facilities and equipment; (3) the nature and degree of control by the principal; (4) opportunities for profit and loss; . . . (5) the amount of initiative judgment or foresight required for the success of the claimed independent enterprise[;] and [(6)] permanency of the relation.” [59] the guidance cautioned that no single factor is controlling, and “[o]rdinarily a definite decision as to whether one is an employee or an independent contractor under the [flsa] cannot be made in the absence of evidence as to [the worker's] actual day to day working relationship with [their] principal. clearly a written contract does not always reflect the true situation.” [60] subsequent whd opinion letters addressing employee or independent contractor status under the flsa have provided similar recitations of the silk factors, sometimes omitting one or more of the six factors described in the 1949 opinion letter, and sometimes adding (or substituting) a seventh factor: the worker's “degree of independent business organization and operation.” [61] numerous opinion letters have emphasized that employment status is “not determined by the common law standards relating to master and servant,” and that “[t]he degree of control retained by the principal has been rejected as the sole criterion to be applied.” [62] in 1962, the department revised the regulations in 29 cfr part 788, which generally provides interpretive guidance on the flsa's exemption for employees in small forestry or lumbering operations, and added a provision addressing the distinction between employees and independent contractors.[63] citing to silk, rutherford, and bartels, the regulation advised that “an employee, as distinguished from a person who is engaged in a business of his own, is one who `follows the usual path of an employee' and is dependent on the business which he serves.” [64] to “aid in assessing the total situation,” the regulation then identified a partial list of “characteristics of the two classifications which should be considered,” including “the extent to which the services rendered are an integral part of the principal's business; the permanency of the relationship; the opportunities for profit or loss; the initiative, judgment or foresight exercised by the one who performs the services; the amount of investment; and the degree of control which the principal has in the situation.” [65] implicitly referring to the bartels decision, the regulation advised that “[t]he court specifically rejected the degree of control retained by the principal as the sole criterion to be applied.” [66] in 1972, the department added similar guidance on independent contractor status at 29 cfr 780.330(b), in a provision addressing the employment status of sharecroppers and tenant farmers.[67] this regulation was nearly identical to the independent contractor guidance for the logging and forestry industry previously codified at 29 cfr 788.16(a), including an identical description of the same six economic reality factors.[68] both provisions 29 cfr 780.330(b) and 788.16(a) remained unchanged until 2021. in 1997, the department promulgated a regulation applying a multifactor economic reality analysis for distinguishing between employees and independent contractors under the migrant and seasonal agricultural worker protection act (mspa), which notably incorporates the flsa's “suffer or permit” definition of employment by reference.[69] the regulation (which has not since been amended) advises that in determining if the farm labor contractor or worker is an employee or an independent contractor, the ultimate question is the economic reality of the relationship whether there is economic dependence upon the agricultural employer/association or farm labor contractor, as appropriate. the regulation elaborates that “[t]his determination is based upon an evaluation of all of the circumstances, including the following: (i) the nature and degree of the putative employer's control as to the manner in which the work is performed; (ii) the putative employee's opportunity for profit or loss depending upon his/her managerial skill; (iii) the putative employee's investment in equipment or materials required for the task, or the putative employee's employment of other workers; (iv) whether the services rendered by the putative employee require special skill; (v) the degree of permanency and duration of the working relationship; (vi) the extent to which the services rendered by the putative employee are an integral part of the putative employer's business.” [70] this description of six economic reality factors was very similar to the earlier description of six economic reality factors provided in 29 cfr 780.330(b) and 788.16(a). also in 1997, whd issued fact sheet #13, “employment relationship under the fair labor standards act (flsa).” [71] like whd opinion letters, fact sheet #13 advises that an employee, as distinguished from a person who is engaged in a business of their own, is one who, as a matter of economic reality, follows the usual path of an employee and is dependent on the business which they serve. the fact sheet identifies the six familiar economic realities factors, as well as consideration of the worker's degree of independent business organization and operation. on july 15, 2015, whd issued additional subregulatory guidance, administrator's interpretation no. 2015 1, “the application of the fair labor standards act's `suffer or permit' standard in the identification of employees who are misclassified as independent contractors” (ai 2015 1).[72] ai 2015 1 reiterated that the economic realities of the relationship are determinative and that the ultimate inquiry is whether the worker is economically dependent on the employer or truly in business for themself. it identified six economic realities factors that followed the six factors used by most federal courts of ( print page 1644) appeals: (1) the extent to which the work performed is an integral part of the employer's business; (2) the worker's opportunity for profit or loss depending on their managerial skill; (3) the extent of the relative investments of the employer and the worker; (4) whether the work performed requires special skills and initiative; (5) the permanency of the relationship; and (6) the degree of control exercised or retained by the employer. ai 2015 1 further emphasized that the factors should not be applied in a mechanical fashion and that no one factor was determinative. ai 2015 1 was withdrawn on june 7, 2017.[73] in 2019, whd issued an opinion letter, flsa2019 6, regarding whether workers who worked for companies operating self described “virtual marketplaces” were employees covered under the flsa or independent contractors.[74] like the department's prior guidance, the letter stated that the determination depended on the economic realities of the relationship and that the ultimate inquiry was whether the workers depend on someone else's business or are in business for themselves. the letter identified six economic realities factors that differed slightly from the factors typically articulated by the department previously: (1) the nature and degree of the employer's control; (2) the permanency of the worker's relationship with the employer; (3) the amount of the worker's investment in facilities, equipment, or helpers; (4) the amount of skill, initiative, judgment, and foresight required for the worker's services; (5) the worker's opportunities for profit or loss; and (6) the extent of the integration of the worker's services into the employer's business.[75] the department later withdrew opinion letter flsa2019 6 on february 19, 2021.[76] on january 7, 2021, the department published the 2021 ic rule, with an effective date of march 8, 2021.[77] the 2021 ic rule set forth regulations to be added to a new part (part 795) in title 29 of the code of federal regulations titled “employee or independent contractor classification under the fair labor standards act,” providing guidance on the classification of independent contractors under the flsa applicable to workers and businesses in any industry.[78] the 2021 ic rule also addressed the department's prior interpretations of independent contractor status in 29 cfr 780.330(b) and 788.16(a) both of which applied to specific industries by cross referencing part 795.[79] the department explained that the purpose of the 2021 ic rule was to establish a “streamlined” economic reality test that improved on prior articulations described as “unclear and unwieldy.” [80] it stated that the existing economic reality test applied by the department and courts suffered from confusion regarding the meaning of “economic dependence,” a lack of focus in the multifactor balancing test, and confusion and inefficiency caused by overlap between the factors.[81] the 2021 ic rule asserted that shortcomings and misconceptions associated with the economic reality test were more apparent in the modern economy and that additional clarity would promote innovation in work arrangements. the 2021 ic rule explained that independent contractors are not employees under the flsa and are therefore not subject to the act's minimum wage, overtime pay, or recordkeeping requirements. it adopted an economic reality test under which a worker is an employee of an employer if that worker is economically dependent on the employer for work and is an independent contractor if the worker is in business for themself.[82] the 2021 ic rule identified five economic realities factors to guide the inquiry into a worker's status as an employee or independent contractor, while acknowledging that the factors were not exhaustive, no one factor was dispositive, and additional factors could be considered if they “in some way indicate whether the [worker] is in business for him  or herself, as opposed to being economically dependent on the potential employer for work.” [83] in contrast to prior guidance and contrary to case law, the 2021 ic rule designated two of the five factors the nature and degree of control over the work and the worker's opportunity for profit or loss as “core factors” that should carry greater weight in the analysis. citing the goal of providing greater certainty and predictability in the economic reality test, the 2021 ic rule determined that these two factors were more probative of economic dependence than other economic realities factors. if both of those core factors indicate the same classification, as either an employee or an independent contractor, the 2021 ic rule stated that there was a “substantial likelihood” that the indicated classification was the worker's correct classification.[84] the 2021 ic rule's first core factor was the nature and degree of control over the work, which indicated independent contractor status to the extent that the worker exercised substantial control over key aspects of the performance of the work, such as by setting their own schedule, by selecting their projects, and/or through the ability to work for others, which might include the potential employer's competitors.[85] the 2021 ic rule provided that requiring the worker to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses (as opposed to employment relationships) did not constitute control for purposes of determining employee or independent contractor classification.[86] the 2021 ic rule's second core factor was the worker's opportunity for profit or loss.[87] the rule stated that this factor indicates independent contractor status to the extent the worker has an opportunity to earn profits or incur losses based on either (1) their exercise of initiative (such as managerial skill or business acumen or judgment) or (2) their management of investment in or capital expenditure on, for example, helpers or equipment or material to further the work. while the effects of the worker's exercise of initiative and management of investment were both considered under this factor, the worker did not need to have an opportunity for profit or loss based on both initiative ( print page 1645) and management of investment for this factor to weigh towards the worker being an independent contractor. this factor indicated employee status to the extent that the worker was unable to affect their earnings or was only able to do so by working more hours or faster. the 2021 ic rule also identified three other non core factors: the amount of skill required for the work, the degree of permanence of the working relationship between the worker and the employer, and whether the work is part of an integrated unit of production (which it cautioned is “different from the concept of the importance or centrality of the individual's work to the potential employer's business”).[88] the 2021 ic rule provided that these other factors were “less probative and, in some cases, may not be probative at all” of economic dependence and were “highly unlikely, either individually or collectively, to outweigh the combined probative value of the two core factors.” [89] the 2021 ic rule also stated that the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible, and provided five “illustrative examples” demonstrating how the analysis would apply in particular factual circumstances.[90] finally, the 2021 ic rule rescinded any “prior administrative rulings, interpretations, practices, or enforcement policies relating to classification as an employee or independent contractor under the flsa” to the extent that such items “are inconsistent or in conflict with the interpretations stated in this part,” and explained that the 2021 ic rule would guide whd's enforcement of the flsa.[91] on january 19, 2021, whd issued opinion letters flsa2021 8 and flsa2021 9 applying the rule's analysis to specific factual scenarios. whd subsequently withdrew those opinion letters on january 26, 2021, explaining that the letters were issued prematurely because they were based on a rule that had yet to take effect.[92] on february 5, 2021, the department published a proposal to delay the 2021 ic rule's effective date until may 7, 2021 60 days after the rule's original march 8, 2001, effective date.[93] on march 4, 2021, after considering the approximately 1,500 comments received in response to that proposal, the department published a final rule delaying the effective date of the 2021 ic rule as proposed.[94] on march 12, 2021, the department published a nprm proposing to withdraw the 2021 ic rule.[95] on may 5, 2021, after reviewing approximately 1,000 comments submitted in response to the nprm, the department announced a final rule withdrawing the 2021 ic rule.[96] in explaining its decision to withdraw the 2021 ic rule, the department stated that the rule was inconsistent with the flsa's text and purpose and would have had a confusing and disruptive effect on workers and businesses alike due to its departure from longstanding judicial precedent. the withdrawal rule stated that it took effect immediately upon its publication in the federal register on may 6, 2021.[97] on march 14, 2022, in a lawsuit challenging the department's delay and withdrawal rules under the administrative procedure act (apa), a district court in the eastern district of texas issued a decision vacating the department's delay and withdrawal rules.[98] while acknowledging that the department engaged in separate notice and comment rulemakings in promulgating both of these rules, the district court concluded that the department “failed to provide a meaningful opportunity for comment in promulgating the delay rule,” [99] failed to show “good cause for making the [delay rule] effective immediately upon publication,” [100] and acted in an arbitrary and capricious manner in its withdrawal rule by “fail[ing] to consider potential alternatives to rescinding the independent contractor rule.” [101] accordingly, the district court vacated the delay and withdrawal rules and concluded that the 2021 ic rule “became effective as of march 8, 2021, the rule's original effective date, and remains in effect.” [102] the district court's ruling did not address the validity of the 2021 ic rule; rather, the case was focused solely on the validity of the delay and withdrawal rules. the department filed a notice of appeal of the district court's decision.[103] in response to requests by the department informing the court of this rulemaking, the fifth circuit court of appeals has entered successive orders staying the appeal. the fifth circuit's most recent order was dated october 9, 2023 and stayed the appeal for an additional 120 days. following a series of stakeholder forums on the classification of workers as employees or independent contractors under the flsa, the department published an nprm on october 13, 2022 proposing to rescind the 2021 ic rule and replace it with new part 795 regulations.[104] in the nprm, the department proposed to add a new part 795 to title 29 of the code of federal regulations providing guidance regarding whether workers are employees or independent contractors, which would be different in notable respects from the regulatory text in the 2021 ic rule, published at 86 fr 1246 through 1248. in contrast to the 2021 ic rule's creation of elevated “core factors,” the department proposed returning to a totality of the circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. additional proposed differences from the 2021 ic rule included restoring consideration of investment as a separate factor, providing additional analysis of the control factor (including detailed discussions of how scheduling, supervision, price setting, and the ability to work for others should be considered), and returning to the longstanding interpretation of the integral factor, which considers whether the work performed is integral to the employer's business. the initial deadline for interested parties to submit comments on the nprm was november 28, 2022. in response to requests for an extension of the time period for filing written comments, the department lengthened the comment period an additional 15 ( print page 1646) days to december 13, 2022, resulting in a total comment period of 61 days.[105] the department received approximately 55,400 comments on the nprm. comments were submitted by a diverse array of stakeholders, including employees, self identified independent contractors, businesses, trade associations, labor unions, advocacy groups, law firms, members of congress, state and local government officials, and other interested members of the public. this section provides a high level summary of commenter views. significant issues raised in the comments received are discussed in subsequent sections of this preamble, along with the department's response to those comments and a discussion of resulting changes that have been made in the final rule's regulatory text. all comments received may be viewed on the http://www.regulations.gov website, docket id whd 2022 0003. many of the comments the department received can be characterized in the following ways: (1) very general statements of support or opposition; (2) personal anecdotes that did not address a specific aspect of the proposal; or (3) identical or nearly identical “campaign” comments sent in response to comment initiatives sponsored by various groups.[106] other comments provided specific data, views, and arguments, which are described throughout this preamble. commenters expressed a wide variety of views on the merits of the department's proposal. acknowledging that there are strong views on the issues presented in this rulemaking, the department has carefully considered the comments submitted. as a general matter, most employees, labor unions, worker advocacy groups, and other affiliated stakeholders generally expressed support for the nprm, asserting that its proposed guidance was more consistent with judicial precedent and would better protect employees from misclassification than the 2021 ic rule. by contrast, most commenters who identified as independent contractors, business entities, and commenters affiliated with those constituencies generally expressed opposition to the nprm, criticizing the department's proposed economic reality test as ambiguous and biased against independent contracting. the department received several comments addressing topics that are beyond the scope of this rulemaking. for example, numerous individuals submitted comments expressing support or opposition to the “protecting the right to organize act”, h.r. 842, 117th cong. (2021), proposed legislation that would amend the nlra. other commenters expressed views on possible legislative reforms to extend wage and hour protections and other employment benefits to workers classified as independent contractors. see, e.g., center for cultural innovation (“cci”) (discussing collective bargaining rights and sector wage standards as “two promising approaches to guaranteeing [wage and hour] protections to independent workers”); doordash (“[l]aws should be updated to preserve the independence workers like dashers value, while clearing the way for new protections and benefits that independent contractors have historically lacked.”); uber (“we look forward to working with the department to address the shortcomings of existing laws, including unlocking access to benefits for independent contractors such as app based workers.”). such legislative efforts are beyond the scope of this rulemaking as they would require congressional action; the scope of this regulation is limited to providing guidance regarding employee or independent contractor classification under the flsa as currently enacted. some commenters addressed the rulemaking's potential effect on workers other than those classified as independent contractors. for example, the labor relations and employment law society at st. john's university school of law requested the department to apply the nprm's proposed economic reality test to evaluate the employment status of unpaid student interns. similarly, boulette golden & marin l.l.p. asserted that the nprm's proposed guidance creates a “false dichotomy” where “every worker in the united states is either an employee or an `independent business.' ” to clarify, this rulemaking specifically addresses the legal distinction between flsa covered employees and independent contractors; it does not replace or supplant the analyses that courts and the department apply when evaluating flsa coverage of other kinds of workers, such as unpaid interns, students, trainees, or volunteers.[107] coverage for these types of workers is not addressed in this rule. finally, some commenters opined on potential compliance or enforcement measures. for example, the sheet metal and air conditioning contractors' national association (“smacna”) requested that the department introduce a mandatory “notice of independent contractor status” form for businesses and independent contractors in the construction industry, to notify “true independent contractors” of their tax obligations and help enforcement against misclassification. this suggestion, however, is outside the scope of this rulemaking, which has not proposed any mandatory notice and focuses specifically on the legal distinction between flsa covered employees and independent contractors. further, some commenters raised compliance with employment verification requirements under the immigration reform and control act (irca), both to note that some employers are incentivized to misclassify immigrant workers as independent contractors in part because they do not have to verify the work authorization of independent contractors, see, e.g., equal justice center; smacna, and to note that being able to operate as an independent contractor or in business for oneself provides economic opportunity for people who lack work authorization, see thedream.us. because this rulemaking pertains only to the question of employee classification under the flsa, it does not address employers' compliance obligations with respect to employees as determined under other laws, such as irca. the flsa's various worker protections apply to flsa covered employees regardless of their citizenship or immigration or work authorization status. the department recognizes that independent contractors and small businesses play an important role in our economy. it is also fundamental to the department's obligation to administer and enforce the flsa that workers who should be covered under the act are able to receive its protections. in the flsa context, employees misclassified as independent contractors are denied ( print page 1647) basic workplace protections, including the rights to minimum wage and overtime pay.[108] meanwhile, employers that comply with the law are placed at a competitive disadvantage compared to other businesses that misclassify employees, contravening the flsa's goal of eliminating “unfair method[s] of competition in commerce.” [109] as explained in the nprm, the department believes that the 2021 ic rule did not fully comport with the flsa's text and purpose as interpreted by the courts. the department further believes that leaving the 2021 ic rule in place would have a confusing and disruptive effect on workers and businesses alike due to its departure from decades of case law describing and applying the multifactor economic reality test as a totality of the circumstances test. while the department agrees that the 2021 ic rule identified a need to further develop and center the concept of economic dependence, the 2021 ic rule included provisions that are in tension with longstanding case law, such as designating two “core factors” as most probative and predetermining that they carry greater weight in the analysis; considering investment and initiative only as part of the opportunity for profit or loss factor; and excluding consideration of whether the work performed is central or important to the potential employer's business. these and other provisions in the 2021 ic rule narrowed the economic reality test by limiting the facts that may be considered as part of the test facts which the department believes are relevant in determining whether a worker is economically dependent on the employer for work or is in business for themself. as the nprm explained, this novel narrowing of the test under which certain factors are always elevated and other facts are essentially precluded from consideration may result in misapplication of the economic reality test and an increased risk of flsa covered employees being misclassified as independent contractors. moreover, the 2021 ic rule did not address the potential risks to workers of such misclassification.[110] the department previously explained these concerns about the 2021 ic rule at length in the withdrawal rule,[111] which was vacated by a district court (the department's appeal of the district court's order is pending). the department now believes it is appropriate to rescind the 2021 ic rule and replace it with an analysis for determining employee or independent contractor status under the act that is more consistent with existing judicial precedent and the department's longstanding guidance prior to the 2021 ic rule. while prior to the 2021 ic rule the department primarily issued subregulatory guidance in this area, the nprm explained that rescinding the 2021 ic rule and replacing it with detailed regulations addressing the multifactor economic reality test in a way that both more fully reflects the case law and continues to be relevant to the evolving economy would be helpful for workers and businesses alike. specifically, the department explained that its proposed guidance would protect workers from misclassification while at the same time provide a consistent approach for those businesses that engage (or wish to engage) with properly classified independent contractors. in the nprm, the department acknowledged that its proposal departed from the approach taken in the 2021 ic rule, and further discussed the rationale used in the 2021 ic rule and why the department had carefully reconsidered that reasoning and determined that modifications were necessary.[112] as the nprm noted, the department had identified four reasons underlying the need to promulgate the 2021 ic rule: (1) confusion regarding the meaning of “economic dependence” because the concept is “underdeveloped”; (2) lack of focus in the multifactor balancing test; (3) confusion and inefficiency due to overlapping factors; and (4) the shortcomings of the economic reality test that are more apparent in the modern economy.[113] the 2021 ic rule had also suggested as a fifth reason that the economic reality test hindered innovation in work arrangements.[114] as discussed further below, the department explained in the nprm that it believed that the proposed rule's approach offers a better framework for understanding and applying the concept of economic dependence by explaining how the touchstone of whether an individual is in business for themself is analyzed within each of the six economic realities factors. further, the department believed that the proposal's discussion of how courts and the department's previous guidance apply the factors brings the multifactor test into focus, reduces confusion as to the overlapping factors, and provides a better basis for understanding how the test has the flexibility to be applied to changes in the modern economy, such that the department no longer viewed the concerns articulated in the 2021 ic rule as impediments to using the economic reality test formulated by the courts and the department's longstanding guidance. thousands of commenters opined on this rulemaking. most commenters that expressed support for the nprm including labor unions, worker advocacy organizations, and workers were highly critical of the 2021 ic rule, often referencing or attaching earlier comments filed in opposition to that rule when it was proposed. see, e.g., american federation of labor and congress of industrial organizations (“afl cio”); national women's law center (“nwlc”); northwest worker justice project; united brotherhood of carpenters and joiners of america (“ubc”). using common template language, several dozen advocacy organizations and local unions affiliated with the united food and commercial workers (“ufcw”) characterized the 2021 ic rule as an “anti worker rule” which “narrowed the scope of who is considered an employee under the flsa.” many of these commenters also asserted that the 2021 ic rule “contravenes the [flsa's] statutory definitions and supreme court precedent.” additionally, numerous commenters supportive of the department's rulemaking asserted that replacing the 2021 ic rule with the nprm's proposed economic reality test would reduce the misclassification of employees as independent contractors, given the proposed test's fuller consideration of facts that were minimized or excluded under the 2021 ic rule. see, e.g., aarp; joint comment of the national electrical contractors association and the international brotherhood of electrical workers (“neca & ibew”); real women in trucking. a number of commenters supportive of the nprm also stated that the economic reality test applied by courts is not only compatible with the modern ( print page 1648) economy, but preferable to the 2021 ic rule's elevation of certain factors as controlling. see, e.g., aarp (“it is precisely because work arrangements are more varied and complex in today's economy that no one factor should be controlling or exclusive to others.”); coalition of state attorneys general and state labor departments (“state ags”) (“as state ags who enforce and defend state wage and hour laws, we know that a flexible standard that considers the totality of the circumstances is required to address changing work arrangements.”). some business stakeholders expressed support for the nprm, but for different reasons. for example, some employers including alto experience, inc., gale healthcare solutions, intelycare, inc., and various union affiliated contractor associations expressed support for the nprm on the grounds that its guidance would better prevent rival businesses from obtaining an unfair competitive advantage through the misclassification of employees as independent contractors, consistent with the flsa's goal of eliminating unfair methods of competition in commerce. additionally, some business stakeholders stated that they preferred the economic reality test applied by courts to the 2021 ic rule. see, e.g., ho chunk inc. (supporting the proposed analysis because the 2021 ic rule “deviat[ed] from established case law”); small business legislative council (“sblc”) (“while the sblc has not taken a position on whether the economic realities test strikes the right balance, applying a test like the economic realities test that has been fleshed out over years through case law and administrative guidance certainly makes this complex issue easier to navigate.”); see also opera america (“the `totality of the circumstances' approach allows for the nuance necessary to truly evaluate the nature of an employment or contractor relationship”); texas association for home care and hospice (“we support the reiteration in the [nprm] that the enumerated factors should each be equally relevant, including any additional relevant factors that indicate economic dependence or independence.”). other commenters, including most business affiliated stakeholders and many self identified independent contractors, disagreed with the department's proposal to rescind and replace the 2021 ic rule. many of these commenters argued that the 2021 ic rule was based on judicial precedent. see e.g., coalition for workforce innovation (“cwi”); independent bakers association (“iba”); pacific legal foundation. commenters opposed to this rulemaking further stated that the 2021 ic rule's analysis is clearer than the nprm's proposed economic reality test, asserting that returning to a totality of the circumstances analysis would increase litigation and deter businesses from engaging with independent contractors. see, e.g., american society of travel advisors (“asta”); financial services institute (“fsi”); u.s. chamber of commerce (“u.s. chamber”). while many commenters opposed to the nprm acknowledged that the misclassification of employees as independent contractors might be a problem in some industries, several commenters disputed the need for generally applicable guidance that (in their view) could be disruptive to businesses and legitimate independent contractors in their particular industries. see, e.g., american translators association; imc companies, llc; see also hr policy association. finally, many self identified independent contractors and advocacy groups asserted that the department's proposal would “misclassify” independent contractors as employees. see, e.g., american society of journalists and authors; cambridge investment research, inc.; fight for freelancers; transportation intermediaries association (“tia”). commenters opposed to this rulemaking agreed with the 2021 ic rule's assessment that the economic reality test traditionally applied by courts is incompatible with the modern economy. see, e.g., institute for the american worker (“i4aw”); society for human resources management (“shrm”); tia. several commenters pointed to differences in the economy today compared to the 1930s and 1940s, when the flsa was enacted and the supreme court first endorsed the economic reality test. see, e.g., flex association (“flex”) (“it is no longer 1938, when congress enacted the flsa. today, independent contractors can leverage app based technology to build their own businesses in ways we could not have conceived even 20, let alone 84, years ago.”); national association of professional insurance agents (“[i]n many ways, the 1938 congress could not have conceived of the present day global economy or the variations among worker statuses that have emerged and continue to evolve therefrom.”). several commenters stated that the department's proposal would deter businesses from engaging with independent contractors, which in turn would have disruptive economic consequences. in a joint comment, 33 business advocacy organizations and over 100 local chambers of commerce (“coalition of business stakeholders”) asserted that, under the nprm, “the only scenario in which a hiring entity can be sure it is safe from an enforcement action by the dol is when it classifies, or misclassifies, its workers as employees” and concluded that the nprm would “upend millions of legitimate, productive independent contractor relationships.” see also, e.g., california association of realtors (c.a.r.) (“this proposal as is would seriously disrupt the current and historical choices of the real estate industry that have been in place for at least fifty years.”); fsi (“changes in laws or regulations that substantially limited or prohibited the use of independent contracting in financial services would harm those who currently work as independent contractors, harm consumers by reducing their financial literacy and thus their ability to accumulate wealth and save for retirement, and harm the economy overall.”). upon consideration of the comments and as described throughout this preamble, the department continues to believe that this final rule's approach offers a better framework for understanding and applying the concept of economic dependence by explaining how the touchstone of whether an individual is in business for themself is analyzed within each of the six economic reality factors. this rule's discussion of how courts and the department's previous guidance apply the factors brings the multifactor test into focus, reduces confusion as to the overlapping factors, and provides a more consistent basis for understanding how the test has the flexibility to be applied to changes in the modern economy. accordingly, the department no longer views the concerns articulated in the 2021 ic rule as impediments to using the economic reality test formulated by the courts and the department's longstanding guidance. the department is, however, retaining its longstanding interpretation, as it did in the 2021 ic rule, that economic dependence is the ultimate inquiry, and that an employee is someone who, as a matter of economic reality, is economically dependent on an employer for work not for income. [115] ( print page 1649) consistent with the 2021 ic rule and as explained in the nprm, the department continues to believe that, as compared to the economic realities analysis generally, the particular concept of economic dependence is underdeveloped in the case law. as noted in the 2021 ic rule, the department and most courts have historically applied a “dependence for work” approach which considers whether the worker is dependent on the employer for work or depends on the worker's own business for work. however, a minority of courts have applied a “dependence for income” approach that considers whether the worker has other sources of income or wealth or is financially dependent on the employer.[116] further, rather than giving primacy to only two factors as indicators of economic dependence, the department believes that developing the concept of economic dependence is better accomplished by, in addition to elaborating on the general meaning of economic dependence, explaining how each of the six factors can illuminate the distinction between economic dependence on the employer for work and being in business for oneself. by focusing on that distinction in its discussion of each factor, the department expects that this rule will provide clarity on the concept of economic dependence that the 2021 ic rule indicated would be welcomed by workers and businesses, but will do so in a way that is consistent with case law and the department's prior guidance. regarding commenters that stated that the 2021 ic rule provided more clarity in distinguishing between factors, the department believes, upon further consideration, that any purported confusion and inefficiency due to overlapping factors was overstated in the 2021 ic rule. moreover, when each factor is viewed under the framework of whether the worker is economically dependent or in business for themself, the rationale for considering facts under more than one factor is clearer. the department explains in more detail in section v why considering certain facts under more than one factor is consistent with the totality of the circumstances approach of the economic realities analysis used by courts. and the department provides guidance regarding how to consider certain facts, such as the ability to work for others and whether the working relationship is exclusive, under more than one factor. the department believes that this flexible approach is supported by the case law and preferable to rigidly and artificially limiting facts to only one factor, as the 2021 ic rule did. concerning comments that the 2021 ic rule was better suited to the modern economy, the department believes that this final rule is well equipped to address a wide array of traditional and emerging work relationships, as discussed throughout section v of this preamble. in the 2021 ic rule, the department stated that “technological and social changes have made shortcomings of the economic realities test more apparent in the modern economy,” thus justifying the 2021 ic rule's characterization of the integral, investment, and permanence factors as less important in determining a worker's classification.[117] upon further consideration, however, the department believes that the multifactor economic reality test relied on by courts where no one factor or set of factors is presumed to carry more weight is the most helpful tool for evaluating modern work arrangements. the test's vitality is confirmed by its application over seven decades that have seen monumental shifts in the economy. modern work arrangements utilizing applications or other technology are best addressed using the underlying economic reality test, which considers the totality of the circumstances in each working arrangement and offers a flexible, comprehensive, and appropriately nuanced approach which can be adapted to disparate industries and occupations. it can also encompass continued social changes because it does not presume which aspects of the work relationship are most probative or relevant and leaves open the possibility that changed circumstances may make certain factors more important in certain cases or future scenarios. the department's response to commenter feedback on the potential economic consequences of this rulemaking is discussed in the regulatory impact analysis provided in section vii. however, the department continues to believe that proper application of the flsa in the modern economy requires the flexibility of an economic reality test that does not predetermine the probative value of particular factors and which is adaptable to different industries and workers. as further explained in sections iii.c and vii, commenter assertions of economic disruption related to this rulemaking are belied by the fact that this rulemaking merely aligns the department's interpretive guidance with the same legal standard courts have been applying for decades and are continuing to apply today. the discussion that follows sets forth the department's explanation of the need for this rulemaking and responds to relevant commenter feedback. in the nprm, the department explained that it was proposing to rescind and replace the 2021 ic rule in part because that rule was not fully aligned with the flsa's text as interpreted by the courts or the department's longstanding analysis, as well as decades of case law describing and applying the multifactor economic reality test. in relevant part, the nprm explained that the department had three primary and overlapping legal concerns with the 2021 ic rule: (1) its creation of two “core factors” as the “most probative” in the economic reality analysis; (2) the oversized role of the control factor in its analysis; and (3) its altering of several economic reality factors to minimize or exclude key facts commonly analyzed by courts.[118] after considering the comments, the department continues to believe that the 2021 ic rule marked a departure from the way in which courts and the department adopted and applied the multifactor, totality of the circumstances economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. the department also continues to believe that the 2021 ic rule's departure from longstanding precedent unduly narrowed the economic reality test by limiting facts that may be considered as part of the test that are relevant in determining whether a worker is economically dependent on the employer for work or is in business for themself. by doing so, the 2021 ic rule artificially restricted the act's expansive definitions of “employer,” “employee,” and “employ,” undermining the act's text and purposes, as interpreted by courts and the department's longstanding interpretation of the economic reality test. ( print page 1650) as the nprm explained, the 2021 ic rule set forth a new articulation of the economic reality test, elevating two factors (control and opportunity for profit or loss) as “core” factors above other factors, asserting that the two core factors have “greater probative value” in determining a worker's economic dependence.[119] notably, the 2021 ic rule further provided that if both core factors point toward the same classification either employee or independent contractor then there is a “substantial likelihood” that this is the worker's correct classification.[120] although it identified three other factors as additional guideposts and acknowledged that additional factors may be considered, it made clear that non core factors “are less probative and, in some cases, may not be probative at all, and thus are highly unlikely, either individually or collectively, to outweigh the combined probative value of the two core factors.” [121] the nprm explained that the department believes that the 2021 ic rule's elevation of the control and opportunity for profit or loss factors was in tension with the language of the act as well as the longstanding judicial precedent, expressed by the supreme court and in appellate cases from across the circuits, that no single factor is determinative in the analysis of whether a worker is an employee or an independent contractor, nor is any factor or set of factors necessarily more probative of whether the worker is in fact economically dependent on the employer for work as opposed to being in business for themself. many commenters expressed concerns about the 2021 ic rule's elevation of two “core factors” and supported the department's proposal to restore a totality of the circumstances analysis where no factor (or set of factors) is given a predetermined weight. several commenters asserted that the use of core factors was contrary to supreme court precedent. see, e.g., international association of machinists and aerospace workers, afl cio; laborers' international union of north america (“liuna”); national employment law project (“nelp'). the afl cio and the north america's building trades unions (“nabtu”) further commented that the 2021 ic rule's elevation of control and opportunity for profit or loss effectively (and impermissibly) adopted a common law test for independent contractor status. the signatory wall and ceiling contractors alliance (“swacca”) stated that “[b]y giving greater emphasis to these two factors . . . the [2021 ic rule] improperly narrows the analysis of the facts and circumstances surrounding the business worker relationship, thereby reducing the scope of the flsa's protections.” see also state ags (commenting that the 2021 ic rule's “emphasis on two `core' factors . . . negated the need to fully consider the remaining factors”). farmworker justice commented that the 2021 ic rule's use of core factors could facilitate the misclassification of farmworkers, whose employment status is particularly dependent on the economic reality factors examining the skill and integrality of the work being performed. see also joint comment from the center for law and social policy & governing for impact (“clasp & gfi”) (same). other commenters supported the 2021 ic rule's use of core factors and did not agree with the department's proposal to change the 2021 ic rule's analysis. pointing to the department's review of appellate case law described in the 2021 ic rule preamble,[122] several commenters stated that the elevation of the control and opportunity for profit or loss factors was fully consistent with the outcome of flsa court decisions, if not their explicit reasoning. see, e.g., associated builders and contractors (“abc”); coalition to promote independent entrepreneurs (“cpie”); flex; fsi. several commenters, like the club for growth, flex, and modern economy project (“mep”) agreed with the 2021 ic rule's determination that the control and the opportunity for profit or loss factors “drive at the heart” of economic dependence.[123] cwi asserted that “it is simply inaccurate that no court has determined, as a general rule, that any core factor should be afforded greater weight in determining whether an individual is an [employee].” see also cpie. having considered the comments, the department continues to believe that the 2021 ic rule was in tension with the act, judicial precedent, and congressional intent. as the department explained in the nprm, there is no statutory basis for such a predetermined weighting of the factors and the department is concerned that prioritizing two core factors over other factors may not fully account for the act's broad definition of “employ,” as interpreted by the courts. the department agrees with those commenters that noted that the elevation of two core factors improperly narrowed the analysis of the relevant facts, thereby reducing the scope of the flsa's protections. for example, if facts relevant to the control and opportunity for profit or loss factors both point to independent contractor status for a particular worker but weakly so, those factors should not be presumed to carry more weight than stronger factual findings under other factors ( e.g., the existence of a lengthy working relationship under the “permanence” factor and the performance of work that does not require specialized skills and is an integral part of the business), which would indicate that the worker is an employee. moreover, the department is not aware of any court that has, as a general rule, elevated any one economic reality factor or subset of factors above others, despite receiving several comments suggesting that there was such case law. the 2021 ic rule did not cite or rely on any particular decision where a court announced such a general rule predetermining the weight of some of the economic reality factors. further, the department has examined cases raised by commenters in support of the core factor analysis and none stand for the proposition that a predetermined elevation of any factor or set of factors is appropriate under the economic reality analysis for worker classification under the flsa. rather, the cases cited by commenters are either relevant to a different statute such as the americans with disabilities act (“ada”) or title vii, reference a joint employment analysis rather than an employee classification analysis, or have had excerpts taken out of context.[124] while ( print page 1651) courts and the department may focus on some relevant factors more than others when analyzing a particular set of facts and circumstances, this does not mean that it is possible or permissible to derive from these fact driven decisions universal rules regarding which factors deserve more weight than the others when the courts themselves have not set forth any such universal rules despite decades of opportunity. the supreme court has emphasized that employment status under the economic reality test turns upon “the circumstances of the whole activity,” rather than “isolated factors.” [125] federal appellate courts have repeatedly cautioned against a mechanical or formulaic application of the economic reality test,[126] and specifically warn that it “ `is impossible to assign to each of these factors a specific and invariably applied weight.' ” [127] the 2021 ic rule's elevation of two “core factors” was also in tension with judicial precedent, expressed by the supreme court and federal courts of appeals, that no single factor in the analysis is dispositive.[128] thus, the 2021 ic rule's predetermined and mechanical weighting of factors was not consistent with how courts have, for decades, applied the economic reality analysis.[129] regarding comments relying on the 2021 ic rule's reference to an appellate case law analysis to support the elevation of core factors, the department has carefully reconsidered the cases cited in the 2020 nprm and 2021 ic rule in support.[130] the appellate cases relied on in the 2020 nprm [131] and 2021 ic rule to support the 2021 ic rule's creation of “core factors” do not, themselves, elevate these two factors rather, the 2021 ic rule made assumptions about the reasoning behind the courts' decisions that are not clear from the decisions themselves and in some cases are contrary to the decisions' instructions that the test should not be applied in a mechanical fashion.[132] in fact, most of the decisions cited as supporting a “core factor” analysis based on the case law review explicitly deny assigning any predetermined weight to these factors, and instead state that they considered the factors as part of an analysis of the whole activity, with no determinative single factor.[133] particularly when viewed in the context of repeated statements from the courts that no one factor in the economic reality test is dispositive, divining from the cases a conclusion that is the exact opposite from what the courts say that they are doing is not persuasive. the department now believes that the 2020 nprm and 2021 ic rule's discussion of the case law in support of the core factors improperly simplified the courts' analysis in an attempt to quantify the probative value of certain factors in a manner that is facially inconsistent with the decisions themselves. additionally, while there are certainly many cases in which the classification decision made by the court aligns with the classification indicated by the control and opportunity for profit or loss factors, the 2021 ic rule did not identify any cases stating that those two factors are “more probative” of a worker's classification than other factors. rather, the 2021 ic rule acknowledged that there are cases in which the classification suggested by the control factor did not align with the worker's classification as determined by the courts.[134] the department has also identified appellate cases in which the classification suggested by the profit or loss factor, for example, did not align with the worker's classification as determined by the courts or in which that factor was simply not addressed due to the fact specific nature of the analysis. see, e.g., nieman v. nat'l claims adjusters, inc., 775 f. app'x 622, 625 (11th cir. 2019) (concluding that worker was an independent contractor without considering profit or loss or integral factors because facts were not presented on those issues); simpkins v. dupage hous. auth., 893 f.3d 962, 967 (7th cir. 2018) (reversing the district court's summary judgment decision and remanding case for determination of employee status without addressing opportunity for profit or loss); thomas v. txx servs., inc., 663 f. app'x 86, 90 (2d cir. 2016) (reversing summary judgment on the issue of plaintiffs' status as employees ( print page 1652) under the flsa but not discussing opportunity for profit or loss); meyer v. u.s. tennis ass'n, 607 f. app'x 121, 123 (2d cir. 2015) (affirming summary judgment decision and concluding that district court did not err in determining that plaintiffs were independent contractors where district court found that the profit or loss factor “cuts both ways”) (quoting meyer, 2014 wl 4495185, at *7); johnson v. unified gov't of wyandotte cnty./kansas city, kansas, 371 f.3d 723, 730 (10th cir. 2004) (affirming jury verdict that workers were independent contractors despite concluding that “[t]he jury could have viewed [the profit or loss] factor as not favoring either side”); donovan v. tehco, inc., 642 f.2d 141, 143 (5th cir. 1981) (noting that the worker “could elect to be paid by the hour or by the job and thus profit from foresight” but that this and other facts were not sufficient “to counterbalance the strong indicia of employee status”). as such, it is clear that mechanically deconstructing certain court decisions and considering what those courts have said about only two factors even when the courts did not present their analyses in this manner ignores the broader approach that most courts have taken in determining worker classification. moreover, it is necessarily the case when applying a multifactor balancing test that when any two factors of that test both point toward the same outcome, the probability of that indicated outcome aligning with the ultimate outcome increases. the 2021 ic rule did not address whether a different combination of two factors would yield similar results. yet, an in depth review of the case law indicates that it would yield similar results, as most of the cases cited in the 2020 nprm and 2021 ic rule in support of its core factor analysis had multiple factors pointing in the same direction.[135] this further underscores the unduly narrow focus on two “core factors” in the 2021 ic rule. in any event, the 2021 ic rule significantly altered the “control” and “opportunity for profit or loss” factors, changing what facts may be considered for each, as discussed more fully in section v. for example, contrary to the approach taken by most courts, the 2021 ic rule placed a significant focus on the worker's control rather than the potential employer's control and recast the opportunity for profit or loss factor as indicating independent contractor status based on the worker's initiative or investment. thus, irrespective of whether control and opportunity for profit or loss were more frequently aligned with the ultimate result in prior appellate cases, the new framing of these factors, as redefined in the 2021 ic rule, set forth a new standard for analysis that is unsupported by precedent. the 2021 ic rule identified “the nature and degree of control over the work” as one of two core factors given “greater weight” in the independent contractor analysis.[136] in the nprm, the department expressed concern that elevating the importance of control in every flsa employee or independent contractor analysis brings the 2021 ic rule closer to the common law control test that courts have rejected when interpreting the act. accordingly, the nprm proposed restoring control to one of six factors to be considered, with no single factor being determinative. commenter views on the 2021 ic rule's emphasis on control overlapped with those responding to its creation of “core factors.” for example, several commenters in support of the nprm asserted that elevating the role of control makes the 2021 ic rule's analysis too similar to a common law control test. see, e.g., afl cio; liuna; nabtu; state ags. lawyers' committee for civil rights under law & the washington lawyers' committee for civil rights and urban affairs (“lccrul & wlc”) discussed court decisions where workers were found to be misclassified employees under the economic reality test despite a lack of “actual control” exercised by the employer, implying that the outcomes might have been different if courts had applied the 2021 ic rule. nelp requested that the department further deemphasize the relevance of control, asserting that “the `control' factor is furthest removed from the statutory `suffer or permit' language, and that an absence of control is not particularly telling given that language.” finally, several commenters asserted that the 2021 ic rule's elevation of control is doubly problematic in view of alterations to the control factor which, in commenters' views, make the factor less likely to indicate employee status. see nwlc (“[t]he 2021 rule not only gave the `control' factor outsized importance, but impermissibly narrowed the concept of control itself by focusing on control over work exercised by the individual worker, as opposed to the right to control by an employer, and defining control primarily with reference to considerations that are often disregarded as irrelevant by courts.”); see also afl cio; international brotherhood of teamsters (“ibt”). as discussed earlier, commenters opposed to the nprm stated that the control factor should be given added weight in the economic reality test (along with the opportunity for profit or loss factor), due to its purported strong correlation with the ultimate outcomes of prior flsa court decisions. see, e.g., abc; cpie; flex; fsi. cwi commented that the 2021 ic rule's elevation of control served a “definitional purpose,” identifying control as a foundational aspect of the “dependence” in “economic dependence.” see also club for growth (“[because control is] virtually synonymous with what it means to be an independent businessperson . . . it makes sense that [it] typically matter[s] more than, for instance, the duration of a business relationship or a worker's level of skill.”). the u.s. chamber commented that the 2021 ic rule “rightly elevated the importance of control” because “courts and scholars have found . . . no functional difference between” the economic reality and common law control tests. see also club for growth (“it would be odd to say that control, which underpins the concept of employment and agency law generally, should have no more weight than, say, whether the worker bought his own boots.”). as noted in the nprm, although the 2021 ic rule's analysis regarding who is an employee and who is an independent contractor was not the same as the common law control analysis, elevating the importance of control in every flsa employee or independent contractor analysis brought the 2021 rule closer to ( print page 1653) the common law control test that courts have rejected when interpreting the act.[137] the supreme court has repeatedly stated that the act establishes a broader scope of employment for flsa purposes than under a common law analysis focused on control.[138] the department remains concerned that the outsized role of control under the 2021 ic rule's analysis was contrary to the act's text and case law interpreting the act's definitions of employment and as such disagrees with commenters who suggested that control is essentially synonymous with economic dependence and should be given more weight. the department, however, also disagrees with nelp that the flsa's “suffer or permit” standard suggests that control should be afforded less weight than other economic reality factors, as courts have similarly not adopted such an approach. the nprm stated that the department remained concerned that the 2021 ic rule's preclusion of certain facts from being considered under the factors improperly narrowed the economic reality test and did not allow for a full consideration of all facts which might be relevant to determining whether a worker is economically dependent upon an employer for work or in business for themself. examples of such narrowing from the 2021 ic rule include: (1) stating that “control” indicative of an employment relationship must involve an employer's “substantial control over key aspects of the performance of the work,” excluding requirements “to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed upon deadlines or quality control standards, or satisfy other similar terms;” [139] (2) making the “opportunity for profit or loss” factor indicate independent contractor status based on either the worker's initiative or investment (even if either a lack of initiative or lack of investment suggests that the worker is an employee); [140] (3) disregarding the employer's investments; [141] (4) disregarding the importance or centrality of a worker's work to the employer's business; [142] and (5) downplaying the employer's reserved right or authority to control the worker.[143] in each of these ways, the 2021 ic rule limited the scope of facts and considerations comprising the analysis of whether the worker is an employee or independent contractor. numerous commenters opined on the 2021 ic rule's general narrowing of the economic reality test and the extent to which it justifies this rulemaking. for example, ibt stated that “[t]he current rule conflicts with the intended broad definition and coverage of the [flsa] and adopts an impermissibly narrow test for determining employee status.” see also, e.g., afl cio (“overall, the 2021 ic rule contracted the coverage of the flsa, strongly contrary to congressional intent and supreme court precedent.”); outten & golden llp (“the january 2021 rule restricts flsa coverage to a smaller subset of workers than those whose work is `suffer[ed] or permit[ted]' under the statute's expansive coverage.”). while some commenters focused on the 2021 ic rule's elevation of “control” as a core factor, other commenters additionally addressed the rule's alteration of individual economic factors. see, e.g., lccrul & wlc (describing the 2021 ic rule as “elevating facts tending to show independent contractor status, while reducing the probative weight of other factors and downplaying facts tending to show employee status”); neca & ibew (“the 2021 ic rule also narrowed the facts to be considered under the `non core' factors.”). the afl cio and lccrul & wlc both identified two changes to the factors from the 2021 ic rule as particularly problematic: the diminution of an employer's reserved right to control, and the alteration of the “integral part” factor (excluding any consideration of the importance or centrality of the work to the employer). other commenters defended the merit of the 2021 ic rule's five economic reality factors, as discussed in greater detail in section v. as a general matter, these commenters praised the 2021 ic rule's description of the economic reality factors for reducing overlap and redundancy compared to the approach taken by courts, stating that such changes brought greater clarity to the regulated community. see, e.g., american hotel & lodging association; center for workplace compliance (“cwc”); fsi; mep; national retail federation and the national council of chain restaurants (“nrf & nccr”). discussing examples such as the “integrated unit” factor's exclusion of the importance or centrality of the individual's work to the potential employer's business,[144] cwi asserted that the 2021 ic rule “ensures that each factor is properly tailored to address the ultimate determinant of employee or independent contractor status economic dependence.” having considered the comments on this issue, the department believes that the 2021 ic rule altered various economic reality factors in ways that improperly narrowed the economic reality test, because such alterations minimized or excluded facts which in many cases are relevant for determining whether a worker is economically dependent upon an employer for work or in business for themself. the department remains of the view that the 2021 ic rule's alteration of several economic reality factors provides another important justification for this rulemaking. commenter feedback on the proper articulation of each factor in the economic reality test is described in greater detail in section v. the 2021 ic rule stated that it sought to “significantly clarify to stakeholders how to distinguish between employees and independent contractors under the act.” [145] however, as previously discussed,[146] the 2021 ic rule introduced a new analysis regarding employee or independent contractor classification that was materially different from the longstanding analysis applied by courts and that included ( print page 1654) several new concepts that neither courts nor the department had previously applied. this final rule (and particularly rescission of the 2021 ic rule) is needed in part because of the concern that the 2021 ic rule's new analysis and concepts did not provide the intended clarity. first, as the department explained in the nprm, because the 2021 ic rule departed from courts' longstanding precedent, it is not clear whether courts would have at some point adopted the rule's analysis were it not being rescinded as part of this rulemaking. the department further explained that this question could have taken years of appellate litigation in different federal courts of appeals to sort out, resulting in more uncertainty as to the applicable economic reality test. businesses operating nationwide would have had to familiarize themselves with multiple standards for determining who is an employee under the flsa. this litigation and these multiple standards would have likely caused confusion and uncertainty.[147] second, as the department noted in the nprm, the 2021 ic rule would have introduced several ambiguous terms and concepts into the analysis for determining whether a worker is an employee under the flsa or an independent contractor. for example, those following the guidance provided in the 2021 ic rule had to grapple with what it means in practice for two factors to be “core” factors and entitled to greater weight. in addition, they had to determine, in cases where the two core factors point to the same classification, how “substantial” the likelihood is that they point toward the correct classification if the additional factors point toward the other classification. additionally, as explained in the nprm, the 2021 ic rule did not specify whether the “additional factors” that could be considered under that rule had less probative value (or weight) than the three non “core” factors. assuming that they did, the 2021 ic rule would have essentially resulted in a three tiered multifactor balancing test, with the “core” factors given more weight than enumerated non “core” factors, and the enumerated non “core” factors given more weight than the “additional” factors. the 2021 ic rule would have also improperly collapsed some factors into each other, so that, for example, investment and initiative would have been considered only as a part of the opportunity for profit or loss factor, requiring courts and the regulated community to reconsider how they have long applied those factors. these new concepts, this new weighing of the factors, and this new treatment of the factors would have likely caused confusion and uncertainty.[148] in sum, the nprm explained that the 2021 ic rule would have complicated rather than simplified the analysis for determining whether a worker is an employee or independent contractor under the flsa, which is further justification for this final rule to rescind and replace the 2021 ic rule. as a threshold matter, commenters disagreed over whether courts would adopt and apply the 2021 ic rule's analysis if it were left in place. multiple commenters agreed with the department's concern, as described in the nprm, that courts might not adopt or apply the 2021 ic rule, which they criticized as an unlawfully narrow interpretation of the flsa. see, e.g., liuna (discussing “the clear illegality of the 2021 rule”); nelp (describing the 2021 ic rule as “a legally incorrect standard” that “merits neither adherence, agency deference, nor smallest persuasive effect”); ubc (“the 2021 rule is so abundantly flawed that it is ripe for challenge under the administrative procedure act.”). the state ags commented that “it could take years of litigation to determine if and how courts will adopt” the 2021 ic rule's analysis. see also swacca (“judicial disregard of the january 2021 rule's interpretation of the flsa would create considerable confusion.”). ubc elaborated that uncertainty over judicial adoption of the 2021 ic rule poses a significant legal risk to businesses, as “any employer relying on the 2021 rule faces the very real possibility that their presumed compliance with the flsa would in fact be the opposite.” see also neca & ibew (asserting that the 2021 ic rule does not provide “certainty and clarity” for businesses because courts will continue applying a broader economic reality test). notwithstanding their concerns with some aspects of the nprm's proposed guidance, some independent contractors and business stakeholders shared the department's concerns over whether courts would actually apply the 2021 ic rule and the attendant risks that they would not. see, e.g., ho chunk, inc. (“ho chunk supports the department's revision of the 2021 ic rule as we agree that [it] would have a confusing and disruptive effect due to its deviation from established case law.”). commenters opposed to the nprm, however, expressed confidence that, if left in place, the 2021 ic rule would be adopted by courts over time and promote greater uniformity in the law. see, e.g., imc companies (“after decades of uncertainty and imprecise applications of the law, the [2021 ic rule] was on the cusp of ushering in a new era of streamlined analysis and consistent court decisions across all jurisdictions.”); nrf & nccr (“if left in place, [the 2021 ic rule] would undoubtedly increase consistency.”). several of these commenters asserted that the department's concerns about the 2021 ic rule's reception by courts were speculative, unsupported by evidence, and premature. see, e.g., american bakers association; cpie; freedom foundation. a comment from two fellows at the heritage foundation asserted that courts would adopt the 2021 ic rule given the deferential standard of review afforded to agency rules that fill statutory gaps under chevron u.s.a., inc. v. natural resources defense council, inc., 468 u.s. 837 (1984).[149] other commenters disputed the relevance of the department's concern over the 2021 ic rule's adoption by courts, asserting that courts were already applying different versions of the economic reality test and arriving at different outcomes prior to the 2021 ic rule. see, e.g., asta; independent women's forum (“iwf”); see also club for growth (“without supporting experience, the critique is no more than the same argument that could be leveled against virtually any regulation.”). finally, many commenters questioned the likelihood that courts would adopt the nprm's proposed guidance, which they viewed as less consistent with the flsa and judicial precedent than the 2021 ic rule. see, e.g., cpie; fsi; national association of manufacturers (“nam”); workplace policy institute of littler mendelson, p.c. (“wpi”). having considered the comments, the department continues to have serious concerns about the extent to which federal courts would have adopted the 2021 ic rule, were it not being rescinded by this rulemaking. the department is unaware of a single federal court that has applied the 2021 ic rule's analysis. to the contrary, to the department's knowledge, only a few court decisions have even considered the 2021 ic rule and all expressly ( print page 1655) declined to apply its analysis.[150] other courts that have considered employee or independent contractor classification under the flsa have continued applying a broader economic reality test consistent with their own longstanding precedent.[151] the department disagrees with commenter assertions that the 2021 ic rule's analysis was more likely to be adopted by courts than the analysis proposed in the nprm. the department's analysis in this rulemaking is grounded in longstanding case law, while the new standard and new concepts introduced by the 2021 ic rule were a very significant departure from that longstanding case law. for example, as previously discussed, the 2021 ic rule created “core” factors that were automatically given greater weight in the analysis, contrary to how every appellate court has described the economic reality test.[152] in line with the case law, this final rule has no “core” factors. similarly, while every federal court of appeals that has applied the integral factor in an flsa independent contractor case has examined whether the worker's work is an “integral part” of the potential employer's business,[153] no circuit applies the 2021 ic rule's narrower inquiry into “whether the work is part of an integrated unit of production” as the standard under this factor.[154] and unlike the 2021 ic rule, all but two circuits share the approach of listing “investment” and “opportunity for profit and loss” as separate economic reality factors, consistent with the supreme court's original listing of these factors in silk .[155] some commenters alleged that certain aspects of the nprm's proposed guidance were departures from judicial precedent, such as its proposal that “control implemented by the employer for purposes of complying with legal obligations, safety standards, or contractual or customer service standards may be indicative of control,” [156] and its proposed consideration of investments made by the potential employer as well as the worker.[157] however, as the discussions of the control and investments factors in section v explain, this final rule's guidance on both issues is well supported by the case law. moreover, the department has made meaningful changes in this final rule to aspects of its proposed guidance in response to comments, including the treatment of control exercised to comply with legal obligations and the consideration of investments made by the potential employer.[158] the department believes that such changes further align this final rule's guidance with the analysis presently applied by courts, providing greater certainty for interested parties. apart from the 2021 ic rule's reception by courts, commenters also disagreed over whether the 2021 ic rule's guidance brought clarity or confusion as a standalone matter. some commenters asserted that the novelty of the 2021 ic rule's analysis, for example, would have created confusion as compared to the longstanding analysis applied by courts. see, e.g., nelp (“by departing from decades of federal case law on the scope of the act's protections, and by downplaying relevant facts of an employment relationship in the analysis, the 2021 ic rule . . . creates more confusion for employers and workers alike.”); swacca (asserting that the ability to “draw[] on 70 years of existing interpretations from the courts and department of labor guidance” under the nprm's guidance will “save time and resources for all stakeholders compared to the january 2021 rule's novel, untested weighted framework.”). in contrast, other commenters asserted that rescission and replacement of the 2021 ic rule would reduce certainty and clarity. see, e.g., americans for prosperity foundation (“afpf”); coalition of business stakeholders; nam; republican members of congress; shrm; u.s. chamber. numerous commenters that preferred the 2021 ic rule identified its establishment of core factors as that rule's most clarifying feature. see, e.g., competitive enterprise institute (“cei”); cwc; iwf; landmark legal foundation; national association of women business owners (“nawbo”); raymond james financial, inc. (“raymond james”). some commenters additionally supported the 2021 ic rule's elimination of purported redundant or overlapping considerations in various economic reality factors. see, e.g., fsi (criticizing the nprm's proposed separation of the “investment” and “opportunity for profit or loss” factors as “yet another way in which the [nprm] . . . undo[es] the 2021 rule's clarifying efforts to articulate an appropriately weighted test with less overlapping redundancy”); mep. having reviewed the comments, the department continues to believe that the 2021 ic rule introduced uncertainty regarding the applicable legal standard for determining whether a worker is an employee or an independent contractor under the flsa, contrary to its stated intent. prior to the 2021 ic rule, there was certainty as to the applicable legal standard for determining whether a worker was an employee or independent contractor under the flsa because federal courts of appeals applied a totality of the circumstances, economic reality test that did not elevate any factors above the others. despite slight variation in the exact number and phrasing of specific economic reality factors, courts and the department generally examined the same economic reality factors. the 2021 ic rule, however, injected uncertainty into this area of the law by putting forth new guidance that was at odds (for all of the reasons discussed herein) with ( print page 1656) the substantive standard applied by courts. as a result of the 2021 ic rule, the regulated community was confronted with inconsistent standards for interested parties to apply to determine a worker's status the test from the 2021 ic rule and the totality of the circumstances test in federal appellate case law.[159] leaving the 2021 ic rule in place would have risked greater confusion regarding its relation to well settled circuit precedent. thus, the 2021 ic rule's new standard introduced uncertainty that did not exist before.[160] additionally, the department continues to believe that the aspects of the 2021 ic rule's analysis introduced confusion, making that rule's guidance vulnerable to misapplication. confusion about how to apply the 2021 ic rule was evident in many of the comments submitted in opposition to the department's proposal to rescind and replace that rule. for example, several commenters inaccurately described the 2021 ic rule as establishing a “two factor test,” see, e.g., cei; national demolition association (“nda”), while others mistakenly assumed that non core factors were only considered when the two core factors pointed to opposite classification outcomes. see, e.g., information technology & innovation foundation; news/media alliance (“n/ma”); professional golfers' association of america (“pga”).[161] some commenters appeared to conflate the reduced importance of non core factors under the 2021 ic rule's analysis with a reduced need to consider such factors at all. see, e.g., national federation of independent businesses (“nfib”); shrm.[162] additionally, some commenters viewed the 2021 ic rule's economic reality test, in its totality, as essentially the same as a common law control test.[163] see the national council of agricultural employers (asserting that common law definitions of independent contractor status “are consistent with the 2021 ic rule”); u.s. chamber (asserting that “despite the ostensible variances between the economic realities and common law control tests, `there is no functional difference between' these tests”). commenter confusion about the 2021 ic rule is unsurprising because that rule set forth a novel analysis which has not been applied by any court. the confusion evident in the comments received reinforces the department's assessment, as explained in the nprm, that the 2021 ic rule could have resulted in misapplication of the economic reality test and may have conveyed to employers that more workers could be classified as independent contractors than prior to the 2021 ic rule. in the nprm, the department explained that to the extent the 2021 ic rule's guidance resulted in the misclassification of employees as independent contractors, the resulting denial of flsa protections could harm the affected workers. these protections include being paid at least the federal minimum wage for all hours worked, overtime compensation for hours worked over 40 in a workweek, and protection against retaliation for complaining about, for example, a violation of the flsa. the department further explained in the nprm that the 2021 ic rule did not fully consider these potential consequences for workers. the nprm noted that this result could have a disproportionate impact on women and people of color, to the extent such workers are overrepresented in low wage positions where misclassification is more likely.[164] the nprm further noted that women and people of color experience multiple types of economic inequities in the labor force, including gender and racial wage gaps and occupational segregation, and that the misclassification of these workers as independent contractors deprives them of wage and hour protections that could help alleviate some of this inequality.[165] many commenters, including worker advocacy groups, labor unions, and other stakeholders, shared views about the 2021 ic rule's effect on employees vulnerable to misclassification. the department also received significant feedback regarding the potential effects of this rulemaking on independent contractors, as well as from commenters who did not agree that the 2021 ic rule would or could increase the prevalence of misclassification. many commenters agreed with the department's assessment that the misclassification of employees as independent contractors remains a serious problem for workers, businesses, and the broader economy. several commenters referenced studies or data estimating a high prevalence of misclassification in the economy, in addition to those mentioned in the nprm's regulatory impact analysis.[166] see, e.g., nabtu (citing multiple studies estimating the misclassification of construction workers in various states); state ags (discussing a june 2022 report estimating that “at least 10 percent of new york state's workers are misclassified as independent contractors” and a december 2022 report estimating that “approximately 259,000 workers in pennsylvania are wrongly classified as independent contractors”). clasp & gfi asserted that the misclassification of employees as independent contractors is “occurring with increased frequency as workplaces `fissure,' ” and “firms . . . outsource bigger and bigger portions of their workforces to other entities and to workers themselves.” similarly, the ufcw asserted that misclassification is a “pervasive and growing problem,” citing one report showing that in washington state, misclassification increased from 5 percent of employers misclassifying workers in 2008 to 14 percent of employers misclassifying workers in 2017, with construction workers, clerical workers, and hotel and restaurant workers the most likely to be misclassified.” several commenters emphasized the prevalence of misclassification in specific industries. see, e.g., american federation of state, ( print page 1657) county and municipal employees (custodial work); farmworker justice (agriculture); intelycare inc. (nursing); national domestic workers alliance (“ndwa”) (domestic and home care); real women in trucking (trucking); service employees international union (janitorial and gig work); smacna (construction). many commenters discussed how the misclassification of employees as independent contractors deprives workers of wages. swacca, for example, commented that “the estimated 20 percent of construction workers who should be treated as employees (but are not) lose close to $1 billion in wages annually.” commenters pointed out that misclassification undercuts employers that comply with the law and causes a “race to the bottom” in labor standards. see, e.g., aarp; indiana, illinois, iowa foundation for fair contracting; swacca (estimating that “construction companies that treat their workforce as independent contractors save at least 20 to 30 percent on labor costs”). gale healthcare solutions stated that “[t]emporary staffing platform companies that hire nursing staff as w2 employees lose talent to companies that use a 1099 model, as 1099 agencies promote wages that appear higher because they do not provide traditional protections of employment or account for withholding taxes and additional expenses required by the w 2 model.” alto experience inc., a ridesharing company that classifies its drivers as employees, asserted that the misclassification of employees as independent contractors constitutes an “unfair method of competition in commerce” that the flsa was passed to prevent. beyond wage effects, commenters identified and discussed many other consequences of worker misclassification. for example, the nwlc asserted “by strengthening the employment test to reduce misclassification, the department can ensure that more nursing mothers will be able to hold their employers accountable for providing appropriate facilities and adequate break time.” see also a better balance (“[w]e are pleased that this rule will help to ensure that workers are able to access their rights under the family and medical leave act and the break time for nursing mothers law.”). as discussed more fully in section vii, commenters also raised other negative consequences of misclassification for workers beyond those directly related to the flsa, such as: decreased access to employment benefits such as health insurance or retirement benefits, inability to access paid sick leave, unemployment insurance, and worker's compensation, a lack of ability to take collective action to improve workplace conditions, and a lack of anti discrimination protections under various civil rights laws. see, e.g., smith summerset & associates llc; ufcw. several commenters emphasized the uniquely harmful risks and consequences of misclassification for workers in certain demographic groups. see, e.g., aarp (senior workers); california immigrant policy center (immigrant workers); equal justice center (low income workers); lccrul & wlc (workers of color); nwlc (women workers). in a joint comment, the action center on race and the economy, color of change, liberation in a generation, unemployed workers united, mediajustice, the national black worker center, muslims for just futures, raise up south florida, human impact partners, roc united, interfaith center on corporate responsibility, heal food alliance, and the public accountability initiative/littlesis.org (“acre et al.”) pointed to the overrepresentation of workers of color in low wage, labor intensive industries where misclassification is pervasive and asserted that they “view misclassification as a critical racial justice issue that the dol must help address.” many commenters agreed with the department's assessment that the 2021 ic rule has increased the risk of misclassification. for example, swacca asserted that challenges in enforcing misclassification in the construction industry “would be compounded if enforcement officials had to pursue bad actors under the january 2021 rule's novel interpretation of the law that could require protracted litigation to clarify and would permit more contractors to argue that their classification of workers as independent contractors is permissible, or at least defensible, under the flsa.” the international association of machinists and aerospace workers asserted that the 2021 ic rule “creates perverse incentives for companies to misclassify workers,” because “[t]he more easily a company can misclassify its workforce, the more incentive for other companies to do the same, creating a `race to the bottom' in employment practices and social standards to the detriment of workers.” clasp & gfi and farmworker justice both commented that the 2021 ic rule's elevation of the “control” and “opportunity for profit or loss” factors might exacerbate misclassification among farmworkers, whose employment status is particularly dependent on the consideration of factors other than the 2021 ic rule's “core” factors. commenters opposed to this rulemaking generally did not dispute the occurrence or importance of employee misclassification, at least in certain industries. for example, a lawyer representing employers acknowledged that “independent contractor status can be abused.” see also, e.g., hr policy association (“the association does not question the fact that worker misclassification does occur and that individuals may be deprived of rights and benefits crucial for their livelihood.”); u.s. black chambers, inc. (“[w]e agree that worker misclassification is a pressing issue to be solved at the federal level[.]”). some commenters, however, alleged that rescinding and replacing the 2021 ic rule would be an overbroad solution for a problem that could be addressed with industry specific measures. see h.r. policy association; imc companies, llc (trucking company) (“what we do ask is that the whd and legislators across our country recognize that targeted regulation of these [app based technology] companies is the answer to this issue.”). other commenters asserted that, in the nprm, the department failed to explain how the 2021 ic rule has increased the risk of worker misclassification or otherwise hampered efforts to reduce misclassification. see, e.g., iwf (“the department has provided no evidence that these drastic changes are necessary to prevent misclassification, or even that widespread misclassification actually occurred under the 2021 rule.”); nawbo. some commenters referenced departmental press releases published after the march 2022 cwi v. walsh decision (which ruled that the 2021 ic rule had taken effect in march 2021) as evidence that the department is successfully using the 2021 ic rule to combat misclassification. see, e.g., coalition of business stakeholders (“dol has repeatedly boasted about the cases it has brought showing improper classification of independent contractors and the amounts of back pay remedies it has secured.”); see also flex; u.s. chamber. having considered the comments, the department remains of the view that the misclassification of employees as independent contractors is a serious problem affecting workers who do not receive proper wages and businesses that have to compete in the economy against businesses that unlawfully misclassify their workers. as explained more fully in section iii.b., the 2021 ic ( print page 1658) rule increased the risk of worker misclassification by adding considerable confusion and uncertainty over the proper analysis for distinguishing between flsa covered employees and independent contractors. by elevating certain factors, devaluing other factors, and precluding the consideration of certain relevant facts, the novel and unprecedented analysis in the 2021 ic rule has improperly narrowed the focus of the inquiry in a way that may have led employers to believe the test no longer includes as many considerations; the comments received evidenced such misunderstanding. if widespread misperceptions about the 2021 ic rule articulated by some of its supporters in the comments are any indication, such confusion and misapplication of that rule could deprive many workers of protections they are entitled to under the flsa. the department's 2022 press releases addressing misclassification enforcement referenced by some commenters primarily involved investigations by the department that were initiated before the 2021 ic rule was published and/or covered a period of investigation prior to march 8, 2021. in any event, the department's ability to pursue some enforcement actions involving misclassification while applying the 2021 ic rule's guidance is not a persuasive reason to retain the 2021 ic rule. the department is not promulgating this rule because the 2021 ic rule renders the department powerless to enforce misclassification. rather, the 2021 ic rule's guidance injected a new framework for analyzing whether workers are employees or independent contractors under the flsa that is inconsistent with decades of case law interpreting the act. as explained earlier, the department is further concerned that widespread stakeholder confusion over the 2021 ic rule and its guidance regarding how its factors should be applied (as discussed in section ii.b.) may be causing some misclassification that would not occur in the absence of the rule. for these reasons, the department believes that rescinding the 2021 ic rule will likely both reduce misclassification and restore the department's ability to consider all relevant facts under a totality of the circumstances economic reality test that does not predetermine the weight of certain factors, consistent with the text of the flsa and decades of judicial precedent. other commenters expressed concern that rescinding the 2021 ic rule will result in the widespread reclassification of workers who should be considered independent contractors. see cambridge investment research, inc. (“[t]he practical result of the [nprm] . . . will be that many workers including workers who want to be independent contractors will be reclassified as employees under the flsa.”); sba office of advocacy (“small businesses and independent contractors have told advocacy that this rule may be disruptive and detrimental to the millions of businesses in industries that rely upon the independent contractor model.”). this concern was also expressed by numerous self identified independent contractors, who feared reclassification or lost work opportunities as an unintended consequence of the rulemaking. some commenters contended that the nprm's guidance was inappropriately broad and would encompass as employees individuals who they assert are appropriately classified as independent contractors. see, e.g., iba (asserting that the nprm would improperly “broaden the test and thereby expand the meaning of `employee' to encompass individuals who under current law would qualify independent contractors”); national association of insurance and financial advisors (“naifa”) (“naifa believes that [the nprm] wrongly construes the scope of flsa coverage and would thus misclassify many independent insurance agents and brokers as employees.”). other commenters asserted that ambiguity inherent in reverting to a “totality of the circumstances” analysis would deter businesses from engaging with independent contractors. see, e.g., beacon center of tennessee (asserting that the nprm would “rob[ ] businesses of the regulatory certainty needed to effectively operate and make personnel decisions, which is likely to have a chilling effect on hiring new employees or contractors”); nfib (“companies . . . will be less likely to engage a contractor or consultant if there's uncertainty over a worker's status since a finding of misclassification can result in ruinous penalties”); opportunity solutions project (“if implemented, the proposal would make it more difficult for entrepreneurs and independent workers to find companies willing to take on the risk of becoming their client.”). other commenters disagreed that the department's proposal would result in the reclassification of appropriately classified independent contractors. for example, an individual commenter wrote that “[i]mproving classification rules and returning to a back to basics approach used for over fifty years does not mean independent contractors will automatically be classified as employees.” noting that “[t]he proposed rule is a restatement of decades of court precedents and whd guidance,” ubc remarked that “[a]ny employer who has been correctly classifying its independent contractors has no worry that the proposed rule will result in liability under the flsa.” multiple business stakeholders and self identified independent contractors commented that they did not expect such reclassification for workers in their industry. for example, lpl financial stated that it believes that the department's proposal “will not result in the reclassification of independent financial professionals as employees” and it “commend[ed] the dol for undertaking the rulemaking process and proposing a rule that recognizes that entrepreneurs who establish and build small businesses utilizing their managerial skills and professional expertise can operate in an independent contractor model to create multigenerational financial advising practices.” over 1,000 financial advisors affiliated with ameriprise and lpl financial submitted separate campaign comments in support of the nprm, asserting that “[the] proposal will allow me to continue to choose to be an independent contractor.” see also international dale carnegie franchise association (“the idcfa is confident that independent instructors would not be reclassified as employees under the proposed ic rule.”). having considered the comments, the department continues to believe that this rulemaking will not jeopardize legitimate independent contracting arrangements. fears to the contrary are not realistic given that the department is adopting guidance derived from the same analysis that courts have applied for decades and have been continuing to apply since the 2021 ic rule took effect. there is no evidence that the status quo prior to the 2021 ic rule was hindering the use of independent contractors.[167] because the flsa's economic reality test is broad and fact specific, the department cannot categorically declare that individual workers in particular occupations or industries will always qualify as independent contractors applying the guidance provided in this rule. however, keeping in mind that the department is adopting guidance in this ( print page 1659) rule that is essentially identical to the standard it applied for decades prior to the 2021 ic rule, the department agrees with those commenters who stated that workers properly classified as independent contractors prior to the 2021 ic rule will likely continue to be properly classified as independent contractors under this rule and disagrees with other commenter assertions that this rule will “cause workers who have long been properly classified as independent contractors . . . to improperly lose their independent status.” abc; see also, e.g., finseca (expressing concern that the nprm “could materially disrupt long standing, well understood, and properly classified independent contractor relationships”); national association of chemical distributors (asserting that the nprm would “disrupt longstanding business models”). rather, because this final rule is aligned with longstanding case law, the department does not anticipate that independent contractors (who sometimes also self identify as freelancers or small/micro business owners) who are correctly classified as independent contractors under current circuit case law would be reclassified applying the guidance provided in this rule. in sum, the department's rulemaking to rescind and replace the 2021 ic rule is motivated, in part, by an assessment that the guidance provided here will likely benefit workers as a whole, including those workers at risk of being misclassified as independent contractors as well as those who are appropriately classified as independent contractors. until the 2021 ic rule, the department had not previously promulgated generally applicable regulations on independent contractor classification in the flsa's 83 years of existence. in light of the consistency of the economic reality test as adopted by the circuits, the department had instead relied on subregulatory documents to provide generally applicable guidance for the department and the regulated community on determining employee or independent contractor status under the flsa. in the nprm, the department explained that, although it believes that its earlier subregulatory guidance provided appropriate guidance to the regulated community, the department upon further consideration recognized that publishing regulatory guidance would be beneficial for stakeholders, particularly because the department had published a regulation in 2021. the nprm elaborated that detailed federal regulations would be easier to locate and read for interested stakeholders than applicable circuit case law, potentially helping workers and businesses better understand the department's interpretation of their rights and responsibilities under the law. additionally, the nprm explained that adopting detailed regulations that are aligned with existing precedent could better protect workers, who were placed at a greater risk of misclassification as a consequence of the 2021 ic rule.[168] several commenters agreed with the department's reasons for replacing the 2021 ic rule with alternative regulatory guidance. these commenters generally asserted that detailed regulatory guidance brings added clarity to interested parties. see, e.g., nelp (“[t]o address confusion that can stem from a multifactor balancing test, the commentary to the proposed rule clarifies how each of the factors (described in more detail below) informs the economic dependence analysis, i.e., how and why each factor helps to answer the question of whether a worker is truly in business for themself.”); state ags (“subregulatory guidance is not as robust as promulgating a new rule.”); winebrake & santillo, llc (supporting the nprm for “clarifying topics which had not been fully explored by all courts”). liuna asserted that the regulatory guidance's “expert synthesis of complicated precedents will . . . clarify the flsa and promote its uniform application.” other commenters commended the accessibility of generally applicable regulatory guidance. see ubc (“in one place, without searching through whd guidance and court cases, employers and workers can go to the rule for information that will assist in correct classification. this need for rulemaking, albeit for slightly different reasons, is where the interest of the proponents of the 2021 rule and drafters of the nprm are aligned.”). some business stakeholders also agreed with the potential benefits of regulatory guidance. see, e.g., consumer brands association (“the cpg industry believes strongly in the potential opportunities afforded through clear rulemaking”); cwc (“we . . . concur with dol's assessment that a clear explanation of the test in easily accessible regulatory text is valuable.”). some labor unions and worker advocacy organizations opined that the department needs to promulgate regulatory guidance to counteract confusion introduced by the 2021 ic rule. see state ags (asserting that “a new rule is necessary because the 2021 rule was such a drastic departure from the status quo”); ubc (“the 2021 rule's confusion and encouragement of misclassification . . . creates the necessity for the proposed rule with its adherence to the intent of congress and judicial precedents.”); see also neca & ibew. several commenters, however, disagreed that the department should issue regulations addressing independent contractor status under the flsa. some of these commenters asserted that the department has no legal authority or expertise to do so. see, e.g., arcbest (“congress has not delegated authority to dol to define `independent contractor' a definition with far reaching economic and political consequences.”); boulette golden & marin l.l.p. (“[w]hile the dol may have authority to issue guidance on its view of the term `employee,' the dol does not have any authority to offer guidance on the meaning of the term `independent contractor.' ”); iba (“the dol has no special expertise in interpreting supreme court precedent.”). insight association and several individual commenters asserted that congress should address the distinction between flsa covered employees and independent contractors rather than the department. finally, cpie asserted that “this area of the law is one that is not appropriate for general regulatory guidance,” urging the department to “continue its policy of issuing subregulatory guidance on the application of the economic reality test to specific facts” if it rescinded the 2021 ic rule. having considered the comments, the department continues to believe not only in the benefits of adopting alternative guidance on the distinction between flsa covered employees and independent contractors, but also in the value of providing such guidance in easily accessible regulatory text. although the department previously issued regulatory guidance on this issue specific to the sharecropping and lumber industries in parts 780 and 788,[169] the department believes that regulatory text that can be applied to workers in any industry is beneficial to the regulated community. further, as noted in the 2021 ic rule, the department “without question has relevant expertise in the area of what ( print page 1660) constitutes an employment relationship under the flsa, given its responsibility for administering and enforcing the act and its decades of experience doing so.” [170] as also noted in the 2021 ic rule, the department's “authority to interpret the act comes with its authority to administer and enforce the act.” [171] the department issues interpretations on a range of issues under the act, and addressing which workers are employees protected by the act or independent contractors not subject to the act is one such issue. the department's attention to relevant judicial precedent interpreting the act is key to providing such guidance. the department acknowledges that some commenters would prefer congress to address this issue through legislation and to adopt one uniform standard that would apply across federal laws. see, e.g., asta; cpie. however, in the absence of congressional legislation to amend the flsa, the department believes that this final rule will provide detailed guidance on employee or independent contractor status that is not only consistent with the flsa and the decades of case law interpreting it, but clearer and more robust than the department's earlier subregulatory guidance on the topic. many of the commenters opposed to this rulemaking asserted that the department's rulemaking to rescind and replace the 2021 ic rule is premature or otherwise ill timed. see, e.g., cpie (“[cpie] urges dol to defer action until courts have had an opportunity to apply the 2021 ic rule.”); cwi (“the most obvious alternative action `within the ambit of the existing policy' is simply to allow the 2021 ic rule to go into effect and study its results, rather than assume unproven consequences.”); mep (“mep strongly believes whd should allow the courts to weigh in on the current rule before determining the analysis does not work and replacing it with a standard that will clearly create substantial confusion and uncertainty for the regulated community.”). some commenters noted the added costs and uncertainty attributable to the department promulgating the 2021 ic rule and subsequently proposing to rescind and replace it. see american association of advertising agencies (“4a's”) (“the regulatory whiplash here is real, and costly, and should not be taken so lightly by dol.”); see also app association; n/ma; vegas chamber. other commenters cited to various economic conditions that caution (in their view) against any rulemaking that would deter independent contracting. see, e.g., nrf & nccr (“as the american economy and the modern workplace continue to evolve in the wake of the covid 19 pandemic, it is imperative that policymakers account for the wide range of innovative and imaginative methods by which individuals engage in the marketplace and feed their families.”); scopelitis, garvin, light, hanson & feary (“scopelitis”) (“the proposed rule would add pressure to already stressed supply chains.”). the department disagrees with the various timing arguments advanced by commenters urging the department to delay or withdraw this rulemaking, though it is mindful of the impact that changes in the department's guidance may end up having on the regulated community. as the department has explained, there are compelling reasons to rescind and replace the 2021 ic rule, including its significant departure from judicial precedent, the confusion it has introduced for affected stakeholders, and the consequences for workers and competing businesses attributable to an increased risk of misclassification. allowing the 2021 ic rule to stay in effect for a longer period would not ameliorate any of those concerns. to the contrary, as nelp pointed out, “over time . . . negative consequences . . . will be exacerbated.” the fact that no court has applied the 2021 ic rule in the year since the district court's decision in cwi v. walsh is not a justification for its retention. the department further finds arguments about stakeholder reliance on the 2021 ic rule to be unpersuasive. before the 2021 ic rule's effective date, the department issued rules intending to delay the effective date of and then withdraw the 2021 ic rule, while also identifying concerns with the 2021 ic rule. the department then announced on june 3, 2022 that it was initiating a new rulemaking on employee and independent contractor classification under the flsa.[172] thus, the regulated community has been on notice since very soon after the 2021 ic rule's publication as to the department's concerns regarding the 2021 ic rule, including the way in which it upset decades of precedent the regulated community and workers had previously been relying on to distinguish between employees and independent contractors. finally, the department disagrees with commenters that it is obligated to wait for more time to gather data before rescinding the 2021 ic rule and promulgating a new rule.[173] as discussed in the nprm, the department considered waiting for a longer period to monitor the effects of the 2021 ic rule but believed that the potential confusion and disruption from the 2021 ic rule outweighed any potential benefit from this monitoring.[174] in making the decision to proceed with this final rule, the department drew upon its extensive experience in interpreting and enforcing the flsa and its consideration of the comments received.[175] the department believes that this rule, which provides guidance that is consistent with longstanding precedent, provides more consistency for stakeholders than the 2021 ic rule. in the nprm, the department noted that it had considered four alternatives to what it proposed.[176] the department further noted that it had previously considered and rejected two of those alternatives issuing guidance adopting either the common law test or the abc test for determining flsa employee or independent contractor status in the 2021 ic rule.[177] regarding adoption of the common law test, as the department explained in the nprm, that test is contrary to the “suffer or permit” language in section 3(g) of the flsa, which the supreme court has interpreted as requiring a broader definition of employment than under the common law. accordingly, the department stated that the common law test is inconsistent with the flsa because that test “is not sufficiently protective in assessing worker classification under the flsa.” regarding adoption of an abc test, as the department explained, the supreme court has held that the economic reality test is the applicable standard for determining workers' classification ( print page 1661) under the flsa as an employee or independent contractor, and “the existence of employment relationships under the flsa `does not depend on such isolated factors' as the three independently determinative factors in the abc test, `but rather upon the circumstances of the whole activity.' ” because an abc test is, in the department's view, inconsistent with supreme court precedent interpreting the flsa, the department explained that “it could only implement an abc test if the supreme court revisits its precedent or if congress passes legislation that alters the applicable analysis under the flsa.” [178] as a third alternative, the department considered proposing to only partially rescind the 2021 ic rule and instead retain some aspects of it. in discussing this alternative, the department listed numerous instances in which its nprm was consistent or in agreement with the 2021 ic rule. the department explained that it considered “simply removing the problematic `core factors' analysis from the 2021 ic rule and retaining the five factors as described in th[at] rule.” however, the department rejected this approach because numerous ways in which that rule described the factors were in tension with judicial precedent and longstanding department guidance and “narrow[ed] the economic reality test by limiting the facts that may be considered as part of the test, facts which the department believes are relevant in determining whether a worker is economically dependent on the employer for work or in business for themself.” for those reasons, the department “concluded that in order to provide clear, affirmative regulatory guidance that aligns with case law and is consistent with the text and purpose of the act as interpreted by courts, a complete rescission and replacement of the 2021 ic rule is needed” as opposed to a partial rescission.[179] as a fourth alternative, the department considered rescinding the 2021 ic rule and, instead of promulgating new regulations, providing guidance on employee or independent contractor classification through subregulatory guidance. in discussing this alternative, the department reiterated the reasons why it believed that rescission of the 2021 ic rule was necessary. the department acknowledged that prior to the 2021 ic rule, it did not have general guidance published in the code of federal regulations on the classification of workers as employees or independent contractors. the department explained that issuing a new rule rather than subregulatory guidance would allow the department to provide in depth guidance that is more closely aligned with circuit case law, allows the department to formally collect and consider a wide range of views by using the notice and comment process, and may further improve consistency among courts regarding the classification of workers because courts are accustomed to considering relevant agency regulations. for these reasons, the department decided not to propose rescinding the 2021 ic rule and providing only subregulatory guidance, and to instead propose the regulations set forth in the nprm.[180] a few commenters expressly addressed the first alternative adopting a common law control test.[181] for example, state ags agreed with the department's reasoning that the common law control test is inconsistent with the flsa. state ags stated that “[t]he common law test, which focuses on control rather than economic dependence, provides a narrower definition of employment than the broad `suffer or permit' language of the flsa” and that the common law test therefore “conflicts with the broad statutory definition of `employ' in the flsa.” ufcw added: “correctly, the dol's proposed rule does not incorporate the narrower common law independent contractor standard because congress sought for the flsa to guard against labor exploitation by intentionally covering employment relationships that may not have constituted employer and employees under common law” (emphasis omitted). asta disagreed. noting the various tests under federal law for determining employment, it advocated for “the adoption of a single standard to evaluate worker status for all federal purposes.” the commenter acknowledged the department's view that it lacks the authority to do so, but asserted that “the simplest means to that end would be amendment of the flsa to replace the economic reality test with the right of control test.” having considered the comments, the department reaffirms its position that the flsa's definitions, as interpreted by courts, reflect congress' rejection of the common law test as determining employee status under the act. the department continues to believe that adopting the common law test would be contrary to flsa section 3(g)'s “suffer or permit” language, which under supreme court and federal appellate precedent requires a broader definition of employment than the common law test.[182] a number of commenters addressed the second alternative adopting an abc test. most commenters agreed with the department's proposed rejection of an abc test as inconsistent with current precedent and/or expressed opposition to an abc test. for example, cci stated that, “[w]hile the abc test may be appropriate in some circumstances (for example collective bargaining rights), we believe the department is correct to return to a broader `totality of the circumstances' analysis for wage and overtime protections under the fair labor standards act.” ubc described the rejection of an abc test as an “adherence to precedent.” state ags stated that, although “the abc test arguably protects against employee misclassification better than other tests in use” and “several of the undersigned state ags apply the abc test,” they “understand the department believes it is constrained under current law from implementing the abc test under the flsa[.]” sblc “applaud[ed] the dol for declining calls to adopt an abc test, like what is currently used in california, or a similar test that would apply a stringent requisite factor test rather than a balancing test.” the international franchise association (“ifa”) “support[ed] the dol's explicit statement in its 2022 nprm that the abc test, which is used in states like california and massachusetts, is `inconsistent' with controlling supreme court authority under the flsa.” the app association expressed concerns with the abc test and “discourage[d] alignment in federal regulation with california's approach.” the coalition of trucking stakeholders stated that the department “properly acknowledge[d] that the adoption of any abc like test, which is not based upon an economic realities assessment, would be contrary to precedent” (citation omitted). and noting that the abc test “assumes all workers are employees unless they can demonstrate that they meet specific criteria,” the owner operator independent drivers association (“ooida”) stated that “the department is correct in its assessment that the abc ( print page 1662) test is not consistent with the history of the flsa because it establishes independently determinative factors.” see also c.a.r. (supporting the decision not to adopt the abc test). some commenters advocated for adoption of an abc test. for example, the los angeles county federation of labor, afl cio & locals 396 and 848 of the international brotherhood of teamsters (“la fed & teamsters locals”) acknowledged that “the department is correct in its conclusion that the lower federal courts have developed a fairly consistent version of what is referred to as the economic realities test by identifying a list of six non exclusive factors to frame their analysis,” but asserted that “there is nothing in the flsa's legislative history nor in the supreme court's precedent that compels this exact six factor framing.” discussing rutherford and silk, the commenter argued that supreme court precedent does not require a six factor economic realities test, prohibit adoption of an abc test, or prevent adoption of a test that includes dispositive factors or presumes employee status unless the employer proves otherwise. see also blitman & king llp; national employment lawyers association (“nela”); nichols kaster. having considered the comments, the department is not adopting an abc test. the department continues to believe that an abc test would be inconsistent with supreme court and federal appellate precedent interpreting and applying the flsa, and therefore, this final rule declines to adopt an abc test. the supreme court has repeatedly explained that “economic reality” is the applicable standard for determining whether a worker is an employee or not under the flsa.[183] the supreme court has further explained that the existence of employment relationships under the flsa does not depend on “isolated factors but rather upon the circumstances of the whole activity,” [184] and that “[n]o one [factor] is controlling nor is the list complete.” [185] as explained in section ii, federal courts of appeals have consistently interpreted this supreme court precedent to apply a nonexhaustive multifactor economic realities analysis in which there is no presumption of employee status that must be rebutted, no one factor is determinative, and all of the factors must be considered and weighed.[186] the department is grounding the economic realities analysis set forth in this final rule in the decades of federal appellate case law applying such analyses and is rescinding the 2021 ic rule because of its deviations from that case law. an abc test, on the other hand, has a presumption of employee status, considers only three factors each of which can be determinative on its own and does not result in all of the factors being weighed or even necessarily considered. adopting the abc test would be a similarly unsupported deviation from that case law, would have no moorings in the case law applying the flsa or the department's prior guidance, and could undermine the department's well founded reasons for rescinding and replacing the 2021 ic rule.[187] for all of these reasons, this final rule does not adopt an abc test. nabtu stated that, although it “believes that the `abc test' is the better test for determining worker classification, nabtu understands that absent congressional action, dol must operate within the parameters of the statute as defined by controlling supreme court precedent” (footnote omitted). nabtu nonetheless recommended that, “for purposes of applying the economic reality test to the construction industry, dol adopt a rebuttable presumption that all construction workers are employees.” [188] the department declines this recommendation for two reasons. first, the department's intent in promulgating this final rule is to provide as much as possible a general analysis for determining employee or independent contractor status. nabtu's recommendation, on the other hand, is specific to one industry. second, regardless of its scope, this recommendation implicates the same concerns as discussed in the above paragraph. specifically, this approach would not be consistent with supreme court precedent and federal appellate case law interpreting and applying that precedent in part because that precedent and case law have not adopted a rebuttable presumption of employee status when determining employee or independent contractor status under the flsa. thus, the department believes that it is not an option to adopt a rebuttable presumption of employee status in this context for the same reasons that the department also declines to adopt an abc test. a number of commenters objected that the department's proposed test (in particular the integral factor) might have the same effect either unintendedly or not as an abc test. see, e.g., cwi; fmi the food industry association (“fmi”); customized logistics and delivery association (“clda”); erik sherman; western states trucking association (“wsta”). however, as discussed in section v.c.5, the suggestion that this final rule's economic realities analysis essentially implements an abc test is baseless. as explained above, the economic realities analysis considers multiple factors (no one of which is dispositive) and weighs them as part of a totality of the circumstances analysis to determine if the worker is economically dependent on the employer for work or in business for themself. an abc test, on the other hand, presumes that a worker is an employee unless the employer can show that each of the three factors is satisfied. (in other words, each factor is dispositive on its own and the other factors need not be considered if one points to employee status.) in sum, this final rule's economic realities test is not an abc test, and any concern that its economic realities analysis is or will become an abc test is thus unfounded.[189] a few commenters addressed generally the nprm's discussion of the alternatives considered by the department. state ags, in addition to commenting on the first and second alternatives, commented that “retaining portions of the 2021 rule that are consistent with the proposed rule would not provide needed clarity because the governing principle of the 2021 rule was a marked departure from ( print page 1663) the department's longstanding position.” in their view, the 2021 ic rule's “emphasis on two `core' factors . . . negated the need to fully consider the remaining factors,” and therefore “a full rescission of the 2021 rule is needed to provide clarity to workers, employers, and the public.” regarding the fourth alternative, state ags stated that “merely rescinding the 2021 rule and issuing subregulatory guidance will not provide the direction necessary to achieve consistent application of the economic reality test.” in their view, “a new rule is necessary because the 2021 rule was such a drastic departure from the status quo” and would “provide needed regulatory guidance for the consistent application of the economic reality test by courts and employers.” state ags agreed with the department's assessment of the four alternatives and that “a full rescission of the 2021 rule and replacement with the proposed rule is most appropriate for clarity and consistency with the flsa.” wpi commented that it “is well settled that agencies are required to consider alternatives within the ambit of the regulation being considered,” including “less restrictive rules than those proposed” (citations omitted). wpi further commented that the district court in cwi v. walsh “held that dol failed to consider any alternatives in the withdrawal of the 2021 ic rule” and asserted that “[t]he department repeats this error and only pays lip service to these requirements by `considering' four alternatives, two of which are not even legally viable options.” the commenter faulted the department for “conclud[ing] in identical fashion to the 2021 rule that codifying a common law or abc test would not be legally permissible, yet . . . nevertheless continu[ing] to `analyze' these two alternatives despite the knowledge that neither can be adopted.” the commenter concluded that the nprm's “consideration of only two viable alternatives falls short of the requirements under the apa and is thus arbitrary and capricious” (citing the district court's decision in cwi v. walsh). as an initial matter, although the department believes that the common law control test and an abc test are not feasible options in this rulemaking, as discussed above, several commenters advocated for the adoption of one or the other of those tests.[190] in any event, the district court's decision in cwi v. walsh (which is on appeal to the fifth circuit) does not support wpi's assertion that a rule's consideration of “only two viable alternatives” makes a rule arbitrary and capricious under the apa.[191] the district court ruled that “agency action is arbitrary and capricious when the agency considers only the binary choice of whether to retain or rescind a policy, without also considering less disruptive alternatives.” [192] in this rulemaking, the department considered less disruptive alternatives than fully rescinding and replacing the 2021 ic rule, including a partial rescission of the 2021 ic rule.[193] in the department's judgment, however, only removing the 2021 ic rule's designation of two factors as the “core” factors would not undo the numerous ways in which that rule's discussion of the factors were “in tension with judicial precedent and longstanding department guidance” and unjustifiably narrowed the facts that may be considered when applying the factors.[194] thus, the department concluded that, “in order to provide clear, affirmative regulatory guidance that aligns with case law and is consistent with the text and purpose of the act as interpreted by courts, a complete rescission and replacement of the 2021 ic rule is needed” as opposed to a partial rescission.[195] as further detailed above, the department also specifically considered rescinding the 2021 ic rule and providing guidance on employee or independent contractor classification through subregulatory guidance instead of through new regulations. the department reiterated the reasons why it believed that rescission of the 2021 ic rule was necessary and identified numerous benefits in favor of issuing a new rule rather than relying on subregulatory guidance.[196] having considered the comment, the department continues to believe that, in addition to rescinding the 2021 ic rule, promulgating new regulations is preferable to providing only subregulatory guidance. although wpi disagrees with the judgments that the department is making, the department plainly considered less disruptive alternatives and made reasonable judgments in not adopting those alternatives.[197] finally, wpi claimed that the nprm did not consider “simply reverting to interpretive guidance already in place prior to the 2021 ic rule” and “ignore[d] this option in a purported quest for clarity.” in the commenter's view, there is already clarity in the economic reality test because of the case law explaining and interpreting it, and the commenter added that the nprm went “beyond any position the department has taken historically” and was not “faithful to settled caselaw and analysis by courts upon which it claims to base its proposed rule.” as an initial matter, the department considered (as the fourth alternative) “rescinding the 2021 ic rule and providing guidance on employee or independent contractor classification through subregulatory guidance instead of through new regulations.” [198] as discussed in the nprm and this final rule, the department concludes that issuing new regulations is the preferable alternative to subregulatory guidance.[199] moreover, as explained generally throughout the nprm and this final rule and specifically in their discussions of each economic reality factor, the department's regulatory text and accompanying guidance seek consistency with, and are grounded in, existing case law. the 2021 ic rule departed from case law in numerous ways, and contrary to wpi's comment, ( print page 1664) the department's stated goal in promulgating this final rule is to realign the department's guidance with that case law. moreover, to the extent that commenters argued that the nprm's proposed analysis was not supported by applicable case law, the department considered those comments and, where appropriate, made changes in this final rule in response. as explained in section iii, the department believes that replacing the 2021 ic rule with regulations addressing the multifactor economic reality test that more fully reflect the case law and continue to be relevant to the modern economy is helpful for workers and employers in understanding how to apply the law in this area. these regulations and the explanatory preamble provide in depth guidance, and because courts are accustomed to considering relevant agency regulations, issuing these regulations may further improve consistency among courts regarding this issue. the department is therefore rescinding the 2021 ic rule and issuing this final rule to replace part 795; the provisions of the regulation are discussed below. having reviewed commenter feedback submitted in response to the proposed rule, the department is finalizing the following regulations to provide guidance regarding whether workers are employees or independent contractors under the flsa. the regulations include a new part 795 and cross  references in 29 cfr 780.330(b) and 788.16(a) to part 795. of particular note, the regulations set forth in this final rule do not use “core factors” and instead return to a totality of the circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. regarding the economic reality factors, this final rule returns to the longstanding framing of investment as a separate factor, and integral as an integral part of the potential employer's business rather than an integrated unit of production. the final rule also provides broader discussion of how scheduling, remote supervision, price setting, and the ability to work for others should be considered under the control factor, and it allows for consideration of reserved rights while removing the provision in the 2021 ic rule that minimized the relevance of retained rights. further, the final rule discusses exclusivity in the context of the permanency factor, and initiative in the context of the skill factor. the department also made several adjustments to the proposed regulations after consideration of the comments received, including revisions to the regulations regarding the investment factor and the control factor (specifically addressing compliance with legal obligations). additionally, in the 2021 ic rule, the department proposed not to revise its regulation addressing employee or independent contractor status under mspa in 29 cfr 500.20(h)(4), stating, in part, that the mspa regulation and the 2021 ic rule both applied an economic reality test in which the ultimate inquiry was economic dependence. in the nprm, the department similarly did not propose to make any revisions to the mspa regulation, which adopts by reference the flsa's definition of “employ,” and considers “whether or not an independent contractor or employment relationship exists under the fair labor standards act” to interpret employee or independent contractor status under mspa.[200] the test contained in the mspa regulation is substantially similar to the proposed test here, and the comments received in this rulemaking did not address mspa. accordingly, the department is not revising the mspa regulation at this time. finally, the department also proposed to formally rescind the 2021 ic rule.[201] in the department's view, the operative effects of rescinding the 2021 ic rule are as follows. with this final rule, the 2021 ic rule is formally rescinded. this rescission operates independently of the new content in this final rule, as the department intends the rescission to be severable from the substantive regulatory text added as part 795. for the reasons set forth in this final rule, the department believes that rescission of the 2021 ic rule is appropriate, regardless of the new regulations in this final rule. thus, even if the entirety of the part 795 regulations promulgated by this final rule or any part thereof were invalidated, enjoined, or otherwise not put into effect, the department would not intend that the 2021 ic rule remain in effect, and the department would rely on federal appellate case law and provide subregulatory guidance for stakeholders as appropriate unless or until it decided to engage in additional rulemaking. the department responds to commenters' feedback on the proposed rule below. proposed § 795.100 explained that the interpretations in part 795 will guide whd's enforcement of the flsa and are intended to be used by employers, employees, workers, and courts to assess employment status under the act.[202] commenters did not generally address this section, which is very similar to the 2021 ic rule introductory statement, except to note that these regulations would be interpretive guidance. see, e.g., nelp; wpi. the department is adopting this section without change. in the nprm, the department proposed to simplify § 795.105(a) of the 2021 ic rule and make additional clarifying edits to § 795.105(b).[203] proposed § 795.105(a) would continue to make clear, as the 2021 ic rule did, that independent contractors are not “employees” under the act. the department did not receive significant comments regarding this and is adopting it without change. the department proposed that paragraph § 795.105(b) would affirm that economic dependence is the ultimate inquiry for determining whether a worker is an independent contractor or an employee; this paragraph also makes clear that the plain language of the statute is relevant to the analysis.[204] the department explained that this proposed section would focus the analysis on whether the worker is in business for themself and clarified that economic dependence does not focus on the amount the worker earns or whether the worker has other sources of income. as a preliminary matter, cetera financial group urged the department to “recognize that economic dependence often does not exist and certainly should not be presumed” and that it “should be the subject of a threshold inquiry prior to applying the other factors in the economic realities test, or, at a minimum, added as an additional factor.” as the department explained in the nprm, the question of economic dependence is the ultimate inquiry, and the factors are tools or guideposts for answering that inquiry, so it would not be appropriate to make “economic dependence” an additional factor or a threshold inquiry. the department agrees, however, that economic dependence should never be presumed and that when it does not exist, that worker is not an employee. ( print page 1665) commenters generally agreed that economic dependence was the right lens for evaluating whether an employment relationship exists under the flsa. see, e.g., cpie; iba; nelp; outten & golden. the afl cio and others, for example, noted that “[c]ourts have interpreted the flsa's broad suffer or permit to work language as seeking to answer one foundational question regarding the relationship between a worker and the entity to whom that worker provides their labor whether as a matter of economic reality that worker is dependent upon the business to which they render service.” at least one commenter, however, stated that using the idea of economic dependence as a “litmus test” is “exceptionally challenging to prove or meet in today's complex world of business operations for both large and small business.” see vegas chamber. additionally, some self identified freelancers questioned how the definition of “economic dependence” would apply to a freelance worker who may, for example, be a writer for multiple publications. one freelancer explained that “self employed independent contractors do not see it as having that many employers [but rather] view those publications as customers.” some commenters stated that the department's proposed language broadened the definition of “economic dependence” and objected to this perceived broadening. see, e.g., goldwater institute, job creators network foundation. the antonin scalia law school's administrative law clinic (“scalia law clinic”), for instance, commented that the department's proposed definition of economic dependence “wrongly states that a worker can be an employee merely because she is dependent in some way on a business, and it incorrectly says that a worker's income is entirely irrelevant to whether a worker is dependent on a business.” similarly, the goldwater institute stated that the proposal “creates a broad new definition of `economic dependence' that does not focus on the amount of income earned or whether the independent contractor has other income streams.” several commenters further stated that the department had put forward a new definition of economic dependence “that a worker is an employee if they are merely `economically dependent' on a business in a small or inconsequential way.” see, e.g., naifa. smith summerset and associates did not disagree with the content of § 795.105(b) but suggested that the provision be edited for clarity, noting that the regulatory language referring to “other income streams” is “unnecessarily abstract and confusing” and suggested incorporating alternative language from the preamble that the department will be adopting. the department notes that this concept of economic dependence one which does not focus on the amount of income earned or whether the worker has other income streams has been the department's consistent position. although some commenters believed the department was proposing a different approach, the concept of economic dependence in the nprm and this final rule is identical to the 2021 ic rule, which stated that, “other forms of dependence, such as dependence on income or subsistence, do not count” and that “dependence of income or subsistence, is not a relevant consideration in the economic reality test.” [205] the department continues to believe that this position is correct and most consistent with the concept of economic dependence for work. as noted in the 2021 ic rule and raised again in comments received in response to the nprm, a minority of courts have applied a “dependence for income” approach that considers whether the worker has other sources of income or wealth or is financially dependent on the employer. most courts, however, as well as the department, believe a “dependence for work” approach that considers whether the worker is dependent on the employer for work or depends on the worker's own business for work is the better interpretation. this approach focuses the analysis on whether the worker is in business for themself (and thus dependent upon themself for work), or whether the worker is dependent upon the potential employer for work.[206] this approach is also consistent with the majority of case law. as the eleventh circuit has explained, “in considering economic dependence, the court focuses on whether an individual is `in business for himself' or is `dependent upon finding employment in the business of others.' ” [207] economic dependence, however, “does not concern whether the workers at issue depend on the money they earn for obtaining the necessities of life . . . . rather, it examines whether the workers are dependent on a particular business or organization for their continued employment.” [208] additionally, consistent with the 2021 ic rule, economic dependence does not mean that a worker who works for other employers, earns a very limited income from a particular employer, or is independently wealthy cannot nevertheless be economically dependent on any particular employer for purposes of the flsa.[209] as the fifth circuit has explained, “it is not dependence in the sense that one could not survive without the income from the job that we examine, but dependence for continued employment.” [210] lastly, as a global matter, some commenters objected to the department's use of the word “employer” throughout the proposed regulatory provisions and recommended that the department use an alternate term such as “potential employer” instead because it made it seem as if the result of the analysis was predetermined in favor of employee status. see, e.g., national association of convenience stores (“nacs”); national home delivery association (“nhda”); scopelitis. having considered the comments, the department is adopting § 795.105(a) and (b) largely as proposed, explaining that economic dependence is the ultimate inquiry, and that an employee is someone who, as a matter of economic reality, is economically dependent on an employer for work not for income. the department is also making three clarifying edits. first, in response to comments, the department uses the phrase “worker's potential employer” or “potential employer” instead of the word “employer” in § 795.105(a). the department did not intend for its use of the word “employer” to predetermine any result and makes the change throughout the regulatory text. the department is using the terms ( print page 1666) “employer,” “potential employer,” and “the worker's potential employer” throughout the preamble discussion, and the terms are not intended to predetermine any result. second, the department is adding the statutory definition of “employer” to § 795.105(a) for completeness. and third, consistent with the 2021 ic rule and the proposed regulatory text, the department is finalizing language that makes clear that other sources of income or amount of pay are not relevant to economic dependence, although, in response to comments, the department is making some minor edits for additional clarity. the department also proposed to delete § 795.105(c) and (d) of the 2021 ic rule because it believed that the factors of the economic reality test should not be given a predetermined weight and designated as “core” or “additional guideposts.” as discussed in section iii (need for rulemaking) as well as in section v.c., the department is proceeding with the removal of these paragraphs, and discussion of the economic reality test and the individual factors is being moved to § 795.110. the comments regarding the discontinuation of “core factors” and the department's return to the economic reality test's longstanding totality of the circumstances analysis are discussed in section v.c. in the nprm, the department proposed to replace § 795.110 (primacy of actual practice) from the 2021 ic rule with a provision discussing the economic reality test and the economic reality factors. proposed § 795.110(a) introduced the economic reality test, emphasizing that the economic reality factors are guides to be used to conduct a totality of the circumstances analysis. it also explained that the factors are not exhaustive, and no single factor is dispositive.[211] the department then proposed to address the economic reality factors in § 795.110(b).[212] many commenters supported the department's return to the longstanding totality of the circumstances economic reality analysis, stating that it would provide clarity and align with the statutory text and relevant case law. see, e.g., ibt; leadership conference on civil and human rights (“leadership conference”); nelp; real women in trucking; state ags; william e. morris institute for justice. outten & golden, for instance, commented that the nprm “properly establishes that the purpose of the `economic reality' factors is to inform and illuminate the `economic dependence' inquiry, while no one factor independently drives the analysis.” neca and ibew commented that they “support returning to the long standing six factor balancing test, which will ensure certainty and clarity for construction employers and employees, provide protection to law abiding responsible contractors and workers in the construction industry, and reduce burdensome and costly litigation.” securities industry financial markets association (“sifma”) agreed that “[t]he department of labor is correct to note that it is the totality of the circumstances that one must look at to properly determine status” and observed that “courts have found that there is no `rule of thumb', but that they must instead look at `the total situation.' ” similarly, the shriver center on poverty law commented that the “proposed rule's six factor `economy reality' analysis is a sensible, totality of the circumstances approach that takes into account all relevant aspects of the worker's relationship with the hiring entity, is not easily manipulated by employers, and is well supported by supreme court and circuit court precedent.” regarding the department's explanations accompanying each factor, nelp commented that “[b]y sharpening the focus of each factor, the proposed rule provides greater clarity, which will encourage employer compliance and reduce misclassification while still enabling true independent contractors to run their businesses as they see fit.” the transport workers union of america commented that the department's proposal “will ensure that the legal line between those realities matches the facts on the ground. the six factor test envisioned in this rule accurately reflects the everyday relationship between workers and their employers. none of our members would risk becoming independent contractors under this rule (as they would have under the previous administration's proposal).” likewise, swacca stated that the department's proposal “will achieve more certainty than the january 2021 rule because it reflects a standard that the courts have clarified and explained in numerous specific contexts through decades of judicial rulings. it is a well understood body of law that employers, workers, enforcement officials, private attorneys, and the federal courts all have considerable experience applying.” several commenters emphasized that the act's definitions should guide the analysis. the la fed & teamsters locals, for example, observed that “[c]ourts have interpreted the flsa's broad suffer or permit to work language as seeking to answer one foundational question regarding the relationship between a worker and the entity to whom that worker provides their labor.” they added that the 2021 ic rule “improperly elevates certain factors and prevents consideration of certain facts, would invite employers to find ways to cloak a worker's dependence in a veneer of independence and would fail to account for changes in working structures that come with societal progress.” in contrast, other commenters stated that the department's proposal to replace the “core factor” analysis and return to the totality of the circumstances analysis undermined the clarity of the 2021 ic rule, creating more uncertainty and confusion. see, e.g., consumer brands association; cwi; forest resources association; i4aw; nys movers and warehousemen's association; wsta. for example, the 4a's stated that the department's proposal to return to a “totality of the circumstances analysis, in which the economic reality factors are no longer weighted more heavily based on importance, represents a change from the 2021 independent contractor rule that will inevitably bring uncertainty and confusion for advertising agencies and the u.s. business community at large.” fsi commented that “[b]y expanding the range of relevant factors and expressly refusing to give guidance on how to weigh them against each other, dol actively undermines the clarifying improvements of the 2021 rule and works against its own stated objectives.” several commenters objected to the department's framing of the proposal as a return to a longstanding analysis, instead opining that the nprm set forth a novel test. see, e.g., mackinac center for public policy; wpi. many of these commenters expressed concern that the proposed rule would have detrimental effects on their industries, work opportunities, and earnings. see, e.g., american council of life insurers (“acli”) (identifying aspects of the proposal that “would be enormously economically disruptive to the local businesses and preferred livelihoods of these individuals”); buckeye institute (“[b]y making it more expensive and more difficult to undertake independent work, this rule will shrink the available labor pool for employers.”); pga (commenting that the proposal could “[t]hreaten the source of income of thousands of workers across the country ( print page 1667) in a time of economic uncertainty”); national pork producers council (“as a result, pork producers and other business owners could be subject to increased legal and tax issues.”). other commenters stated that the 2021 ic rule's core factor analysis was better suited to the issues of the current economy than the department's proposal. for instance, the job creators network foundation commented that the department's proposal “conflicts with the way america's economy works today” and that the new economy would be “significantly diminished” if the proposal were to move forward. in contrast, other commenters stated that the nprm “accurately analyzes modern workplace trends and provides detailed guidance on how these changes to the nature of work itself must be integrated and considered within those six identified factors (and within the additional factors that may arise in particular factual scenarios).” la fed & teamsters locals; see also lccrul & wlc (commenting that the nprm “closely aligns with long standing judicial precedent and that has proven well suited to adapt to the myriad forms of working arrangements that have existed in the over 80 years since the flsa's passage, as well as to unforeseeable work structures that will appear in the future”). some commenters stated that the department's proposed factors were too broad and not tethered to economic dependence. iba and cpie, for example, commented that the proposed regulations “are not faithful to answering the question of economic dependence” and instead “consistently resolve alternative interpretations of a specific factor in the direction of broadening the scope of the factor.” similarly, some commenters stated that the department's proposal expanded the range of relevant factors and “hold[s] a thumb on the analytical scale towards employment.” see shrm. the u.s. chamber stated that the proposed rule “would not only lead to significant reclassification of independent contractors but would also lead to a considerable increase in litigation. the bias in favor of employee status, which appears throughout the proposed rule, makes the risk that independent contractors would be misclassified as employees especially acute, with potentially dramatic consequences for entire industries.” see also boulette golden & marin llp (commenting that the department has attempted “to narrow the scope of the economic reality test and suggests an individual is not an employee only if the employee has a free standing business”). relatedly, other commenters requested that “[i]f it is the department's intent that this rule should uphold practices that were in place for years before the 2021 independent contractor rule, then we believe any final rule should confidently state that most workers would not see a change.” see ooida. several commenters requested that the department provide additional guidance regarding how to weigh the factors in various scenarios. see, e.g., grantmakers in the arts; national small business association. nrf & nccr, for example, commented that “[t]his approach provides little guidance as to how individuals and businesses should apply those factors when they do not all point in the same direction.” commenters also stated that, in contrast to the 2021 ic rule, potential overlap among factors made this test more challenging to understand. for example, the club management association of america and the national club association (“cmaa & nca”) commented that “[e]ach factor includes multiple subjective elements for consideration that are not distinct from other factors” and the alabama trucking association stated that the proposal “also create[ed] subtests that overlap at least conceptually or completely with aspects of other parts of the test.” see also mep (“overlap makes it more difficult for the regulated community to understand how to analyze the different elements of the contractual relationship.”). various commenters requested that the department state that workers in their particular industry or occupation were bona fide independent contractors. see, e.g., insights association (strongly urging “the addition of a clarification that market research participants receiving incentives are independent contractors”); american securities association (stating its belief “that, consistent with this precedent, there is wisdom in including in the proposed rule an exemption for the financial services and insurance industries”); c.a.r. (“c.a.r. asks the dol to not apply any new rule to established industries whose businesses have already addressed this long standing issue.”); national alliance of forest owners (“nafo”) (requesting “a safe harbor provision to provide forestry businesses a clear standard for classifying workers as independent contractors”). after considering all comments and as discussed in detail below, the department is adopting § 795.110(a) as proposed. regarding comments that the department's proposal is generally biased in favor of employee status, or that its analysis of each factor places a “thumb on the scale” toward employment, the department reiterates that its proposal is consistent with longstanding judicial precedent and, critically, the plain language of the act. the department agrees with those commenters who emphasized the act's relevant statutory definitions. as it has stated previously, the department believes that determining whether an employment relationship exists under the flsa begins with the act's definitions.[213] the act's text is expansive, defining “employer” to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee,” “employee” as “any individual employed by an employer,” and “employ” to “include[ ] to suffer or permit to work.” [214] prior to the flsa's enactment, the phrasing “suffer or permit” was commonly used in state laws regulating child labor. as the eleventh circuit explained in antenor v. d & s farms, “[t]he `suffer or permit to work' standard derives from state child labor laws designed to reach businesses that used middlemen to illegally hire and supervise children.” [215] in other words, the standard was designed to ensure that an employer could be covered under the labor law even if they did not directly control a worker or used an agent to supervise the worker. the supreme court has explicitly and repeatedly recognized that this “suffer or permit” language demonstrates congress's intent for the flsa to apply broadly and more inclusively than the common law standard.[216] this textual breadth reflects congress's stated intent. section 2 of the act, congress's “declaration of policy,” states that the act is intended to eliminate “labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well being of workers.” [217] particularly relevant to misclassification, section 2 identifies “unfair method[s] of competition in commerce” as an additional condition “to correct and as ( print page 1668) rapidly as practicable . . . eliminate.” [218] in its 1947 brief before the supreme court in rutherford, the department explained that the act “contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this act, were not deemed to fall within an employer employee category.” [219] the department continued, stating that “[t]he purposes of this act require a practical, realistic construction of the employment relationship . . . and the broad language of the statutory definitions is more than adequate to support such a construction.” [220] the determination of whether a worker is covered under the flsa must be made in the context of the act's own definitions and the courts' expansive reading of its scope.[221] the flsa's “particularly broad” definition of “employee” encompasses all workers who are, “as a matter of economic reality, . . . economically dependent upon the alleged employer.” [222] the supreme court agreed, reiterating the breadth and reach of the act's definitions to work relationships that were not previously considered to constitute employment relationships and emphasizing that the determination of an employment relationship under the flsa depends not on “isolated factors but rather upon the circumstances of the whole activity.” [223] thus, the department's analysis does not place a “thumb on the scale” for employment. rather, it was congress's clear intent in fashioning the act (which has been repeated by courts for decades) that the statutory language sweep broader than the common law and encompass all workers who are “suffered or permitted” to work, and the test for employment must reflect that plain language and clear intent. the department emphasizes again, however, that there is a wide assortment of bona fide independent contractors across industries and occupations, and it believes that the regulations as finalized in this rule allow for this range of work relationships from employees to independent contractors to be appropriately classified. the department has also considered the comments opining that the department's totality of the circumstances economic reality test will cause confusion or uncertainty and that the 2021 ic rule's core factors analysis was clearer. the department believes, however, that an analysis that has been applied for decades and is aligned with the breadth of the relevant statutory definitions and binding judicial precedent is not only more faithful to the act but also more familiar to the regulated community, workers, and those enforcing the act. the economic reality test was developed by the supreme court in interpreting and applying the social legislation of the 1930s, including the flsa.[224] in 1947, the supreme court issued two decisions, silk and rutherford, that used an economic reality test to determine employment status.[225] as explained in rutherford, the “economic reality” test is designed to bring within such legislation “persons and working relationships which, prior to this act, were not deemed to fall within an employer employee category.” [226] only a worker who “is instead in business for himself” is an independent contractor not covered by the act.[227] the “focus” and “ultimate concept” of the determination of whether a worker is an employee or an independent contractor, then, is “the economic dependence of the alleged employee.” [228] the statutory language thus frames the central question that the economic reality test asks whether the worker is economically dependent on an employer who suffers or permits the work or whether the worker is in business for themself. to aid in answering this ultimate inquiry of economic dependence, several factors have been considered by courts and the department as particularly probative when conducting a totality of the circumstances analysis of whether a worker is an employee or an independent contractor under the flsa.[229] in silk, the supreme court suggested that “degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation and skill required in the claimed independent operation are ( print page 1669) important for decision.” [230] the court also drew a distinction between workers who are an integral part of the business but are not the directors of their business, and workers who “depend upon their own initiative, judgment, and energy for a large part of their success.” [231] the court cautioned that no single factor is controlling and that the list is not exhaustive.[232] in rutherford, the court used a similar analysis when concluding that the workers in that case were employees, considering “the circumstances of the whole activity,” and relied on the fact that the workers' work was “a part of the integrated unit of production.” [233] these considerations identified by the supreme court are the same factors that the department set forth in its nprm. courts, employers, workers, and enforcement personnel have been considering these factors for over 75 years. as such, the department does not see a credible basis for comments that predict sharply increased litigation, dramatic curtailment of opportunities, or massive reclassification of workers. this is the analysis that the department (except for the 2021 ic rule) and courts have applied for more than 7 decades to classify workers under the act, and the predictions raised in the comments as concerns have not been evident. moreover, this final rule represents the department's most comprehensive guidance regarding the economic reality test used by courts to determine employee or independent contractor status. as such, to the extent there was litigation around this issue due to a lack of clarity, that should be further alleviated by this rulemaking. as explained further in the economic analysis in section vii, because of this alignment with a longstanding analysis, the department does not expect widespread reclassification as a result of this rule. rather, the economic reality test, the case law, and the department's position have remained remarkably consistent since the 1940s, and throughout this time the test has demonstrated its ability to address evolving workplace trends. the test's focus has remained on whether the worker is in business for themself, with the inquiry directed toward the question of economic dependence. this consistency is, at least in part, due to the fact that the analysis works for a broad swath of work arrangements, both longstanding and emerging, and its overarching rationale based on economic dependence makes common sense. it is not surprising that some courts and the department may have used somewhat different iterations of the factors over the last several decades, as the factors “are aids tools to be used to gauge the degree of dependence of alleged employees on the business with which they are connected.” [234] these factors are only guideposts, and “[i]t is dependence that indicates employee status. each [factor] must be applied with that ultimate notion in mind.” [235] this is why most courts, and the department, have long made clear that additional factors may be relevant when applying the test to a particular case. it is also expected that outcomes may vary somewhat among workers even in the same profession, for example, because the test demands a fact specific analysis. facts like job titles or whether a worker receives a 1099 form are not probative of the economic realities of the relationship. rather, in undertaking this analysis, each factor is examined and analyzed in relation to one another and to the act's definitions. importantly, “[n]one of these factors is determinative on its own, and each must be considered with an eye toward the ultimate question the worker's economic dependence on or independence from the alleged employer.” [236] while the department appreciates, as some commenters noted, that two factors (like any test with fewer factors) are simpler in some ways than six factors, the department believes that it would be a disservice to stakeholders to present an analysis that is contrary to how courts view the totality of the circumstances analysis. courts have repeatedly admonished against a mechanical application of the factors and have required a full analysis of all relevant factors, which is why the department believes that any clarity created by shrinking the test to two core factors and artificially weighting them is illusory. as addressed in the nprm, since silk and rutherford, federal courts of appeals have applied the economic reality test to distinguish independent contractors from employees who are entitled to the flsa's protections. federal appellate courts considering employee or independent contractor status under the flsa generally analyze the economic realities of the work relationship using the factors identified in silk and rutherford.[237] there is significant and widespread uniformity among the federal courts of appeals in the application of the economic reality test, although there is slight variation as to the number of factors considered or how the factors are framed (for example, whether relative investment is considered within the investment factor, or whether skill must be used with business like initiative).[238] as the 2021 ic rule explained, “[m]ost courts of appeals articulate a similar test,” and these courts consistently caution against the “mechanical application” of the economic reality factors, view the factors as tools to “gauge . . . economic dependence,” and “make clear that the analysis should draw from the totality of circumstances, with no single factor being determinative by itself.” [239] all of the federal courts of appeals that have addressed employee or independent contractor status under the flsa consider five of the same factors.[240] briefly, these factors include the degree of control exercised by the employer over the worker, skill, permanency, opportunity for profit or loss, and investment, although the second circuit and the d.c. circuit treat the worker's opportunity for profit or loss and the worker's investment as a single factor.[241] nearly all federal courts of appeals expressly consider a sixth factor, whether the work is an integral part of the employer's business. the fifth circuit has not adopted the integral factor as an enumerated factor but has at times assessed integrality as an additional relevant factor.[242] as such, courts can and do accord weight to different factors depending upon the particular facts of a case. and because courts are the ultimate arbiter of disputes regarding worker classification, an analysis that is aligned with how courts view the issue is the most beneficial guidance that the department can provide to stakeholders. regarding comments that the department should provide additional guidance regarding how to weigh the ( print page 1670) factors, the department believes that adding mechanistic rules for analyzing the factors would be contrary to judicial precedent and would limit the test's intended flexibility. as explained in the nprm, this totality of the circumstances analysis considers all factors that may be relevant and, in accordance with the case law, does not assign any of the factors a predetermined weight. limiting and weighting the factors in a predetermined manner undermines the very purpose of the test, which is to consider based on the economic realities whether a worker is economically dependent on the employer for work or is in business for themself.[243] importantly, each factor, considered in isolation, does not determine whether a worker is economically dependent on an employer for work or in business for themself. rather, the factors are tools or indicators and must be analyzed together in order to answer this ultimate inquiry. this is the guidance that the department has tried to provide for each factor, as discussed in this section below.[244] depending on the facts and circumstances of a case, it is to be expected that one or more factors may be more probative than the other factors. the analysis, however, cannot be conducted like a scorecard or a checklist. for example, two factors that strongly indicate independent contractor status in a particular case could possibly outweigh other factors that indicate employee status, and vice versa. but to assign a predetermined and immutable weight to certain factors ignores the totality of the circumstances, fact specific nature of the inquiry that is intended to reach a multitude of employment relationships across occupations and industries and over time. similarly, it is possible that not every factor will be particularly relevant in each case and that is also to be expected.[245] accordingly, the department believes that the nuanced analysis that accompanies each factor below is more appropriate guidance than rote instructions for weighing the factors. regarding comments that certain relevant facts may overlap among the factors, as explained in the nprm, the department believes that emphasizing the discrete nature of each particular factor and evaluating each factor in a vacuum fails to analyze the entire range of potential employment relationships in the manner demanded by the act's text and accompanying case law. additionally, the test must be able to identify the vast variety of legitimate independent contractor relationships.[246] as such, the department does not wish to be overly prescriptive regarding overlap among factors, because doing so encourages a more formulaic application of the factors as a checklist, when instead the factors are guides to determining, by looking at all relevant facts, the economic reality of the situation. applying a formulaic or rote analysis that isolates each factor is contrary to decades of case law, decreases the utility of the economic reality test, and makes it harder to analyze the ultimate inquiry of economic dependence. rather, the analysis needs to be flexible enough to apply to all kinds of work, and all kinds of workers, from traditional economy jobs to jobs in emerging business models. as the supreme court stated in silk, “[p]robably it is quite impossible to extract from the [ssa] a rule of thumb to define the limits of the employer employe[e] relationship” but the court identified factors as “important”: “degrees of control, opportunities for profit or loss, investment in facilities, permanency of relation[,] and skill required in the claimed independent operation” and added that “[n]o one is controlling, nor is the list complete.” [247] with this rule, the department is providing its most detailed guidance to date regarding the application of each of the considerations identified by the supreme court as being important to the determination of whether a worker is an employee under the act. as to those comments stating that the proposed rule was not well suited to the modern economy, the department disagrees. the department notes that the cases addressing employee vs. independent contractor status discussed in this rule and using the economic reality test apply to a wide range of today's workers, from cable installers to exotic dancers to health care workers, and the department's enforcement experience applying the economic reality test is similarly varied. with this rulemaking, the department describes the economic reality factors that reflect the totality of the circumstances approach that courts have taken for decades and are still applying to today's workplaces, and provides an analysis as to how the department considers each factor in today's workplaces, based on case law and the department's enforcement expertise in this area. for example, the investment factor is returned to being a separate factor, considers facts such as whether the investment is capital or entrepreneurial in nature, and considers the worker's investments relative to the employer's investments. significant additional guidance is provided for the control factor, including detailed discussions of how scheduling, supervision, price setting, and the ability to work for others should be considered when analyzing the degree of control exerted over a worker. and the integral factor is returned to its longstanding departmental and judicial interpretation, rather than the “integrated unit of production” approach that was included in the 2021 ic rule. the department declines commenter requests to provide any industry specific or occupation wide exemptions or carve outs to this rule. as explained elsewhere, the department intends these regulations to apply to a broad range of work relationships and will continue to assess the need for more specific subregulatory guidance. finally, multiple commenters seemed to refer to worker classification as a preference or suggested that the department's proposal would infringe upon workers' or businesses' choices. see, e.g., cambridge investment research (commenting that the result of the nprm “will be that many workers including workers who want to be independent contractors will be reclassified as employees under the flsa”); transcend software and technology solutions (commenting that the proposal would create an environment “where the freedom for entrepreneurs to operate as independent contractors is significantly diminished”). for instance, the nda stated that it “believes employers and workers should have the freedom and flexibility to engage in labor arrangements that meet the specific needs and preferences of both parties involved,” and cetera financial group commented that the “department could ( print page 1671) take a huge step toward . . . certainty [for stakeholders] by including the expressed intention of the parties as a threshold criteria for the existence of economic dependence.” while businesses are certainly and unequivocally able to organize their businesses as they prefer consistent with applicable laws, and workers are free to choose which work opportunities are most attractive to them, if a worker is an employee under the flsa, then those flsa protected rights cannot be waived by either party. the supreme court's “decisions interpreting the flsa have frequently emphasized the nonwaivable nature of an individual employee's right[s] . . . under the act” and “have held that flsa rights cannot be abridged by contract or otherwise waived.” [248] the supreme court has identified at least three reasons for this nonwaiver rule. first, the court has determined, based on the legislative history of the flsa, that the act constituted “a recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency.” [249] according to the court, the protective purposes of the act thus “require that it be applied even to those who would decline its protections”; otherwise, “employers might be able to use superior bargaining power to coerce employees to . . . waive their protections under the act.” [250] second, in enacting the flsa, congress sought to establish a “uniform national policy of guaranteeing compensation for all work” performed by covered employees.[251] consequently, “[a]ny custom or contract falling short of that basic policy, like an agreement to pay less than the minimum wage . . . cannot be utilized to deprive employees of their statutory rights.” [252] third, the court has held that permitting employees to waive their flsa rights is inconsistent with the explicit purpose of the act to protect employers against unfair methods of competition.[253] accordingly, flsa rights cannot be waived by either party under the law. the department is finalizing § 795.110(a) as proposed. in the sections that follow, the department is providing a detailed analysis about the application of each factor based on case law and the department's enforcement experience as a guide for employers and workers in determining whether a worker is an employee or an independent contractor, with each factor discussed through the lens of economic dependence. regarding the opportunity for profit or loss depending on managerial skill factor, the department proposed that this factor consider “whether the worker exercises managerial skill that affects the worker's economic success or failure in performing the work.” the department identified a nonexclusive list of facts that may be relevant when considering this factor: whether the worker determines or can meaningfully negotiate the charge or pay for the work provided; whether the worker accepts or declines jobs or chooses the order and/or time in which the jobs are performed; whether the worker engages in marketing, advertising, or other efforts to expand their business or secure more work; and whether the worker makes decisions to hire others, purchase materials and equipment, and/or rent space. the department added that, if a worker has no opportunity for a profit or loss, then this factor suggests that the worker is an employee. the department said further that some decisions by a worker that can affect the amount of pay that a worker receives, such as the decision to work more hours or take more jobs, generally do not reflect the exercise of managerial skill indicating independent contractor status under this factor.[254] the department explained that the proposed regulatory text for this factor focused the opportunity for profit or loss factor on whether the worker exercises managerial skill that affects the worker's economic success or failure in performing the work. the department noted that the 2021 ic rule similarly considered managerial skill, but explained that the proposed regulatory text more accurately reflects the consideration of the profit or loss factor in the case law and reflects the ultimate inquiry into the worker's economic dependence or independence. the department further explained that many federal courts of appeals “apply this factor with an eye to whether the worker is using managerial skill to affect the worker's opportunity for profit or loss” and discussed that case law. the department also noted that its proposal would consider investment as a separate factor, unlike the 2021 ic rule's consideration of investment within its opportunity for profit or loss factor. additionally, the department explained that the proposed regulatory text stating that the fact that a worker has no opportunity for a loss indicates employee status is consistent with the overall inquiry into economic dependence and is supported by the case law. finally, the department discussed the case law and its prior guidance supporting its view that a worker's decision to work more hours (when paid hourly) or work more jobs (when paid a flat fee per job) where the employer controls assignment of hours or jobs is similar to decisions that employees routinely make and does not reflect managerial skill.[255] in addition to the numerous comments generally supporting the department's six factor analysis, a number of commenters expressed support for the nprm's discussion of the opportunity for profit or loss depending on managerial skill factor. for example, smith summerset & associates llc “highly applaud[ed] inclusion of `managerial skill' in the title line and in the first sentence of the proposed” regulatory text and stated that “the exercise of managerial skill is a sine qua non of independent contractor status.” la fed & teamsters locals agreed “that it is managerial skill that matters when analyzing whether a worker's earning ability is relevant to the employee status analysis” (emphasis omitted). several commenters (including farmworker justice, nwlc, and the shriver center) stated that “a worker who has the power to make key business decisions that affect their opportunity for profit or loss is more likely to be an independent contractor than a worker who does not have power over these decisions.” similarly, nelp expressed agreement with the proposal “to explicitly tie the opportunity for profit or loss to a worker's managerial skill, not their ability to work longer” (emphasis omitted). see also gale healthcare solutions. ooida agreed with the department's rejection of how the 2021 ic rule discussed this factor, commenting: “we believe that the 2021 rule may have opened additional opportunities for truckers to fall prey to lease purchase schemes by stipulating that an individual only needed to exhibit exercise of initiative or ( print page 1672) management of investment for the factor to weigh towards the individual being an independent contractor. the formulation of the factor may have dismissed predatory leasing arrangements because an owner operator otherwise exercised some initiative in the management of their work.” regarding the department's proposal that decisions to work more hours or take more jobs “generally do not reflect the exercise of managerial skill indicating independent contractor status under this factor,” [256] ndwa agreed, stating that “a worker's ability to impact their pay by working more hours or taking more jobs does not show the exercise of managerial skill indicating independent contractor status.” ibt also agreed with the nprm's “rejection of the proposition that a worker['s] decision to take additional hours or tasks indicates `managerial skill.' ” see also leadership conference, roc united, ufcw. several commenters found the nprm's listing of potentially relevant facts when applying this factor to be helpful. real women in trucking noted that this factor can appropriately indicate employee or independent contractor status for truck drivers and that the nprm's “addition of relevant facts to consider under this factor . . . provides helpful context to differentiate between these scenarios.” smith summerset & associates llc “applaud[ed] the specific examples of managerial skill listed in the [proposal].” and ufcw stated that, “[c]orrectly, the proposed rule highlights whether the worker can meaningfully negotiate, accept or decline jobs, and engage in efforts to expand their independent business.” some other commenters that generally supported the department's six factor analysis requested changes to or clarifications of the opportunity for profit or loss depending on managerial skill factor. for example, ufcw cited agreements that it says are imposed by companies like instacart, uber, and lyft that prohibit workers from connecting with or soliciting their customers and stated that “actively prohibit[ing] workers from developing an independent business is evidence of a lack of opportunity to profit or loss based managerial skill.” ufcw also stated that, “when black box algorithms solely dictate their available work, pay, and other economic conditions,” “[w]orkers are powerless to negotiate or make any managerial decisions.” the department agrees that such facts would be probative of whether a worker has an opportunity for profit or loss depending on managerial skill but also reiterates that no one fact is dispositive under this factor. real women in trucking requested that the department address “free market” load boards (load boards are matching systems where shippers post freights that they need carried and carriers post their availability), which, in the commenter's view, “offer an opportunity to control profit or loss (unlike internal load boards).” similarly, ooida explained its view that “the mere fact that an individual purchases equipment or services from a business they work with does not necessarily indicate an employee relationship.” ooida further explained that “[t]here are many owner operators who choose to make purchases from the business they are leased to because it is a profitable deal” and provided an example involving a group discount on tires. ooida “believe[s] that the nprm's totality of the circumstances approach should be able to distinguish between these types of situations.” the department appreciates these concerns and agrees that the test put forth is flexible enough to account for a wide variety of situations, but its intent in promulgating this final rule is to provide as much as possible a general standard for determining employee or independent contractor status. the requested guidance is technical and industry specific and is better addressed outside of rulemaking after this final rule takes effect. smith & summerset recommended adding “depending on managerial skill” to the third sentence of the regulatory text so that it reads: “if a worker has no opportunity for profit or loss depending on managerial skill, then this factor suggests that the worker is an employee.” the commenter stated that, “[w]ithout the managerial skill qualifier, the reader is invited to quickly think of working more or fewer hours as an opportunity for profit or loss.” however, the subsequent sentence in the regulatory text addresses working more hours. moreover, the intent of the third sentence is to explain that, where a worker who has no opportunity for profit or loss, this factor indicates employee status. qualifying that explanation with a reference to managerial skill is unnecessary, because regardless of managerial skill, the worker's lack of an opportunity for profit or loss points this factor toward employee status. nela recommended a number of changes to this factor. it stated that a “worker who can experience `profit' with no attached risk of business loss is not truly in business for themselves,” and suggested that the following language from the nprm preamble be added to the regulatory text: “the fact that a worker has no opportunity for a loss indicates employee status. workers who incur little or no costs or expenses, simply provide their labor, and/or are paid hourly, piece rate, or flat rate are unlikely to experience a loss. this factor suggests employee status in those circumstances.” however, the third sentence of the regulatory text already explains that this factor indicates employee status where a worker has no opportunity for a loss. nela further suggested that the department should “incorporate the flip side” of its above suggestion and state that “the chance for a `loss' with no corresponding opportunity for profit is a sign of dependence on the employer, which points toward employee status.” again, the third sentence of the regulatory text already covers circumstances where the worker has “no opportunity for a profit or loss.” nela also suggested that the following language be added to the regulatory text: “the fact that an employer may impose fines, penalties, or chargebacks on a worker for faulty performance does not mean that the worker may experience a loss. these kinds of costs are likely to make workers more dependent on their employers, and therefore more like employees.” (the first sentence is from the nprm preamble, and the second sentence is new language suggested by nela.) the department declines to add this language to the regulatory text. the department notes that although fines, penalties, and chargebacks can indicate a worker's economic dependence on the employer, whether they indicate dependence may depend on the circumstances. nela additionally suggested changing the regulatory text identifying accepting or declining jobs as a relevant factor so that it would read: “whether the worker exercises managerial skill in accepting or declining jobs without employer input or chooses the order and/or time in which the jobs are performed independent from employer control.” in the department's view, however, adding a reference to “managerial skill” is unhelpful because accepting or declining jobs is an underlying fact that is relevant to determining whether the worker exercises managerial skill. and adding references to “employer input” and “employer control” are unnecessary because the focus of this factor is whether the worker has an opportunity ( print page 1673) for profit or loss through managerial skill, and there are many aspects of accepting/declining jobs and choosing the order/time to perform jobs not only “employer input” and “employer control” which may shed light on whether those decisions and choices exemplify managerial skills. finally, nela suggested adding two sentences to the regulatory text. the first sentence would read: “a worker's technical proficiency in completing each job is not the type of managerial skill that would indicate independent contractor status.” this suggested sentence is, in the department's view, correct in the abstract. as the department explained in the nprm, “where a worker is paid by the job, the worker's decision to work more jobs and the worker's technical proficiency in completing each job are not the type of managerial skill that would indicate independent contractor status under this factor.” [257] however, the department also identifies in the regulatory text instances of managerial skill, such as efforts to expand a business or secure more work, hiring others, and purchasing materials and equipment, that can affect a worker's opportunity for profit or loss by, at least in part, increasing the worker's technical proficiency. the focus of this factor should be the degree of managerial skill, and the department does not believe that adding a blanket statement regarding technical proficiency to the regulatory text would be helpful because doing so could distract from evaluating managerial skill. technical proficiency in completing a job, even if it affects a worker's earnings, is alone insufficient for this factor to indicate independent contractor status, but, ultimately, whether that technical proficiency is the product of managerial skill is probative of employee or independent contractor status. nela's second suggested sentence would read: “managerial skill will typically affect opportunity for profit or loss beyond a given job, and will relate to the worker's business as a whole.” the department believes that the second suggested sentence is not necessarily probative of this factor and is not a point emphasized in the case law. numerous commenters opposed, disagreed with, and/or requested changes to or clarifications of the proposed opportunity for profit or loss depending on managerial skill factor. for example, several commenters raised concerns that certain of the facts in the nonexclusive list of facts identified by the department as relevant to this factor cannot be satisfied in their particular industries. texas association for home care & hospice stated that, “[i]n home care, independent contractor clinicians cannot hire other workers for the purposes of completing the contracted jobs ( i.e., patient visits) they have accepted from the home care agency” because of “stringent human resources and patient care regulations from both state and federal regulatory agencies.” it added that workers “purchase and maintain their own equipment,” but if the worker “accepts a specialized patient job, for instance a wound care patient, then the home care agency must purchase and provide to the independent contractor clinician the appropriate wound care supplies . . . as ordered by the physician.” the acli stated that, “[w]ithout question, [insurance agents'] profit or loss depends upon their own managerial skill,” but “insurance regulations, including new york insurance law § 4228, set strict limits on the commissions that insurers can pay to agents, who are “unable to negotiate or change their commission structure.” and although it “generally supports the department's proposed application” of this factor, the american securities association expressed concern that this factor “globally suggests, without any exceptions, that `whether the worker determines or can meaningfully negotiate the charge or pay for the work provided' is a relevant factor.” because “insurance and financial services regulations . . . set strict limits on the premiums that can be charged to customers and on the commissions that can be paid to agents and advisors,” it asserted that financial professionals would not be seen as independent under this factor. the american securities association suggested that the department “eliminate from consideration whether the worker can meaningfully negotiate his or her pay from the list of potentially relevant facts under this factor,” include a carveout, or “clarify that a brokerage firm establishing prices to meet regulatory supervision obligations or considerations of its registered representatives does not create an employee relationship and is at most a neutral factor.” abc suggested that the nprm “improperly presumes that independent contractors must have a staff and a marketed `business' to `manage.' ” it stated that “many independent contractors deliberately offer their services to employers of their choosing for the express purpose of avoiding negotiating costs” and “do not want to run a business that requires overhead for services, advertising and hiring support staff.” it added that “[i]t should be made clear that a worker who does solicit work from multiple clients remains an independent contractor.” finally, although it “generally agree[d] with the description of this factor,” the california chamber of commerce (“ca chamber”) expressed concern “that this factor would weigh against a gig worker being an independent contractor simply because the company for which they perform work sets pricing.” having considered these comments, the department adopts its proposed list of facts that may be relevant when applying this factor. the list is plainly nonexclusive, and neither any fact listed nor this factor will be dispositive of a worker's status. as the regulatory text provides, “no one factor or subset of factors is necessarily dispositive,” and the “outcome of the analysis does not depend on isolated factors but rather upon the circumstances of the whole activity.” [258] the status of the workers identified by these comments will be determined by multiple facts bearing on their work relationships, and accordingly, these commenters' concerns do not reflect how the department's analysis will be applied. consistent with a totality of the circumstances analysis, not hiring others and not advertising, for example, do not make the worker an employee or even conclusively determine that this factor indicates employee status. (and as discussed below, certain decisions to “not” take business actions such as those listed in the regulatory text may be as indicative of managerial skill as decisions to take those business actions.) in that same vein, soliciting work from multiple clients, for example and while of course relevant, does not guarantee that a worker is an independent contractor or even that this factor points to independent contractor status. in addition, the department believes that the nonexclusive list of facts that are potentially relevant to this factor provides helpful guidance, as other commenters have stated. and even if a particular fact is not probative or always points in one direction for a particular worker in a particular industry, that does not mean that the fact is not probative on a general level. the department is striving to provide a generally applicable regulation in this rulemaking and will provide additional ( print page 1674) guidance after this final rule takes effect.[259] although the u.s. chamber agreed that the facts listed in the regulatory text are “relevant to whether workers are independent contractors or employees,” it stated that the nprm was “wrong to require a worker to `exercise' these decisions to exemplify independent contractor status.” analogizing to the nprm's discussion of how reserved rights can be relevant in addition to actual practice, the u.s. chamber asserted that “the more important question is whether the worker has the opportunity to impact their profits and losses by engaging in various activities such as working for other companies, regardless of whether the worker actually acts on that opportunity.” cwi criticized the nprm for, in its view, “requir[ing] consideration of whether the worker actually exercises his skill to impact economic success.” cwi asserted that the nprm “consistently references `opportunity,' not actual exercise of that opportunity, as the relevant touchstone” and added that: “whether a worker chooses to exercise the opportunities for profit and loss available to him is fundamentally his own business decision. it is the ability to follow that business judgment even to his detriment that is the hallmark of the independence he is afforded.” see also n/ma; nrf & nccr. having considered the comments on this point, the department is revising the final regulatory text to emphasize the worker's “opportunities” for profit or loss based on managerial skill and to delete the reference to whether the worker “exercises” managerial skill. the department concurs that the term “opportunities,” which encompasses opportunity more broadly than “whether the worker exercises managerial skill,” is more consistent conceptually with the case law analyzing this factor and with the remainder of the regulatory text. although the department did not intend for the “exercises managerial skill” language to be limiting, focusing on “opportunities” should capture the facts relevant to a worker's profit or loss and managerial skill, as explained further in the discussion of comments in the following paragraph. the coalition of business stakeholders stated that “[m]any independent contractors offer their services to select employers for the express purpose of avoiding negotiating costs for services, advertising, and hiring support staff,” and that the nprm “utterly fails to account for workers' preference for having an independent contractor relationship that avoids these costs.” the commenter asserted that this “framework would virtually always weigh in favor of employment status.” nrf & nccr stated that “the fact that someone might not engage in certain practices or take on certain risks that would further impact the level of profit or loss should not result in a finding that the individual is not an independent contractor, unless that person is prevented from doing so by the entity with whom the individual contracts.” according to the commenter, for example, “[a] carpenter or plumber who chooses to market through word of mouth and to complete one job at a time, and not hire helpers and make the investments necessary to work on multiple job[s] simultaneously, is no less an independent contractor than a carpenter or plumber who has made different choices about how to operate his or her business.” the department believes that the opportunity, for example, to hire others or purchase materials and equipment, and a decision to not take such action based on a consideration of possible costs and rewards, can indicate managerial skill. for this to be the case, the worker must have a real opportunity to take the action and make an independent business decision indicating managerial skill to not take the action. in other circumstances, not taking an action may not indicate managerial skill. for example, if the action requires approval from the employer (for example, the employer must approve any person hired by the worker as a helper) or the action is not feasible financially (for example, the worker is lower paid and cannot hire others or make purchases), then there is likely no opportunity for the worker to make an independent business decision indicating managerial skill. regardless, no one action or lack of action should determine whether this factor indicates employee or independent contractor status; the department identifies in the regulatory text a number of possibly relevant facts, and other relevant facts may be considered too. several commenters expressed concern that the mention of “managerial skill” in the proposed regulatory text did not include references to “initiative,” “business acumen,” and “judgment.” for example, cwi stated that the proposed regulatory text “narrows the inquiry” as compared to the 2021 ic rule, which referenced “business acumen or judgment” in its discussion of this factor. cwi further stated that the nprm's preamble “acknowledge[d] that `initiative,' `business acumen,' and `judgment' are informative of the opportunity for profit or loss factor” (citing 87 fr 62238). cwi requested that the department “retain the 2021 ic rule's formulation of the standard.” see also n/ma. the u.s. chamber added that the proposed regulatory text “wrongly narrows the inquiry to `whether the worker exercises managerial skill,' as opposed to `managerial skill or business acumen or judgment,' as stated in the 2021 ic rule.” the department did not intend to exclude initiative, judgment, or business acumen from the inquiry under this factor. the nprm's preamble explained that considering initiative and judgment is very similar to considering managerial skill.[260] accordingly, in light of the comments and the discussion of managerial skill in the nprm's preamble and the cases cited therein, the department is modifying the regulatory text to clarify that managerial skill includes “initiative or business acumen or judgment.” thus, with this change and the change discussed above, the first sentence of the regulatory text for this factor reads: “this factor considers whether the worker has opportunities for profit or loss based on managerial skill (including initiative or business acumen or judgment) that affect the worker's economic success or failure in performing the work.” cpie commented that, although earlier court decisions “properly considered an individual's opportunity for loss in evaluating the individual's economic dependence,” the u.s. economy has changed, and “[t]here are countless numbers of individuals today who operate thriving businesses with their laptop computers and incur no risk of loss whatsoever.” the commenter asserted that “[t]he fact that these individuals operate a type of business that does not require a substantial financial investment should not deny them their right to offer their services as ( print page 1675) independent contractors.” having considered this comment, the department stands by its position that “the fact that a worker has no opportunity for a loss indicates employee status.” [261] the department believes that the risk of a loss as a possible result of the worker's managerial decisions indicates that the worker is in business for themself. although a worker need not experience a loss or even likely experience a loss for this factor to indicate independent contractor status, the scenario presented by the commenter “no risk of loss whatsoever” does not suggest that the worker is an independent contractor because at least some risk of a loss is inherent in operating an independent business. moreover, the department's position is grounded in the case law, which has recognized that the lack of possibility of a loss indicates employee status.[262] the department notes, however, that whether the worker in the scenario presented by the commenter is an employee or independent contractor depends on application of all of the factors and a consideration of the totality of the circumstances because neither this factor nor any other factor is necessarily dispositive. thus, workers “who operate thriving businesses with their laptop computers and incur no risk of loss whatsoever” (the scenario presented by the commenter) may be employees or independent contractors depending on all of the factors. a number of commenters expressed concerns with and/or sought changes to the last sentence of the regulatory text: “some decisions by a worker that can affect the amount of pay that a worker receives, such as the decision to work more hours or take more jobs, generally do not reflect the exercise of managerial skill indicating independent contractor status under this factor.” for example, nhda stated that each decision by a “driver to accept or reject an opportunity (in this case, a load) is a business decision that affects his/her economic success” and “involves the weighing of an opportunity cost” ( i.e., “the cost of accepting that load versus the revenue to be earned and also against the foregone opportunity to transport a different load”). nhda further stated that, for these reasons, this sentence “is misleading and susceptible to short circuiting a proper analysis.” see also scopelitis (same). flex described this sentence as “misleading” and “likely lead[ing] to the discounting of evidence that is, in fact, highly relevant to a worker's `opportunity for profit or loss depending on managerial skill.' ” it stated that, “[i]f a cashier at a fast food restaurant voluntarily chooses to work overtime or pick up an additional shift, that decision would not support independent contractor status[,]” but if a driver “who was planning to drive clients five days one week is solicited by a new client for a lucrative opportunity on saturday, the decision to accept that new client and work an extra day is plainly an entrepreneurial decision that reflects managerial decision making.” flex explained that “technological advances . . . have facilitated independent contractors' ability to quickly determine what earnings opportunities and hours worked will yield for them the biggest return on the investment of their time.” shrm added that “[t]he economic reality is that a worker who can profit by taking other jobs is more independent and therefore less economically dependent on the employer than an employee who cannot,” and that “[t]he ability to make that choice should point to an independent relationship.” cwi stated that “[t]he department's commentary even cites authority noting that choosing among `which jobs were most profitable' is evidence of independent contractor status, but the proposed rule contains no similar nuance.” see also u.s. chamber; mep. having considered these comments, the department believes that the last sentence of the proposed regulatory text for this factor can be more precise. in the nprm, the department explained this concept as follows: “a worker's decision to work more hours (when paid hourly) or work more jobs (when paid a flat fee per job) where the employer controls assignment of hours or jobs is similar to decisions that employees routinely make and does not reflect managerial skill.” [263] the proposed regulatory text, however, did not account for payment for the hours and jobs at a fixed rate or the employer's control over the flow of work. the nprm recognized that courts have held that a worker's ability to freely choose among jobs based on the worker's assessment of the comparable profitability of those jobs can indicate independent contractor status when applying the opportunity for profit or loss factor.[264] other cases relied on by the department in the nprm involved workers who were paid at set or fixed rates and/or situations where more work was dictated by the employer's needs as opposed to the worker's initiative.[265] based on the comments, the discussion in the nprm, and the case law, the department is revising the last sentence of the opportunity for profit or loss factor. in the nprm, that sentence read: “some decisions by a worker that can affect the amount of pay that a worker receives, such as the decision to work more hours or take more jobs, generally do not reflect the exercise of managerial skill indicating independent contractor status under this factor.” as revised, that sentence reads (with the new language in italics): “some decisions by a worker that can affect the amount of pay that a worker receives, such as the decision to work more hours or take more jobs when paid a fixed rate per hour or per job, generally do not reflect the exercise of managerial skill indicating independent contractor status under this factor.” the department also considered adding to the regulatory text a reference to the employer's control of assignment of the hours or jobs. although such control may be relevant in this context, the department believes that the fact that the hours or jobs are paid at a fixed rate is more indicative that the worker is not exercising managerial skill by taking more such hours or jobs. fight for freelancers asserted that there was a conflict between this provision regarding working more hours or jobs and the provision stating that accepting or declining jobs can be a relevant fact when applying this factor. the coalition of business stakeholders commented that the nprm is “unclear on whether, when assessing the opportunity for profit or loss factor, a worker's ability to accept or decline work weighs in favor of independent contractor status.” the department believes these comments overlook the totality of the circumstances nature of the analysis; there is no particular factor to satisfy. in addition, the text addresses two concepts that are not in conflict. the last sentence of the regulatory text (as revised) addresses a worker who can earn more by working more hours or taking more jobs. that worker is working more to earn more but not exercising managerial skill (at least in that regard). on the other hand, a worker may be able to accept and ( print page 1676) decline jobs where the jobs have varying degrees of potential profitability and the worker must determine which jobs to pursue and how much of the worker's time and resources should be devoted to the various jobs. that worker is exercising managerial skill (at least in that regard), which weighs in favor of independent contractor status. mep commented that “managerial skill should be broadly defined” and that “managerial skill should include an individual's ability to complete the work more efficiently or effectively.” world floor covering association (“wfca”) commented that, although it “recognizes that merely working longer hours or more efficiently does not distinguish an independent contractor from an employee,” “[a]n individual who uses initiation or judgment to perform a job more efficiently can generate greater profits, even if compensated by the hour or by piecework rates.” wfca suggested that “depending on managerial skill” be stricken from the title of this factor and that the first sentence of the regulatory text be revised to state: “this factor considers whether the worker exercises managerial skills, implements innovations, or uses other entrepreneurial concepts that affects the worker's economic success or failure in performing the work.” for the reasons explained in the nprm and in this section, managerial skill is properly the focus of the opportunity for profit or loss factor because it helps to distinguish between decisions that affect a worker's earnings and the use of initiative, judgment, or business acumen that may create opportunities for profit or loss. as further explained in the nprm, whether the worker's opportunity for profit or loss depends on managerial skill (or initiative or judgment as discussed above) is ingrained in the case law.[266] accordingly, striking “depending on managerial skill” would not be supported. and although being innovative and acting entrepreneurially are synonymous with managerial skill, implementing innovations and using entrepreneurial concepts are not necessarily synonymous with the worker's managerial skill if those innovations and concepts are developed and perfected by others. wfca's suggested language would detract the focus from, and not necessarily be consistent with, managerial skill. in addition, wfca provided examples of workers who can “install complex wood or tile patterns” and requested that implementing “new techniques or innovations” and developing “specialized or unique skills” be added to the nonexclusive list of facts that may be relevant when applying this factor. however, as discussed in this section, implementing techniques or innovations is not necessarily indicative of managerial skill and may instead relate more to how the worker performs the work. the same may be said about developing skills; especially considering the examples provided by wfca, these skills seem more about performing particular work. as discussed above in response to nela's comment that technical proficiency in completing each job is not managerial skill indicative of independent contractor status, the focus of this factor is the worker's managerial skill and not the worker's performance of particular jobs. accordingly, the department declines to make the changes requested by wfca.[267] the department is finalizing the opportunity for profit or loss depending on managerial skill factor (§ 795.110(b)(1)) with the modifications discussed herein. a worker for a landscaping company performs assignments only as determined by the company for its corporate clients. the worker does not independently choose assignments, solicit additional work from other clients, advertise the landscaping services, or endeavor to reduce costs. the worker regularly agrees to work additional hours in order to earn more. in this scenario, the worker does not exercise managerial skill that affects their profit or loss. rather, their earnings may fluctuate based on the work available and their willingness to work more. because of this lack of managerial skill affecting opportunity for profit or loss, these facts indicate employee status under the opportunity for profit or loss factor. in contrast, a worker provides landscaping services directly to corporate clients. the worker produces their own advertising, negotiates contracts, decides which jobs to perform and when to perform them, and decides when and whether to hire helpers to assist with the work. this worker exercises managerial skill that affects their opportunity for profit or loss. thus, these facts indicate independent contractor status under the opportunity for profit or loss factor. regarding the investments factor, the department proposed that this factor consider “whether any investments by a worker are capital or entrepreneurial in nature.” the provision stated that “[c]osts borne by a worker to perform their job,” such as “tools and equipment to perform specific jobs and the worker's labor,” “are not evidence of capital or entrepreneurial investment and indicate employee status.” the provision further stated that investments that are capital or entrepreneurial in nature and thus indicative of independent contractor status are those that “generally support an independent business and serve a business like function, such as increasing the worker's ability to do different types of or more work, reducing costs, or extending market reach.” the department also proposed that “the worker's investments should be considered on a relative basis with the employer's investments in its overall business.” the provision further said that “[t]he worker's investments need not be equal to the employer's investments, but the worker's investments should support an independent business or serve a business like function for this factor to indicate independent contractor status.” [268] the department explained that its proposal to treat investments as its own separate factor in the economic reality analysis is consistent with its approach prior to the 2021 ic rule and with the approach of most courts. the department further explained that considering investments as part of the opportunity for profit or loss factor, as the 2021 ic rule did, is flawed because, among other reasons, it “may incorrectly tilt the analysis in favor of independent contractor outcomes” and “have the effect in some cases of ( print page 1677) preventing investment from affecting the analysis.” the department set forth its reasons (and the supporting case law) for focusing on the nature and reason for the worker's investment and why the worker's investment must be capital in nature for it to indicate independent contractor status. consistent with that focus, the department further explained (with a discussion of supporting case law) that “the use of a personal vehicle that the worker already owns to perform work or that the worker leases as required by the employer to perform work is generally not an investment that is capital or entrepreneurial in nature.” [269] finally, the department explained that its proposal to evaluate the worker's investment in relation to the employer's investment in its business “is not only consistent with the totality of the circumstances analysis that is at the heart of the economic reality test, but it would also provide factfinders with an additional tool to differentiate between a worker's economic dependence and independence based on the particular facts of the case.” the department discussed the federal appellate case law supporting its proposal and addressed any contrary federal appellate case law.[270] in addition to the numerous comments generally supporting the department's six factor analysis, a number of commenters expressed support for the nprm's treatment of investments as a separate factor in the economic realities analysis. nwlc explained that, “[c]onsistent with the department's guidance from its earliest applications of the economic reality test until the 2021 rule, the proposed rule considers investments by the worker and the employer as a factor distinct from opportunity for profit or loss.” la fed & teamsters locals stated that the 2021 ic rule had “improperly combine[d]” the investments factor with the opportunity for profit or loss factor and that the nprm's treatment of the investments factor as a separate factor “more faithfully adheres to the long history of jurisprudence defining how to determine the economic reality.” the state ags agreed that treating investments as a separate factor is “consistent with the case law.” gale healthcare solutions expressed “support [for] the proposal to treat worker investment as a standalone factor in the economic reality analysis rather than as part of [the] opportunity for profit or loss analysis.” others, including nelp, real women in trucking, ibt, and afl cio, expressed similar support. a number of commenters also supported the substance of the nprm's discussion of the investments factor. for example, leadership conference appreciated the clarification that the nprm's investments factor would provide, stating that “[a] true independent contractor should make significant capital or entrepreneurial investments in their business, especially relative to the entity that hired them.” the shriver center agreed that the investments of “a true independent contractor . . . must be capital or entrepreneurial, as opposed to tools that a worker is required by a business to have in order to perform a job.” others, including farmworker justice, real women in trucking, and liuna, commented similarly. see also nelp, winebrake & santillo, llc, gale healthcare solutions. roc united described as crucial the nprm's clarification “that `the use of a personal vehicle that the worker already owns to perform work or that the worker leases as required by the employer to perform work is generally not an investment that is capital or entrepreneurial in nature.' ” afl cio “strongly encourage[d] [the department] to include in the final rule its observation” regarding a worker's use of a personal vehicle. la fed & teamsters locals agreed that the nprm's approach to a worker's use of a personal vehicle was right and added that evaluating the worker's investment relative to the employer's “is critical because even when employers push the cost of tools and supplies onto the workers doing the work at the core of the employer's business, the employers often have even larger investments.” some commenters that generally supported the department's six factor analysis requested changes to or clarifications of the investments factor. in particular, a number of commenters addressed costs and expenses that employers require workers to bear or that they otherwise impose on workers and argued that such costs and expenses are not of a capital or entrepreneurial nature indicating independent contractor status. for example, intelycare asserted that when a nursing agency shifts fees for malpractice insurance onto workers, those fees are not an investment by the workers. intelycare added: “we urge the department to close such loopholes and instruct that companies cannot shift or attempt to disguise their own investments in an effort to avoid employee classification.” gale healthcare solutions likewise requested that the department “clarify that when a company shifts its `investment' cost or a typical cost of doing business to workers ( e.g.,. . . purchasing group malpractice insurance and deducting the cost from workers' pay), this transferred cost does not constitute worker investment.” la fed & teamsters locals requested that the department make “clear in its final rule that any investments that an employer requires fall into th[e] category of non probative investments, and provide additional guidance to ensure that employers cannot find additional ways to manipulate these factors.” nelp similarly requested that the department “clarify that investments made by a worker that reflect a contractual demand by the hiring entity, rather than an independent business investment decision or meaningful negotiation between business parties, should not weigh towards independent contractor status.” nelp added: “without this clarification, hiring entities may misclassify workers as independent contractors and require or pressure them, as a condition of receiving work, to make expenditures that appear large in comparison to an undercapitalized hiring entity such as a fly by night subcontractor or labor broker to avoid accountability.” having considered these comments, the department agrees that costs unilaterally imposed by an employer on a worker are not capital or entrepreneurial in nature. where the worker has no meaningful say either in the fact that the cost will be imposed or the amount, the cost cannot be an investment indicating that the worker is in business for themself. using malpractice insurance for nurses as an example, if such insurance is required by law or regulation and a nursing staffing agency purchases and maintains the insurance for the nurses and passes that cost on to, or imposes a charge for insurance on, the nurses, that cost does not indicate independent contractor status. but, if insurance is required by law or regulation, and the nurse can choose among policies based on their prices and coverages and does independently procure a policy, then the cost of the insurance could be capital or entrepreneurial in nature and indicative of independent contractor status. for these reasons, the department is modifying the relevant sentence from the regulatory text regarding the investments factor to add the following text: “and costs that the ( print page 1678) potential employer imposes unilaterally on the worker.” [271] relatedly, real women in trucking stated that truck drivers who wholly own or independently finance a truck are true owner operators because “[t]his type of investment gives [them] the ability to keep their truck if they decide to stop working for any particular company, and accordingly some measure of economic independence.” the commenter further stated that, in contrast, “employer sponsored leases for work equipment, including for trucks, are not investments of the kind that weigh in favor of independent contractor classification.” the department generally agrees with this distinction, although it is hesitant to state that the existence of an employer sponsored lease can never indicate independent contractor status. consistent with the discussion of malpractice insurance in the previous paragraph, if a driver is not required to lease a truck from the employer, is able to consider independent financing options, is able to meaningfully negotiate the terms of the lease with the employer, is not required by the employer to work for it for a minimum period of time nor prohibited by it from using the leased truck to work for others, and then decides to lease from the employer, the cost of the truck leased from the employer could be capital or entrepreneurial in nature, especially if the lease could ultimately result in the driver's wholly owning the truck.[272] regarding the proposed regulatory text's statement that the costs to workers of tools to perform specific jobs are not capital or entrepreneurial investments, liuna suggested the following addition: “the mere utility of a worker's tools to perform similar work for other employers does not render the worker's purchase of those tools an entrepreneurial investment, especially where the pertinent employer invests far more in facilitating or purchasing the employees' work.” in support, liuna stated that “[t]he weight of authority . . . overwhelmingly suggests that the potential utility of a workers' tools for other projects does not render those workers[] independent contractors.” this statement, however, overlooks that the economic realities analysis considers the totality of the circumstances. a worker's use of tools alone does not determine whether the worker is an employee or independent contractor. moreover, the department believes that a worker's purchase of tools and equipment for use performing multiple jobs for multiple employers can be a capital or entrepreneurial investment. the regulatory text already explains that the nature of such purchases of tools and equipment needs to be determined and that such costs to a worker and the worker's other investments should be considered on a relative basis with the employer's investments in its overall business. accordingly, the department declines liuna's suggestion. nela stated that the nprm “correctly focuses on whether investments are capital or entrepreneurial in nature” but expressed concerns that the “department's decision to separate the `investment' prong from the `opportunities for profit and loss' prong . . . goes too far, and detracts from . . . needed clarity.” according to nela, “[a]n expenditure is only an `investment' when it may impact profit and loss,” and “[i]f an employee has spent money for work but has no opportunity for profit and loss as a result, then the conclusion should be that they are not `investing' in anything.” nela requested that the nprm “be edited to clarify that `investment' inherently implies the possibility of profit and is only `capital or entrepreneurial in nature' . . . when it has a nexus with profit and loss.” the department agrees that whether the worker's expenditures may result in profits or losses to the worker is highly relevant to whether those expenditures are capital or entrepreneurial in nature. however, because, as explained further below, the investment factor is not synonymous with the opportunity for profit or loss factor and because adding a “nexus with profit or loss” requirement is not supported by the weight of the case law that has historically viewed the two factors as analytically distinct under the economic reality test, the department declines to promulgate an absolute requirement that expenditures have “a nexus with profit and loss” to be capital or entrepreneurial in nature. moreover, such a requirement could be viewed as similar to the 2021 ic rule's approach of combining the consideration of investments with opportunity for profit or loss an approach that the department is rejecting as discussed below. for all the reasons stated herein, the department is restoring investments as its own separate factor. although some overlaps between factors are understandable, tying investments to profits and losses in the absolute manner suggested by nela would be contrary to the department's goal of rectifying the 2021 ic rule's treatment of investments as part of the opportunity for profit or loss factor. nela further stated that the nprm was “correct to incorporate a relative investment analysis” in this factor, but that “the department should explain that the relative investment analysis is qualitative, not quantitative, to better align this prong with the overarching dependence/independence inquiry.” according to nela, “[a] qualitative review of relative investments helps determine whether the investment is entrepreneurial in nature,” but “[a]n analysis that instead focuses on a quantitative comparison of investments is rarely conclusive, because not all industries are equally capital intensive.” nela added that “the threshold question of which expenditures are entrepreneurial `investments' versus `tools' makes quantitative comparison confusing and inconclusive.” see also nelp (the department should “clarify[] that the comparison of investments must be qualitative.”); real women in trucking (“while a single tractor trailer is a relatively small investment compared to the fleets of trucks owned by some firms, when wholly owned or independently financed, it is sufficient to support a personal trucking business, and thereby meets the standard discussed in the proposed rule.”). having considered these comments, the department agrees that focusing the comparison of the worker's and the employer's investments on their qualitative natures is helpful. as nela points out, different industries may be more or less “capital intensive.” thus, focusing only on the quantitative measures ( e.g., dollar values or size) of the investments may not achieve the full probative value of comparing the investments. on the other hand, comparing the investments in a qualitative manner ( i.e., the types of investments) is a better indicator of whether the worker is economically ( print page 1679) dependent on the employer for work or is in business for themself. that is because regardless of the amount or size of their investments, if the worker is making similar types of investments as the employer or investments of the type that allow the worker to operate independently in the worker's industry or field, then that fact suggests that the worker is in business for themself. the comment from real women in trucking captures this point well. although the driver who wholly owns or is independently financing a single truck is making a quantitatively smaller investment (in dollars and size) than the employer that has a fleet of trucks, the driver is making a similar type of investment as the employer and a sufficient investment so that the driver can operate independently in that industry suggesting independent contractor status. another example is an individual photographer who has cameras and related equipment, has software to edit photos, and works out of their home. although the individual may not have the extent of equipment, software with every capability, or a leased office space like a larger firm, the type of investments that the individual has made are sufficient in this case for the individual to operate independently in the photography field suggesting independent contractor status. accordingly, the department is revising the last sentence of the proposed regulatory text for the investments factor to be two sentences and to read: “the worker's investments need not be equal to the potential employer's investments and should not be compared only in terms of the dollar values of investments or the sizes of the worker and the potential employer. instead, the focus should be on comparing the investments to determine whether the worker is making similar types of investments as the potential employer (even if on a smaller scale) to suggest that the worker is operating independently, which would indicate independent contractor status.” [273] numerous commenters opposed, disagreed with, and/or requested changes to or clarifications of the proposed investments factor. for example, several commenters opposed the nprm's proposed treatment of investments as its own separate factor. nrf & nccr stated that “investments are so interrelated with profits and losses that analyzing them separately is duplicative and unnecessary,” and that the 2021 ic rule, “following second circuit precedent,” “brings clarity and helps reduce overlap to this analysis.” n/ma stated that “[i]nvestment by a worker in their own business creates an expense, which by definition creates an equation whether the worker may experience loss or profit depending on the worker's net profits.” cwi stated that, “because the investment factor is already sufficiently addressed in the opportunity for profit or loss factor, there is no need for it to be addressed again as a standalone factor.” cwi disagreed with the department's characterization of the 2021 ic rule on this point, stating that the 2021 ic rule “provides that both initiative and investment must be considered, though both are not required” and thus “provides that the satisfaction of either is a necessary condition for the opportunity for profit or loss factor, but not that either is per se sufficient ” (emphases added). see also coalition of business stakeholders. fsi stated that the nprm “introduces redundancy and double counting by assessing a worker's `investment' in the business as a `standalone factor.' ” the commenter further stated that although the supreme court in silk articulated investment as a separate factor than opportunity for profit or loss, the court “analyzed them together,” which the commenter asserted that the department “fail[ed] to address.” other commenters, such as abc, north american meat institute, and the u.s. chamber, also disagreed with the nprm's treatment of investments as its own separate factor. having considered the comments, the department agrees with the comments discussed above from commenters including afl cio, ibt, la fed & teamsters locals, nelp, and nwlc, and is retaining investments as a separate factor in the economic realities analysis. the department's approach is consistent with the overwhelming majority of federal appellate case law and the department's practice prior to the 2021 ic rule. almost all of the federal courts of appeals consider investments as a separate factor.[274] in addition, the department consistently identified investments as a separate factor in the analysis prior to the 2021 ic rule.[275] the department understands that the second and d.c. circuits consider investments and opportunity for profit or loss as one factor.[276] however, treating investments as a separate factor is consistent with the approach taken by most federal appellate courts, the department's intent for this final rule to be as grounded as possible in the case law, and the department's prior guidance. and as explained below, treating investments as a separate factor rather than including it in the opportunity for profit or loss factor as the 2021 ic rule ensures that investments are considered in each case and may result in a fuller consideration of relevant facts. the department recognizes that the consideration of investments may be related to the consideration of the opportunity for profit or loss. as explained above in response to a comment from nela, whether the worker's expenditures may result in profits or losses to the worker is highly relevant to whether those expenditures are capital or entrepreneurial in nature. the u.s. chamber, for example, cited the fourth circuit's decision in mcfeeley to support its argument that “[i]nvesting in one's business necessarily entails creating an opportunity for profit or risking a loss on that investment.” in mcfeeley, the court noted that the two factors “relate logically to one other” [277] but nonetheless articulated them ( print page 1680) separately [278] and ultimately made determinations on each factor as it related to the workers' status as employees or independent contractors.[279] and even assuming that the supreme court in silk “analyzed them together” as fsi argued, the court did articulate the two factors separately.[280] moreover, as decisions from the fifth circuit and other circuits demonstrate, investments may be relevant to whether the worker is economically dependent on the employer separate and apart from the worker's opportunity for profit or loss. for example, the fifth circuit found in parrish that the investment factor favored employee status (although it merited “little weight” in that case given the nature of the work) and that the opportunity for profit or loss factor favored independent contractor status.[281] in cromwell, the fifth circuit conversely found that the investment factor indicated independent contractor status because the workers “invested a relatively substantial amount in their trucks, equipment, and tools” but that their opportunity for profit or loss was “severely limit[ed].” [282] in nieman, the eleventh circuit found that the investment factor weighed in favor of independent contractor status while the opportunity for profit or loss factor did “not weigh in favor of either” independent contractor or employee status.[283] and in scantland, the eleventh circuit found that the opportunity for profit or loss factor “point[ed] strongly toward employee status” although the investment factor weighed slightly in favor of independent contractor status.[284] the 2021 ic rule's treatment of investments as part of its opportunity for profit or loss factor further reinforces the department's decision to treat investments as a separate factor. the 2021 ic rule stated that its opportunity for profit or loss factor indicates independent contractor status if the worker exercises initiative or if the worker manages their investment in the business.[285] although “the effects of the [worker's] exercise of initiative and management of investment are both considered” under its opportunity for profit or loss factor, the 2021 ic rule clearly stated that a worker “does not need to have an opportunity for profit or loss based on both for this factor to weigh towards the individual being an independent contractor.” [286] thus, contrary to, for example, the argument of cwi that there would be a “balancing test,” the 2021 ic rule provided that, if either initiative or investment suggested independent contractor status, the other could not change that outcome even if it suggested employee status. the 2021 ic rule's approach to investments was accordingly flawed because it, in some cases, eliminated the role of investments in helping to determine a worker's status, particularly when the investments or the lack thereof indicated that the worker was an employee. in sum, nothing in this final rule forecloses consideration, in an appropriate case, of investments as they relate to the worker's opportunity for profit or loss. however, for all of the reasons set forth above and consistent with this final rule's totality of the circumstances approach, treating investments as a separate factor in the analysis ensures that investments are accorded, at least at the outset of the analysis, the same considerations as the other factors and that the probative value of the investments toward the worker's dependence or independence will affect the ultimate outcome of the analysis. a few commenters objected to the proposed regulatory text's statement that the investments factor “considers whether any investments by a worker are capital or entrepreneurial in nature.” [287] cwi commented that “[n]othing in silk or rutherford construed the factor so narrowly,” and that “limiting investments to those that are `capital or entrepreneurial' would disproportionately impact underserved communities” because “the standard imposes significant barriers for individuals without the financial resources needed for capital and entrepreneurial investments  i.e., it penalizes, and removes freedom in choosing work arrangements, from those without pre existing financial resources.” flex made a similar point, stating that “tools need not be `capital or entrepreneurial in nature' to have the effect of helping the worker achieve economic independence.” having considered these comments, the department adopts the proposal that whether the worker's investments are capital or entrepreneurial in nature is probative of whether they indicate employee or independent contractor status. considering the worker's investment in this manner is consistent with the overall inquiry of determining whether the worker is economically dependent on the employer for work or is in business for themself because a capital or entrepreneurial investment indicates that the worker is operating as an independent business. more specifically, capital or entrepreneurial investments tend to help a worker work for multiple companies a characteristic of an independent business. accordingly, the examples in the regulatory text (“increasing the worker's ability to do different types of or more work, reducing costs, or extending market reach”) generally involve efforts to work independently for multiple companies. focusing on whether the worker's investments are capital or entrepreneurial in nature does not construe the factor “narrowly,” as cwi asserted. as explained below in response to specific comments asserting that this factor is limiting, there are no minimum dollar thresholds or other requirements for investments to be capital or entrepreneurial and thus indicate independent contractor status. instead, focusing on the nature of the worker's investments ties this factor to the worker's economic dependence or independence. many federal appellate court decisions have emphasized how the worker's investment must be capital in nature for it to indicate independent contractor status. for example, the seventh circuit determined in lauritzen that migrant farm workers were not independent contractors, but employees, due in part to the lack of capital investments made by the workers.[288] the court explained that investments that establish a worker's status as an independent contractor should be “risk capital [or] capital investments, and not negligible items or labor itself. . . . the workers here are responsible only for providing their own gloves [which] do not constitute a ( print page 1681) capital investment.” [289] in paragon, the tenth circuit explained that “the relevant `investment' is `the amount of large capital expenditures, such as risk capital and capital investments, not negligible items, or labor itself.' ” [290] the fifth circuit has focused on whether the worker has any “risk capital” in the work and has found this factor to indicate employee status when all or an overwhelming majority of the risk capital is provided by the employer.[291] and the sixth circuit has described this factor as the “capital investment factor.” [292] moreover, cwi's efforts to use silk and rutherford to undercut the department's approach are unpersuasive. in silk, the unloaders “provided only picks and shovels,” and there was nothing to suggest that their “simple tools” were capital or entrepreneurial in nature.[293] on the other hand, the “driver owners” at issue in silk “own[ed] their own trucks” and “hire[d] their own helpers,” and at least some worked “for any customer.” [294] the circumstances of the driver owners, and particularly the indication that their owned trucks and hired helpers allowed them to manage their businesses, operate independently, and work for multiple customers, suggest that their investments were capital or entrepreneurial in nature. and rutherford is not instructive because the workers merely owned some tools specific to their boning work nothing that suggested any type of investment to the court indicating that they were independent contractors.[295] focusing on whether the worker's investments are capital or entrepreneurial nature is thus consistent with silk and rutherford and is not a narrowing of those decisions. appraisal institute and real estate evaluation advocacy association asked whether “an appraiser seeking out specialized education, training, and certification” is making a capital or entrepreneurial investment “even when those trainings or certifications are industry requirements for certain categories of work.” as a general matter and as opposed to costs that a potential employer unilaterally imposes on a worker, a worker's efforts to obtain specialized education, training, and certification that are required by an industry can be capital or entrepreneurial in nature if (for example and as explained in the regulatory text) they increase the worker's ability to do different types of or more work or extend market reach. clda asserted that the “rule commentary also states the investment must be large, must be a capital expenditure, and must be entrepreneurial in nature.” it added: “this ignores the practical realities of starting a business. few entrepreneurs can start a business with multi million dollar investments in equipment, technology, and real estate.” direct selling association (“dsa”) similarly commented that focusing on whether the investment is capital or entrepreneurial in nature “would disproportionately impact underserved communities that direct selling serves such as hispanics.” stating that “practically any individual can start [a direct selling business] for an average of $82.50,” it added that the department proposed “a rule that would penalize this low cost business by requiring a large investment to point towards being an independent contractor.” thedream.us commented that “dreamers certainly have skills and initiative, but not the resources to make the level of capital investment that the dol seems to be proposing.” although the nprm cited cases discussing “large” expenditures,[296] the nprm focused on the nature of the investments, did not propose any minimum dollar threshold, and absolutely did not suggest that “multi million dollar” or even “large” investments are required for this factor to indicate independent contractor status. as explained above, focusing on the nature of the investments and whether they are capital or entrepreneurial in nature is most probative of whether the worker is economically dependent on the employer for work or in business for themself. consistent with that focus, there is no minimum dollar threshold or requirement that the investment be “large” or of a certain level for a worker's investment to be capital or entrepreneurial in nature. mep stated that the examples of capital or entrepreneurial investments in the proposed regulatory text “unnecessarily limit the personal investments that should be considered in the analysis and seem to suggest that independent contractors can only be those individuals who want to expand their business, increase their workload, or extend the business' market reach.” these examples, however, are preceded in the regulatory text by the words “such as” and are plainly a nonexhaustive set of examples none of which have to be satisfied.[297] a worker's investments are most likely to be capital or entrepreneurial in nature if they create or further the worker's ability to work for multiple employers (as these examples suggest), but the examples are not limiting as mep asserted. likewise, in response to comments discussed below about particular types of investments, such as computers, phones, and specialized software, the department is not suggesting that certain types of investments are always or can never be capital or entrepreneurial. instead, the focus should be on the nature of the investment in the circumstances. numerous commenters raised concerns with the statement in the proposed regulatory text that: “costs borne by a worker to perform their job ( e.g., tools and equipment to perform specific jobs and the workers' labor) are not evidence of capital or entrepreneurial investment and indicate employee status.” [298] for example, coalition of business stakeholders stated that the proposed provision “is far too broad of a directive to be of any use in conducting an independent contractor analysis” and that it would require factfinders to “ignore any amount of investment a worker made in his or her tools and equipment, even if those tools and equipment were as in the case of a software security auditor who provides his own specially designed laptop highly specialized and expensive.” cwi stated that, contrary to the proposed regulatory text, “such investments are plainly a function of the business like decisions that contractors must make in choosing between the projects available to them” because “[t]hey may purchase equipment that allows them to complete a particular job more quickly and thus more profitably or may bypass projects requiring discrete expenditures that would lower profitability.” abc added “independent contractors in the construction industry who invest in their own tools and equipment are in fact acting as entrepreneurs, and such investment should continue to be recognized as indicative of independent contractor status.” the u.s. chamber ( print page 1682) stated this provision “contradicts the weight of case law, which has held that a worker's investment in the equipment necessary to perform a discrete job is evidence of independent contractor status” and that “[e]ven the fifth circuit, which utilizes a `relative investment' inquiry, has found this to be true”). the u.s. chamber added that “workers can be in business for themselves without having to expend huge sums of money,” and that “[a] `knowledge based' worker, such as an it worker, may be able to perform independent work with only a laptop or tablet, which are seemingly ubiquitous and relatively inexpensive.” relatedly, fight for freelancers asked whether “the investment in a computer, a cell phone and some specialized software constitute a meaningful enough investment to indicate independent contractor status under [the investments factor]?” moreover, although wfca agreed with evaluating the worker's “capital expenditures,” it expressed concern that the nprm “eliminates one of the major capital expenses of many independent contractors tools and equipment.” wfca identified “specialty tools” such as a “floor scrapper” and “power stretchers,” and stated that `[t]hese tools and equipment are major investments and should be recognized in evaluating whether the installer is an independent contractor or an employee.” wfca suggested modifying this provision in the regulatory text so that it provides that “investment in tools and equipment to perform specific jobs (other than common household tools or equipment) are evidence of capital or entrepreneurial investment and indicate independent contractor status.” flex commented: “when a worker's investment in tools and equipment allows the worker to move from client to client, the worker's investment in those tools and equipment makes the worker less economically reliant on any one client.” cpie, noting that “the tenth circuit reasoned that `[t]he mere fact that workers supply their own tools or equipment does not establish status as independent contractors' ” (citing paragon, 884 f.3d at 1236), commented that “ not establishing status as independent contractors is vastly different from establishing status as employees,” and that “[a]t most, a finding that an individual bears that costs of performing a service would be neutral.” ooida expressed concern that this provision “might be construed as saying that the purchase or financing of equipment like a truck or trailer does not weigh in favor of independent contractor status since this equipment is used to complete a job.” it asked the department to “better clarify between the `tools and equipment' that are used by a worker to perform specific jobs and may not indicate independent contractor status with the `capital and entrepreneurial' investments that do.” nhda expressed concern that a “medium duty class 6 box truck, which costs between $50,000 $90,000 on average . . . may not indicate independence under the proposed rule, because . . . a medium duty truck is arguably expedient to perform the business of home delivery transportation.” having considered these comments, the department continues to believe that it is helpful to provide guidance regarding workers who provide tools and equipment to perform a specific job, but acknowledges that the “to perform their job” language in the proposed regulatory text can be made more precise. applying the general principle from the regulatory text that the focus should be on whether the investment is capital or entrepreneurial in nature and that capital or entrepreneurial investments tend to increase the worker's ability to do different types of or more work, reduce costs, or extend market reach, investment in tools or equipment to perform a specific job would not qualify as capital or entrepreneurial. as the department explained in the nprm, “an investment that is expedient to perform a particular job (such as tools or equipment purchased to perform the job and that have no broader use for the worker) does not indicate independence.” [299] on the other hand, a worker may invest in tools and equipment for reasons beyond performing a particular job, such as to increase the worker's ability to do different types of or more work, reduce costs, or extend market reach. such investments can be capital or entrepreneurial in nature. to the extent that the “to perform their job” language in the proposed regulatory text suggested otherwise, the department is removing that language. accordingly, the department is further modifying the regulatory text so that this provision reads: “costs to a worker of tools and equipment to perform a specific job, costs of workers' labor, and costs that the potential employer imposes unilaterally on the worker, for example, are not evidence of capital or entrepreneurial investment and indicate employee status.” a worker may have expenses to perform a specific job and also make investments that generally support, expand, or extend the work performed which may be of a capital or entrepreneurial nature. thus, the existence of expenses to perform a specific job will not prevent this factor from indicating independent contractor status so long as there are also investments that are capital or entrepreneurial in nature. a number of commenters expressed concerns with the statement in the nprm's preamble that “the use of a personal vehicle that the worker already owns to perform work or that the worker leases as required by the employer to perform work is generally not an investment that is capital or entrepreneurial in nature.” [300] several of those commenters, however, gave examples of vehicles that are plainly not the type of vehicles identified in this statement. see, e.g., nhda (purchasing or leasing “personal vehicles for the primary purpose of starting a transportation business, whether full time or part time”); u.s. chamber (purchasing “a car to use as a driver for a ride sharing application”); wfca (purchasing “a vehicle that is capable of carrying the weight of flooring materials and tools”). the nprm's statement does not cover vehicles of the types in these examples that a worker purchased for a business purpose vehicles which can be investments of a capital or entrepreneurial nature.[301] clda commented that “most entrepreneurs start their businesses with what they already have,” stating that “[t]hey start with using . . . their car as their delivery vehicle.” clda added that “[t]hose items may have started as personal items, but they become critical business tools and critical business investments when the entrepreneur starts using them to build a business.” the u.s. chamber commented that the nprm's “absolutist statement ignores the fact that contractors may utilize their personal vehicles in a way that shows entrepreneurial activity. for example, if workers forgo selling their personal vehicle and, instead, choose to use their vehicle to drive for a ridesharing platform, that is quintessentially entrepreneurial activity. the fact that they had already owned their vehicle is immaterial.” uber commented that “[w]hile it is true that drivers on platforms like uber's ( print page 1683) may be using vehicles they owned before they started driving, drivers can, and some do, choose to invest in, for example, a luxury vehicle in order to earn more by way of higher end engagements . . . [or] a hybrid or electric vehicle specifically to increase their fuel economy.” mep stated that “[i]ndividuals may not make . . . investments [in things such as personal vehicles] for the purpose of performing work, but individuals can choose to monetize those investments through independent work arrangements, such as via the gig economy.” it added that “[u]sing these pre owned investments to engage in independent work should reflect economic independence, which is the ultimate inquiry in the worker classification analysis.” cwi suggested that the nprm's “discussion of vehicle investments should be withdrawn, and that the weight that each investment is afforded should instead be evaluated under the totality of the circumstances in which each such investment occurred.” having considered the comments, the department agrees with the comments discussed above from commenters that supported the nprm's statement regarding personal vehicles, including afl cio, la fed & teamsters locals, and roc united, and reaffirms this statement. whether a vehicle owned or leased by a worker and used to perform work is a capital or entrepreneurial investment does depend on the totality of the circumstances. in the scenario where a worker already owns a vehicle and happens to then use it to perform work, the acquisition of that vehicle was not for a business purpose and generally cannot be a capital or entrepreneurial investment. as the eleventh circuit explained in scantland, the “fact that most technicians will already own a vehicle suitable for the work” suggests that there is “little need for significant independent capital.” [302] if a worker already owns a vehicle for personal use and then modifies, upgrades, or customizes the vehicle to perform work, the worker's investment in modifying, upgrading, or customizing the vehicle could be a capital or entrepreneurial investment. in other scenarios, whether the vehicle is a capital or entrepreneurial investment often depends on whether the vehicle was purchased for a personal or business purpose. where any vehicle is suitable to perform the work, purchase of the vehicle is generally not a capital or entrepreneurial investment. when the worker owns a vehicle with certain specifications (such as a van or truck) to perform the work and the worker also uses the vehicle for personal reasons, that personal use is relevant, but the vehicle may still be a capital or entrepreneurial investment. for example, the sixth circuit has found that, where the workers' vehicles “could be used for any purpose, not just on the job,” they did not indicate independent contractor status.[303] the fifth circuit has considered the purpose of the vehicle and how the worker uses it, and in mr. w fireworks, it noted that most of the workers in that case purchased vehicles for personal and family reasons, not business reasons, in concluding that the investment factor indicated employee status.[304] the fifth circuit has also noted that, “[a]lthough the driver's investment of a vehicle is no small matter, that investment is somewhat diluted when one considers that the vehicle is also used by most drivers for personal purposes.” [305] in sum, focusing on the purpose of the vehicle and how it is used is consistent with the overarching inquiry of examining the economic realities of the worker's relationship with the employer. and the reality for a worker who already owns a vehicle for personal use and then uses it (without any modifications) to perform work is that the vehicle was not purchased for a business purpose and generally is not a capital or entrepreneurial investment.[306] even where a personal vehicle is not a capital investment indicating independent contractor status, there may be other facts relevant to the investment factor, and the worker's ultimate status will be determined by application of all of the factors, consistent with the totality of the circumstances analysis. finally, numerous commenters opposed the nprm's proposal to consider the worker's investments “on a relative basis with the employer's investments in its overall business.” [307] that proposed regulatory text further provided that “[t]he worker's investments need not be equal to the employer's investments, but the worker's investments should support an independent business or serve a business like function for this factor to indicate independent contractor status.” [308] for example, cwi expressed “grave concerns” with comparing investments, stating that this approach “is inconsistent with law, uninformative to the economic realities test, and ultimately injects nothing but further uncertainty into the analysis.” cwi added that the supreme court in silk addressed only the workers' investments and not the employer's investments, and that an “employer investing in its own business provides absolutely no insight into whether the worker is economically dependent on that business.” cwi further stated that “[i]t is hardly surprising that virtually all workers employees and independent contractors alike have fewer resources than businesses,” but “[t]hat fact, however, does not influence the question of economic dependence for either group.” nrf & nccr requested that any consideration of relative investments “be stricken entirely,” raising similar concerns to cwi. nrf & nccr added that consideration of relative investments would create barriers to entry in businesses because workers “would effectively be excluded from contracting with any but the smallest of companies.” the ifa requested clarification in the franchise context, noting that franchise opportunities require varying upfront investments, but “[t]his does not mean that someone who invests in a lower cost franchise opportunity is any less an independent business person than someone with the means to invest a million dollars in a franchise.” n/ma argued that considering relative investments is inconsistent with silk because the supreme court in that case “addressed the investment of the worker as part of the economic realities test only by reference to the worker's investment.” the commenter added: “a putative employer's level of investment in its own business provides no insight into ( print page 1684) whether the worker is economically dependent on that business, as the work and investment made by the worker may be in an entirely different area of services than that even performed by the putative employer.” fsi stated that the department “offers no reasoned explanation why that relative inquiry is probative of independent contractor status, contrary to the 2021 rule's conclusion that it measures an irrelevant comparison of respective organizational size.” club for growth foundation commented that the 2021 ic rule was correct to reject a relative investments analysis. it added: “the size of the hiring business has no relevance to whether the worker is a contractor or an employee. consider a talented translator who translates a book, on the same terms and for the same fee, into french for a local college press and into spanish for a major commercial publishing house. why should she be considered more likely to be an employee when doing the spanish work?” ooida similarly commented that “it doesn't make sense that an owner operator would be an independent contractor if they are working with a three truck carrier but then be judged differently if they go to work for a carrier with hundreds or thousands of trucks.” the ca chamber, clda, flex, nacs, nhda, and scopelitis, made similar points. see also abc; cpie; wfca. having considered these comments, the department continues to believe that comparing the worker's investments to the employer's investment is well grounded in the case law and the department's prior guidance. the department further believes that comparing types of investments is indicative of whether a worker is economically dependent on the employer for work or is in business for themself. although the supreme court in silk did not make such a comparison, federal courts of appeals applying the factors from silk routinely make that comparison. for example, the fifth circuit “consider[s] the relative investments” and has explained that, “[i]n considering this factor, `we compare each worker's individual investment to that of the alleged employer.' ” [309] the sixth circuit has explained that “[t]his factor requires comparison of the worker's total investment to the `company's total investment, including office rental space, advertising, software, phone systems, or insurance.' ” [310] the fourth circuit has similarly compared the employers' payment of rent, bills, insurance, and advertising expenses to the workers' “limited” investment in their work.[311] in addition, the third,[312] ninth,[313] and tenth [314] circuits have compared the worker's investments to the employer's investments. moreover, the department has previously provided guidance that the worker's investments and the employer's investments should be compared. in ai 2015 1, the department explained that a worker's investment “should not be considered in isolation” because “it is the relative investments that matter.” [315] ai 2015 1 further explained that, in addition to “the nature of the investment,” “comparing the worker's investment to the employer's investment helps determine whether the worker is an independent business.” [316] the department has also compared the worker's and the employer's relative investments in opinion letters issued by whd.[317] in sum, the relative investments approach is firmly supported by the case law and the department's precedent.[318] that said, the department understands the concerns raised by many commenters with merely comparing the size of and dollar expenditures by the worker to those of the employer, especially for workers who are sole proprietors. accordingly, as explained above in response to comments from nela and others that suggested that the comparison of the worker's and the employer's investments should focus on the “qualitative” nature of their respective investments, the department is modifying the last sentence of the proposed regulatory text for the investments factor to be two sentences and to read: “the worker's investments need not be equal to the potential employer's investments and should not be compared only in terms of the dollar values of investments or the sizes of the worker and the potential employer. instead, the focus should be on comparing the investments to determine whether the worker is making similar types of investments as the potential employer (even if on a smaller scale) to suggest that the worker is operating independently, which would indicate independent contractor status.” this modification should address commenters' concerns that the size of and/or dollar investments of the employer will determine the outcome when comparing the investments. as explained above, comparing the qualitative (rather than primarily the quantitative) value of the investments is a better indicator of whether the worker is economically dependent on the employer for work or is in business for themself. that is because, regardless of the amount or size of their investments, if the worker is making similar types of investments as the employer or investments of the type that allow the worker to operate independently in the worker's industry or field, then that fact suggests that the worker is in business for themself.[319] applying this qualitative approach to, for example, the hypothetical truck driver described by ooida is instructive. the hypothetical suggests that a driver “would be an independent contractor if [the driver is] working with a three truck carrier,” but the same driver would be an employee if the driver goes “to work for a carrier with hundreds or thousands of trucks.” [320] comparing the driver's investment qualitatively with each carrier, however, should produce the same indicator of employee or independent contractor status. with respect to either carrier, the focus should be on whether the driver is making similar types of investments as the carrier (even if on a smaller scale) so that the driver (like the carrier) can operate independently in the industry. as the application of a qualitative comparison to this hypothetical shows, this focus better aligns the relative investment analysis with the ultimate inquiry of whether the worker is dependent on the employer for work or in business for themself.[321] acli commented that the proposed “relative investment factor conflicts with . . . the ability to profit or loss based on managerial skill factor” because the department is “saying that a worker's effectiveness in managing their overhead and expenses to maximize profit suggests independent contractor status, but that a worker's failure to invest sizeable sums to offset the company's investment suggests employment status.” it added that the opportunity for profit or loss factor “should be given greater weight than the relative investment factor so that workers who are skilled in managing their own overhead expenses are not penalized and deemed employees simply because they are better businesspeople and need to invest less and less over time as their businesses mature.” american securities association made a similar point. as an initial matter, the department is not giving any factor any greater predetermined weight than any of the other factors for all of the reasons explained in this final rule. and as reiterated in this final rule, workers will not be “deemed employees” when applying the economic realities analysis based on one fact or factor because the analysis considers the totality of the circumstances. the department's modifications to the investments factor, and particularly the emphasis on comparing the worker's investments and the employer's investments qualitatively more than quantitatively, should address any concern that “a worker's failure to invest sizeable sums to offset the company's investment suggests employment status.” the department is finalizing the investments factor (§ 795.110(b)(2)) with the revisions discussed herein. a graphic designer provides design services for a commercial design firm. the firm provides software, a computer, office space, and all the equipment and supplies for the worker. the company invests in marketing and finding clients and maintains a central office from which to manage services. the worker occasionally uses their own preferred drafting tools for certain jobs. in this scenario, the worker's relatively minor investment in supplies is not capital in nature and does little to further a business beyond completing specific jobs. thus, these facts indicate employee status under the investment factor. a graphic designer occasionally completes specialty design projects for the same commercial design firm. the graphic designer purchases their own design software, computer, drafting tools, and rents an office in a shared workspace. the graphic designer also spends money to market their services. these types of investments support an independent business and are capital in nature ( e.g., they allow the worker to do more work and extend their market reach). thus, these facts indicate independent contractor status under the investment factor. for this factor, the department proposed that the degree of permanence of the work relationship would “weigh[ ] in favor of the worker being an employee when the work relationship is indefinite in duration or continuous, which is often the case in exclusive working relationships,” and that this factor would “weigh[ ] in favor of the worker being an independent contractor when the work relationship is definite in duration, non exclusive, project based, or sporadic based on the worker being in business for themself and marketing their services or labor to multiple entities.” the department noted that independent contractors may have “regularly occurring fixed periods of work,” but that “the seasonal or temporary nature of work by itself would not necessarily indicate independent contractor classification.” to further clarify, the department proposed that “[w]here a lack of permanence is due to operational characteristics that are unique or intrinsic to particular businesses or industries and the workers they employ, rather than the workers' own independent business initiative,” this would not indicate that the workers are independent contractors.[322] as the department noted in the nprm and in the 2021 ic rule, courts and the department routinely consider the permanence of the work relationship as part of the economic reality analysis under the flsa to determine employee ( print page 1686) or independent contractor status.[323] courts typically describe this factor's relevance as follows: “ `independent contractors' often have fixed employment periods and transfer from place to place as particular work is offered to them, whereas `employees' usually work for only one employer and such relationship is continuous and of indefinite duration.” [324] for example, a typical employee often has an at will work relationship with the employer and works indefinitely until either party decides to end that work relationship. conversely, an independent contractor does not usually seek such a permanent or indefinite engagement with one entity. because of these general characteristics of work relationships, the length of time or duration of the work relationship has long been considered under the “permanence” factor as an indicator of employee or independent contractor status.[325] consistent with case law analyzing this factor, the department proposed to provide further specificity by noting that an indefinite or continuous relationship is often consistent with an employment relationship, but that a worker's lack of a permanent or indefinite relationship with an employer is not necessarily indicative of independent contractor status if it does not result from the worker's own independent business initiative.[326] the department also proposed to continue to recognize that a lack of permanence may be inherent in certain jobs such as temporary and seasonal work and that this lack of permanence does not necessarily mean that the worker is in business for themself instead of being economically dependent on the employer for work. for example, courts have also recognized that the temporary or seasonal nature of some jobs may result in a “lack of permanence . . . due to operational characteristics intrinsic to the industry rather than to the workers' own business initiative.” [327] in such instances, a lack of permanence alone is not an indicator of independent contractor status. many commenters agreed with the department's overall proposal for this factor. see, e.g., afl cio; ibt, la fed & teamsters locals; ndwa; nelp; nwlc; real women in trucking; ufcw. the la fed & teamsters locals noted in particular that by relegating the permanence factor to “secondary status,” the 2021 ic rule had negated the significance of “effectively indefinite working relationships” and that the department's proposal “corrects this issue” by returning the factor to “an equal basis with all other factors.” nelp concurred that “[a] worker whose work relationship is indefinite or continuous or who is performing a job that is regularly required by the business is more likely to be an employee than a worker who performs work that is definite in duration, project based, or sporadic.” many commenters also agreed with the portion of the department's proposal that addressed situations in which a lack of permanency is inherent in the work, such as temporary or seasonal positions, which the department had proposed as not necessarily indicating independent contractor status if it is not the result of the worker's own business initiative. see, e.g., gale healthcare solutions; la fed & teamsters locals; liuna; nabtu; nelp. gale healthcare solutions agreed that a lack of permanence may be due to operational characteristics intrinsic to the industry rather than the workers' own business initiative, and it provided the example of temporary or seasonal forces such as “flu season” that can drive temporary nursing demand in the healthcare industry. it analogized this to the second circuit's decision in superior care, where temporary nurses' lack of permanence did not preclude them from being employees because “this reflected `the nature of their profession and not their success in marketing their skills independently.' ” and commenters such as farmworker justice and the new mexico center on law and poverty affirmed the importance of recognizing that farmwork can be seasonal and/or temporary, but that this does not weigh against employee status for farmworkers, as many courts have recognized.[328] the primary concern commenters raised about the department's proposal to consider the degree of permanence of the work relationship as an indicator of employee or independent contractor status is that a long term pattern of interaction is valued in business relationships, and that it can indicate the vitality and stability of a business where, for example, satisfied long term clients or customers continue to use their services or contract for particular work. see, e.g., cpie; fight for freelancers; n/ma; nrf & nccr; ooida; sifma; shrm; u.s. chamber. similarly, commenters such as cwi and the u.s. chamber noted that independent contractors may have mutually beneficial business relationships for a long or indefinite time period, which brings into question whether an “indefinite” work relationship is probative of employee status.[329] commenters raising such ( print page 1687) concerns did not want the fact that an independent contractor had fostered successful, long term business relationships to indicate that these economically independent businesses were actually employees of the entities that continued to use their services. they contended that the analysis should be more nuanced, including cwi's comment that “as is the case with most aspects of the economic realities analysis, `[t]he inferences gained from the length of time of the relationship depend on the surrounding circumstances.' ” the department agrees that the permanence factor, like other factors in the economic reality test, is best understood in the overall context of the relationship between the parties where all relevant aspects are considered. the department also clearly recognizes and appreciates that people who are in business for themselves often rely on repeat business and long term clients or customers in order for their business to remain economically viable or successful. thus, the department notes that the proposed regulatory text does not reduce the permanence analysis to a simple long term/short term question. instead, it looks to the general characteristics historically identified by courts and the department regarding the permanency factor, which indicate employee status where there is a longer term, continuous, or indefinite work relationship, and independent contractor status where the work is definite in duration, nonexclusive, project based, or sporadic due to the worker being in business for themself. it explicitly recognizes that an independent contractor may have “regularly occurring fixed periods of work.” as shown in the example, a 3 year relationship between a cook who provides specialty meals and an entertainment venue does not automatically result in the cook being an employee of the venue, particularly where the cook acts as a “freelancer” by providing meals intermittently to the venue while marketing their meal preparation services to multiple customers and the cook can determine whether to provide meals for specific events at the venue based on any reason, including because the cook is too busy with other work. several commenters expressed a mistaken belief that having a degree of permanence in a work relationship would automatically make workers employees, s ee, e.g., n/ma; sba office of advocacy, or that the department was creating a “per se” rule that work of continuous or indefinite duration equates to employee status, see, e.g., cwi; nrf & nccr. commenters who raised this concern generally asked the department to either modify the regulatory text or eliminate this factor from consideration. however, as the department has repeatedly explained, the economic reality test is a totality of the circumstances test where no one factor is dispositive. even if the degree of permanence in a work relationship indicates employee status, this is just one factor that would be considered along with other factors such as control, opportunity for profit or loss, investment, integral, and skill and initiative. the department does not believe there is a scenario in which, for example, a worker who controls conditions of employment, sets their own fees, hires helpers, and markets their business is converted from an independent contractor to an employee solely because they have long lasting relationships with some clients. some commenters suggested clarifications to better capture the permanency factor, in their view. for example, ibt and nelp suggested that the department focus on whether the worker's role or position in a business is long term, regular, or indefinite, rather than focusing on the individual's tenure, because high turnover of individuals in a particular position does not mean that the position or role within a business is not long term, but that the job may be economically unsustainable or too dangerous for the worker. the department agrees that a short term duration of work may not be indicative of independent contractor status for these and other reasons. however, the department notes that while this factor is known as the “permanency” factor, which could be observed literally by the length of an individual worker's tenure, the regulatory text also provides guidance regarding whether the work was on an indefinite or continuous basis. the department believes that this captures situations where a position began as an indefinite or continuous one but was cut short without the need to focus on the nature of the position or role within a business. further, the commenters' suggestion is not, to the department's knowledge, an analysis that has been adopted for this factor by the courts. nelp also suggested that the department note that an employer may manipulate the permanence of a work relationship by firing or terminating a worker, and that if a worker lacks the power to influence their own permanence, this should weigh in favor of employee status. the department notes that consideration of whether this type of manipulation to evade the obligations of the flsa has occurred would seem to be more appropriate in an enforcement situation than in the regulatory text. one commenter, cwi, objected to the department's inclusion of “[w]here a lack of permanence is due to operational characteristics that are unique or intrinsic to particular businesses or industries and the workers they employ, rather than the workers' own business initiative, this factor is not indicative of independent contractor status” because it felt this language fails to account for the fact that “many types of independent contractor work are often limited or sporadic in duration precisely because such work is only needed for a discrete period of time” and that “the critical question is whether the worker acted like a business.” the u.s. chamber also contended that it “makes no difference whether . . . project to project work occurs as a result of `operational characteristics,' ” urging the department to more clearly identify that whether a worker is acting independently is better viewed through the lens of whether the worker chooses “how, when, and the volume of services to provide.” the department agrees with these commenters that the critical question is whether the worker is in business for themself, which is why the proposed regulatory language would require consideration of whether a lack of permanence is due to the workers' own business initiative. commenters such as nabtu and the ndwa supported the department's proposal in this respect, noting that in industries like construction and home care, employment can be temporary and sporadic, and that consideration of whether the worker exercised independent business initiative was important. the department continues to believe that it is consistent with the case law and relevant to the overall question of economic reality to consider whether short periods of work are due to workers acting independently to obtain business opportunities or to the operational characteristics of particular industries ( print page 1688) and the workers they employ.[330] however, after considering the comments received, the department finds that a clearer articulation of the final sentence in the proposed regulatory text would be beneficial to employees, employers, independent contractors, and the department's enforcement staff. therefore, the last sentence of § 795.110(b)(3) has been rephrased to emphasize whether the worker is exercising their own business initiative: “where a lack of permanence is due to operational characteristics that are unique or intrinsic to particular businesses or industries and the workers they employ, this factor is not necessarily indicative of independent contractor status unless the worker is exercising their own independent business initiative.” (emphasis added.) the department believes this formulation makes it clearer that the proper analysis is not categorically based on operational characteristics of particular industries, as some commenters seemed to have read into the proposal, and that it is important to consider whether the worker is exercising independent business initiative with respect to these periods of work. many commenters suggested industry specific analyses for the permanence factor. see, e.g., acli (insurance agents); afl cio (platform based companies); american securities association and lpl financial (financial advisors); mep (applications on smart phones); nabtu (construction); nafo (forestry); national association of realtors (“nar”) (real estate brokers). because the department is promulgating a general rule, it believes that this type of industry specific guidance would be better suited to potential subregulatory guidance. the department agrees that these types of factual analyses would, however, be highly relevant when applying the factors to particular situations and should certainly be considered by parties and factfinders. as some commenters noted, however, see, e.g., cwi and u.s. chamber, the operational characteristics of a particular business or industry would not take precedence over the overall inquiry as to whether, as a matter of economic reality, the worker is in business for themself. a smaller number of commenters addressed the department's proposal to recognize that the exclusivity of a work relationship is appropriately considered under the permanency factor and to reject the 2021 ic rule's approach of considering exclusivity just under the control factor based on whether the worker has the ability to work for others.[331] ibt strongly supported the inclusion of this consideration “because working exclusively for a particular employer clearly speaks to the permanence of the work relationship.” farmworker justice, liuna, and nabtu highlighted the case law discussed in the nprm where courts found that working exclusively for a particular employer for the duration of a seasonal or temporary job was indicative of employee status, agreeing that this was the appropriate analysis.[332] the coalition of business stakeholders, nhda, and nrf & nccr commented that they preferred to have exclusivity considered only under the control factor, as in the 2021 ic rule. similarly, the american trucking association contended that the permanence factor was redundant with the control factor because the only relevant aspect of the tenure of the parties' relationship is whether the entity contracting with the worker exercised coercion to prevent them from pursuing other business. another commenter, fsi, objected that the department had proposed to include exclusivity under the permanence factor based in part on the weight of the federal appellate case law rather than applying its own independent reasoning. the department continues to believe, as discussed in the nprm, that when analyzing worker classification under the flsa, all facts that may be relevant to a particular factor should be considered, consistent with the totality of the circumstances approach taken by courts.[333] the case law clearly indicates that facts regarding the exclusivity of a work relationship are salient under both the permanence and control factors. in many cases courts considered this under permanence,[334] and in many cases courts consider this under both permanence and control,[335] while a smaller number of cases considered this only as part of a control analysis.[336] because the weight of federal appellate authority does not confine consideration of exclusivity to the control factor, and because the department has historically viewed exclusivity as relevant to permanence,[337] the department does not believe it is appropriate to silo these facts under the control factor.[338] for ( print page 1689) example, in keller the court considered the exclusivity of the work relationship under the permanence factor because an exclusive work relationship is a hallmark of the regularity of many employment relationships, and under the control factor because an employer's action that directly or indirectly prevents workers from working for others (thereby imposing an exclusive relationship) is a relevant mechanism of control.[339] the department believes it is appropriate to consider the weight of the case law when providing guidance, as the department is doing consistently in this rule. for these reasons, the department concludes that exclusivity should remain in the permanence factor and that it may also be considered under the control factor to the extent it speaks to the employer's control. liuna suggested certain edits to the proposed regulatory text to better capture, in its view, the case law discussed in the nprm where courts found that working exclusively for a particular employer for the duration of a seasonal or temporary job was indicative of employee status. liuna commented that the first sentence of the proposed regulatory text did not properly reflect this case law because it could be read solely as a characterization of work relationships that are indefinite or continuous: “this factor weighs in favor of the worker being an employee when the work relationship is indefinite in duration or continuous, which is often the case in exclusive working relationships.” it suggested that the department better align the regulatory text with the case law by substituting the language regarding exclusivity in that sentence with the phrase “or exclusive of work for other employers.” the department agrees that the concept of exclusivity should not be limited to work relationships that are indefinite or continuous, and that it is more precise and aligned with the case law to substitute the language suggested, which the department is adopting in this final rule. the department wishes to emphasize, however, that the disjunctive word “or” is used in the regulatory text, and that it is intended to mean that exclusivity is not required in order for this factor to weigh in favor of employee status.[340] liuna requested further clarifying edits that would remove “project based” from the general description of work relationships that weigh in favor of independent contractor status in order to add a more specific sentence stating that exclusivity in definite term, project based working relationships in industries that require project based work “such as certain segments of the agricultural or construction industries” is probative of employee status. similarly, outten & golden noted that project based work can be indicative of employment when it is “regular, repeated, or when it is project based, but still long term” and it recommended including in the regulatory text the examples of seasonal or temporary work that were discussed in the nprm as being consistent with an employment relationship, such as seasonal construction, agriculture, and retail work and temporary staffing agencies. see also nela; nichols kaster pllp.[341] the department declines to remove “project based” from the general description of work relationships that weigh in favor of independent contractor status because courts and the department have associated project based work with independent contractor status,[342] but it notes that “project based” work alone is not dispositive of whether this factor weighs in favor of independent contractor status because all considerations relating to the permanence of the work should be considered. the department also declines to add a more specific sentence or examples as requested because the department has determined that it is not appropriate to address particular industries in this regulation of general applicability. nhda posited that whether a work relationship is exclusive is less illustrative of whether a worker is in business for themself than the reason for the exclusivity, and that where a worker freely chooses to have an exclusive relationship with one transportation provider because of a “satisfying selection of routes or loads that permits the worker to attain financial goals,” that worker should “not be judged as less in business for themselves than a worker who contracts with multiple transportation providers.” the department agrees that an exclusive relationship alone would not be determinative of the economic reality of the working relationship, and that it is important to look at all relevant factors, including factors referenced by the comment such as the worker's opportunity for profit or loss, to aid in the analysis. the department notes that by recognizing that exclusivity weighs in favor of the worker being an employee, the department is not stating either that independent contractors can never have exclusive relationships with other businesses or that employees who have nonexclusive relationships with employers because they work multiple jobs become independent contractors. to the contrary, as discussed in the nprm, although an exclusive relationship is often associated with an employment relationship and a sporadic or project based, nonexclusive relationship is more frequently associated with independent contractor classification, courts have explained that simply having more than one job or working irregularly for a particular employer does not remove a worker from employee status and the protections of the flsa. for example, in silk, the “unloaders” came to the coal yard “when and as they please[d] . . . work[ing] when they wish and work[ing] for others at will.” [343] the court nevertheless determined that the unloaders were employees: “that the unloaders did not work regularly is not significant. they did work in the course of the employer's trade or business. this brings them under the coverage of the act.” [344] similarly, as the second circuit explained in superior care, the fact that the temporary nurses “typically work[ed] for several employers,” was “not dispositive of independent contractor status” as “employees may work for more than one employer ( print page 1690) without losing their benefits under the flsa.” [345] courts have also determined that the fact that a worker does not rely on the employer as their exclusive or primary source of income is not indicative of whether an employment relationship exists.[346] for example, the sixth circuit explained: “[w]hether a worker has more than one source of income says little about that worker's employment status. many workers in the modern economy, including employees and independent contractors alike, must routinely seek out more than one source of income to make ends meet.” [347] commenters supported the department's clarification in the nprm, which the department reiterates here, that exclusivity is not required in order to find a degree of permanence and that working multiple jobs does not necessarily favor independent contractor status particularly because, as the sixth circuit noted, many workers' financial needs require them to have multiple sources of income. see, e.g., ibt; lccrul & wlc; nelp. lccrul & wlc described a current client who “often has to work for a variety of gig economy jobs simultaneously, such as uber eats, gopuff, instacart, and caviar, to keep her finances afloat.” and nelp observed that in “low wage industries, particularly in services such as transportation, delivery, or home care, many workers juggle multiple jobs with multiple entities not as an exercise of their own business judgment but as a necessity to cobble together a living wage in an underpaying economy.” finally, the department noted in the nprm that where workers provide services under a contract that is routinely or automatically renewed, courts have determined that this indicates permanence and an indefinite working arrangement associated with employment.[348] the proposed regulation noting that work relationships that are indefinite in duration or continuous weigh in favor of employee status is consistent with this case law. some commenters mistakenly believed that the regulatory text explicitly stated that contractual renewals equate to employee status and objected for largely the same reasons commenters objected to their reading of the proposed regulatory text to imply that businesses could not have long term relationships with clients without being considered employees of their clients, to which the department responded above. see fight for freelancers; nrf & nccr. the department is finalizing the permanence factor (§ 795.105(b)(3)) with the modifications discussed herein. a cook has prepared meals for an entertainment venue continuously for several years. the cook prepares meals as directed by the venue, depending on the size and specifics of the event. the cook only prepares food for the entertainment venue, which has regularly scheduled events each week. the relationship between the cook and the venue is characterized by a high degree of permanence and exclusivity. these facts indicate employee status under the permanence factor. a cook has prepared specialty meals intermittently for an entertainment venue over the past 3 years for certain events. the cook markets their meal preparation services to multiple venues and private individuals and turns down work for any reason, including because the cook is too busy with other meal preparation jobs. the cook has a sporadic or project based nonexclusive relationship with the entertainment venue. these facts indicate independent contractor status under the permanence factor. in the nprm, the department proposed to modify § 795.105(d)(1)(i), which considered control as a “core” factor in the economic reality test. the 2021 ic rule assessed the employer's and the worker's “substantial control over key aspects of the performance of the work,” which included setting schedules, selecting projects, controlling workloads, and affecting the worker's ability to work for others.[349] the 2021 ic rule also stated that “[r]equiring the individual to comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed upon deadlines or quality control standards, or satisfy other similar terms that are typical of contractual relationships between businesses . . . does not constitute control” for purposes of the economic reality test.[350] in its proposal and consistent with the 2021 ic rule, the department explained that it continues to believe that issues related to scheduling, supervision over the performance of the work (including the ability to assign work), and the worker's ability to work for others are relevant considerations in evaluating the nature and degree of control. the department's proposal also considered additional aspects of control in the workplace that have been identified in the case law or through the department's enforcement experience such as control mediated by technology or control over the economic aspects of the work relationship. however, as noted above, the department's proposal did not elevate control as a “core” factor in the analysis.[351] in addition, and contrary to the 2021 ic rule, the department's proposed regulation included a sentence stating that an employer's compliance with ( print page 1691) legal obligations, safety or health standards, or requirements to meet contractual or quality control obligations, for example, may indicate that the employer is exerting control, suggesting that the worker is economically dependent on the employer. commenters from across the spectrum agreed that control was a highly relevant factor to the economic reality analysis. see, e.g., gig workers rising; u.s. chamber. some commenters objected to the department's proposed text that shifted the focus of this factor back to the nature and degree of control exerted by the potential employer, rather than by the worker. the 2021 ic rule described the factor as considering the worker's and the potential employer's nature and degree of control, while the nprm described the factor as considering primarily the potential employer's nature and degree of control.[352] n/ma, for example, commented that “a worker's right to control the manner and means by which a worker provides services is, and should remain, a primary consideration in the department's discussion of the right to control factor.” cwi described this aspect of the proposal as “misguided” because “[f]ocusing on the individual's control ensures that the totality of the worker's business are evaluated, including control the worker may have over whether to subcontract, how to manage his workforce, whether and how to advertise his services, and whether to prioritize, stagger, or overlap projects.” it added that such “considerations are largely lost when the analysis is unduly narrowed to an evaluation of an individual putative employer's alleged control.” see also nam (“instead of focusing on the control a worker exercises over their work (which would evidence that they are in business for themselves), the department would rather determine `employee' status on the employer's generally considered control over the work.”). in contrast, other commenters agreed with the department's returned focus on the nature and degree of the potential employer's control. for instance, the state ags stated that the “case law is clear that the appropriate focus for this factor must be on the employer's control over the worker, and not the worker's control over the work.” similarly, farmworker justice commented that the nprm “helpfully clarifies that a hiring entity/employer who has the ability to control key aspects of the work is likely an employer.” regarding the proposed scope of the factor, one commenter criticized the department's proposal for eliminating the 2021 ic rule's “express requirement of `substantial' control.” see scalia law clinic. additionally, business commenters generally disagreed with the inclusion of reserved control, stating that that this broadened the control factor and introduced additional uncertainty by using this “undefined, vague terminology.” u.s. chamber; see also cwi. other commenters, however, such as the state ags, noted that inclusion of reserved control is “the appropriate interpretation of the control factor and properly accounts for the variety of today's work arrangements.” see also afl cio (commenting that “discounting contractual or reserved control is inconsistent with congressional intent to expand the coverage of the flsa beyond the narrow confines of common law employment”). a very large proportion of the comments received regarding the control factor addressed the proposal that an employer's compliance with legal obligations, safety or health standards, or requirements to meet contractual or quality control obligations may indicate control, suggesting that the worker is economically dependent on the employer. many commenters objected to this proposal. for example, flex commented: “legally required control is generally disregarded since that is control imposed by the government, not by the client or hiring party. the client or hiring party is not choosing to exercise legally required control; it is required to do so.” see also richard reibstein, publisher of legal blog. the wfca and others commented that “[r]equiring an independent contractor to comply with legal obligations, safety standards, contractual obligations, or industry standards should not be indicative of control” because “[t]hese requirements are standard in contracts and subcontracts.” see also genesis timber; national association of home builders (“nahb”); nrf & nccr. other commenters stated that the department's proposal would disincentivize employers to prioritize safety and other beneficial policies, because employers would not want to risk workers being classified as employees. see, e.g., kentucky trucking association; southeastern wood producers association, inc. the u.s. chamber commented that workers and businesses should not be discouraged from incorporating contractual terms that “support sound, lawful, safe work practices,” as those terms do not evidence control over the worker by the business under the act's economic realities test. shrm stated that this aspect of the nprm “will deter some companies from upholding their obligations in this respect by holding the specter of a misclassification finding over their heads for simply trying to do right by the people who make their businesses viable.” see also cwi (commenting that this aspect of the nprm “would effectively encourage businesses to avoid measures encouraging legal compliance and the safety of both independent workers and the public generally, so that they do not increase their risk of misclassification claims”). wpi noted that all businesses operate against regulatory backdrops and posited the following example: “a regulation might require all people on a construction site to wear a hard hat. the builder might, therefore require site visitors, including the eventual tenant, to wear hardhats. is the eventual tenant now the builder's employee based [on] the exercise of control over a worksite?” [353] and multiple financial advisors submitted identical comments stating that “[t]he department should recognize that [supervision in order to comply with regulatory requirements] . . . helps my firm and me stay compliant with securities law and should not be viewed as a negative factor when determining my status under the [flsa].” flex opposed this proposed language as well, and further commented that the proposed regulatory language “lacks all of the context provided in the preamble” and that, “[i]f the department's intent is to make clear that there `may' be `some cases' in which compliance with legal, safety, or quality control obligations `may' be relevant, then the rule should say that and should provide the full context contained in the narrative.” some heavily regulated industries in particular expressed concern about this proposed provision, including the trucking, financial services, insurance, and real estate industries. scopelitis stated that “the proposal to consider compliance with legal, safety, or quality control obligations as employer like control indicative of an employee relationship is untenable in the highly regulated trucking and logistics industries and any rollback of ( print page 1692) requirements for owner operators to comply with such obligations will almost certainly lead to less safe roads in our nation.” [354] sifma commented that “[i]t is important for the highly regulated securities industry that independent contractors do not morph into employees merely because they must remain in compliance with federal and state securities, banking, and insurance laws.” the acli stated that “[i]t also would place at risk the careful balance that the courts and legislatures have fashioned in confirming the importance and viability of independent contractor models while ensuring regulatory compliance to protect the public.” and nar stated that “[w]hile there may be some degree of control over an individuals' work within broker agent relationship as required by state law, the manner in which that work is completed at the individuals' broad discretion, for example is a critical distinction that should not weigh in favor of classification as an employee.” fight for freelancers similarly explained that there are basic legal obligations for anyone involved in publishing, such as contract provisions that prohibit libel or theft of copyrighted material, and that such terms are “not indicative of a business's control over how, when and where an article is written.” other commenters supported this proposed provision. the afl cio commented that the very fact that a government entity or court “imposes an obligation on an entity to ensure a workplace or a set of workers complies with law strongly suggests that responsible government officials believe that the entity stands in a relationship with the workers such that it is appropriate for it to do so.” see also nela (“when the employer, rather than the worker, controls compliance with legal, safety, or other obligations, it is evidence that the worker is not in fact in business for themselves because they are not doing the risk management work involved in understanding and adhering to the legal and other requirements that apply to the work they perform and are not assuming the risk of noncompliance.”); nelp (“the department should explain that if a government agency or other entity looks to the hiring entity for compliance, that fact alone suggests that the hiring entity has the requisite control to demand compliance.”). roc united commented that it was “an appropriate correction of the 2021 rule” because delivery companies tend to exert control with respect to customer service standards and that “monitoring of drivers' compliance is indicative of the control [those companies] has over them.” see also a better balance; outten & golden (commenting that the regulation should state that controls implemented by the employer to comply with legal obligations, safety standards, or contractual or customer service standards provides a strong indication of employee status). finally, intelycare supported this provision of the proposed regulation and further commented that the department should explain that certain industries “are so highly regulated such that it is inherent in the nature of the work that the company must comply, and exercise control to require their workers to comply, with legal and safety regulations” and that in such circumstances the use of independent contractors is “likely inappropriate.” upon consideration, the department is adopting proposed § 795.110(b)(4) with several revisions in response to comments received. for decades, courts and the department have taken the view that the control factor represents one facet of the economic reality test.[355] as noted in the nprm, the department continues to believe that control should be analyzed in the same manner as every other factor, rather than take an outsized role when analyzing whether a worker is an employee or independent contractor. as the fifth circuit stated in 2019, it “is impossible to assign to each of these factors a specific and invariably applied weight.” [356] moreover, as explained in the nprm and consistent with the economic reality analysis, this factor should necessarily focus on whether the employer controls meaningful economic aspects of the work relationship because that focus is probative of whether the worker stands apart as their own business. simply assessing whether the employer lacks control over discrete working conditions ( e.g., scheduling) or whether the employer exercises physical control over the workplace does not fully address whether the employer controls meaningful economic aspects of the work relationship.[360] specifically, the fifth circuit applied this analytical approach in a case where an insurance sales firm not only “controlled the hiring, firing, assignment, and promotion of the [workers' subordinates],” but also controlled how the workers priced the insurance products, received leads for sales, and defined the territory in which the agents could sell products.[361] these actions made it clear that the employer, and not the workers, retained meaningful control over the “economic aspects of the business,” suggesting that the workers were employees.[362] the third circuit has similarly held that even though dancers had some scheduling flexibility, the control factor weighed in favor of employee status because the employer, and not the workers, controlled the economic aspects of the dancers' work, such as the price of services, the clientele to be served, and the operations of the club in which they worked.[363] regarding the comments received addressing the scope of the control factor such as whether reserved control should be included or whether the regulation should require “substantial” control, the department declines to make the changes requested. first, the department believes that the reference to reserved control should remain in the regulation as proposed. control can certainly be exerted directly in the workplace by an employer, such as when it sets a worker's schedule, compels attendance, or directs or supervises the work.[364] as explained in the nprm and addressed fully in section v.d. of this final rule, however, the absence of these more apparent forms of control does not invariably lead to the conclusion that the control factor weighs in favor of independent contractor status.[365] employers may also exercise control in other ways, including reserved rights to control, because such reserved rights may, in some situations, be probative of the economic reality of the total situation. second, the department declines to modify the regulation to require “substantial control” as requested by the scalia law clinic. the department does not believe such a modifier is appropriate in the regulatory text because the totality of the circumstances must be considered, and this heightened requirement is not supported by case law. of course, substantial control can be indicative of employee status as several cases have held, but “substantial control” is not a predetermined requisite under the economic reality test.[366] moreover, as the regulatory text provides, “[m]ore indicia of control by the potential employer favors employee status; more indicia of control by the worker favors independent contractor status.” [367] thus, substantial control by the employer would clearly favor employee status, though it is not required.[368] finally, current § 795.105(d)(1)(i) states that an employer requiring a worker to “comply with specific legal obligations, satisfy health and safety standards, carry insurance, meet contractually agreed upon deadlines or quality control standards, or satisfy other similar terms . . . does not constitute control that makes the [worker] more or less likely to be an employee.” [369] in the nprm, the department explained that a blanket prohibition on consideration of compliance with legal or other obligations would not be appropriate, and that certain instances of control should not be excluded as irrelevant to the economic reality analysis only because they are required by business needs, contractual requirements, quality control standards, or legal obligations. moreover, the department recognized that the “case law is not uniform on this issue” and undertook a detailed discussion explaining why a complete bar to ever considering such compliance with legal, safety, or health obligations, or quality control measures would be inappropriate under the economic reality test. the department took a more nuanced approach in the preamble discussion than some commenters recognized in their comments, and it continues to find cases such as scantland and others which recognize that compliance with legal or contractual obligations or quality control may be relevant evidence of control persuasive and more consistent with a totality of the circumstances, economic reality analysis.[370] the nprm explained ( print page 1694) explicitly and with detail that compliance with legal requirements may not always be relevant to control, and that such compliance was only one facet of control. however, the department takes seriously the many comments received from stakeholders about the proposed regulatory language, the legitimate points they raised, and the concerns commenters expressed, even though the department does not necessarily agree with all issues raised. in the nprm, the department was cognizant of the challenge of setting forth a regulation that would capture all of the facts relevant to the nature and degree of a potential employer's control while balancing the practical considerations of the way businesses, particularly in some industries, must simultaneously comply with a host of legal, regulatory, and business related demands. while the department sought to strike the suitable balance between these two concerns in the nprm, the comments have persuaded the department that the provision as proposed may lead to unintended consequences due to stakeholder confusion and uncertainty. the department does not agree, however, with commenters who stated that the department's proposed regulatory text would make compliance with the law a “negative factor.” as noted by commenters, businesses already must comply with various legal and regulatory requirements for example, from the irs, state licensing boards, and city ordinances. additionally, the department never had a blanket prohibition prior to the 2021 ic rule on the consideration of compliance with legal obligations, and none of the mass uncertainty or noncompliance with legal norms suggested by commenters were apparent.[371] nevertheless, the department recognizes the confusion evident in the comments regarding this provision. the department agrees with commenters, for example, that stated that a publication's required compliance with libel law for a writer is not probative of a worker's economic dependence on that publication but if the publication instructed how, when, and where the work is performed, that is relevant to the control analysis. to provide another example, a home care agency requiring a criminal background check for all individuals with patient contact in compliance with a specific medicaid regulation requiring such checks would not be indicative of control. accordingly, the department is revising the regulation to state that “actions taken by the potential employer for the sole purpose of complying with a specific, applicable federal, state, tribal, or local law or regulation are not indicative of control.” the department is further revising the regulation to state that “actions taken by the potential employer that go beyond compliance with a specific, applicable federal, state, tribal, or local law or regulation and instead serve the potential employer's own compliance methods, safety, quality control, or contractual or customer service standards may be indicative of control.” this part of the regulatory text means that a potential employer's control over compliance methods, safety, quality control, or contractual or customer service standards that goes beyond what is required by specific, applicable federal, state, tribal, or local law or regulation may in some but not all cases be relevant to the analysis of a potential employer's control if it is probative of a worker's economic dependence. for example, in contrast to the background check example in the prior paragraph, a home care agency's extensive provider qualifications, such as fulfilling comprehensive training requirements (beyond training required for relevant licenses), may be probative of control. the department continues to believe that control exerted by the employer to achieve these ends may be relevant to the underlying analysis of whether the worker is economically dependent on the employer, particularly where the employer dictates and enforces the manner and circumstances of compliance. these instances of potential control, however, are relevant only if probative of the worker's economic dependence, as with any other consideration under the economic reality factors. for example, when an employer, rather than a worker, imposes safety or customer service obligations beyond what is required by specific, applicable federal, state, tribal, or local law or regulations, it may be evidence that the worker is not in fact in business for themself. in those instances, they are not doing the entrepreneurial tasks that suggest that they are responsible for understanding and adhering to requirements that apply to the work or services they are performing such that they are assuming the risk of noncompliance a typical and expected risk that workers in business for themselves regularly assume. moreover, the department understands that parties representing a wide array of business relationships enter into contracts, and this regulation should not inhibit those practices. for example, if a potential employer requires all workers to sign a contract acknowledging that the business's general policy is that invoices for work projects must be submitted within a particular timeframe, this is not indicative of control because such a generally applicable contractual term does not itself suggest that a worker is economically dependent on the employer for work. in contrast, if a potential employer requires all workers to sign a contract outlining specifically how, when, and where the work must be performed, that specific direction would be indicative of control because it suggests that the workers are not operating independently. the department believes that this revised text will be able to encompass control that is relevant to the overall analysis of economic dependence while providing businesses with a clear rule regarding compliance with specific legal obligations. as the department emphasized in the nprm and again emphasizes here, the facts and circumstances of each case must be assessed, and the manner in which the employer chooses to implement such obligations will be highly relevant to the analysis. for example, under this final regulatory text, it is not indicative of control if a potential employer requires everyone who enters a construction site to wear a hard hat as required by city ordinance. ( print page 1695) however, if a potential employer chooses a specific time and location for its own weekly safety briefings that are not specifically required by law and requires all workers to attend, that may be probative of control. similarly, it is not probative of control if a potential employer requires workers to provide proof of insurance required by state law, but if a potential employer mandates what insurance carrier workers must use, that may be probative of control. the department reminds stakeholders that this is merely one aspect of one factor of a multifactor test. even if compliance with specific safety, contractual, customer service, or quality control requirements is indicative of control in a specific case, this does not compel a particular conclusion that the control factor favors employee status or that the overall analysis requires a particular result.[372] thus, the final rule does not preclude a finding that a worker is an independent contractor where an employer obligates workers, for example, to comply with its own safety standards or quality control measures, after also considering other relevant factors in the economic reality analysis. with these general principles in mind, the next sections address the department's proposals regarding several aspects of control to be considered in determining whether the nature and degree of control indicates that the worker is an employee or an independent contractor. this discussion is intended to be an aid in assessing common aspects of control including scheduling, supervision, price setting, and ability to work for others but should not be considered an exhaustive list, given the various ways in which an employer may control a worker or the economic aspects of the work relationship. additional changes to the final regulatory text in response to comments are also discussed throughout these sections. as a consideration under the control factor, the department proposed that“[f]acts relevant to the employer's control over the worker include whether the employer sets the worker's schedule[.]” [373] while the 2021 ic rule similarly recognized that a potential employer's control over “key aspects of the performance of the work, such as by controlling the individual's schedule” is relevant to determining employee or independent contractor status, the 2021 ic rule also suggested that the worker's “substantial control over key aspects of the performance of the work” may be demonstrated simply by “by setting his or her own schedule.” [374] as explained in the nprm, after further consideration and review of the case law, the department considered that framing to be too narrow because it shifted focus away from the employer's control potentially allowing a finding of independent contractor status under the control factor based solely on a worker setting their own schedule, irrespective of other relevant considerations under control and did not encompass actions the employer may take that would limit the significance of the worker's ability to set their own schedule. the department recognizes that many independent contractor relationships include the worker's ability to start and end work as they see fit.[375] and the department noted that such scheduling freedom may be probative of a worker's independent contractor status.[376] yet, multiple courts of appeals have determined that workers were employees, rather than independent contractors, even when they had the flexibility to choose their work schedule.[377] further, the department noted that employers may still be able to limit the number of hours available for a worker to choose or arrange the sequence or pace of the work in such a way that it would not be possible for the worker to have a truly flexible schedule, thus exhibiting control that could indicate that a worker is an employee.[378] as the department noted, courts have often found that a worker's ability to set their own schedule, by itself, provides only minimal evidence that a worker is an independent contractor, particularly when the hiring entity exerts other types of control; therefore, the freedom to set one's schedule should be evaluated against other forms of control implemented by an employer.[379] the department also cited the tenth circuit's common sense observation that “flexibility in work schedules is common to many businesses and is not significant in and of itself.” [380] for example, in silk, the “unloaders” who came to the coal yard “when and as they please[d]” were employees rather than ( print page 1696) independent contractors.[381] flexibility that allows workers to use time between tasks or jobs may also be an inherent component of some business models, but such flexibility does not preclude a finding that the employer has sufficient control over a worker in other ways to weigh in favor of employee status. for instance, the department noted that “the power to decline work, and thus maintain a flexible schedule, is not alone persuasive evidence of independent contractor status when the employer can discipline a worker for doing so.” [382] moreover, both employees and independent contractors may possess scheduling flexibility in their working relationships. as the discussion in the nprm concluded, control over a worker's schedule exhibits just that: one form of control.[383] both employees and independent contractors can take advantage of flexible work arrangements, which is why such scheduling flexibility, on its own, may not clearly indicate that the employer lacks control over the worker.[384] as the department noted, this approach is consistent with the economic realities, totality of the circumstances approach, where such scheduling flexibility should be weighed along with other aspects of control the employer may be implementing. several commenters expressed general support for the nprm's discussion of scheduling flexibility. for example, the afl cio noted that “[t]he nprm . . . correctly makes clear that . . . `scheduling flexibility is not necessarily indicative of independent contractor status where other aspects of control are present[.]' ” in their comments, acre et al. and the washington center for equitable growth agreed that flexible work schedules can be common to employees and independent contractors alike and acre et al. noted that “flexible schedules alone do not determine a worker's employment status.” see also npwf. powerswitch action supported the nprm's discussion of scheduling flexibility, commenting that the economic reality inquiry “is not illuminated by whether a worker can choose to perform their work at nights instead of days (or vice versa), in short several hour increments over a single day or several days, or in periods that vary seasonally.” it contended that workers classified as employees have historically included workers with great scheduling flexibility across various industries, indicating that such freedoms are not synonymous with being an independent contractor. the la fed & teamsters locals agreed, noting that scheduling flexibility, alone, is a “poor indicator[ ] of the economic realities of the contemporary working relationship” unless that fact can “actually demonstrate the worker's economic independence.” nwlc noted that “[t]he department's guidance here is consistent with court decisions finding, for instance, that nurses, dancers, and delivery drivers . . . were employees even though they had substantial control over their work hours, because their employers retained control over prices for their services and/or other important elements of their jobs.” some commenters addressed industry specific practices. for example, roc united noted that their members, who are restaurant workers, “frequently decide when and how long to work,” yet, “once working, they have very little control over how they actually do the work,” suggesting their economic dependence. ufcw similarly commented that, in their experience working with drivers, app based companies “threaten to expel workers from the platform or reduce the availability of work shifts, unless the worker continuously accepts jobs;” a situation that limits the benefit of flexibility.[385] real women in trucking applauded “the department's decision to broaden its framing of the scheduling element from the 2021 rule and to focus on whether apparent scheduling flexibility actually provides for economic independence or whether the worker is still functionally dependent.” it noted that truckers can be constrained by other forms of control such as retaliation for declining too many offered loads and stated the proposal's “emphasis on whether apparent scheduling flexibility is constrained by economic reality is accordingly well considered.” the law firm nichols kaster noted that, in their experience, “employers who misclassify their workers as independent contractors rely on the workers' ability to decline work as evidence of lack of control. but there is oftentimes no meaningful choice because declining work can result in discipline or other consequences.” it suggested including language from the preamble in the final rule to emphasize this point. nela agreed with the department's discussion of scheduling flexibility and similarly suggested that the department include more information about scheduling flexibility in the final rule. moreover, gale healthcare solutions noted that the term “scheduling flexibility” needs further refinement, since workers in the healthcare industry may have the flexibility to select their preferred shift from a job board but do not have the flexibility to decide when the shift starts and ends, and this “inherently less `flexibility' ” would indicate employee status. the department declines commenters' suggestions to include additional content in the final regulatory text for this factor. the current proposal was intended to provide succinct statements regarding each factor of the economic reality test with the understanding that the preamble will be accessible for additional information regarding the rule, as will future subregulatory guidance. several commenters also expressed concern with the department's approach, asserting that scheduling flexibility is a strong indicator of independent contractor status. for instance, uber stated that “a worker's ability to autonomously determine their own work schedule (days, hours, time of day, and more) is a strong predictor of independent status on uber, drivers and couriers can start and stop work whenever and wherever they choose, accepting only those offers they want to take[.]” doordash asserted that “[n]ot only is scheduling flexibility a significant distinction between employment and independent work: it gets to the very heart of the economic ( print page 1697) reality test.” see also national propane gas association. shrm suggested that the department's treatment of scheduling flexibility is misguided because, for example, “contract work may provide [low wage earners] with control over their schedules, providing the ability to maximize their earnings and better attend to their personal obligations.” multiple individuals, like one “independent healthcare professional,” stressed that many people like them want “the freedom to engage in flexible work arrangements that best meet our needs.” the department recognizes that many workers need and desire flexibility in their work schedules and seek out job opportunities that provide that flexibility. and, in some cases, control over one's schedule can be probative of an employer's lack of control over a worker, indicating that they may be an independent contractor.[386] however, case law has consistently held that scheduling flexibility may be a relatively minor freedom, especially in those cases where a worker is prevented from exercising true flexibility because of the pace or timing of work or because the employer maintains other forms of control, such as the ability to punish workers who may seek to exercise flexibility on the job.[387] in this way, the 2021 ic rule's focus on scheduling flexibility as a fact that demonstrates “substantial control over key aspects of the performance of the work” misapplied relevant cases that suggest the opposite conclusion.[388] the proper lens for the test is the totality of the circumstances analysis, which considers scheduling flexibility along with other forms of control the employer might exert, as well as with other factors in the economic reality test.[389] some commenters asserted that consideration of scheduling flexibility should take into account specific industry and/or contractual arrangements that limit its availability. for example, nrf & nccr commented that the department's proposed approach “ignores key realities of business relationships common to retailers and restaurants.” examples include individuals who rent retail space but are constrained by limited operating hours of the building in which they rent, food delivery workers who may only be able to deliver food when a restaurant is open, or cleaning crews who can only do their work at night. they asserted that these types of limitations do not necessarily indicate that the worker lacks control over their schedule. the ca chamber echoed this sentiment, noting that “[a] business engaging a contractor to perform services is likely to have certain dates or times that they would prefer or possibly need that work to be performed,” suggesting the department did not take this reality into account. see also afpf (asserting that the control analysis is complicated “by adding to it such items of routine contractual terms” like scheduling which “cast no meaningful light on employer employee status.”). the pga noted, specific to its industry, that “[golf] teaching professionals set their own schedules,” yet “their ability to teach at a particular space may be limited by the space's operating hours or conflicting events that require the use of the property.” they asserted that this limitation “should not be viewed as an example of a lack of control by the teaching professional.” dart contended that if the department's perspective is that limited scheduling control by the worker indicates employee status, then many drivers who independently “elect to transport similar loads along the same routes over a period of time, risk losing their status and independence under this factor.” they asserted that drivers who wish to remain independent would thus have to “arbitrarily switch routes and carriers, and . . . bear whatever costs or inefficiencies such switches may give rise to, simply to preserve their independent status under this factor” and requested that the department adopt “language which specifically incorporates consideration of the reality of the industry in question.” in addition, doordash suggested that the type of flexibility its workers possess is fundamentally different from the flexibility an employee may obtain from an employer. for instance, “[h]aving some room to voice a preference about shifts or work remotely isn't true scheduling flexibility, because the ultimate control still belongs to their employers, who dictate things like deadlines and meeting schedules that can't be shirked.” in contrast, doordash noted that its platform allows workers to work on their own time and walk away, potentially for weeks or months at a time. the department disagrees that its formulation of the control factor must explicitly consider unique contractual or industry specific scenarios that might affect scheduling flexibility. the language of the proposed rule noted that “[f]acts relevant to the employer's control over the worker include whether the employer sets the worker's schedule,” or where the employer “places demands on workers” that do not allow them to work . . . when they choose.” [390] to the extent a potential employer is exerting control over when and for how long an individual can work, that fact is indicative of the employer's control. and even in those scenarios where the worker's schedule is constrained by contract or employer requirements, such scheduling control is only one fact among many that could be considered under the control factor. finally, some commenters asserted that the department's shift in focus to the employer's control was misguided. cwi suggested that “where a result or service is perishable or deadline driven, based on the consumer's desire or the nature of the product or service, it is inappropriate to describe the final deadline as evidence of the business setting the worker's schedule.” in this way, cwi argued, a focus on scheduling flexibility solely from the perspective of the employer, “prevents a counterbalancing of those separate actions by the employee that, separate and apart from its direct interactions with the putative employer, establish he is in business for himself.” similarly, n/ma noted that a shift in focus “from the worker's right to control the manner and means by which the work is performed to the purported employer's control . . . [is] misdirected,” and does not consider “the totality of the worker's business . . . including . . . whether the worker . . . determines to prioritize, stagger, or overlap projects from multiple entities” as they see fit. ( print page 1698) the department's decision to present the control factor from the perspective of the employer's control over the economic aspects of the working relationship conforms to relevant case law describing the factor and also represents a common sense understanding that an employer's ability to control a worker's time may be probative of the worker's status.[391] and as discussed earlier, where a worker has the ability to set their own work schedule, courts have often found this to be less significant relative to other ways in which the employer exerts control. as such, scheduling flexibility should not be considered potentially dispositive of the control factor as articulated in the 2021 ic rule. moreover, the rule does not eliminate the relevance of the worker's ability to control their schedule in the analysis, as the rule notes that “more indicia of control by the worker,” such as control over one's schedule, may “favor[ ] independent contractor status.” [392] the department is finalizing the scheduling portion of the control factor at § 795.105(b)(4) as proposed. with respect to the consideration of supervision within the control factor, the department proposed that “[f]acts relevant to the employer's control over the worker include whether the employer . . . supervises the performance of the work” including “whether the employer uses technological means of supervision (such as by means of a device or electronically)” or “reserves the right to supervise or discipline workers.” [393] in describing its proposal, the department noted the common sense observation that an employer's close supervision of a worker on the job may be evidence of the employer's control over the worker, which is indicative of employee status. conversely, as the department noted, the lack of close supervision may be evidence that a worker is free from control and is in business for themself.[394] however, courts have found that traditional forms of in person, continuous supervision are not required to determine that this factor weighs in favor of employee status.[395] a lack of supervision is not alone indicative of independent contractor status,[396] such as when the employer's business or the nature of the work make direct supervision unnecessary. for example, in off duty police, the sixth circuit determined that security officers were employees although they were “rarely if ever supervised” on the job, noting that “the actual exercise of control `requires only such supervision as the nature of the work requires.' ” [397] moreover, “the level of supervision necessary in a given case is in part a function of the skills required to complete the work at issue.” [398] as the court noted, there was a limited need to supervise where officers in that case “had far more experience and training than necessary to perform the work assigned.” [399] and in dialamerica, the third circuit concluded that homeworkers were employees even though they were subject to little direct supervision (a fact typical of homeworkers generally).[400] as the second circuit stated, “[a]n employer does not need to look over his workers' shoulders every day in order to exercise control.” [401] in the nprm, the department also explained that employers may rely on training and hiring systems that make direct supervision unnecessary. as the department noted, in keller v. miri microsystems llc, an employer relied on pre hire certification programs and installation instructions when hiring their satellite dish installers.[402] the court noted that the employer had little day to day control over the workers and did not supervise the performance of their work, but that a factfinder could “find that [the employer] controlled [the installer's] job performance through its initial training and hiring practices.” [403] the department also highlighted, from the fifth circuit's statement in parrish, that the “lack of supervision [of the individual] over minor regular tasks cannot be bootstrapped into an appearance of real independence.” [404] yet, the department recognizes that a worker's ability to work without supervision may be probative of their independent contractor status, such as in nieman, where the court affirmed a district court's conclusion that an insurance claims investigator was properly classified as an independent contractor, in part, because the investigator worked largely without supervision when setting up appointments, and deciding where to work and how and when to complete his assignments.[405] finally, the department noted that supervision can come in many different forms beyond physical “over the shoulder” supervision, which may not be immediately apparent.[406] for instance, supervision can be maintained remotely through technology instead of, or in addition to, being performed in person, such as when supervision is implemented via monitoring systems that can track a worker's location and productivity, and even generate automated reminders to check in with supervisors.[407] additionally, an employer can remotely supervise its workforce, for instance, by using electronic systems to verify attendance, manage tasks, or assess performance. 408 ( print page 1699) thus, a totality of the circumstances analysis properly includes not only exploring ways in which supervision is expressly exercised, but also those instances where supervision is not apparent but still used by the employer either through the job's structure, training, or the use of technological tools. several commenters supported the department's discussion of supervision generally. for instance, lccrul & wlc noted that case law confirms the fact that, “direct, on site supervision” is not a prerequisite to find that a worker is an employee. as lccrul & wlc noted, the department's approach toward supervision allows a “more accurate and comprehensive determination of the economic reality of the parties' relationship.” acre et al., powerswitch action and other commenters noted that the department's description of supervision is helpful, since it highlights the many ways in which a worker might be controlled at work through direct management or technological surveillance. commenters such as nelp and roc united commended the department's decision to address technologically mediated supervision, since, as nelp noted, “[m]any businesses today manage their workforces with monitoring systems that track productivity, location, and attendance.” providing this focus, nelp explained, “will ensure that supervision is analyzed regardless of the medium used to accomplish it.” as clasp & gfi commented, “new technologies make[ ] it easier for employers to keep close tabs on workers and simultaneously disengage from modes of management that, in a pre digital world, would likely have been indicators of an employment relationship.” the use of such technology, they noted, may particularly effect low wage workers whose jobs can be easier to measure, such as warehouse workers whose efficiency in moving material can be readily quantified, or delivery drivers, whose speed, routes, and drop off points can be managed digitally. as they describe, in some industries, digital “surveillance has completely supplanted in person supervision in cases where the nature of the work would otherwise require an onsite supervisor.” while some comments supported the overall approach to supervision in the nprm, others suggested that the department go further, either by adding additional context to the regulatory text or discussing additional facets of supervision. for instance, nichols kaster commented that the department's approach is helpful since “supervision can take multiple forms” and employers have often argued that their workers are independent contractors by citing to the fact that they don't engage in in person supervision of their work. however, it, along with nela, called on the department to include more information from the preamble discussion in the final regulatory text, specifically language addressing supervision via automated systems and that the lack of apparent supervision would not necessarily be indicative of a worker's independent contractor status. similarly, nelp requested that the department include language in the final regulatory text specifically clarifying “that a lack of direct supervision may still support a finding of an employer's right to control if an employer can simply exert control when it deems it in the employer's interest to do so.” outten & golden noted that the text of the final rule should also encompass the concept of “monitoring,” since “many workers who work remotely . . . are primarily `supervised' through digital monitoring.” in addition, gale healthcare solutions and intelycare suggested that the department include supervision provided by onsite or related entities such as scenarios where healthcare staff sent by an employer to a worksite receive “supervisory like feedback” on their performance that can be communicated back to their employer. moreover, gale healthcare was concerned that if the department indicated in the final rule that initial training which some employers have deployed in lieu of direct supervision is indicative of control, and thus employee status, that employers who wish to continue engaging independent contractors may forego such training, which could harm individuals in the healthcare industry. the department declines to adopt the additional regulatory language suggested by commenters, as it believes additional discussion is more appropriate for future subregulatory guidance. in response to nelp, the department understands its suggestion as requesting additional detail regarding reserved control, which is discussed elsewhere in this final rule. the department also declines to add the phrase “monitoring” to the final regulatory text as requested by outten & golden. as described below, the department agrees that supervision of a worker includes all forms of supervision which go to the worker's performance of the work. thus, while the act of collecting data through monitoring systems could be used to supervise the performance of work, it might instead serve other operational needs of the employer not related to control. therefore, adding “monitoring” to the regulatory text would not be helpful at highlighting this distinction. moreover, to the extent outten & golden's comments were intended to include monitoring to capture situations where the employer would monitor a worker and then exert supervisory control when needed or desired, the department is confident that this scenario is very similar to its discussion of reserved control where an employer possesses supervisory control but elects to exert it when it chooses.[409] where an employer reserves the right to use electronic or digital means of supervision rather than traditional in person supervision to monitor a worker and thus correct or direct the performance of the work when it deems necessary, then this too would be relevant to the economic reality analysis.[410] accordingly, the department concludes that the regulatory language describing the control factor contains sufficient information to inform stakeholders about the scope of this factor. the department also recognizes the situation that gale healthcare solutions and intelycare raise regarding supervision that may be performed by other entities where the work is performed and relayed back to a potential employer. however, the department declines to add specific language addressing this scenario, since this scenario would require a fact specific inquiry. for example, if a potential employer is exercising control, but delegates it to a third party that is conducting onsite supervision and then reports that to the employer, then the same analysis regarding the employer's supervision would apply. finally, to gale healthcare's concern regarding training, while it may be indicative of other factors in the economic reality test ( e.g., skill and initiative), its relevance for the purposes of this portion of the control analysis is to simply highlight how training may be used by some employers to avoid any necessary supervision once the worker begins performing work. such training that is not a replacement for close supervision, ( print page 1700) such as apprising workers of safety protocols, would not necessarily be indicative of supervisory like control. ufcw commended the department's focus on providing additional context to the control factor analysis, specifically the ways in which an employer might use technology to supervise its workforce. however, as discussed in the section on examples used in the preamble, ufcw, several of its locals, and the afl cio would also have the department go further by providing additional examples of ways in which employers use technology, including surveillance, data collection, and algorithmic management tools, to supervise workers. according to ufcw, since “employers in all industries are rapidly exploiting electronic surveillance to supervise workers,” the final rule “should additionally explain that a company's use of nontransparent computer algorithms (programming codes) to manage workers is evidence indicative of employer control.” the department agrees with commenters like the afl cio that control over the performance of work that is exercised by means of data, surveillance, or algorithmic supervision is relevant to the control inquiry under the economic reality test. such tools could be used directly by the employer or on their behalf to supervise the performance of the work. digital tools are many times developed, controlled, and deployed to assist in (or independently conduct) supervision in ways that would have otherwise required in person oversight. however, the department believes that such tools, including algorithmic control, if used by the employer to supervise the performance of the work, are already captured by the regulatory text addressing a potential employer's use of “technological means of supervision (such as by means of a device or electronically).” relatedly, the department declines to add additional language suggesting actions like mere data collection would constitute supervision for the purposes of control. like monitoring, an employer may collect data on business operations for purposes unrelated to its relationship to workers. yet, the department recognizes that where the employer collects information that then is used for the purposes of supervision and thus goes beyond information collection, that may be probative of an employer's control under this factor. several commenters disagreed with the department's approach regarding supervision. cwi noted that a lack of supervision may in fact reflect that a worker is an independent contractor as independent contractors are often “retained precisely because they perform work that the putative employer does not,” which results in less supervision. cwi further contended that a lack of supervision should edge toward a finding of independent contractor status in most cases. this concern was echoed by n/ma, which suggested that the department's approach “turns the control factor upside down by effectively ignoring a lack of putative employer control.” many independent contractors, n/ma contended, function without supervision precisely because of the specialized or technical services they render. n/ma asserted that “work that does not require supervision by the hiring entity is exactly the type of work that should be recognized as more likely to result in a determination of a lack of control over the manner and means by which the work is performed, and indicative of independence.” the department agrees with commenters that a lack of supervision may be probative of a worker's independent contractor status. that fact is reflected in case law as well as the department's proposal.[411] for example, regarding n/ma's comment, the department agrees that workers who deliver technical or specialized services may use that technical expertise to operate without supervision (either because the employer need not supervise a technically proficient worker or the employer does not have the expertise themselves to meaningfully supervise). in such circumstances, an employer's lack of supervision may support a finding that the control factor weighs in favor of independent contractor status. the department notes however, also consistent with case law, that the lack of supervision on its face should not halt a full analysis.[412] lack of direct or in person supervision may not indicate that the control factor weighs in favor of independent contractor status if there are other ways in which the employer is able to accomplish the same manner of control that would have otherwise been performed through close, in person supervision over the performance of the work. as the department indicated, for example, the employer may rely on detailed training or instructions, deploy electronic tools to direct the performance of the work remotely, or retain the right to conduct in person supervision. cwi further suggested that the department's proposal missed a critical distinction. by focusing merely on the fact that supervision may be maintained by technological means, they asserted that the proposal did not distinguish between supervision through technology that is “targeted toward the direction of the manner in and means by which the worker performs his work” and monitoring that is “targeted toward the particular goods or services at issue.” [413] the california and u.s. chambers of commerce and wpi agreed, with wpi similarly contending that electronic monitoring “has little to no impact on economic realities, and that it is an often commonplace component of normal arm's length contracts.” see also cambridge investment research, raymond james, and wfca. as flex similarly noted, technology is used to manage basic business functions and compliance monitoring, as well as “enhance[ ] the user experience for consumers” such as noting a driver's location, arrival time, or facilitating the exchange of money for the consumer. see also dsa; nhda. moreover, flex noted that federal regulations require electronic monitoring for safety purposes in some industries, like trucking.[414] see also; american trucking association; state trucking associations; u.s. chamber. therefore, to avoid confusion, flex suggested that references to technology should be stricken from the rule. see also dsa; pga; raymond james. cwi also stated, however, that technological supervision “coupled with some manner of corrective direction about the means and manner of performance may evidence employment,” yet they commented that the department's proposal “sweeps too broadly.” the coalition of business ( print page 1701) stakeholders noted that the language in the proposal could encompass the employer's or worker's use of everyday technologies that are used to run a contemporary workplace. finally, the ca chamber noted that independent contractors are also supervised, suggesting that it would be “nonsensical to assert that you would hire a contractor and never oversee their services or check in on progress.” the department agrees with commenters such as cwi and wpi that employers may at times use technology to track information critical to their business or, as the ca chamber notes, the mere status of work performed by a worker. such actions can be performed consistent with an independent contractor relationship with a worker, even when the data being collected is generated from the actions of the worker. the department thus agrees with cwi, for example, that the proposed regulatory text missed this nuanced distinction. however, as cwi noted, where such tracking is then paired with supervisory action on behalf of the employer such that the performance of the work is being monitored so it might then be directed or corrected, then this type of behavior may suggest that the worker is under the employer's control. thus, the department is adding additional language to the control factor to clarify that the relevant consideration is not simply the employer's use of technology to supervise, but the use of technology “to supervise the performance of the work.” this is why the department disagrees with flex's call to eliminate any reference to technology and wpi's assertion that the use of technology never implicates the analysis under the economic reality test. such a complete bar would suggest that a worker's performance of the work can never be controlled or directed by technology, which is not correct, especially when such tools are not only ubiquitous in many employment settings, but also are specifically deployed by some employers to supervise and direct the means through which a worker performs their job. moreover, the department does not believe that the inclusion of a reference to technology, as noted by the coalition of business stakeholders, would act as an unbounded factor, pulling in all forms of technology used in modern workplaces. the only forms of technology referenced by the rule are those that are deployed by the employer as a means of supervising the performance of the work which are thus probative of economic dependence, not all technologies that the employer might be using in their business. the department notes that comments received regarding the proposal's discussion of an employer's reserved control over the worker, including reserved rights to supervise, are addressed in the discussion of reserved rights in section v.d. the department is finalizing the supervision portion of the control factor at § 795.105(b)(4) with the revisions discussed herein. regarding the control factor's treatment of the ability to set a price or rate for goods or services, the department proposed that this factor consider whether the “employer controls economic aspects of the working relationship . . . including control over prices or rates for services.” [415] as the department noted, facts related to the employer's ability to set prices or rates of service relate directly to whether the worker is economically dependent on the employer for work and help answer the question whether the worker is in business for themself.[416] at the outset, the department noted that workers in business for themselves are generally able to set (or at least negotiate) their own prices for services rendered.[417] the department further noted that one of the early supreme court cases applying the economic reality test concluded that the workers were employees in part because they were not “selling their products on the market for whatever price they can command.” [418] the court explained that, instead, the workers were “regimented under one organization, manufacturing what the organization desires and receiving the compensation the organization dictates.” [419] the department also cited multiple court of appeals and district court decisions finding that an employer's command over the price or rate for services indicated their control over the worker and that the worker was thus less likely to be in business for themself.[420] conversely, the department noted that when a worker negotiates or sets prices, those facts weigh in favor of independent contractor status.[421] for instance, in eberline v. media net, llc, the court found that a jury had sufficient evidence to conclude that a worker exerted control over meaningful aspects of his business in part due to “testimony that installers could negotiate prices for custom work directly with the customer and keep that money without consequence.” [422] the department also noted that the price of goods and services may sometimes be included in contracts between a business and an independent contractor.[423] the department quoted mcfeeley, where the court observed that a worker doesn't “automatically become[ ] an employee covered by the flsa the moment a company exercises any control over him. after all, a company that engages an independent contractor seeks to exert some control, whether expressed orally or in writing, over the performance of the contractor's duties[.]” [424] yet, the department cautioned that the presence of a contract does not obviate the need for a complete analysis regarding the control exerted by the employer, such as the worker's ability to negotiate and alter the terms ( print page 1702) of the contract. as the discussion in the nprm concluded, it is evidence of employee status when an entity other than the worker sets a price or rate for the goods or services offered by the worker, or where the worker simply accepts a predetermined price or rate without meaningfully being able to negotiate it.[425] multiple commenters supported the department's inclusion and description of price setting under the control factor. for example, the la fed & teamsters locals stated that this inclusion is a “recognition of the great significance of an employer's control over setting prices for services” which is “much more reliable indicia of entrepreneurial status than less significant aspects of control.” such an approach, it suggested, will prevent employers from “offering [workers] minor forms of control while effectively setting a ceiling on the workers' earnings by maintaining control over the rates offered to customers.” the law firm nichols kaster noted that the proposal “expounds on this important point and provides focus and clarity on what `economic aspects' means.” nelp stated that the department's discussion of price setting appropriately recognized that price setting is a form of control, since an independent contractor “controls, and has the right to control, all important business decisions,” including “what good or service to sell and at what price.” as nelp further noted, “without the power to set prices for goods or services, a worker will likely be economically dependent on an employer for work, and if she wants to increase earnings, her only option is to work longer, harder, or more jobs.” real women in trucking commended the department for providing “helpful clarity” regarding price setting generally, providing an example of a worker's ability to negotiate rates where drivers select jobs from a “free market load board” where they can negotiate the rates for their services and sign a rate contract directly with brokers. some commenters suggested revisions to the proposed regulatory language. for example, ufcw urged the department to amend the discussion regarding control to include a discussion of information asymmetries, noting that where a company conceals pricing data, that would indicate that a worker is not an independent contractor, since the worker lacks key information regarding price that would affect entrepreneurial decisions they might make. acre et al. similarly suggested that the department “clarify in the rule that another factor in determining if workers are considered employees must include if a corporation exercises control over workers through pay structures,” specifically bonus pay systems used by some transportation network companies that encourage workers to drive more. acre et al. also suggested that the department clarify that price (or wage) setting is so critical to the analysis that “workers who can not independently set their own wage rates are, per se, not independent contractors.” see also jobs with justice; nela; outten & golden; powerswitch action. the department agrees that the lack of information regarding prices may prevent a worker from negotiating prices to further their own business. the department believes that this concept was captured in the proposed language that the department is finalizing which states that “[w]hether the employer controls economic aspects of the working relationship” should be considered, including “control over prices or rates for services.” [426] control over price is one specific example and is not meant to be exhaustive. further, the department believes that defining the relationship in terms of “information asymmetry” would be less helpful to businesses that are trying to understand their obligations, since that term is ambiguous. moreover, the department is confident that situations in which the employer is controlling specific payment terms or pay structures are captured by the proposed regulatory language because the relevant inquiry focuses on an employer's control of “economic aspects of the working relationship,” which can embrace a nonexclusive set of considerations that may be relevant to a specific working relationship. finally, the department declines to adopt multiple commenters' suggestion to state that a worker's lack of control over prices would suggest conclusively that they are not independent contractors. as mentioned throughout this final rule, the department declines suggestions to predetermine the weight of certain considerations, facts, or individual factors. the department notes, however, that in a particular case, after considering all the facts of a particular relationship, control over pricing may be highly relevant to whether the control factor weighs in favor of employee or independent contractor status. this approach is consistent with case law, where a court “adapt[s] its analysis to the particular working relationship, the particular workplace, and the particular industry in each flsa case.” [427] some commenters were opposed to the inclusion of price setting or the extent to which it may be used to illuminate the control factor of the economic reality test. for instance, the ca chamber noted that while it “generally agree[s] with the description of this facet of the control factor,” it was concerned that it may receive too much weight in the analysis because some employees, “such as salaried white collar workers” can negotiate their pay, while others, like an “hourly employee on an assembly line” may not. therefore, the ca chamber stated that considerations regarding price control, “should have limited use in the analysis because it is not a defining feature of employment generally.” see also afpf; richard reibstein, publisher of legal blog. the ifa noted its concern with the department's treatment of price as it related to franchising relationships. ifa explained, “[f]ranchisors commonly suggest resale prices for offerings across the franchise system and, subject to applicable law, may set minimum or maximum prices for products or services, or have uniform advertising requirements for system wide promotions.” ifa requested that the department, “expressly state that, in the franchise context, the fact that a franchisor sets prices for goods or services is not probative of an employment relationship.” similarly, acli shared that considerations regarding price are misplaced for the insurance industry, as “neither insurers nor insurance agents have unlimited discretion to adjust prices however they see fit.” in fact, “[c]onsistent with the requirement of financial solvency, insurance agents and advisors have no say or influence over the price of the products that they sell on behalf of firms, and they are prohibited by law from `rebating' any of the commissions earned from those sales,” a fact that “effectively bars them from getting involved in, or setting, pricing.” the alternative and direct investment securities association noted a similar arrangement among some investment advisors, who cannot fully negotiate rates for commissions because such rates are, in part, determined by the application of sec regulations. similarly, c.a.r. noted that real estate industry commission payments in california are required to be paid through a broker (with a written ( print page 1703) agreement on how the commission will be shared between broker and salesperson). and the coalition of cattle associations stated that cattle health processing crews, workers common in the cattle industry that care for herds, are similarly paid indirectly by a cattle farm that contracts for services of a company that engages crew members. cwi commented that considerations around prices or rates are superfluous because “[a] worker's ability to negotiate or otherwise impact the amounts that he earns for his work is already fully incorporated in the opportunity for profit or loss factor.” thus, cwi suggested that since this consideration should be withdrawn as it is redundant. the n/ma similarly noted that such overlapping analysis results in “improper[ ] double counting.” see also cmaa. & nra. the department declines to adopt commenters' proposals to de emphasize the relevance of control over prices or rates of service. just as the department declined the suggestion that it elevate the role of control over prices, the department concludes that giving this consideration less weight would similarly undermine a totality of the circumstances analysis. an employer's control over pricing should be one fact among all other facts considered under the control factor as it may be probative of a worker's economic dependence on a potential employer. the department recognizes that many industries, occupations, or even business sectors set prices and rates for goods or services in ways that are unique, as noted by commenters like acli and ifa. however, workers who are truly in business for themselves will generally control the fundamental economic components of their business, including the prices to charge customers or clients for the goods or services offered. as discussed in section v.c.4.a, the department is revising the final regulatory text of this factor to state: “actions taken by the potential employer for the sole purpose of complying with a specific, applicable federal, state, tribal, or local law or regulation are not indicative of control.” however, beyond those obligations, where the potential employer exerts control to set rates or prices for services, the worker is more likely to be “receiving the compensation the organization dictates,” and thus less likely to be in business for themself.[428] in addition, the department disagrees with commenters such as cwi and n/ma contending that the discussion of price in both the nature and degree of control and opportunity for profit and loss factors is not warranted. in the former, the analysis is focused on the employer's actions that would control the economic aspects of the working relationship, while the discussion of the latter focuses on ways in which the individual has opportunities for profit or loss based on managerial skill (including initiative or business acumen or judgment) that affect the worker's economic success or failure in performing the work. each discusses prices from different analytical points of view, an effort that is consistent with this final rule's approach, which is to analyze the working relationship in all its facets. finally, the department declines commenter suggestions to omit any discussion of price setting under the control factor. the department continues to believe, consistent with case law, that a potential employer's general control over the prices or rates for services paid to the workers or set by the employer is indicative of employee status. when an entity other than the worker sets a price or rate for the goods or services offered by the worker, or where the worker simply accepts a predetermined price or rate without meaningfully being able to negotiate it, this is relevant under the control factor. as such, the department declines to create a carve out for certain business models or industries, as requested by some commenters, although the department emphasizes that this position is intended to be consistent with the case law on this issue and is not creating a novel interpretation. importantly, however, as with all considerations discussed under all the factors, the department does not intend for this fact to presuppose the outcome of employment classification decisions in any particular industry, occupation, or profession. the department is finalizing the price setting portion of the control factor at § 795.105(b)(4) as proposed. another consideration that the department proposed under the control factor was whether the employer “explicitly limits the worker's ability to work for others” or “places demands on workers' time that do not allow them to work for others.” [429] this consideration was consistent with the 2021 ic rule, which also recognized that directly or indirectly requiring an individual to work exclusively for an employer was indicative of an employer employee relationship.[430] as explained in the nprm, where an employer exercises control over a worker's ability to work for others, this is indicative of the type of control over economic aspects of the work that is associated with an employment relationship rather than an independent contractor relationship.[431] control over a worker's ability to work for others may be exercised by directly prohibiting other work for example, through a contractual provision.[432] it may also be exercised indirectly by, for example, making demands on workers' time such that they are not able to work for other employers,[433] or by imposing other restrictions that make it not feasible for a worker to work for others.[434] for ( print page 1704) example, in scantland, the eleventh circuit determined that cable technicians could not work for other companies, either because they were told they could not do so or because the workers essentially had an exclusive work relationship with the employer because they were required to work 5 to 7 days a week and could not decline work without risking termination or being refused subsequent work.[435] thus, the employer controlled whether they could work for others, which suggested that they were economically dependent on the employer.[436] the nprm also recognized that some courts find that less control is exercised by a potential employer where the worker is not prohibited from working for others, particularly competitors, and that this may be indicative of an independent contractor relationship.[437] however, the department declined to include in the regulatory text for the control factor a blanket statement that the ability to work for others is a form of control exercised by the worker that indicates independent contractor status. the department was concerned that this framing, which was in the 2021 ic rule, fails to distinguish between work relationships where a worker has multiple jobs in which they are economically dependent on each potential employer and do not exercise the control associated with being in business for oneself, and relationships where the worker has sought out multiple clients in furtherance of their business.[438] as the department noted, if one worker holds multiple lower paying jobs for which they are dependent on each employer for work in order to earn a living, and a different worker provides services to multiple clients due to their business acumen and entrepreneurial skills, there are qualitative and legally significant differences in how these two scenarios should be evaluated under the economic reality test. ultimately, as stated in the nprm, the question is “whether a [worker's] freedom to work when she wants and for whomever she wants reflects economic independence, or whether those freedoms merely mask the economic reality of dependence.” [439] dating back to silk, the “unloaders” who came to the coal yard “when and as they please[d] . . . work[ing] when they wish and work[ing] for others at will” were deemed to be employees rather than independent contractors.[440] and as the fifth circuit has explained, “[the] purposes [of the flsa] are not defeated merely because essentially fungible piece workers work from time to time for neighboring competitors.” [441] for example, in seafood, inc., the fifth circuit examined whether piece rate workers who peeled and picked crabmeat and crawfish for a seafood processor, and who were allowed “to come and go as they please . . . and even to work for competitors on a regular basis” were, as a matter of economic reality, dependent on their employers and therefore employees under the act.[442] the court determined that the workers' ability to work for others was not dispositive, and that “[l]aborers who work for two different employers on alternate days are no less economically dependent on their employers than laborers who work for a single employer” because “that freedom is hardly the same as true economic independence.” [443] the sixth circuit has further observed that “[m]any workers in the modern economy, including employees and independent contractors alike, must routinely seek out more than one source of income to make ends meet.” [444] several commenters supported the way the department's proposal framed consideration of the ability to work for others within the control factor, including both direct and indirect means of limiting individuals' ability to work for others. see, e.g., la fed & teamsters locals; nwlc; real women in trucking; ufcw. for example, the la fed contended that the 2021 ic rule “misapplies the law” by stating that workers could be found to exercise “substantial control” by having the ability to work for others, because “[f]or decades, employees have been able to have multiple jobs . . . without losing the protections the law bestows on employees.” the la fed supported the department's proposal, explaining that it “rightly recognizes that workers' ability to . . . work for others does not support independent contractor status unless . . . facts actually demonstrate the worker's economic independence.” similarly, the nwlc stated that the 2021 ic rule “impermissibly narrow[ed] the concept of control itself by focusing on control over work exercised by the individual worker, as opposed to the right to control by an employer” and by using as an example a worker's “substantial control” through the ability to work for others despite many decisions finding workers to be employees even though they worked for others. some commenters requested that the department provide a description of this aspect of the control factor that would address the workers' ability to work for others, not just the employer's actions, and state that where an individual has the ability to work for others, including competitors, this weighs in favor of independent contractor status. see, e.g., cpie; doordash; n/ma. for example, doordash commented that the proposed rule “adopts a one sided approach: if a hiring entity limits a worker's ability to work for others, that counts toward employee status, but if a worker has the freedom to work for others, that doesn't count toward independent contractor status.” however, outten & golden observed that employer limitations on the ability to work for others cannot be viewed simply as the converse of a worker's ability to work for others: “the fact that an employer entity does not prohibit outside work does not suggest independent contractor status because having multiple jobs is compatible with an employment relationship. however, being prohibited from working for others clearly indicates the control of an employer, rather than an independent contractor relationship.” cwi also contended that the “employer centric focus” of the proposed regulatory text addressing a worker's ability to work for others was “misguided” because, as the department noted in the nprm, there is appellate authority acknowledging “a worker's ability to work for others and thus develop multiple sources of business as evidence of independent contractor status.” cwi did not feel it ( print page 1705) was sufficient to address this factor by stating that a business placing a limitation on the ability to work for others was evidence of employee status because this failed to take into account “the fact that a worker may be simultaneously (and in a multi app situation, potentially at the exact same time) working for others.” moreover, referencing saleem, cwi contended that the fact that a worker could earn income through work for others meant that the worker was “less economically dependent on his putative employer.” the department notes that the mere fact that a worker earns income from more than one employer does not mean that the worker is not economically dependent on one or all of those employers, as a matter of economic reality. economic dependence is based on an analysis of the multifactor economic reality test, not whether a worker is less financially dependent on the income they earn from any one employer.[445] as discussed under this factor and the permanence factor (section v.c.3), it is well established that having multiple jobs is not inconsistent with employee status under the flsa, and in fact, workers are often required to take on more than one job just to make ends meet. moreover, in saleem, the case referenced in cwi's comment, the second circuit recognized that: “a company relinquishes control over its workers when it permits them to work for its competitors.” [446] this case supports the importance of looking to whether a potential employer restricts a worker's ability to work for others. similarly, n/ma argued that the focus should be on the worker's right to control and not the employer's control, because “a freelancer may perform multiple projects among multiple separate (and sometimes competing) entities,” and n/ma felt that the right to control factor should consider “the totality of the worker's business . . . including control over whether the worker subcontracts any part of the work necessary to complete a project, whether and how the worker may advertise their services, and whether the worker determines to prioritize, stagger, or overlap projects from multiple entities.” the department views n/ma's comment to be advocating for a totality of the circumstances test that is congruent with the economic reality test, including consideration not just of control, but also factors like opportunity for profit or loss, investment, and use of specialized skills in connection with business like initiative. whether a potential employer restricts a worker's ability to work for others would certainly not be the only consideration under control, nor would it preclude consideration of the other factors listed in n/ma's comment. further, the department notes that even within the control factor, the regulatory text acknowledges that “more indicia of control by the worker favors independent contractor status.” [447] several commenters pointed out the increased fluidity in terms of working for others that can be associated with using applications or platforms to access work. doordash explained with respect to its business that workers “are free to work with anyone they want, including our competitors. most importantly . . . they can do it in real time even while they're logged into our app. if [they] find a better work opportunity (or work that's simply more appealing to them), they can switch back and forth.” cei noted that “rideshare drivers often work for different app based companies simultaneously. anyone who calls for a ride using [uber] has noticed the driver's car also bearing a lyft sticker. . . this situation is common in gig work, where the companies are, in effect, bidding for the same workers.” cei further noted the department's concern that the framing in the 2021 ic rule, which indicated independent contractor status if a worker had the ability to work for others, fails to distinguish between work relationships where a worker has multiple jobs in which they are dependent on each employer and do not exercise the control associated with being in business for oneself, and relationships where the worker has sought out multiple clients in furtherance of their business. cei stated: “the framing does not distinguish between the two scenarios because there is no significant distinction. a worker who has `sought out multiple clients in furtherance of their business' is no less dependent on those clients than the hypothetical worker with multiple jobs.” cei suggested that the only solution to this problem was beyond the scope of this rulemaking and would require congress to amend the flsa to “carve out specific professions.” ufcw, however, did not view “multi apping” as a unique concept that could not be addressed within the economic reality test, arguing that a “worker who attempts to leverage earnings between two app based platforms (`multi apping') [is] now simply dependent on two platform companies for which the employee is waiting around for work to perform. this is not indicative of the worker exercising initiative to develop a business for themselves independent of these platform companies.” the department does not believe that the ability to use applications or platforms to access work necessitates changing how the ability to work for others is weighed when determining employee or independent contractor status. the department reiterates that as always, the overall test is economic dependence. even if a worker has the ability to more fluidly move among potential employers while performing work by using multiple applications, this does not necessarily mean that the entire control factor weighs in favor of independent contractor status. nor is it dispositive of whether the worker is in business for themself rather than being subject to the control of the entity for whom they are performing work at any given time.[448] while shrm posited that the department's proposal “adopts an antiquated view of economic independence in its consideration of a worker's ability to work for others under the control factor” because “low wage earners may, in fact, gain independence by maintaining the flexibility to work with multiple hiring entities,” nelp observed that in “low wage industries, particularly in services such as transportation, delivery, or home care, many workers juggle multiple jobs with multiple entities not as an exercise of their own business judgment but as a necessity to cobble together a living wage in an underpaying economy.” for example, the lccrul & wlc described a current client who “often has to work for a variety of gig economy jobs simultaneously, such as uber eats, gopuff, instacart, and caviar, to keep her finances afloat.” further supporting the notion that the ability to work for multiple employers simultaneously does not necessarily indicate independent contractor status, the ndwa explained that home care workers may work for more than one third party agency at the same time, “given the scheduling irregularities and occasional disruptions in assignments that are an unavoidable part of the in home personal care industry.” however, it noted that “[w]hile home care workers may choose to have multiple employers at the same time, it does not defeat the ( print page 1706) conclusion that they are employees rather than independent contractors.” after considering these comments, the department declines to add a statement to the regulatory text stating that a worker's ability to work for others indicates independent contractor status. the department believes that having multiple jobs can too often be necessary for financial survival in the modern economy, as many commenters and courts have noted.[449] for example, an employee may have two jobs, several part time jobs, or a regularly recurring seasonal job in addition to a full time employment situation, and an independent contractor may also have multiple customers based on their exercise of business initiative. thus, the mere ability to work for others is not necessarily an indicator of employee or independent contractor status. some commenters urged the department to create an exception for industries like trucking where legal requirements make it more complicated for drivers to use the same equipment to work for another motor carrier. see e.g., nhda, scopelitis, garvin, light, hanson & feary. however, real women in trucking observed that “the ability to work for others is key to whether a driver is economically dependent or not,” noting that “the department's emphasis that both direct prohibitions on working for others and indirect barriers are relevant to this factor” was “[e]specially important” because their members experienced working arrangements where they were nominally permitted to carry loads for other carriers, but “this flexibility is not available in practice.” this situation was addressed by the seventh circuit in a recent decision where the company retained sole discretion to deny the driver's request to haul freight for another carrier, and it also reserved the right to arrange for third party monitoring of compliance with federal safety regulations at the driver's expense if he drove for other carriers.[450] further, even if the driver received approval to haul for another carrier and could have afforded to pay for third party compliance monitoring, he would have been required to remove or cover the company's identification on his truck and to display his own or the other company's information.[451] the court determined that these facts, showing that the company's “system for approving and monitoring trips made for other carriers was so complex and onerous that drivers could not, as a practical matter,” haul loads for other carriers, weighed in favor of employee status.[452] although the department is recognizing in this final rule that actions taken by a potential employer for “the sole purpose of complying with a specific, applicable federal, state, tribal, or local law or regulation” are not indicative of control, the department continues to believe that where a business goes beyond compliance with the law or regulation in a way that serves the business's own compliance methods for example, the system described in brant that imposed several restrictions on the driver's ability to haul freight for others, including requiring the driver to pay for a third party monitor this may be indicative of control. therefore, the department declines to adopt a more blanket, imprecise provision pertaining to industry specific limitations on the ability to work for others. moreover, commenters and the brant decision have prompted the department to conclude that the regulatory proposal addressed indirect means of limiting workers' ability to work for others too narrowly, as it only would have recognized situations in which the potential employer “places demands on workers' time” that do not allow them to work for others.[453] as nelp noted, “whether a worker is truly free to work for others requires an examination of the facts on the ground; businesses may place demands on time or monetary penalties that effectively preclude a worker from seeking other work.” because businesses may impose financial demands or other restrictions on workers' ability to work for others such as the “complex and onerous” system in brant  in addition to demands on time that do not allow them to work for others the department is revising the regulatory language in the final rule to encompass such situations. the revised text removes the word “time” and adds the words “or restrictions” after “or places demands” to more accurately capture indirect means of limiting workers' ability to work for others. ufcw urged the department to add additional considerations that are related to a potential employer limiting a worker's ability to work for others. first, it contended that platform companies essentially coerce workers to continuously accept work (which would preclude them from working for others) by threatening to terminate workers from the platform or reduce the availability of work shifts unless the worker continuously accepts jobs. additionally, it noted that an employer may prohibit workers from developing their own business or customer base, for example, by prohibiting a platform worker from doing any independent work for customers they connect with through the app. the lccrul & wlc also described clients a tow truck driver and a cannabis dispensary delivery driver who similarly were not able to work for others because they were expected to be on call all day waiting for assignments. the department agrees that these types of facts could be relevant to whether a potential employer has either explicitly limited the worker's ability to work for others or has placed demands or other restrictions on workers that do not allow them to work for others. however, the department views these as encompassed within the final regulatory text, such that there is no need to add additional language. finally, ooida encouraged the department to view the ability to work for others within a working arrangement as “relevant, but not determinative of the relationship” and as “one of several considerations within the `control' factor.” the department reaffirms that the ability to work for others is just one consideration within the control factor and agrees with the commenter that it is relevant, but not determinative, of whether the worker is an employee or independent contractor. moreover, the control factor itself is not determinative of a worker's status the economic reality test is a totality of the circumstances test where no one factor is dispositive.[454] the department is finalizing the ability to work for others portion of control factor at § 795.105(b)(4) with the revisions discussed herein. a registered nurse provides nursing care for alpha house, a nursing home. the nursing home sets the work schedule with input from staff regarding their preferences and determines where in the nursing home each nurse will work. alpha house's internal policies prohibit nurses from working for other nursing homes while employed with ( print page 1707) alpha house in order to protect its residents. in addition, the nursing staff are supervised by regular check ins with managers, but nurses generally perform their work without direct supervision. while nurses at alpha house work without close supervision and can express preferences for their schedule, alpha house maintains control over when and where a nurse can work and whether a nurse can work for another nursing home. these facts indicate employee status under the control factor. another registered nurse provides specialty movement therapy to residents at beta house. the nurse maintains a website and was contacted by beta house to assist its residents. the nurse provides the movement therapy for residents on a schedule agreed upon between the nurse and the resident, without direction or supervision from beta house, and sets the price for services on the website. in addition, the nurse simultaneously provides therapy sessions to residents at beta house as well as other nursing homes in the community. the facts that the nurse markets their specialized services to obtain work for multiple clients, is not supervised by beta house, sets their own prices, and has the flexibility to select a work schedule indicate independent contractor status under the control factor. in § 795.110(b)(5), the department proposed to return to framing this factor as “whether the work performed is an integral part of the employer's business.” [455] the department emphasized its belief that its proposed articulation of the integral factor which considers whether the work is “critical, necessary, or central to the employer's principal business” better reflects the economic reality case law and is more consistent with the totality of the circumstances approach to determining whether a worker is an employee or an independent contractor than the 2021 ic rule's “integrated unit of production” framing.[456] the department explained that the 2021 ic rule's integral formulation relied on a rigid reading of rutherford (which noted that the work was “part of an integrated unit of production” of the employer).[457] having further considered the case law, the department concluded in the nprm that the 2021 ic rule's approach did not reflect supreme court or federal appellate court precedent.[458] as the 2021 ic rule acknowledged, the supreme court's decision in silk determined that coal “unloaders” were employees of a retail coal company as a matter of economic reality in part because they were “an integral part of the business[ ] of retailing coal.” [459] the 2021 ic rule interpreted this language as merely articulating a part of the overall inquiry rather than a specific factor useful for deciding the question of economic dependence or independence. but as the department explained in the nprm, the court in silk explicitly considered the fact that the workers were an “integral part” of the business to be relevant to the inquiry, and later courts likewise found this framing to be useful to the economic reality analysis so much so that most federal courts of appeals routinely list “integral” as an enumerated factor, but no court of appeals uses “integrated unit” for this factor.[460] additionally, the nprm explained that the department has also used this proposed approach to the integral factor for decades and has consistently found it to be a useful factor in the economic reality analysis.[461] for these reasons, the department proposed to eliminate the “integrated unit” factor as an enumerated factor and instead to restore the integral factor, understood by courts as being focused on whether the work is critical, necessary, or central to the potential employer's business.[462] the department explained that most courts adopt a common sense approach to determining whether the work or service performed by a worker is an integral part of a potential employer's business.[463] for example, if the potential employer could not function without the service performed by the workers, then the service they provide is integral.[464] the department noted that “[s]uch workers are more likely to be economically dependent on the potential employer because their work depends on the existence of the employer's principal business, rather than their having an independent business that would exist with or without the employer.” [465] additionally, courts also look at whether the work is important, critical, primary, or necessary to the potential employer's business.[466] in most cases, if a potential employer's primary business is to make a product or provide a service, then the workers who are involved in making the product or providing the service are performing work that is integral to the potential employer's business.[467] the department emphasized that the judicial treatment of the integral factor reflects the understanding that a worker who performs work that is integral to an employer's business is more likely to be employed by the business, whereas a worker who performs work that is more peripheral to the employer's business is more likely to be independent from the employer.[468] finally, the department ( print page 1708) noted that while it is only one part of the overall inquiry, courts continue to find the integral factor useful for evaluating economic dependence. many commenters expressed agreement with the department's decision to return to the framing of this factor as the extent to which the work performed is an integral part of the potential employer's business. see, e.g., afl cio; century foundation; ibt; ndwa; nelp; nwlc; roc united; state ags; transport workers union of america. for example, nelp commented that it agreed with the statement in the nprm that “if the [employer] could not function without the service performed by the workers, then the service they provide is integral,” explaining that this factor “recognizes a simple truth: workers are more likely employees under the flsa if `they perform the primary work of the alleged employer.' ” afl cio similarly commented that it “strongly supports the return of this factor to its `longstanding departmental and judicial interpretation, rather than the `integrated unit of production' approach that was included in the 2021 ic rule.' ” the century foundation commented that “[t]his factor helpfully looks at whether the work performed is an essential or critical aspect of the business,  i.e., whether the work is critical to the main service or product that the business provides.” nwlc agreed with the nprm's rejection of the 2021 ic rule's “integrated unit” framing of this factor, stating that the department's proposal “appropriately considers whether the work performed is an essential or critical aspect of the business  i.e., whether the work is critical to the main service or product that the business provides.” nwlc explained that the nprm's “framing is consistent with the long line of court decisions finding a worker's performance of work that is integral to the employer's business to be an indicator of employee status, reflecting the commonsense understanding that employers are more likely to hire employees to perform the tasks involved in providing the core products and/or services that their business offers.” ibt expressed support for the department's proposed articulation of the integral factor and recommended “that guidance for this factor make explicitly clear the focus of the factor is on the work performed, not the individual worker.” outten & golden also stated that the final regulatory text should incorporate the text from the nprm stating that “the focus of the integral factor is on the work performed, not the individual worker.” as the department explained in the nprm, this approach evaluates whether the worker performs work that is central to the employer's business, not whether the worker possesses some unique qualities that render them indispensable as an individual.[469] an individual worker who performs the work that an employer is in business to provide but is just one of hundreds or thousands who perform the work is nonetheless an integral part of the employer's business even if that one worker makes a minimal contribution to the business when considered among the workers as a whole.[470] the department believes that the proposed regulatory text, which states that “[t]his factor considers whether the work performed is an integral part of the employer's business” rather than “whether any individual worker in particular is an integral part of the business” sufficiently captures this understanding of the integral factor. some commenters urged the department to maintain the 2021 ic rule's framing of this factor as “integrated unit of production,” expressing the view that the 2021 ic rule's approach is more consistent with silk and rutherford. see e.g., freedom foundation; scalia law clinic; u.s. chamber; see also nela; outten & golden. for example, scalia law clinic commented that rutherford and silk “make clear that the `integral' factor concerns whether a worker is part of an integrated unit of production, not whether she is economically important to a business operation.” the u.s. chamber commented that “focusing the integral prong on an integrated unit of production is fully supported by the extant decisional law” stating that “[t]he supreme court has described this prong as considering whether the worker is part of an `integrated economic unit' in the putative employer's business.” the freedom foundation similarly commented that the supreme court in rutherford espoused the proper articulation of the factor as “integrated unit of production” explaining that “ `[i]ntegral' and `integrated' could be described as near homonyms . . . they are etymologically related words that sound similar but have different meanings.” the freedom foundation further explained that “ `[i]ntegral,' in the sense described by the department . . . means `necessary to make a whole complete; essential, fundamental;' whereas `integrated' in the sense used by the supreme court in rutherford means `with various parts linked or coordinated.' ” the freedom foundation commented that it believes the department misrelies on silk to support its proposed framing of the integral factor, noting that “ silk did not include integrality in its list of factors, nor did it apply it as a factor of decision.” see also i4aw (factor was originally articulated as “integrated unit of production” but “[o]ver the years . . . morphed, without explanation, into whether a role was `integral' to the business hiring the putative contractor. . . . [t]his scrivener's error has created greater confusion for businesses that want to be or work with ics and has made it more difficult for courts to permit independent contract work”). nelp agreed with the department's framing of the integral factor but stated that “[t]o provide further clarity on this factor, the dol should recognize that the question of integration is not an either/or proposition” noting that “[w]hether the work is integral such that the business could not offer its goods or services without it . . . is important to consider” but “it does not define the outer limits of this factor.” nelp explained that “[a]s the supreme court has recognized[,] whether the work is part of an `integrated unit of production' also informs whether the worker is more likely to be an employee or independent contractor.” after considering these comments, the department is retaining the approach proposed in the nprm, which considers whether the work performed by the worker is an integral part of the employer's business. as discussed below, the department believes that its proposed approach to the integral factor is more consistent with longstanding judicial precedent and decades of department guidance than the 2021 ic rule's articulation of this factor, which focused on whether the worker is part of a “integrated unit of production.” the department notes, however, that it does not intend to preclude consideration of the potential relevance of the supreme court's discussion of the “integrated unit of production” in rutherford. consistent with the totality of the circumstances approach, under which all relevant facts should be considered, the department recognizes that the extent to which a worker is ( print page 1709) integrated into a business's production processes may be relevant to the question of economic dependence or independence and may be considered under any relevant enumerated factor, or as an additional factor. for example, as the department expressed in the nprm, indicators that a worker is integrated into an employer's main production processes, such as whether the worker is required to work at the employer's main workplace or wear the employer's uniform, may illustrate an employer's control over the work being performed.[471] commenters' claims that the 2021 ic rule's emphasis on the “integrated unit of production” is more consistent with applicable judicial precedent than the approach proposed in the nprm stands in sharp contrast to decades of judicial precedent and departmental guidance. the supreme court's decision in silk determined that coal “unloaders” were employees of a retail coal company as a matter of economic reality in part because they were “an integral part of the business [ ] of retailing coal.” [472] some commenters took the position that the court in silk merely mentioned the integral nature of the work performed but did not intend for it to be a factor considered in the overall inquiry. however, the supreme court in silk emphasized that its list of factors was not intended to be exhaustive, but instead consisted of factors the court believed would be useful to courts and agencies applying the economic reality test in the future. moreover, the court explicitly considered it relevant to the determination of employment status that the coal unloaders in silk were an “integral part” of the retail coal business, and the majority of federal courts of appeals have likewise adopted this consideration as a relevant factor for the inquiry into economic dependence or independence.[473] commenters attempted to cast aside decades of judicial precedent by employing an overly rigid understanding of rutherford, an understanding that no federal court of appeals has adopted as the standard for this factor in the decades since silk and rutherford. as the department has emphasized, the approach in this final rule is underpinned by a desire to bring consistency and clarity to the economic reality inquiry by aligning this rule with the approach taken by the majority of federal appellate case law. nearly all the federal courts of appeals expressly consider whether the work performed is an integral part of the potential employer's business as a sixth enumerated factor in the economic dependence or independence inquiry.[474] the fifth circuit has not expressly enumerated the integral factor but has at times assessed integrality as an additional relevant factor.[475] the department has also long considered whether the work performed is an integral part of the employer's business as a factor in the economic realities' inquiry.[476] for example, in one of the department's earliest pronouncements of the economic reality factors a 1949 whd opinion letter distilling the six “primary factors which the court considered significant” in rutherford and silk  the first factor enumerated was “the extent to which the services in question are an integral part of the `employer[']s' business.” [477] the department disagrees with the commenters' contention that the approach proposed by the department and taken by nearly every federal court of appeals is a result of a misunderstanding of rutherford, silk, the flsa, and the economic reality inquiry. the historical approach to this factor by the department and the courts stands in stark contrast to the fact that not a single federal court of appeals identifies “integrated unit of production” as the standard for this enumerated factor of the economic reality test. commenters identified one federal appellate decision that they contend applied rutherford's “integrated unit of production” as the standard for this factor in an independent contractor inquiry under the flsa, tobin v. anthony williams mfg. co.[478] see e.g., cpie; cwi; dsa; iba; n/ma. the decision in tobin does not, however, stand for the proposition that the relevant standard for this factor under the enumerated factors of the economic reality test is whether workers are part of an “integrated unit of production.” instead, tobin was a factually analogous case to rutherford where the eighth circuit found it relevant to the overall economic reality inquiry that the timber haulers and wood workers were part of one integrated unit of production.[479] consistent with the department's discussion above, tobin illustrates how rutherford' s “integrated unit of production” framing may be considered when relevant to the question of economic dependence. moreover, the eighth circuit has elsewhere recognized that the extent to which the work performed is integral to the employer's business is one of the enumerated factors under the economic reality test.[480] a number of commenters expressed concerns that the department's proposed articulation of the integral factor was an attempt to adopt one of the prongs of the abc test. see, e.g., 4a's; club for growth; fight for freelancers; nrf & nccr; u.s. chamber; wsta. for example, the u.s. chamber commented that “it appears that the proposed rule's shift away from the supreme court's focus on an `integrated unit' to whether the work is `critical, necessary, or central' is a thinly veiled attempt to inject prong b of the abc test whether the work takes place outside the usual course of the putative employer's business into the analysis.” the club for growth, nrf & nccr, and the u.s. chamber contended that the department's proposal for the integral factor was at odds with the department's explanation elsewhere in the nprm that the department believes the abc test to be inconsistent with supreme court precedent interpreting the flsa, and as such, cannot be adopted without supreme court or congressional alteration of the applicable analysis under the flsa. fight for freelancers also commented that “[the integral factor] is the most likely to misclassify legitimate independent contractors as employees, because it is so similar to the b prong of the abc test.” although there may be conceptual overlap between the department's proposed integral factor and prong b of the abc test, as discussed above, the department is not adopting an abc test. the assertion that the department's proposal regarding the integral factor is an attempt to insert prong b of an abc test in this rule is baseless. first, the integral factor is but one factor in a ( print page 1710) multifactor inquiry, where no one factor is dispositive, and where the totality of the circumstances is considered to determine the ultimate question of whether a worker is economically dependent on the potential employer for work or is in business for themself. the totality of the circumstances test thus stands in stark contrast to an abc test, in which each element of the test is dispositive. as the department expressly recognized in the nprm, and reaffirms here, not all workers who perform integral work are employees, and there may be times when this factor misaligns with the ultimate result. this is entirely consistent with the totality of the circumstances approach.[481] prong b of the abc test, on the other hand, is dispositive of employment status. if the hiring entity cannot show that the work being performed by the worker is outside the usual course of the hiring entity's business, employment status is found regardless of the other factors of the abc test.[482] thus, while a worker can perform work that is integral to the potential employer's business and still be considered an independent contractor under this final rule, a worker performing work in the usual course of their potential employer's business will always be an employee under the abc test. in this final rule, the department is returning to the longstanding understanding of the integral factor consistent with decades of court precedent and department guidance applying the economic reality test under the flsa. again, the department is not adopting an abc test. several commenters expressed concerns that the integral factor would lead to virtually every worker being classified as an employee since most, if not all, work performed for a business could theoretically be considered critical or necessary to an employer's business. see, e.g., alabama forestry association; fmi; goldwater institute; mep; nafo; scalia law clinic; u.s. chamber. for example, scalia law clinic commented that “[a]ll work for a business is in some sense `critical, necessary, or central to . . . [a] business,' because businesses only hire workers that add economic value.” the u.s. chamber similarly commented that “[t]he department has mistakenly equated `integral' with `critical, necessary, or central to the employer's business'. . . . taken literally, this could include every independent contractor, because a business would not hire an independent contractor unless it was `necessary' to do so.” nafo similarly commented “[t]his new interpretation makes it impossible to understand or apply the `integral' factor” noting that the department's rule “would effectively subsume virtually every contracting or subcontracting relationship because all subcontractors perform a function that the entity deems `integral' to a product or a service otherwise, it would not contract with them.” mep further explained that “[t]his is particularly the case with small businesses that need to rely on outside expertise.” as an example, mep noted that it, security, services, marketing, or legal consulting services, may not be the main intent of the business, but they may be critical or necessary to the business. as a threshold matter, the department reiterates that, as with the other enumerated factors of the economic reality test, the integral factor is just one area of inquiry that is considered along with the other factors to reach the ultimate determination of economic dependence or independence. the department again emphasizes that it is “not always true that workers whose work is integral are employees.” [483] additionally, commenters' assertions that this factor would subsume every contracting relationship and would always weigh in favor of employee status are misguided. the commenters misapply the department's articulation of this factor by suggesting that virtually every type of work commissioned by a business would be considered integral, since businesses do not contract for work that isn't necessary or critical to their functioning. the key limiting word that commenters appear to overlook is “principal.” as illustrated by the example the department provided for this factor in the nprm, which is also part of this final rule, while it might in some sense be critical or necessary for a business to hire an accountant to manage their tax obligations, for example, this accounting work may nonetheless not be critical, necessary, or central to the potential employer's principal business. to further illustrate, a coffee shop's “principal” business is making, selling, and serving coffee. a coffee shop might need window washers to ensure clear views and a clean appearance for customers, but the window washers are not generally integral to the principal business of the coffee shop. commenters maintaining that any work contracted by a business is central, necessary, or critical to its functioning overlook this important limitation of the integral factor only work that is critical, necessary, or central to the potential employer's principal business is integral. some commenters requested clarification for their specific industries, expressing concerns that in certain industries laws and regulations mandate relationships such that the work performed would be considered an integral part of the potential employer's business. for example, nar commented “that the extent to which the work is performed as an integral part of the employer's business within the real estate industry context, is mandated by state laws and regulations.” nar suggested the department's rule “should recognize such industry nuances, understanding that compliance with state statutory and regulatory provisions does not conflict with the ability to work as an independent contractor under the test.” acli similarly commented that “if insurance and/or securities industry laws and regulations compelling agents and registered representatives to affiliate with licensed insurers and broker dealers were sufficient to negate independent contractor status, this factor would perpetually weigh against independent contractor status for insurance industry relationships.” acli requested the department “categorically affirm that where laws or regulations dictate that an insurance worker must be affiliated with a company in the same business . . . the integral part of the business factor be viewed as at most a neutral factor.” as the department repeatedly states throughout this final rule, no one factor is dispositive, and the ultimate question is whether as matter of economic reality the worker is in business for themself or is economically dependent on the potential employer for work. if the work being performed is necessarily integral to the business of the potential employer, the integral factor may weigh in favor of employee status, but it is only one part of the inquiry. it is not dispositive. where the other factors weigh in favor of independent contractor status, and the economic reality as a whole indicates the worker is in business for themself, the overall conclusion may likely be that the worker is an independent contractor; notably, compliance with specific, applicable legal obligations is addressed in the discussion of the control factor, section v.c.4.a of this preamble. this inquiry, however, is specific to the ( print page 1711) factual circumstances of a particular relationship, and the department cannot broadly make a determination about the status of an entire sector of workers whose economic relationships are varied. therefore, the department declines to provide exemptions from a particular factor for certain industries. after consideration of the comments received, the department reiterates its belief that the extent to which the work performed is an integral part of the potential employer's business sheds light on the ultimate inquiry of whether a worker is economically dependent on the potential employer for work or is in business for themself. the department is returning to this framing of the integral factor in this final rule because this approach is more consistent with supreme court precedent, decades of judicial precedent in the federal courts of appeals, and the totality of the circumstances approach than the 2021 ic rule's “integrated unit of production” framing of this factor. the department is adopting the integral factor as proposed in the nprm with minor wording changes to provide additional clarity (adding “of the business” to the end of the second sentence of the regulatory text to state “whether the function they perform is an integral part of the business”). the department is finalizing the integral factor (§ 795.110(b)(5)) as discussed herein. a large farm grows tomatoes that it sells to distributors. the farm pays workers to pick the tomatoes during the harvest season. because picking tomatoes is an integral part of farming tomatoes, and the company is in the business of farming tomatoes, the tomato pickers are integral to the company's business. these facts indicate employee status under the integral factor. alternatively, the same farm pays an accountant to provide non payroll accounting support, including filing its annual tax return. this accounting support is not critical, necessary, or central to the principal business of the farm (farming tomatoes), thus the accountant's work is not integral to the business. therefore, these facts indicate independent contractor status under the integral factor. the department proposed that the skill and initiative factor consider “whether the worker uses specialized skills to perform the work and whether those skills contribute to business like initiative.” the department stated that “[t]his factor indicates employee status where the worker does not use specialized skills in performing the work or where the worker is dependent on training from the employer to perform the work.” the department further stated that, “[w]here the worker brings specialized skills to the work relationship, it is the worker's use of those specialized skills in connection with business like initiative that indicates that the worker is an independent contractor.” [484] the department explained that the proposed regulatory text for this factor would reaffirm the longstanding principle that this factor indicates employee status where the worker lacks specialized skills. the department further explained that it believed that the application of initiative in connection with specialized skills is useful in answering the overarching inquiry of whether the worker is economically dependent on the employer for work or is in business for themselves, and that, as a result, it was “proposing to reintegrate initiative into this factor and no longer exclude consideration of initiative when applying this factor, as provided in the 2021 ic rule.” the department then discussed the case law supporting its position that a worker's lack of specialized skills when performing the work generally indicates employee status, but also reiterated that no one factor is dispositive, consistent with the overarching economic realities analysis. because both employees and independent contractors can be highly skilled and/or bring specialized skills to the work relationship, the department discussed how focusing on whether the worker uses “the specialized skills in connection with business like initiative” is helpful in distinguishing between the two classifications and further discussed the case law and its prior guidance supporting such an approach. finally, the department acknowledged that some facts showing an exercise of initiative can be relevant under the skill factor and another factor, and explained that considering facts showing an exercise of initiative under more than one factor to the extent appropriate depending on the facts of a case is consistent with and furthers the totality of the circumstances approach to assessing the economic realities of the work relationship.[485] in addition to the numerous comments generally supporting the department's six factor analysis, a number of commenters expressed support for the nprm's discussion of the skill and initiative factor. for example, ndwa stated that the nprm's analysis “is helpful because requiring initiative as well as skill better answers the questions of whether a worker is in business for themselves.” the shriver center agreed. the leadership conference similarly stated that the nprm's analysis “is helpful because we believe that all work is skilled work in the colloquial sense of the term, and elevating the question of whether a worker can exercise initiative as well as skill better answers the question of whether a worker is in business for themselves.” gale healthcare solutions advised that for nurses, “adding business initiative to skill is an appropriate measure for distinguishing workers who should be classified as independent contractors . . . from those who, while they employ nursing skills in the performance of their work, do not do so in combination with the business like initiative needed to grow a nursing practice.” the la fed & teamsters locals commented that the nprm “appropriately recognizes that while a lack of specialized skills indicates employee status, the exercise of such specialized skills does not indicate independent contractor status absent the worker's using business like initiative in relation to those skills.” and roc united stated that the nprm's “decision to include skill and initiative as a stand alone factor is another improvement over the 2021 rule,” and that the nprm “correctly recognizes that most work that does not require specialized skills is not performed by independent contractors ( e.g., security guards, janitors, drivers, landscape workers, and call center workers).” see also nelp (expressing agreement with also including in this factor “an analysis of whether the worker uses those skills in connection with `business like initiative' ”); nwlc (commenting that the nprm would correctly restore consideration of initiative to this factor and affirm that “a true independent contractor is likely to have specialized skills” and use those skills to exercise “business like initiative”). some other commenters that generally supported the department's proposal requested changes to or clarifications of the skill and initiative factor. for example, smacna stated that “[t]his is correct as far as skills” but added that, “for workers who are highly skilled, the `skill and initiative' factor should not be ( print page 1712) used to weigh against employee status.” the case law, however, does not support the position that, for highly skilled workers, this factor should not weigh against employee status.[486] real women in trucking stated that it would appreciate clarification that, “although truck driving typically is not classified as `skilled' labor in other contexts, it requires sufficient skill that, when combined with business like initiative, drivers are appropriately considered independent contractors.” the department agrees that, consistent with the analysis for this factor and its discussion of commercial drivers' licenses (cdls) below, this factor would indicate independent contractor status for a worker who uses truck driving skills in connection with business like initiative. farmworker justice stated that “courts have made clear that `most farm labor jobs require little specialized skill' ” and “encourage[d] the dol to include reference to such cases in the final rule, as it has for workers in numerous other industries, such as janitors, security guards, landscape workers, and call center workers.” the department agrees with this characterization of the case law regarding “most farm labor jobs” and notes that it has taken that position in its own enforcement actions.[487] ibt “supports the department's proposal for this factor,” “applauds the department's recognition that several courts have already determined that certain workers including, drivers, security guards, janitors, landscape workers, and call center workers do not require specialized skills,” and “recommends that guidance for this factor include specific instruction that asks courts to rely on the previous decisions finding certain occupations do not require prior experience; the workers are dependent on training from the employer to perform the work; or that the work requires no training, and thus are indicators that the relevant worker(s) lack(s) specialized skills.” the department declines to include that type of instruction as it is unnecessary in light of these court decisions. moreover, the department is not intending to identify any particular occupation as lacking specialized skills in all cases. nela stated that, “[a]lthough the proposed rule correctly reestablishes the link between skill and business like initiative as the raison d'etre of the factor, it does not make clear enough that the factor only points to independent contractor status when such a link is found.” nela suggested accordingly that the final rule “would be strengthened by incorporating a few key principles from the commentary into the rule itself.” nela requested that sentences from the nprm stating that the “fact that workers are skilled is not itself indicative of independent contractor status” and that “[b]oth employees and independent contractors may be skilled workers” be added to the regulatory text.[488] the department agrees that including versions of these sentences in the regulatory text will help sharpen the point that use of skills in connection with business like initiative is what distinguishes between independent contractors and employees under this factor. accordingly, the department is revising the last sentence of the proposed regulatory text for this factor to be two sentences and to read (the italicized language is new as compared to the nprm): “where the worker brings specialized skills to the work relationship, this fact is not itself indicative of independent contractor status because both employees and independent contractors may be skilled workers. it is the worker's use of those specialized skills in connection with business like initiative that indicates that the worker is an independent contractor.” the department, however, believes that it is unnecessary to add the following sentence that nela suggested incorporating into the regulatory text: “to indicate possible independent contractor status, the worker's skills should demonstrate that they exercise independent business judgment.” this sentence would be duplicative of the existing regulatory text language that it “is the worker's use of those specialized skills in connection with business like initiative that indicates that the worker is an independent contractor.” the department further believes that adding “only” to this existing regulatory text language (as nela requested) so that it would read that it “is only the worker's use . . .” would not provide clarification, especially considering the changes that the department is making to the regulatory text. numerous commenters opposed, disagreed with, and/or requested changes to, or clarifications of, the proposed skill and initiative factor. for example, cwi stated that, although it agrees that “both skill and initiative may play a role in the independent contractor calculus,” it “fundamentally disagrees, however, that those considerations should be treated as a standalone factor in the economic realities calculus.” and n/ma stated that “[c]onsideration of skill and initiative as a stand alone factor creates confusion and ambiguity, and results in the considerations under that factor being provided outsized weight in the totality of the circumstances analysis.” see also scalia law clinic (“the nprm creates a new definition of the `skill' factor that gives it greater weight, despite precedent to the contrary.”). however, courts and the department have invariably included some version of skill and initiative as a separate and distinct factor in their analyses for decades. consistent with the department's repeated statements in this final rule, this factor should not be given, as a predetermined matter, any different weight than any of the other factors.[489] shrm commented that the nprm “purports to convert a standard consideration utilized by myriad independent contractor classification tests the degree of skill required by the work into an assessment of a worker's business acumen.” see also thedream.us (describing a focus on business like initiative as an “amorphous qualification to an otherwise straightforward consideration”). shrm expressed concern that “[t]his is not only a drastic departure from a well settled standard, but it also negates the proposed rule's decree that a worker's opportunity for profit or loss based on their managerial skill is relevant to their classification as an employee or an independent contractor.” many federal courts of appeals consider initiative as part of this factor,[490] and thus, it is by no means a ( print page 1713) “drastic departure.” moreover, because both employees and independent contractors may be skilled workers, considering whether a worker uses specialized skills in connection with business like initiative rather than considering only whether the worker has specialized skills helps to distinguish the worker's status and is probative of the ultimate question of economic dependence.[491] and there is no basis for asserting that the skill and initiative factor “negates” the relevance of the opportunity for profit or loss factor; both factors are relevant to the analysis even if, as explained in the nprm,[492] some facts showing an exercise of initiative can be considered under both factors. fsi, coalition of business stakeholders, and nrf & nccr similarly objected to the inclusion of initiative in this factor. fsi stated that including initiative in the skill factor contravenes silk and that “this alteration represents yet another way in which the proposed rule repeatedly and improperly emphasizes `entrepreneurial drive' as an overarching consideration across many factors.” the coalition of business stakeholders and nrf & nccr disagreed with the inclusion of initiative in this factor and described it as “inconsistent” with silk. this factor, however, is consistent with silk. the unloaders in silk performed “simple tasks” [493] and were employees, in part, for that reason; the department's skill and initiative factor would likewise point to employee status for such unloaders. the “driver owners” in silk, on the other hand, seemed to use their truck driving skills in a business like way, drove for multiple clients, and were described by the court as “small businessmen.” [494] the department's skill and initiative factor would likewise point to independent contractor status for such driver owners. fsi further stated that emphasizing “entrepreneurial drive” may “lead to erroneous classification decisions because, among other considerations, some workers may strongly prefer to work as independent contractors, not for the flexibility to grow their businesses, but for the flexibility to control their workloads and to work when they want to.” it added that, “while initiative is an appropriate consideration in favor of independent contractor status, its absence does not indicate that a worker is not pursuing independence.” 4a's similarly stated that the “the proposed rule could create uncertainty for agencies that utilize legitimate independent contractor relationships to carry out important business functions, but their freelance talent does not have entrepreneurial drive or take personal initiative to expand their business to working with other agencies or in house marketing shops.” the department continues to believe that whether workers with specialized skills use those skills in connection with business like initiative is probative of their status as employees or independent contractors. using such skills to “grow” or “expand” their work is a prime example of business like initiative as the commenters recognize, but there may be other ways in which workers can use such skills in connection with business like initiative. of course, the determination of a worker's status ultimately requires consideration of the totality of the circumstances not just the skill and initiative factor. dsa stated that “[a]n individual could not have a specialized skill, but still take the initiative of an independent business or vice versa. if the rule were to go forward as proposed, and each factor pointed in different directions, there could be confusion as to where a ruling may come down on this one factor.” the department does not believe this to be the case when applying the skill and initiative factor. as explained in the nprm, courts have often recognized that a worker's lack of specialized skills to perform the work indicates that the worker is an employee. as the tenth circuit, for example, has explained, “the lack of the requirement of specialized skills is indicative of employee status.” flint eng'g, 137 f.3d at 1443 (quoting snell, 875 f.2d at 811) (alteration omitted).[495] when a worker lacks specialized skills, this factor will indicate employee status even if the worker exercises “the initiative of an independent business.” that initiative, of course, is very relevant to the overall analysis, and the worker who lacks the specialized skills but exercises “the initiative of an independent business” may very well be an independent contractor after considering all of the factors. for those reasons, there should be no confusion. the landscaper example in the nprm's discussion of the skill and initiative factor provides additional explanation; the landscaper's landscaping work does not require specialized skills, but the landscaper's use of initiative and other facts may demonstrate that the landscaper is an independent contractor.[496] the u.s. chamber similarly commented that the nprm was “wrong to focus on `specialized skills' as probative in determining independent contractor status.” the u.s. chamber further commented that “a focus on `the amount of skill required' separate from a worker's initiative that impacts the worker's profits is an unnecessarily restrictive view of independent work currently being performed in the u.s. economy.” in making these arguments, however, the u.s. chamber did not rebut the substantial case law relied on by the department explaining that the use of specialized skills in an independent or business like way is what makes this factor probative of employee or independent contractor status. the department grounds this factor in that case law. citing drivers among other occupations, the u.s. chamber added that “[e]ven low skilled workers can work as independent contractors if they have a skill that they can market to customers.” see also scalia law clinic. the department agrees, as stated above, that workers lacking specialized skills can be independent contractors when all of the ( print page 1714) factors are considered. in addition, the department continues to believe that the landscaper example in the nprm's discussion of this factor, an example which the department reaffirms, addresses that scenario.[497] moreover, no one fact or factor determines whether a worker of any skill level is an employee or independent contractor. mep described the department's articulation of this factor as “unreasonably narrow” and stated that the department “should recognize a wide variety of skills that demonstrate an individual's business like initiative.” it added that the department “should not be in the business of judging which skills are considered specialized or nonspecialized or place high or low value on the skills independent contractors provide.” as noted in the nprm, courts have identified some occupations where workers were found to lack specialized skills (for example, security guards, traffic control officers, drivers, janitorial work, landscaping, and call center workers).[498] the department is seeking to ground this factor in that case law. certain occupations may often lack specialized skills, but the department cannot say that a particular occupation always lacks specialized skills. for example, a explained below, drivers may often lack specialized skills, but drivers with cdls may have a specialized skill. moreover, determining whether a worker has specialized skills is just one part of the inquiry, and workers who lack specialized skills may still be independent contractors. the landscaper example referenced above is one example of a worker who can be an independent contractor even if the work is unskilled, and this outcome is possible in other industries because a worker's classification is ultimately determined by application of all of the factors. nrf & nccr recommended that “specialized skills” be changed to “skill, talent or creativity,” referencing singers at restaurants among other examples. again, the department is not seeking to limit the types of work that involve skills or taking the position that any particular occupation lacks specialized skills. instead, consistent with the bulk of case law, the department is focusing this factor on whether the worker uses their specialized skills in connection with business like initiative rather than only considering whether the worker has specialized skills because that focus is probative of the ultimate question of economic dependence. regarding the nprm's statement that “[n]umerous courts have found that driving is not a specialized skill,” nhda commented that “a number of courts have found professional driving, including driving that requires a commercial driver's license (cdl), involves specialized skills” (footnote omitted). see also scopelitis. these commenters added that “[a] driver with a cdl is a clear indicator of an individual pursuing a specialized skill to engage in a business.” ooida commented similarly, stating that the cases relied on by the department in the nprm “were focused on automobile driving, not the driving of a commercial motor vehicle,” and that it was “unclear whether the department believes the driving skills required for a class a commercial drivers license (cdl) are not specialized.” considering these comments and the requests for clarification, the department clarifies that it recognizes the distinctive nature of cdls and further recognizes that drivers performing work requiring such licenses are likely using specialized skills as compared to drivers generally.[499] as with any worker, consideration of whether a driver with a cdl uses that specialized skill in connection with business like initiative determines whether this factor indicates employee or independent contractor status. cpie stated that “the nprm's interpretation would ignore any initiative that is not attributable to an individual's specialized skill,” expressed concern that this factor may not always align with the ultimate outcome, and “respectfully urges dol to interpret this factor to consider any business initiative that demonstrates an individual's economic independence, regardless of whether the initiative is attributable to any skills.” as an initial matter, the department notes that it is not unusual when applying a multifactor economic realities analysis for one factor to not align with the ultimate outcome when the analysis is applied and the totality of the circumstances is considered. regardless, any business initiative by a worker is plainly relevant to the analysis and may be considered under the opportunity for profit or loss depending on managerial skill factor and other factors, as the landscaper example in the nprm's discussion of the skill and initiative factor demonstrates. accordingly, this rulemaking accounts for iba's comment that “[a] true measure of economic independence would not restrict the analysis of skill and initiative to considering only specialized skills and only initiative attributable to those skills but instead would consider `all major components open to initiative,' such as `business management skills.' ” if not under the skill and initiative factor, the factors comprising the economic realities analysis certainly consider all types of initiative and business management skills by the worker. fight for freelancers asserted that, in the case of a highly skilled worker who is asked by “one of her regular clients” to do “a task that requires far less skill” ( print page 1715) than usual, the worker “would now have to tell her client with whom she likes to work that she cannot provide what the client needs for this particular project, because it does not make use of her more specialized skills.” the department recognizes that using specialized skills in connection with business like initiative does not preclude (and, in fact, may often also include) performance of lower skilled tasks. whether the worker uses specialized skills to perform the work is not determined by isolating any one task performed by the worker; instead, consistent with a totality of the circumstances approach, the worker's work on the whole should be considered to determine if the worker uses specialized skills in connection with business like initiative. coalition of business stakeholders stated that the department's articulation of this factor “dispenses with all independent consideration of a worker's specialized skills obtained or developed separate and apart from the hiring entity” and “all but ensures consideration of this factor will preclude an independent contractor finding.” this comment overlooks the totality of the circumstances nature of the analysis; no one factor can preclude an independent contractor or employee finding. contrary to this commenter's assertion, the department believes that the worker's skills developed separate and apart from the hiring entity are relevant. the regulatory text providing that this factor indicates “employee status . . . where the work is dependent on training from the employer to perform the work” reflects that bringing skills to the work relationship ( i.e., skills developed separate and apart from the employer) may indicate independent contractor status if the skills contribute to business like initiative. regarding training, america outdoors association stated that it “may benefit an outfitter to train an independent contractor, or pay for a first aid certification class, in order for the contractor to better serve out the terms of the contract.” referencing a labor shortage in its industry, wfca stated that “the mere fact that a contractor or dealer is willing to pay to train independent contractor should not make the worker an employee” and asked that the regulatory text be revised to reflect that. see also abc. as an initial matter, some basic training in a workplace, such as paying for a first aid certification class, does not prevent a finding that a worker uses specialized skills to perform the work. instead, the analysis is more general and, as the regulatory text states, should focus on whether the worker is dependent on training from the employer to perform the work. finally, the revision requested by wfca is unnecessary given that the regulatory text already provides generally that “the outcome of the analysis does not depend on isolated factors but rather upon the circumstances of the whole activity” and, “[c]onsistent with a totality of the circumstances analysis, no one factor or subset of factors is necessarily dispositive.” [500] the department is finalizing the skill and initiative factor (§ 795.110(b)(6)) as discussed herein. a highly skilled welder provides welding services for a construction firm. the welder does not make any independent judgments at the job site beyond the decisions necessary to do the work assigned. the welder does not determine the sequence of work, order additional materials, think about bidding the next job, or use those skills to obtain additional jobs, and is told what work to perform and where to do it. in this scenario, the welder, although highly skilled technically, is not using those skills in a manner that evidences business like initiative. these facts indicate employee status under the skill and initiative factor. a highly skilled welder provides a specialty welding service, such as custom aluminum welding, for a variety of area construction companies. the welder uses these skills for marketing purposes, to generate new business, and to obtain work from multiple companies. the welder is not only technically skilled, but also uses and markets those skills in a manner that evidences business like initiative. these facts indicate independent contractor status under the skill and initiative factor. section 795.105(d)(2)(iv) of the 2021 ic rule stated that additional factors may be considered if they are relevant to the ultimate question of whether the workers are economically dependent on the employer for work or in business for themselves.[501] the department proposed to retain this provision with only minor editorial changes, moving it to § 795.110(b)(7). specifically, the department's proposed regulatory text provided that “[a]dditional factors may be relevant in determining whether the worker is an employee or independent contractor for purposes of the flsa, if the factors in some way indicate whether the worker is in business for themself, as opposed to being economically dependent on the employer for work.” [502] the department explained in the nprm that retaining this provision would “reiterate[ ] that the enumerated factors are not to be applied mechanically but should be viewed along with any other relevant facts in light of whether they indicate economic dependence or independence.” [503] additionally, it reemphasized that “only factors that are relevant to the overall question of economic dependence or independence should be considered.” [504] the department explained that this approach reflects the necessity of considering all facts that are relevant to the question of economic dependence or independence, regardless of whether those facts fit within one of the enumerated factors. the department reasoned that this approach is consistent with the supreme court's guidance in silk, where the court cautioned that its suggested factors are not intended to be exhaustive.[505] additionally, this approach is also consistent with the approach that courts and the department have used in the decades since silk to determine whether workers are employees or independent contractors under the flsa.[506] like in the 2021 ic rule, the department proposed not to identify any specific additional factors, and specifically declined to identify the “degree of independent business organization and operation,” a factor considered in prior departmental guidance, as a seventh factor in the analysis. the department explained that given the “focus in this proposed rulemaking on reflecting the economic reality factors commonly used by the circuit courts of appeals, the department chose not to include the worker's `degree of independent business organization and operation' as a seventh factor.” [507] the department noted that it was not aware of any court that has used this as a standalone factor and expressed concerns that “facts that may relate to whether a worker has an independent business organization such as whether the worker has incorporated or receives an internal ( print page 1716) revenue service (irs) form 1099 from an potential employer reflect mere labels rather than the economic realities and are thus not relevant.” [508] a few commenters expressed support for the department's proposed section on additional factors. see e.g., nwlc; afl cio; dsa; and state ags. dsa commented that it “agrees with the department's retention of the 2021 ic rule that additional factors may be considered if they are relevant to the ultimate question of economic dependence.” the afl cio expressed support for the department's additional factors provision, noting that the department correctly recognized that additional factors should be considered when relevant to the economic reality. several commenters expressed concerns with a perceived vagueness and lack of clarity arising from inclusion of additional factors, and some requested that the department delete the additional factors section from the final rule entirely. for example, iec commented that “[t]he proposed rule does little to further define `additional factors' which will only lead to employers, employees, and independent contractors” speculating about “how to apply this in their analysis.” sba expressed concerns with what it described as an “open ended factor” and recommended the department delete it. inline translation services similarly commented that “[t]he catch all phrase `additional factors' should be removed entirely,” stating that “this open ended clause could introduce innumerable other factors during labor audits with very uncertain and unpredictable outcomes.” afpf expressed concerns that “[s]takeholders will have no clarity as to what additional factors may be considered in any particular case.” goldwater institute commented that “[t]o the extent an employer has concluded its economic dependence analysis and finds that the worker is indeed an independent contractor, this final consideration could ostensibly swallow the rule.” the national restaurant association also expressed concerns with the department's decision not to define specific additional factors, commenting that the undefined additional factors section could create confusion as it offers “little guidance to the regulated community.” [509] nafo commented that “this catch all factor provides [the department] a vague and highly discretionary means by which it can determine whether there is something that `indicates' whether a worker is economically dependent on an employer for work without historical precedent or guidance.” the coalition of business stakeholders similarly expressed that “the [department] inserts into the proposed rule a mechanism whereby it can hinge its classification decision on anything it deems to `indicate' that a worker is either in business for themselves or economically dependent on an employer, regardless of whether such consideration has historically, or ever, been considered as part of the classification analysis.” see also, e.g., mep, promotional products association international. contrary to some of the commenters' assertions, the department reiterates that the proposed regulatory language on additional factors is consistent with and reflects decades of supreme court and federal appellate court precedent as well as guidance from the department including the 2021 ic rule emphasizing that the enumerated economic realities factors are not exhaustive. for example, the supreme court explained in silk that “[n]o one [factor] is controlling nor is the list complete.” [510] many federal courts of appeals have also emphasized that the enumerated factors are not exhaustive.[511] courts have reiterated that “[t]he determination of whether an employer employee relationship exists for purposes of the flsa should be grounded in `economic reality rather than technical concepts,' . . . determined by reference not to `isolated factors but rather upon the circumstances of the whole activity.' ” [512] the department's guidance has emphasized a similar approach. for example, whd fact sheet #13 has indicated that its factors are not exhaustive and stated that “the supreme court has held that it is the total activity or situation which controls” the inquiry and that “[t]he employer employee relationship under the flsa is tested by `economic reality' rather than `technical concepts.' ” [513] ai 2015 1 explained that courts “routinely note that they may consider additional factors depending on the circumstances.” [514] the department continues to believe that the additional factors section is entirely consistent with how the courts and the department have approached the economic realities inquiry for decades, including in the 2021 ic rule. commenters expressing concerns that the consideration of additional factors will lead to confusion and uncertainty overlook several important considerations. first, as mentioned, this has been the approach of the courts and the department for decades the enumerated economic realities factors are not exhaustive, all relevant facts should be considered, and the focus of the determination should be grounded in the economic realities as opposed to any isolated factors. there is no basis for the concern that the retention of a regulatory provision stating what courts, the department, and the regulated community have understood to be part of the economic reality test under the flsa for over 75 years will result in confusion and uncertainty as opposed to consistency and familiarity. second, the additional factors section is not ( print page 1717) unbounded and includes clear constraining language in the regulatory text, emphasizing that only those additional factors which indicate that the worker is economically dependent on the potential employer for work or in business for themself can be considered. this reflects the necessity of considering all facts that are relevant to the question of economic dependence or independence, regardless of whether those facts fit within one of the six enumerated factors. while the department declines to specify any particular additional factors, the language of the regulatory text appropriately limits the scope of potentially relevant additional facts or factors that might be considered. moreover, the department recognizes that, in many instances, consideration of additional factors will not be necessary because the relevant factual considerations can and will be considered under one or more of the enumerated factors. the additional factors section is simply a recognition by the department, consistent with decades of case law, that a rule applying to varying economic relationships across sectors of the economy must be applied in a non mechanical fashion and must focus on the totality of the circumstances. the u.s. chamber expressed concern that the additional factors section “has the potential to swallow the six defined factors,” and that “[b]usinesses and workers alike are being asked to consider, weigh, and make significant business decisions under a test that has unlimited undefined possibilities.” the u.s. chamber distinguished the nprm's additional factors section from the 2021 ic rule's section on additional factors, asserting that the 2021 ic rule constrained or narrowed the additional factors application by, first, explicitly assigning more weight to core factors than any potentially relevant additional factors, and second, by identifying relevant additional factors. some commenters suggested that the department assign the category of potentially relevant additional factors less weight than the enumerated factors. see shrm; u.s. chamber. but as the department explained in the nprm, “to assign a predetermined and immutable weight to certain factors ignores the totality of the circumstances, fact specific nature of the inquiry that is intended to reach a multitude of employment relationships across occupations and industries and over time.” [515] this is true both in respect to the elevation of core factors above non core and additional factors in 2021 ic rule, and with respect to the suggested devaluation of potential additional factors that some commenters urged here. other commenters asked the department to specifically recognize certain additional factors. for example, dsa suggested that the department identify as an additional factor “the recognition of independent contractor status for businesses under other statutes, such as the internal revenue code and numerous state statutes.” techserve alliance urged the department to “consider the degree of independent business formalization (incorporation, licenses, taxes) in analyzing” independent contractor status. acre et al. requested that the department consider the degree of transparency provided to a worker about the nature of the work, such as the location, scope, and pay for a particular task, as an additional factor. sifma commented that the department should recognize employment or independent contractor agreements as an additional factor relevant to the economic reality inquiry. abc suggested the department recognize as an additional factor “whether it is a recognized, longstanding practice for a large segment of the industry to treat certain types of workers as independent contractors.” a legal blogger urged the department to clarify some additional factors courts have used in determining whether there is an employment relationship, stating that, for example, “the courts have considered whether the potential employer has the right to terminate the worker for any reason at any time; whether the parties are subject to an agreement indicating an intent to establish an independent contractor relationship; and whether the worker operates in the form of a corporate entity, including as a limited liability company.” after further consideration, and consistent with the nprm, the department declines to identify in this final rule any particular additional factors that may be relevant. the department believes that the regulatory text addressing additional factors, which focuses on whether the additional factors are indicative of whether the worker is in business for themselves or is economically dependent on the potential employer for work, is sufficiently constrained to narrow the possible relevant considerations and sufficiently flexible to capture potentially relevant factual considerations that fall outside the enumerated factors. in light of this, the department believes it is unnecessary to specify any additional factors. the department previously identified the “degree of independent business organization and operation” as a seventh factor that it considered in its analysis.[516] however, as noted in the nprm, the department is not aware of any court that has used this as a standalone factor, and the department declines to identify this as a standalone factor in this final rule. additionally, as explained in the nprm, the department is concerned that facts such as whether the worker has incorporated or receives an irs form 1099 from a potential employer reflect mere labels rather than the economic realities and are thus not relevant. the department has similar concerns that contractual provisions indicating the intent of the parties to establish an independent contractor relationship also may reflect mere labels rather than the economic realities and are thus not relevant. to the extent facts such as the worker having a business license or being incorporated may suggest that the worker is in business for themself, they may be considered either as an additional factor or under any enumerated factor to which they are relevant. however, consistent with an economic reality analysis, it is important to inquire into whether the worker's license or incorporation are reflective of the worker being in business for themselves as a matter of economic reality. for example, if a potential employer requires a worker to obtain a certain license or adopt a certain form of business as a condition for performing work, this may be evidence of the potential employer's control, rather than a worker who is independently operating a business.[517] finally, flex requested that the department clarify whether it still agrees with guidance as to the lack of relevance of certain factors expressed in whd fact sheet #13. flex urged the department to “add guidance to the proposed rule that mirrors the subregulatory guidance in fact sheet #13 and make clear that the same factors previously deemed not relevant are still deemed not relevant.” while the department declines to identify specific factors as never relevant to the inquiry of whether a worker is economically dependent or in business for themselves, the department agrees that certain factors are generally immaterial ( print page 1718) in determining the existence of an employment relationship because they reflect mere labels rather than the economic realities, and do not indicate whether a worker is in business for themselves or is economically dependent on a potential employer for work. as it has stated previously, the department continues to believe that “such facts as the place where work is performed, the absence of a formal employment agreement, . . . whether an alleged independent contractor is licensed by state/local government,” and “the time or mode of pay” do not generally indicate whether a worker is economically dependent or in business for themself.[518] the department is finalizing the additional factors section (§ 795.110(b)(7)) as proposed with one minor editorial change as explained. the department proposed to remove § 795.110 of the 2021 ic rule and use that section for the discussion of the economic reality factors.[519] section 795.110 of the 2021 ic rule provided that in determining economic dependence “the actual practice of the parties involved is more relevant than what may be contractually or theoretically possible.” [520] in the nprm, the department explained that this absolute rule “is overly mechanical and does not allow for appropriate weight to be given to contractual provisions in situations in which they are crucial to understanding the economic realities of a relationship.” [521] the department expressed its belief that a less prescriptive approach is more faithful to the totality of circumstances economic reality analysis, such that contractual or other reserved rights should be considered like any other fact under each factor to the extent they indicate economic dependence.[522] in its proposal, the department acknowledged that contractual authority may in some instances be less relevant, but noted that the 2021 ic rule's position that actual practice is always more relevant is incompatible with an approach that does not apply the factors mechanically but looks to the totality of the circumstances in evaluating the economic realities. the department explained that the focus is always on the economic realities rather than mere labels, but contractual provisions are not always mere labels. instead, contractual provisions sometimes reflect and influence the economic realities of the relationship. the department explained that within each factor of the test, there may be actual practices that are relevant, and there may also be contractual provisions that are relevant and that this examination will be specific to the facts of each economic relationship and cannot be predetermined.[523] in the nprm, the department also discussed the 2021 ic rule's response to “comments asserting that prioritizing actual practice would make the economic reality test impermissibly narrower than the common law control test.” [524] the 2021 ic rule asserted that “the common law control test does not establish an irreducible baseline of worker coverage for the broader economic reality test applied under the flsa.” [525] as the department noted in the nprm, this view of the flsa's scope of employment is inconsistent with the supreme court's observations that “[a] broader or more comprehensive coverage of employees” than under the flsa “would be difficult to frame,” [526] and that the flsa “stretches the meaning of `employee' to cover some parties who might not qualify as such under a strict application of traditional agency law principles.” [527] the department further explained that the “2021 ic rule's blanket diminishment of the relevance of the right to control is inconsistent with the supreme court's observations that the flsa's scope of employee coverage is exceedingly broad and broader than what exists under the common law.” [528] finally, the department recognized that the fact that the employer's right to control is part of the common law test shows that it is a useful indicator of employee status.[529] multiple commenters expressed support for the department's decision to remove the 2021 ic rule's provision on the primacy of actual practice. for example, the state ags agreed with the nprm's reasoning, noting “that unexercised contractual powers among the parties may be equally as relevant to determining economic dependence as exercised powers” and stating that “[t]he department rightly recognizes that the parties' actual practice is not more relevant than any other factor as to the question of economic dependence.” the la fed & teamsters locals stated “a worker cannot be said to be acting independently in running their own business if they are unable to make and effectuate certain decisions because another entity has reserved power over those decisions.” similarly, nelp commented that the nprm rightly recognized “that contractual provisions can be powerful silencers; a right that is never exercised may be more significant evidence of control than a right that is routinely ignored.” justice at work pennsylvania commented that they support the department's position on the primacy of actual practice “which would restore the broad, holistic test for flsa employment, as intended by congress.” gale healthcare solutions similarly commented that they “agree with dol's proposal to remove section 795.110 of the 2021 ic rule, as every fact that is relevant to economic dependence should be considered in the analysis of economic dependence, and contractual possibilities not just actual practices should be considered.” a number of commenters, however, expressed disagreement with the department's proposal to remove this provision of the 2021 ic rule. for example, fmi commented that “control has always been evaluated based upon the actual exercise of control, that is, what the actual practice of the business and worker is not the theoretical reservation of control.” cambridge investment research commented that “[m]erely because an independent contractor elects not to take advantage of his or her independence or freedom says nothing about whether in fact the worker is properly classified.” the u.s. chamber expressed concern that the nprm “contradicts the principle that `[i]t is not significant how one “could have” acted under the contract terms. the controlling economic realities are reflected by the way one actually acts.' ” n/ma urged the department to maintain the 2021 ic rule's position “that unexercised contractual rights are not irrelevant, they are simply not as informative as the actual experience of the parties,” expressed concerns that the nprm “turns the economic realities test into a focus on economic possibilities,” and noted that “[c]ontractual provisions that are truly important necessarily manifest in the actual experiences of the worker.” cwi similarly commented: “to be clear, the 2021 ic rule does not provide that unexercised rights are irrelevant. it merely states the obvious: ( print page 1719) that what the control a putative employer actually exercises is more informative than the control it could exercise.” see also cwc; mep; nrf& nccr. upon considering the comments, the department is finalizing the removal of § 795.110 of the 2021 ic rule (primacy of actual practice). consistent with case law and the department's historical position prior to the 2021 ic rule, the department declines to create a novel bright line rule that assigns a predetermined and immutable weight or level of importance to reserved rights. as explained in the nprm, the department believes a less prescriptive approach is more faithful to the totality of the circumstances, economic reality analysis, and contractual or other reserved rights should be considered like any other fact under each factor to the extent they indicate economic dependence.[530] the significance of each fact in the analysis should be informed by its relevance to the economic realities and this analysis will be specific to the facts of each economic relationship and cannot be predetermined. finally, the department's approach to the reserved right to control is more consistent with the historical bounds of the control factor than the 2021 ic rule's blanket diminishment of the relevance of the right to control, which was inconsistent with the supreme court's observations that the flsa's scope of employee coverage is exceedingly broad, even more so than under the common law.[531] that the common law test includes the employer's right to control shows that it is a useful indicator of employee status.[532] as such, the department believes that removal of this provision is appropriate. specific concerns raised in the comments relevant to this issue are discussed and addressed in this section below. several commenters expressed concerns that the proposed removal of the primacy of actual practice provision was inconsistent with longstanding case law and previous guidance issued by the department. see, e.g., cwc; dsa; fsi; scalia law clinic; u.s. chamber. for example, fmi expressed concerns that the nprm was inconsistent with “the articulation of the control factor in administrator's interpretation (ai) no. 2015 1 (july 15, 2015)” which fmi contends “debunked the idea that reserved control should be a consideration.” fmi also suggested that the nprm was inconsistent with case law cited in ai 2015 1 which expressed that a “worker's control over meaningful aspects of the work must be more than theoretical the worker must actually exercise it.” see also cwc. dsa commented that the 2021 ic rule's elevation of actual practice as always more relevant than contractual or theoretical possibilities was consistent with a 1949 opinion letter that stated “ordinarily, a definite decision as to whether one is an employee or independent contractor under the [flsa] cannot be made in the absence of evidence as to his actual day to day working relationship with his principal.” the u.s. chamber commented that the nprm was inconsistent with decades of court precedent holding that “the focus is on economic reality, not contractual language.” according to the u.s. chamber, the nprm “would effectively elevate reserved contractual rights above the actual practice of the parties” and the “economic realities test would be replaced by a contractual reservation test.” similarly, mep expressed its position that the 2021 ic rule “ensures the true nature of the contractual relationship is considered above all but leaves room for theoretical possibilities to still be considered,” which it contended is consistent with court precedent. contrary to these comments, the department's approach to this issue is consistent with both prior departmental guidance as well as judicial precedent. as the department explained in the nprm, ai 2015 1 recognized six economic realities factors that followed the six factors used by most federal courts, including a control factor described as “the degree of control exercised or retained by the employer.” [533] the nprm also noted “ai 2015 1 further emphasized that the factors should not be applied in a mechanical fashion and that no one factor was determinative.” [534] thus, contrary to fmi's contention, the nprm's approach to the primacy of actual practice is consistent with ai 2015 1's non mechanical, totality of the circumstances approach to the economic dependence inquiry and the potential relevance of the reserved right to control as an indicator of economic reality.[535] additionally, the department's approach to this issue is certainly not in tension with the notion that the economic reality inquiry cannot be made without evidence of the day to day working relationship between a worker and their potential employer.[536] as the department emphasizes in this final rule, it in no way intends to depart from case law which similarly emphasizes consideration of the actual behavior of the parties in deciding the economic reality inquiry.[537] indeed, the department's position is more consistent with the case law, which does not deem actual practice and reserved rights to be mutually exclusive and instead requires a nuanced consideration of all relevant facts.[538] some commenters misconstrued the department's proposal to remove the primacy of actual practice provision from the regulatory text. to be clear, the department does not seek to elevate the weight of theoretical or contractual rights above the weight of actual practice. rather, the department affirms that actual practice is always relevant to the economic reality test. further, the department agrees that in many if not most circumstances the actual practices of the parties will be more relevant to the economic reality than reserved rights or unexercised contractual terms (as, for example, where an employer theoretically or contractually permits workers to decline work assignments, but in practice disciplines workers who decline assignments).[539] and, as the department explained in the nprm, it does not intend to in any way minimize or disregard the longstanding case law that considers the actual behavior of the parties in order to determine the ( print page 1720) economic reality.[540] these cases reflect a bedrock principle about the economic reality test, which looks to the reality of a situation rather than assuming that a written label, contractual arrangement, or form of business, is dispositive. this case law, however, does not require or even support the adoption of a generally applicable rule that in all circumstances reserved or unexercised rights, such as the right to control, are in every instance less indicative of the economic reality than the actual practices of the parties. such a rule would be inconsistent with federal appellate court precedent recognizing that reserved rights may be more probative, such as the temporary nurse staffing agency in superior care that reserved the right to supervise the nurses even though in actuality it did so infrequently.[541] the 2021 ic rule's mandate regarding the primacy of actual practice effectively established a bright line rule that has not been adopted by courts and is in tension with longstanding instructions from courts that a totality of the circumstances analysis be applied in order to analyze a worker's economic dependence. as such, rejecting the 2021 ic rule's prescriptive regulation is more consistent with a non mechanical, fact specific approach to the economic dependence or independence inquiry that has been adopted by the courts.[542] some commenters seemingly conflated the terms “economic reality” and “actual practice.” see, e.g., fsi (defining “actual practice” as “the economic reality of the relationship at issue”). again, the department's position is not departing from or minimizing case law holding that the focus of the inquiry is on the “economic reality, not contractual language.” [543] courts routinely consider both reserved rights and actual practice in order to evaluate the overall question of economic reality. for example, the seventh circuit recently addressed both in brant.[544] in that case, the court examined the operating agreement signed by the driver, which purported to grant the driver broad authority over how to conduct their work, but also “retain[ed] the right to gather remotely and to monitor huge quantities of data about how drivers conducted their work.” the court rejected the company's argument that the broad grant of authority in the agreement was dispositive of independent contractor status because it found that the company exercised complete control over meaningful aspects of the transportation business, including by retaining the right to gather data that could be used to terminate the driver for noncompliance, which weighed in favor of employee status.[545] moreover, none of the case law cited by commenters and to the best of the department's knowledge, no existing case law stands for the proposition that reserved or unexercised rights cannot under any circumstances be indicative of the economic realities, nor does the 2021 ic rule's provision state that reserved rights are never relevant. rather, as discussed, the case law is more consistent with the approach the department is adopting in this final rule, which recognizes that while mere contractual language is not generally driving the economic reality inquiry, reserved contractual rights, like reserved control, may in certain cases be equally as, or more, indicative of the economic reality than the actual practice of the parties. n/ma expressed their view that the department “failed to identify any scenarios in which a contractual, but unexercised right would be more relevant than the parties' actual practices in assessing a worker's day to day economic realities.” the nprm illustrated how reserved rights might be more indicative of the economic reality than actual practice where, for example, a potential employer reserves the right to supervise workers despite rarely making supervisory visits.[546] the mere existence of such reserved rights to control the worker may strongly influence the behavior of the worker in their performance of the work even absent the employer actually exercising its contractual rights. as a result, this reserved right to supervise may be more indicative of the reality of the economic relationship between the worker and the potential employer than the potential employer's apparent hands off approach to supervision. several commentors also expressed concerns that the nprm's approach will lead to an inconsistent application of the economic reality test and a lack of certainty and clarity for employers, workers, and factfinders. for example, shrm urged the department to retain the actual practice provision from the 2021 ic rule, noting the nprm “implies that unexecuted contractual rights may be more important than real world practices” and “will require hr professionals to speculate on how whd or a court may interpret each individual criterion” which will “surely result in inconsistencies in application and the resulting confusion will lead to continued uncertainty for employers and workers.” nahb expressed similar concerns about clarity, noting that “actual practice is more relevant than what may be contractually or theoretically possible . . . and it provides a clearer and simpler federal test for determining worker status for regulated employers and small businesses.” because the entirety of the economic reality must be considered in the analysis, the department finds that it cannot reduce the inquiry to only actual practice and that the 2021 ic rule's predetermined elevation of actual practice above unexercised or reserved rights is not fully consistent with the economic reality inquiry that the department and courts have followed for decades. the coalition of business stakeholders expressed concerns that the department failed to “specify just how important such `reserved control' is” and stated that the nprm exacerbates “the uncertainty with which the proposed rule may be implemented” and “apparently directs the factfinder to weigh the control factor in favor of employee classification if a hiring entity merely possesses the ability to exercise control of a worker, regardless of whether the hiring entity ever has exercised such control.” the coalition of business stakeholders also commented that by including “the vague concept of `reserved control', which is to be considered in some unstated capacity, the proposed rule broadens the control factor far beyond its historical bounds and creates such uncertainty that the definition of `control' under the proposed rule is ( print page 1721) unworkable and would all but preclude an independent contractor finding.” the department notes again that reserved control was included in the 2021 ic rule.[547] in any event, the coalition of business stakeholders misconstrues the department's discussion of reserved control. the department does not take the position that reserved rights are always indicative of economic dependence, and certainly does not preclude the existence of factual circumstances where this fact could be found to weigh in favor of independent contractor status. moreover, the department reiterates, consistent with decades of case law and guidance from the department, that “the economic reality test is a multifactor test in which no one factor or set of factors automatically carries more weight and that all relevant factors must be considered.” [548] the notion that the department's position that the reserved right of control can be indicative of the economic reality in some circumstances somehow makes the economic reality test “unworkable” and “all but precludes an independent contractor finding” is simply inconsistent with a multifactor totality of the circumstances approach in which this is but one potentially relevant fact under one factor. that a potential employer's reserved right to control might indicate an employment relationship does not preclude a finding of independent contractor status based on other factual indicators of the economic reality of the relationship. iwf expressed concerns that nprm's approach to the primacy of actual practice was inconsistent, noting that “even accepting the department's focus on theory, the proper application of this factor is far from clear. . . . the proposed rule states both that (1) `[i]t is often the case that the actual practice of the parties is more relevant to the economic dependence inquiry than contractual or theoretical possibilities,' and (2) `in other cases the contractual possibilities may reveal more about the economic reality than the parties' practices.' ” the department's recognition that actual practice is often more relevant to the economic dependence inquiry than contractual possibilities is not at all inconsistent with its position that, in some factual circumstances, reserved contractual rights can be more or equally as indicative of the economic reality as the actual practices of the parties. the department is rejecting the overly broad and mechanical approach that in all factual circumstances, for every worker in every industry and occupation, actual practice is always more indicative of the economic reality than reserved rights or contractual possibilities. the department's position is more consistent with the case law, which does not deem these two concepts to be mutually exclusive and instead requires a nuanced consideration of all relevant facts.[549] some commenters felt that the department was focusing solely on how reserved rights might be used to find employee status. for example, iwf stated that the department was interested in reserved rights only to the extent they support finding employee status. see also coalition of business stakeholders. minnesota trucking association commented that it would support the nprm's logic on the relevance of reserved rights to the economic realities test “so long as the analysis also considers the rights the worker possesses but also chooses not to exercise.” see also clda. the department does not agree with the contention that its approach to actual practice and reserved rights would always only be used to indicate employee status.[550] the inquiry should take every aspect of the relationship into account if relevant to the economic reality and the worker's dependence on their potential employer.[551] the club for growth foundation expressed concerns with the department's statement that a reserved right to supervise workers, even unexercised, “may strongly influence the behavior of the worker in [his or her] performance of the work,” and this “may be more indicative of the reality of the economic relationship between the worker and the company than the company's apparent hands off practice,” noting that “even under this example a company that does not intervene is surely exercising less control than one that does.” this comment misunderstands the relevant inquiry. the question is not whether a potential employer who reserves the right to control their workers can be said to exercise more control than a different potential employer who in actual practice exercises control over their workers. rather, the inquiry is whether, as a matter of economic reality, a potential employer's reserved right of control is probative of a worker's economic dependence. the 2021 ic rule mechanically provided that actual practice is always more relevant than reserved control. by removing that provision, this final rule takes the position that all relevant aspects of the working relationship, including reserved rights, should be considered, without placing a thumb on that scale. the u.s. chamber also raised concerns that having “contractual language eclipse actual practice would flip the economic realities on its head” and “would also prohibit certain facts from being introduced into evidence: namely, the actual practice of the parties, which according to the supreme court is the touchstone of the analysis.” the department reiterates firmly that this final rule neither tips the scales in favor of contractual language over actual practice nor excludes the consideration of any relevant facts demonstrating economic dependence. rather, the department is merely declining to adopt a bright line rule predetermining how relevant facts may be considered, recognizing that in some factual circumstances reserved rights may be as indicative of the economic reality as the actual practice of the parties. additionally, the department's final rule does not prohibit any subset of facts from being introduced into evidence before a factfinder, and certainly does not prohibit facts about the actual practices of the parties from being introduced into evidence. to the contrary, the purpose of eliminating the actual practice provision from the 2021 ic rule is to ensure that all facts relevant to inquiry of economic dependence or independence may be considered.[552] within each factor of the test, there may be actual practices that are relevant, and there may also be ( print page 1722) contractual provisions that are relevant. the examination is specific to the facts of each economic relationship and cannot be predetermined. for all of the foregoing reasons, the department is finalizing the removal of § 795.110 of the 2021 ic rule (primacy of actual practice). as discussed in section v.c, § 795.110 of this rule contains a new provision discussing the economic reality test and the economic reality factors. several commenters addressed the examples that the department provided in the proposed rule to illustrate the application of each factor of the economic reality test as applied to various factual scenarios. the department provided these examples in the preamble of the proposal rather than in the final text of the regulations as was the case with the 2021 ic rule to provide readers an application of the proposed factor immediately following the detailed description of each factor along with the discussion of the case law and rationale.[553] each example provided two scenarios: one where the facts indicated that a factor pointed toward employee status and one where the facts indicated that a factor pointed toward independent contractor status. as the department cautioned in the nprm, additional facts or alterations to the examples could change the resulting analysis.[554] moreover, no example attempted to determine the worker's ultimate status, only which way a particular factor would point based on the described facts. several commenters found the examples generally helpful or applied them to their industry practices. for instance, the advisor group applied the department's skill and initiative example to financial advisors. a freelance writer and editor found the examples provided in the preamble to be reasonable, though they suggested that sections describing each factor were narrower than the examples suggested. the afl cio commended the department's “decision to provide examples of how each of the various factors have been applied in commonly occurring fact patterns.” other commenters had concerns regarding the examples or suggested alterations to various examples. for instance, the ca chamber suggested that the investment factor example was confusing since the relative investments of a graphic designer would be dwarfed by a design firm, leading to different outcomes depending on whether the graphic designer worked for a large firm or a sole proprietor. in addition, a comment from two fellows at the heritage foundation suggested that this example was ambiguous because it was unclear if all the facts in the example, including the worker's investment in equipment, office space, and marketing, were required for the analysis. regarding the investment factor example, the department discussed relative investments in the first scenario, where a worker occasionally purchased and used their own drafting tools while working for a commercial design firm. these tools were minor investments that do not further the worker's independent business beyond completing specific jobs for the commercial design firm. regarding the ca chamber's concern that the size of the business would alter a relative investment analysis, the example was not intended to alter the size of the hypothetical employer. however, to avoid confusion, the department is aligning the examples to ensure that both feature a “commercial design firm” as the hypothetical employer. additionally, the regulatory text for the investments factor explains that, in addition to comparing the sizes of the worker's and the employer's investments, the focus should be on comparing the nature of their investments to determine whether the worker is making similar types of investments as the employer that suggest that the worker is operating independently.[555] further, commenters were concerned that the same facts that point toward independent contractor status under the investment prong example would point toward employee status under the integral prong. as the department stated in the nprm, however, the examples are intended to be aids to apply the discussion of each proposed factor; the examples are not designed to illustrate the application of the full totality of the circumstances test. for instance, the department's investment example intentionally does not address whether the designer is integral to the commercial design firm, which would necessitate a separate analysis. regarding the integral factor, iwf was concerned that the examples were unhelpful because they covered two different industries and did not illuminate what kinds of activities would be considered central or important. the department's intent regarding this factor was to illuminate those tasks that are core to the functioning of the business, e.g., jobs which the “employer could not function without the service performed by the workers.” [556] here, a farm selling tomatoes could not function without the work of those picking the tomatoes. however, while a business is generally required to file their tax returns, failure to do so would not immediately halt the operations of the farm, suggesting that non payroll accounting support is “more peripheral to the employer's business.” [557] the department's intent was to provide a comparison meant to highlight the “common sense approach” many courts have taken when evaluating this factor.[558] similarly, abc was concerned that the example for the opportunity for profit or loss factor did not differentiate the facts between the two workers in a way that would demonstrate which facts were determinative of the analysis. as they noted, even if a worker relies on word of mouth instead of traditional advertising or only works for one client at a time, they can still be found to be independent contractors. however, the example of the landscaper includes a scenario where the first landscaper does not actively market their services and a second where the landscaper does market their services. the inclusion of these facts in the example does not indicate that the department believes that traditional marketing is required for a worker to be classified as an independent contractor, only that such affirmative marketing may be probative of the worker acting in a way consistent with being in business for themself. put another way, the department intentionally drafted the examples to avoid giving the impression that certain facts are always less or always more probative to the analysis of any given factor. smacna noted that the department's second example for skill and initiative featuring a welder should omit the fact that the welder has specialty skills, since that should not change the general analysis under this factor. instead, it suggested that the example should clarify how the welder “ `markets those skills in a manner that evidences business like initiative.' ” similarly, the dsa's comment noted that the skill and ( print page 1723) initiative example (featuring a welder) only drew a distinction between the two workers based on their ability to market their services where both workers have specialized skill. it proposed including an example where a worker has no specialized skill but can still market their services to demonstrate initiative. finally, abc objected to the same example, noting that the skills of the workers “should not have to be paired with independent business marketing skills” to find that a worker is an independent contractor. the department chose to display both workers as having high technical skills to illuminate the discussion regarding skill in the nprm. specialized skills are required for this factor to point to independent contractor status, but specialized skills alone are not sufficient; it is the use of those specialized skills to “contribute to business like initiative that is consistent with the worker being in business for themself instead of being economically dependent on the employer.” [559] as the department noted in the nprm, “workers who lack specialized skills may be independent contractors even if this factor is very unlikely to point in that direction in their circumstances.” [560] thus the existence of specialized skills or the marketing of services, while relevant to the analysis under this factor, would not necessarily resolve the ultimate inquiry of the worker's classification. several comments suggested that the department include new industry specific examples for various factors. for instance, gale healthcare solutions requested that the department provide an example that would apply to on demand nursing staffing scenarios. 4a's requested that specific industries, such as “video production professionals, web designers, freelance writers, [and] fashion workers” be included as examples. and nafo requested that a forestry example be included in the section of the rule discussing the integral factor. the department recognizes that examples specific to an industry can provide helpful guidance for that segment of the regulated community. as the department explained, however, its intent is for the examples to provide general guidance to regulated parties in this rulemaking. adding examples specific to commenter industries would reduce their general applicability to other parties and would require more facts and detail than can be included to create succinct, yet helpful, examples. the department mentions various industries or occupations in the examples to provide recognizable context for the reader; the examples do not provide the department's definitive view on the ultimate outcome of the totality of the circumstances analysis. some commenters suggested that the department add examples to capture newer facets of the economic reality factors. for instance, one commenter suggested that the department should include an example to show how an employer's collection of data related to how a worker performs and use of that data to enhance their operations could be part of the economic reality analysis. the afl cio similarly suggested that the department should include an example where an employer implements control using algorithms. in addition, commenters suggested that the department should provide more examples of how current facets of the economic reality test would be applied. for instance, leadingage requested more examples of how the department views reserved control and more examples regarding situations in which a worker's ability to work for others is constrained by the number of hours or days they need to work. flex suggested that if the department were to retain language under the control factor related to regulatory or contractual control, then the department should provide “a comprehensive set of examples to illustrate that such cases would be rarities.” and cpie requested additional examples of where the department would find a worker to be properly classified as an independent contractor, particularly under the control, investment, and skill and initiative factors. the department agrees with commenters like the afl cio that topics like control over data or algorithmic supervision are highly relevant to some workers and could have an impact on the economic reality test. however, as noted above, the purpose of the examples is to provide aids to applying the information just discussed in the preamble as to each factor. the department intends for the examples to provide general guidance to regulated parties and not to be tied to the specifics of certain businesses or jobs. the examples reflect the department's enforcement experience in some of the most commonly occurring scenarios. in addition, the department understands that commenters such as leadingage would prefer more context regarding reserved control. however, the department declines to add that additional context to the current examples, which were drafted to address common themes regarding each factor to illuminate the preamble discussion, not present every fact or issue presented in the proposed rule. the department is also concerned that additional results oriented examples such as those requested by nahb specifically addressing when a worker would be classified as an independent contractor under certain factors would not be helpful to the broader public. such examples could leave the impression that the proper classification of workers rests on one or a handful of factors. to the contrary, the department believes the current examples' focus on illustrating the basic analysis under a single factor and noting that the results indicate potential classification under each factor, but not the ultimate result, provides more useful guidance for this rule. moreover, industry  or profession specific examples relaying how a worker's ultimate classification would be resolved are best addressed in subregulatory guidance after the issuance of this final rule as necessary. commenters suggested that the department provide examples that mix and compare the factors together. for instance, grantmakers in the arts suggested that the department include examples that demonstrate the resolution of a worker's status after applying multiple factors and arcbest corporation provided an example applying the full economic reality test to an owner operator in the trucking industry. the department declines to offer such examples in this rulemaking. while a multifactor example might appear helpful, the department is also concerned that such an example could potentially prejudge a specific case in a specific industry or occupation not yet before the department or a court, without adequate factual predicates. moreover, such an example would undermine the department's efforts to align the economic reality analysis with current precedent, which requires a consideration of all the factors. finally, any multifactor analysis would require a larger number of facts to be useful, which may be less generally useful to workers and businesses who may not be able to analogize the given example to their current working relationships. iba commented that some examples were too similar to prior withdrawn subregulatory guidance. the department notes that it assembled these examples, in part, by reviewing case law, opinion letters, the 2021 ic rule, and other subregulatory guidance. each source was consulted and helped the department arrive at the examples provided. ( print page 1724) other commenters requested that the department keep examples that were provided in the 2021 ic rule. for instance, the arizona trucking association suggested that the department keep the trucking example from the 2021 ic rule. similarly, nawbo noted how helpful the trucker and home repair examples were in the 2021 ic rule. as explained above, some facets of the 2021 ic rule's examples no longer align with the approach in this final rule. for instance, the 2021 ic rule's app based home repair example discusses investment as a component of the opportunity for profit or loss factor. as proposed in the nprm and finalized here, however, the two factors are separate and evaluated independently. finally, some commenters suggested that the department include examples in the final rule's regulatory text, as was done with the 2021 ic rule. for instance, the author of an independent contractor legal blog requested that more examples be provided in the regulatory text, including those related to the integral factor. 4a's similarly requests that examples be included in the regulatory text and that they better correlate with modern trends in employment. the department recognizes that examples are helpful to workers and businesses alike. the department continues to believe, however, that the examples provided in the nprm currently provide the greatest value by residing in the preamble to the final rule following the detailed discussion of the relevant factor. in this way, the examples can provide a capstone for each section's discussion of the relevant economic reality factor, rather than being disconnected from that discussion and appearing only in regulatory text. the department is confident that the examples initially provided in the nprm preamble, as modified in the preamble to this final rule in response to comments received, serve this explanatory purpose. over time, the department will continue providing guidance where necessary through subregulatory guidance. as it did in the nprm, the department is including examples of each factor in the preamble to this final rule. as discussed above, the example of the investment factor has been clarified. in addition, non substantive changes have been made to the final sentence of each paragraph in each example to clearly indicate which factor is under discussion and that the facts of each example indicate employee or independent contractor status under that factor. the department proposed that the regulatory text include a severability provision.[561] specifically, the department proposed that, if any provision of its regulation “is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, the provision shall be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding shall be one of utter invalidity or unenforceability, in which event the provision shall be severable from [the regulation] and shall not affect the remainder thereof.” [562] the department noted that the 2021 ic rule contained a severability provision and that it was not proposing any edits to that provision.[563] in addition, the department explained in the nprm that rescission of the 2021 ic rule would be separate from the new regulations regarding employee and independent contractor status promulgated to replace the 2021 ic rule: “that rescission would operate independently of the new content in any new final rule, as the department intends it to be severable from the substantive proposal for adding a new part 795.” the department further explained that, even if the “substantive provisions” ( i.e., the new regulations) of a final rule were invalidated, enjoined, or otherwise not put into effect, the department would not intend that the 2021 ic rule become operative. instead, in such case, for all of the separate reasons for rescinding the 2021 ic rule set forth by the department, the rescission would still take effect, and “the department would rely on circuit case law and provide subregulatory guidance for stakeholders through existing documents (such as fact sheet #13) and new documents (for example, a field assistance bulletin).” as the department noted, relying on federal appellate case law and subregulatory guidance consistent with that case law for determining whether a worker is an employee or independent contractor would accurately reflect the flsa's text and purpose as interpreted by the courts and offer a standard familiar to most stakeholders.[564] few commenters addressed severability, and the focus of their comments was more on the severability of the rescission of the 2021 ic rule from the proposed regulations to replace it than the proposed severability provision at 29 cfr 795.115. several commenters supported the department's position that the rescission of the 2021 ic rule is severable from the proposed regulations to replace it. for example, farmworker justice stated that “[b]oth the rescission of the 2021 ic rule and the newly proposed portion of the [nprm] are critical to reinstating stability and clarity in the department's approach to defining an employee.” it advocated that the “department should expressly state that it intends for the rescission of the 2021 ic rule to be severable from the new portion of the [nprm].” the afl cio agreed that “the severability clause and dol's explanation of that clause in the preamble to the nprm make clear that, in the unlikely event a court were to decide to enjoin some portion of the final rule addressing the economic reality test, dol intends that the rescission of the 2021 ic rule should still take effect.” it described this approach as “cautious” and “prudent” and added that “the severance clause makes clear that dol intended that the rescission of the 2021 ic rule stands on its own.” liuna also supported “the department's decision to render rescission of the 2021 ic rule severable from the substantive proposal for adding further regulatory guidance.” it added that the department was “correct to conclude that, in the unlikely event its substantive proposals are `invalidated, enjoined, or otherwise not put into effect,' the 2021 ic rule should still not become operative.” several other commenters criticized the department's position that the rescission of the 2021 ic rule is severable from the proposed regulations to replace it. for example, freedom foundation stated that “[t]he rescission of the [2021 ic rule] and the adoption of the proposed rule should not be severable” and added that the department's “promise that in the absence of a regulation it would provide subregulatory guidance has a hollow ring.” raymond james described the department's position as “present[ing] workers and business with a hobson's choice: either accept the new regulations, or there will be no regulations at all.” it stated that, “[c]onsidering that the department will not even consider making discrete changes, it does not seem appropriate to require businesses and workers to accept a wholesale re write or face the risks of having no rule at all.” and cwi asserted that the reference to “ `substantive' provisions” in the nprm's severability discussion were ( print page 1725) inconsistent with how, “[e]lsewhere” in the nprm, “the department present[ed] the proposed rule as only `interpretive guidance.' ” having considered the comments, the department is finalizing the severability provision in 29 cfr 795.115 as proposed and finalizing its proposal that the rescission of the 2021 ic rule set forth in this final rule is separate and severable from the new part 795 regulations for determining employee or independent contractor status under the flsa set forth in this final rule. no commenter questioned the well settled legal principle that one portion of a rule may remain operative if another portion is deemed impermissible as long as the agency would independently adopt the remaining portion and the remaining portion can operate sensibly without the impermissible portion.[565] the department continues to believe that rescission of the 2021 ic rule is proper for all of the reasons stated in this final rule, and its intent accordingly is for the rescission to remain operative even if this final rule's regulations replacing the 2021 ic rule are invalidated for any reason. in addition, the department continues to believe that if any particular provision or application of this final rule is invalidated, the rest should continue in effect and can operate sensibly. in such case, case law and the department's subregulatory guidance, as appropriate, would provide a familiar and longstanding standard for businesses and workers. freedom foundation's assertion that this “has a hollow ring” neglects the multiple forms of subregulatory guidance, including fact sheets and field assistance bulletins, that the department may issue. and there was no “hobson's choice” between the proposed rule and “having no rule at all”; the department has carefully considered the many comments to the proposed rule and, as reflected in this final rule, has made numerous changes as a result of those comments. finally, cwi took the department's reference to “substantive provisions” out of context. the department's reference to the proposed regulatory provisions as “substantive” was not a characterization of this rulemaking, but an effort to distinguish promulgating the new part 795 regulations from rescinding the 2021 ic rule. finally, in addition to the proposed regulations at part 795, the department proposed to amend existing regulatory provisions addressing employee or independent contractor status under the flsa in particular contexts at 29 cfr 780.330(b) (tenants and sharecroppers) and 29 cfr 788.16(a) (certain forestry and logging workers).[566] specifically, the department proposed to replace these provisions with cross references to the guidance provided in part 795. the department did not receive commenter feedback regarding the proposed amendments of these provisions. accordingly, the department finalizes the amendments to these provisions as proposed. the paperwork reduction act of 1995 (pra), 44 u.s.c. 3501 et seq., and its attendant regulations, 5 cfr part 1320, require the department to consider the agency's need for its information collections, their practical utility, the impact of paperwork and other information collection burdens imposed on the public, and how to minimize those burdens. this final rule does not contain a collection of information subject to omb approval under the pra. under executive order 12866, as amended by executive order 14094, the office of management and budget's (omb) office of information and regulatory affairs (oira) determines whether a regulatory action is significant and, therefore, subject to the requirements of the executive order and omb review.[567] section 3(f) of executive order 12866 defines a “significant regulatory action” as a regulatory action that is likely to result in a rule that may: (1) have an annual effect on the economy of $200 million or more, or adversely affect in a material way a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities; (2) create serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees or loan programs or the rights and obligations of recipients thereof; or (4) raise legal or policy issues arising out of legal mandates, the president's priorities, or the principles set forth in the executive order. oira has determined that this rule is a “significant regulatory action” under section 3(f)(1) of executive order 12866. executive order 13563 directs agencies to, among other things, propose or adopt a regulation only upon a reasoned determination that its benefits justify its costs; that it is tailored to impose the least burden on society, consistent with obtaining the regulatory objectives; and that, in choosing among alternative regulatory approaches, the agency has selected those approaches that maximize net benefits.[568] executive order 13563 recognizes that some costs and benefits are difficult to quantify and provides that, when appropriate and permitted by law, agencies may consider and discuss qualitatively values that are difficult or impossible to quantify, including equity, human dignity, fairness, and distributive impacts. the analysis below outlines the impacts that the department anticipates may result from this rule and was prepared pursuant to the above mentioned executive orders. in this rule, the department is rescinding and replacing regulations addressing the classification of workers as employees or independent contractors under the fair labor standards act (flsa or act) to be more consistent with judicial precedent and the act's text and purpose as interpreted by the courts. for decades, the department and courts have applied an economic reality test to determine whether a worker is an employee or an independent contractor under the flsa. the ultimate inquiry is whether, as a matter of economic reality, the worker is economically dependent on the employer for work (and is thus an employee) or is in business for themself (and is thus an independent contractor). to answer this ultimate inquiry of economic dependence, the courts and the department have historically conducted a multifactor totality of the circumstances analysis, considering multiple factors with no factor or factors being dispositive to determine whether a worker is an employee or an independent contractor under the flsa. in january 2021, the department published a rule titled “independent contractor status under the fair labor standards act” (2021 ic rule) that ( print page 1726) provided guidance on the classification of independent contractors under the flsa.[569] as explained in sections iii, iv, and v above, the department believes that the 2021 ic rule did not fully comport with the flsa's text and purpose as interpreted by the courts and, had it been left in place, would have had a confusing and disruptive effect on workers and businesses alike due to its departure from decades of case law describing and applying the multifactor economic reality test as a totality of the circumstances test. the 2021 ic rule included provisions that were in tension with this longstanding case law such as designating two factors as most probative and predetermining that they carry greater weight in the analysis, considering investment and initiative only in the opportunity for profit or loss factor, and excluding consideration of whether the work performed is central or important to the employer's business. these and other provisions in the 2021 ic rule narrowed the application of the economic reality test by limiting the facts that may be considered as part of the test, facts which the department believes are relevant in determining whether a worker is economically dependent on the employer for work or in business for themself. the department believes that retaining the 2021 ic rule would have had a confusing and disruptive effect on workers and businesses alike due to its departure from case law describing and applying the multifactor economic reality test as a totality of the circumstances test. departing from the longstanding test applied by the courts also increases the risk of misapplication of the economic reality test, which the department believes could result in the increased misclassification of workers as independent contractors. therefore, the department is rescinding the 2021 ic rule and replacing it with an analysis for determining employee or independent contractor status under the act that is more consistent with existing judicial precedent and the department's longstanding guidance prior to the 2021 ic rule. of particular note, the regulations set forth in this final rule do not use “core factors” and instead return to a totality of the circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. regarding the economic reality factors, this final rule returns to the longstanding framing of investment as its own separate factor, and integral as an integral part of the potential employer's business rather than an integrated unit of production. the final rule also provides broader discussion of how scheduling, remote supervision, price setting, and the ability to work for others should be considered under the control factor, and it allows for consideration of reserved rights to control while removing the provision in the 2021 ic rule that minimized the relevance of retained rights. further, the final rule discusses exclusivity in the context of the permanency factor, and initiative in the context of the skill factor. the department also made several adjustments to the proposed regulations after consideration of the comments received, including revisions to the regulations regarding the investment factor and the control factor (specifically addressing compliance with legal obligations). the department believes this rule is more grounded in the ultimate inquiry of whether a worker is in business for themself or is economically dependent on the employer for work. workers, employers, and independent businesses should benefit from affirmative regulatory guidance from the department further developing the concept of economic dependence and how each economic reality factor is probative of whether the worker is economically dependent on the employer for work or is in business for themself. when evaluating the economic impact of this rule, the department has considered the appropriate baseline with which to compare changes. as discussed in section ii.c.3., on march 14, 2022, in a lawsuit challenging the department's delay and withdrawal of the 2021 ic rule, a federal district court in the eastern district of texas issued a decision vacating the delay and withdrawal of the 2021 ic rule and concluded that the 2021 ic rule became effective on march 8, 2021.[570] because the 2021 ic rule is in effect according to the district court until this final rule takes effect and would continue to be in effect in the absence of this rule, the department believes that the 2021 ic rule is the proper baseline to compare against when estimating the economic impact of this rule.[571] compared to the 2021 ic rule, the department anticipates that this rule may reduce misclassification of employees as independent contractors, because this rule is more consistent with existing judicial precedent and the department's longstanding guidance. the 2021 ic rule's elevation of certain factors, devaluation of other factors, and its preclusion of consideration of relevant facts under several factors could result in misapplication of the economic reality test and may have conveyed to employers that it might be easier than it was prior to the 2021 ic rule to classify workers as independent contractors rather than flsa covered employees. as discussed in section iii.b., the department received comments indicating confusion about how to apply the analysis in the 2021 ic rule, which could lead to misclassification of workers as independent contractors. the issuance of this rule could reduce or prevent this type of misclassification from occurring. because the department does not have data on the number of misclassified workers and because there are inherent challenges in determining the extent to which the rule would reduce this misclassification, much of the analysis is presented qualitatively, aside from rule familiarization costs, which are quantified.[572] the department has therefore provided a qualitative analysis of the effects (transfers and benefits) that could occur because of this reduced misclassification. as discussed above, the 2021 ic rule is the appropriate baseline to represent what the world could look like going forward in the absence of this rule. however, this baseline may not fully reflect what the world would look like absent this rule. until march 2022, the department had not been using the framework for analysis from the 2021 ic rule when assessing independent contractor status in its enforcement and compliance assistance activities because the department had published final rules delaying the effective date of, and subsequently withdrawing, the 2021 ic rule. (as described in section ii.c., a federal district court in march 2022 vacated the department's delay and withdrawal rules and ruled that the 2021 ic rule had taken effect in march ( print page 1727) 2021.) further, as explained earlier in section iii.b., the department is not aware of any federal district or appellate court that has endorsed the 2021 ic rule's analysis in the course of resolving a dispute regarding the proper classification of a worker as an employee or independent contractor. therefore, if the department were to instead compare this final rule to the current economic and legal landscape that continues to reflect the courts' longstanding multifactor economic reality test, the economic impact would be much smaller, because this rule is consistent with that landscape ( i.e., the longstanding judicial precedent and guidance that the department was relying on prior to march of 2022). the coalition to promote independent entrepreneurs agreed that the 2021 ic rule is the correct baseline to analyze the recission of the rule, but not the separate issue of issuing new regulations “containing a new interpretation of the multifactor economic reality test.” this commenter appeared to disagree with the department's explanation that “under the current economic and legal landscape baseline, the economic impact of dol's proposed new iteration of the test might, or might not, be `much smaller.' ” it asserted that the direction of this economic impact would be negative, because the rule would lead to increased uncertainty and confusion and would create an adverse economic impact by “denying individuals their right to be recognized as independent contractors under the flsa.” the department addresses claims from this commenter and others on the potential costs and benefits of this rule throughout this economic analysis. the department does not believe, as reflected in this analysis, that this rule will result in widespread reclassification of workers. that is, for workers who are properly classified as independent contractors, the department does not, for the most part, anticipate that the guidance provided in this rule will result in these workers being reclassified as employees. especially compared to the guidance that was in effect before the 2021 ic rule, the test put forth in this rule would not make independent contractor status significantly less likely. rather, impacts resulting from this rule will mainly be due to a reduction in misclassification. if the 2021 ic rule had been retained, the risk of misclassification could have increased. as noted previously in section iii, the 2021 ic rule's elevation of certain factors and its preclusion of consideration of relevant facts under several factors, which is a departure from judicial precedent applying the economic reality test, could result in misapplication of the economic reality test and may have conveyed to employers that it might be easier than it was prior to the 2021 ic rule to classify certain workers as independent contractors rather than flsa covered employees. this rule could therefore help prevent this misclassification by providing employers with guidance that is more consistent with longstanding precedent. many commenters who wrote in opposition to the proposed rule were concerned that, because of this rule, many independent contractors would be reclassified as employees, and that there would be a large negative impact associated with this reclassification. for example, a senior research fellow at the mercatus center said “dol implicitly assumes that 100 percent of potential contracting jobs will be turned into employment jobs; this assumption is extremely optimistic and downplays very significant consequences in connection with the rule in question.” cambridge investment research inc. stated that the practical result of the proposed rule would be that many workers will be reclassified as employees, including those who want to be independent contractors. however, the proposed rule explicitly noted that the department does not expect any widespread reclassification of independent contractors as employees, and at no point assumed that 100 percent of contracting jobs would be turned into employment jobs. the department believes that concerns about widespread reclassification are not realistic because the department is adopting guidance in this rule that is essentially identical to the standard it applied for decades prior to the 2021 ic rule, derived from the same analysis that courts have applied for decades and have been continuing to apply since the 2021 ic rule took effect. the department received multiple comments discussing the negative impacts of widespread reclassification and citing research about potential job losses and loss of earnings. for example, littler's workplace policy institute says, “[a] study published last april concluded that widespread reclassification would destroy as many as 769,000 work opportunities and wipe out $9.1 billion in earnings.[573] the proposed rule fails to take these effects into account.” the chamber of progress cites this same study, noting that, “a national rule reclassifying independent contractors as employees could result in approximately 4.4 million people being involuntarily reclassified[.]” however, the study that these data points come from is an analysis of the potential impacts of a nationwide abc test. the chamber of progress release about the report states, “specifically, the study examines the `abc test,' which is used in a variety of state and federal proposals to determine whether a worker is an employee or an independent contractor.” the department believes that the reclassification effects raised by these commenters cannot be applied to this rule, because the department's economic reality test is not the abc test. while the department responds throughout this economic analysis to comments about the potential negative impacts of the rule from those who are in opposition, it is important to note that any reclassification or job loss estimates associated with a nationwide abc test are not appropriate to apply to this rule because this rule does not adopt an abc test and are therefore not included in the department's estimated impacts. to provide some context on the prevalence of independent contracting, the department first estimated the number of independent contractors. there are a variety of estimates of the number of independent contractors spanning a wide range depending on methodologies and how the population is defined.[574] there is no data source on independent contractors that perfectly mirrors the definition of independent contractor in the department's regulations. there is also no regularly published data source on the number of independent contractors and data from the current year does not exist, making it difficult to examine trends in independent contracting or to measure how regulatory changes impact the number of independent contractors. the department believes that the current population survey (cps) contingent worker supplement (cws) offers an appropriate lower bound for ( print page 1728) the number of independent contractors; however, there are potential biases in these data that will be noted. this was the estimation method used in the 2021 ic rule and the proposed rule, and the department has not found any new data or analyses to indicate a need for any changes. some recent data sources provide an indication of how covid 19 may have impacted the number of independent contractors, but this is inconclusive. additionally, estimates from other sources will be presented to demonstrate the potential range. the u.s. census bureau conducts the cps, and it is published monthly by the bureau of labor statistics (bls). the sample includes approximately 60,000 households and is nationally representative. periodically since 1995, and most recently in 2017, the cps included a supplement to the may survey to collect data on contingent and alternative employment arrangements. based on the cws, there were 10.6 million independent contractors in 2017, amounting to 6.9 percent of workers.[575] the cws measures those who say that their independent contractor job is their primary job and that they worked at the independent contractor job in the survey's reference week. the bls's estimate of independent contractors includes “[w]orkers who are identified as independent contractors, independent consultants, or freelance workers, regardless of whether they are self employed or wage and salary workers.” bls asks two questions to identify independent contractors: [576] it is important to note that independent contractors are identified in the cws in the context of the respondent's “main” job ( i.e., the job with the most hours).[577] therefore, the estimate of independent contractors does not include those who may be an employee for their primary job, but may also work as an independent contractor.[578] for example, lim et al. (2019) estimate that independent contracting work is the primary source of income for 48 percent of independent contractors.[579] applying this estimate to the 10.6 million independent contractors estimated from the cws, results in 22.1 million independent contractors (10.6 million ÷ 0.48). alternatively, a survey of independent contractors in washington found that 68 percent of respondents reported that independent contract work was their primary source of income.[580] however, because this survey only includes independent contractors in one state, the department has not used this data to adjust its estimate of independent contractors. the cws's large sample size results in small sampling error. however, the questionnaire's design may result in some non sampling error. for example, one potential source of bias is that the cws only considers independent contractors during a single point in time the survey week (generally the week prior to the interview). these numbers will thus underestimate the prevalence of independent contracting over a longer timeframe, which may better capture the size of the population.[581] for example, farrell and greig (2016) used a randomized sample of 1 million chase customers to estimate prevalence of the online platform economy.[582] they found that “[a]lthough 1 percent of adults earned income from the online platform economy in a given month, more than 4 percent participated over the three year period.” additionally, collins et al. (2019) examined tax data from 2000 through 2016 and found that the number of workers who filed a form 1099 grew substantially over that period, and that fewer than half of these workers earned more than $2,500 from 1099 work in 2016. the prevalence of lower annual earnings implies that most workers who received a 1099 did not work as an independent contractor every week.[583] the cws also uses proxy responses, which may underestimate the number of independent contractors. the rand ( print page 1729) american life panel (alp) survey conducted a supplement in 2015 to mimic the cws questionnaire but used self responses only. the results of the survey were summarized by katz and krueger (2018).[584] this survey found that independent contractors comprise 7.2 percent of workers.[585] katz and krueger identified that the 0.5 percentage point difference in magnitude between the cws and the alp was due to both cyclical conditions, and the lack of proxy responses in the alp.[586] therefore, the department believes a reasonable upper bound on the potential bias due to the use of proxy responses in the cws is 0.5 percentage points (7.2 versus 6.7).[587 588] another potential source of bias in the cws is that some respondents may not self identify as independent contractors. for example, abraham et al. (2020) estimated that 6.6 percent of workers in their study initially responded that they are employees but were then determined (by the researcher) to be independent contractors based on their answers to follow up questions.[589] additionally, individuals who do what some researchers refer to as “informal work” may in fact be independent contractors though they may not characterize themselves as such.[590] this population could be substantial. abraham and houseman (2019) confirmed this in their examination of the survey of household economics and decision making. they found that 28 percent of respondents reported doing “informal work” for money over the past month.[591] conversely, another source of bias in the cws is that some workers who self identify as independent contractors may misunderstand their status or may be misclassified by their employer. these workers may answer the survey in the affirmative, despite not truly being independent contractors. while precise and representative estimates of nationwide misclassification are unavailable, multiple studies suggest its prevalence in numerous sectors in the economy.[592] see section vii.d.2. for a more thorough discussion of the prevalence of misclassification. because reliable data on the potential magnitude of the biases discussed above are unavailable, and so the net direction of the biases is unknown, the department has not attempted to calculate how these biases may impact the estimated number of independent contractors. as noted above, integrating the estimated proportions of workers who are independent contractors on secondary or otherwise excluded jobs produces an estimate population of 22.1 million, representing the total number of workers working as independent contractors in any job at a given time. given the prevalence of independent contractors who work sporadically and earn minimal income, adjusting the estimate according to these sources captures some of this population. it is likely that this figure is still an underestimate of the true independent contractor pool. this is because, in part, the cws estimate represents only the number of workers who worked as independent contractors on their primary job during the survey reference week, which is why the department applied the research literature and adjusted this measure to include workers who are independent contractors in a secondary job or who were excluded from the cws estimate due to other factors. to further consider the range of estimates available, the department conducted a literature review, the findings of which are presented in table 1. other studies were also considered but are excluded from this table because the study populations were broader than just independent contractors, limited to one state, or include workers outside of the united states.[593] the rand alp,[594] the gallup survey,[595] and the general social survey's (gss's) quality of worklife (qwl) [596] supplement are ( print page 1730) widely cited alternative estimates. however, the department chose to use sources with significantly larger sample sizes and/or more recent data for the primary estimate. jackson et al. (2017) [597] and lim et al. (2019) [598] use tax information to estimate the prevalence of independent contracting. in general, studies using tax data tend to show an increase in prevalence of independent contracting over time. the use of tax data has some advantages and disadvantages over survey data. advantages include large sample sizes, the ability to link information reported on different records, the reduction in certain biases such as reporting bias, records of all activity throughout the calendar year (the cws only references one week), and inclusion of both primary and secondary independent contractors. disadvantages are that independent contractor status needs to be inferred; there is likely an underreporting bias ( i.e., some workers do not file taxes); researchers are generally trying to match the irs definition of independent contractor, which does not mirror the scope of independent contractors under the flsa; and the estimates include misclassified independent contractors.[599] a major disadvantage of using tax data for this analysis is that the detailed source data are not publicly available and thus the analyses cannot be directly verified or adjusted as necessary ( e.g., to describe characteristics of independent contractors, etc.). table 1 summary of estimates of independent contracting the department's estimate of the number of independent contractors, 22.1 million, is based primarily on 2017 data. because covid 19 has had a substantial impact on the labor market, it is possible that this estimate is not currently appropriate. the department conducted a search for more recent data to indicate any trends in the number of independent contractors since 2017. the findings are inconclusive but generally do not indicate an increase. the federal reserve board's annual survey of household economics and decisionmaking (shed) provides measures of the economic well being of u.s. households. the federal reserve board publishes a report “economic well being of u.s. households” summarizing the findings of each survey.[600] one subsection of the employment section describes the results of the questions related to “the gig economy.” while the survey questions about work in the “gig economy” include more types of work scenarios than just independent contracting, a decrease from 30 percent to 20 percent of adults answering “yes” from 2017 to 2020 may indicate that the number of independent contractors in this industry also decreased during that time period.[601] the report summarizing the 2021 data is available, but unfortunately the gig economy questions were revised substantially, so a comparable value is not available for 2021. moreover, trends of potential independent contractors in one industry are not necessarily indicative of trends across the economy. mbo partners, a company with the goal of connecting enterprise organizations and top independent professionals, also conducts an annual survey and prepares a research report of the findings.[602] in all groups of “independent workers,” mbo partners ( print page 1731) similarly found a decrease in the number from 2017 to 2020. conversely, in total, the 2021 report shows a large increase from 2020, enough that the number of independent workers in 2021 is larger than the 2017 number. however, this increase occurs only in the “occasional independent” workers category, described as those who work part time and regularly, but without set hours. comparing the number of part time and full time independent workers yields similar values in 2017 and 2021, so the department believes that no adjustments are needed to the 2017 estimate of 22.1 million independent contractors. a few commenters said that the department underestimated the number of independent contractors in the u.s. because the estimate is based on outdated data. commenters such as the coalition for workforce innovation referenced a more recent study from upwork, which found that “59 million workers performed freelance work in the past 12 months, representing 36% or more than one third of the entire u.s. workforce.” [603] as discussed above, the department acknowledges that its estimate of independent contractors could be an underestimate. however, the estimates presented in the upwork study could be an overestimate because their definition of “freelancer” likely also includes some workers who would be classified as employees under the flsa in addition to those who would be classified as independent contractors.[604] furthermore, the department was unable to verify whether their sample of 6,000 workers was representative of all workers in the u.s. while the department appreciates this additional context on the potential scope of independent contracting in the u.s., the estimate of independent contractors in this analysis has not been revised. the department reviewed demographic information on independent contractors using the cws, which, as stated above, only measures those who say that their independent contractor job is their primary job and that they worked at the independent contractor job in the survey's reference week. according to the cws, these primary independent contractors are most prevalent in the construction and professional and business services industries. these two industries comprise 44 percent of primary independent contractors. independent contractors tend to be older and predominately male (64 percent). millennials (defined as those born 1981 1996) have a significantly lower prevalence of primary independent contracting than older generations: 4.2 percent for millennials compared to 7.2 percent for generation x (defined as those born 1965 1980) and 10.2 percent for baby boomers and matures (defined as individuals born before 1965).[605] however, other surveys that capture secondary independent contractors, or those who did informal work as independent contractors show that the prevalence of informal work is lower among older workers. abraham and houseman (2019), find that among 18  to 24 year olds, 41.3 percent did informal work over the past month. the rate fell to 25.7 percent for 45  to 54 year olds, and 13.4 percent for those 75 years and older.[606] according to mbo partners, the covid 19 pandemic may have accelerated this trend; when accounting for both primary and secondary independent work, 2021 marked the first year that millennials and members of generation z (34 percent and 17 percent of independent workers respectively) outnumbered members of generation x and baby boomers (23 percent and 26 percent respectively) as part of the independent workforce.[607] according to the cws, 64 percent of primary independent contractors are men. additionally, garin and koustas (2021) find that men comprise both a larger share of independent contractors who perform work through traditional contracting arrangements and those who secure work through online platforms.[608] this study also found that a greater share of men than women who earn income in this way are primarily self employed; women who perform online platform work are more likely to use that work to supplement other income.[609] according to the cws, white workers are somewhat overrepresented among primary independent contractors; they comprise 85 percent of this population but only 79 percent of the population of workers. conversely, black workers are somewhat underrepresented (comprising 8 percent and 13 percent, respectively).[610] the opposite trends emerge when evaluating the broader category of “informal work”, where racial minorities participate at a higher rate than white workers.[611] primary independent contractors are spread across the educational spectrum, with no group especially overrepresented. the same trend in education attainment holds for workers who participate in informal work.[612] table 2 characteristics of workers, all workers and independent contractors an individual commenter wrote that because the covid 19 pandemic created specific burdens for women and people of color and resulted in the increased participation of both groups in self employment, the use of 2017 data reduces the inclusion of these workers. the commenter cited a study from the center for economic policy and research (cepr), which found “[t]he share of employed women who report being self employed rose from 7.5 percent in the pre pandemic period to 8.2 percent: an increase of 0.7 percentage points. by contrast, the share of employed men who report being self employed rose by just 0.3 percentage points (from 12.1 percent to 12.4 percent).” [613] the study also found “[t]he share of employed blacks who reported being self employed rose from 5.8 percent to 6.8 percent: an increase of 1.0 percentage point. . . . for hispanics, there was a 1.5 percentage point rise in shares from 8.4 percent to 9.9 percent . . . . by contrast, the rise in self employment among whites was just 0.2 percent, from 11.3 to 11.5 percent.” while the department acknowledges that the demographic makeup of independent contractors could have shifted following the covid 19 pandemic, the data cited in the cepr study includes all self employed persons, which is a broader population than independent contractors. it is possible that this data may also reflect the demographic trends of the more specific population of ( print page 1733) independent contractors, but the department has not made any adjustments to its overall estimate of the number of independent contractors. regulatory familiarization costs represent direct costs to businesses and current independent contractors associated with reviewing the new regulation. to estimate the total regulatory familiarization costs, the department used (1) the number of establishments and government entities using independent contractors, and the current number of independent contractors; (2) the wage rates for the employees and for the independent contractors reviewing the rule; and (3) the number of hours that it estimates employers and independent contractors will spend reviewing the rule. this section presents the calculation for establishments first and then the calculation for independent contractors. regulatory familiarization costs may be a function of the number of establishments or the number of firms.[614] presumably, the headquarters of a firm will conduct the regulatory review for businesses with multiple locations and may require some locations to familiarize themselves with the regulation at the establishment level. other firms may either review the rule to consolidate key takeaways for their affiliates or they may rely entirely on outside experts to evaluate the rule and relay the relevant information to their organization ( e.g., a chamber of commerce). the department used the number of establishments to estimate the fundamental pool of regulated entities which is larger than the number of firms. this assumes that regulatory familiarization occurs at both the headquarters and establishment levels. to estimate the number of establishments incurring regulatory familiarization costs, the department began by using the statistics of u.s. businesses (susb) to define the total pool of establishments in the united states.[615] in 2019, the most recent year available, there were 7.96 million establishments. these data were supplemented with the 2017 census of government that reports 90,075 local government entities, and 51 state and federal government entities.[616] the total number of establishments and governments in the universe used for this analysis is 8,049,229. this universe is then restricted to the subset of establishments that engage independent contractors. in 2019, lim et al. used extensive irs data to model the independent contractor market and found that 34.7 percent of firms hire independent contractors.[617] these data are based on annual tax filings, so the dataset includes firms that may contract for only parts of a year. multiplying the universe of establishments and governments by 35 percent results in 2.8 million entities. the department assumes that a compensation, benefits, and job analysis specialist (soc 13 1141) (or a staff member in a similar position) will review the rule.[618] according to the occupational employment and wage statistics (oews), these workers had a median wage of $32.59 per hour in 2022 (most recent data available).[619] assuming benefits are paid at a rate of 45 percent of the base wage,[620] and overhead costs are 17 percent of the base wage, the reviewer's effective hourly rate is $52.80. the department assumes that it will take on average about 1 hour to review the rule. in the proposed rule, the department assumed a review time of 30 minutes, but has increased this estimate in response to concerns from commenters that the regulatory familiarization costs were understated. the department has provided a discussion of these comments at the end of this section. the department believes that 1 hour, on average, is appropriate, because while some establishments will spend longer to review the rule, many establishments may rely on third party summaries of the changes or spend little or no time reviewing the rule. furthermore, the analysis outlined in this rule aligns with existing judicial precedent and previous guidance released by the department, with which much of the regulated community is already familiar. total regulatory familiarization costs to businesses in year 1 are estimated to be $148,749,744 ($52.80 × 1 hour × 2,817,230) in 2022 dollars. for regulatory familiarization costs for independent contractors, the department used its estimate of 22.1 million independent contractors and assumed each independent contractor will spend 30 minutes to review the regulation. in the proposed rule, the department assumed that it would take independent contractors an average of 15 minutes to review the regulation but has also increased this estimate in the final rule in response to commenters' concerns. the average time spent by independent contractors is estimated to be shorter than for establishments and governments. this difference is in part because the department believes independent contractors are likely to rely on summaries of the key elements of the rule change published by the department, worker advocacy groups, media outlets, and accountancy and consultancy firms, as has occurred with other rulemakings. this time is valued at $23.46, which is the median hourly wage rate for independent contractors in the cws of $19.45 updated to 2022 dollars using the gross domestic product (gdp) deflator.[621 622] therefore, regulatory familiarization costs to ( print page 1734) independent contractors in year 1 are estimated to be $259,233,000 ($23.46 × 0.5 hour × 22.1 million). the total one time regulatory familiarization costs for establishments, governments, and independent contractors are estimated to be $408 million. regulatory familiarization costs in future years are assumed to be de minimis. employers and independent contractors would continue to familiarize themselves with the applicable legal framework in the absence of the rule, so this rulemaking is not expected to impose costs after the first year. this amounts to a 10 year annualized cost of $56.4 million at a discount rate of 3 percent or $54.3 million at a discount rate of 7 percent. multiple commenters said that they were concerned that the department's rule familiarization cost estimate was too low. commenters asserted that the department's initial estimate of 30 minutes to review the rule was too short, and that it would take firms much longer to read and understand the final rule. for example, a comment from two fellows at the heritage foundation estimated that “[e]ven individuals with very high rates of reading and comprehension” would need more than two hours to read the full proposal. the coalition for workforce innovation said that while a person could simply read the rule in 30 minutes, it wouldn't be enough time to understand the rule and translate the understanding into advice to be communicated within the organization. the u.s. chamber of commerce commented, “[a]n economically appropriate approach for gauging the scale of familiarization costs is to assume no less than one hour of familiarization time for both affected workers and hiring establishments.” the modern economy project commented that the complexity of the rulemaking and of the issue of worker classification necessitates more time for review. other commenters echoed similar sentiments. in response to all the comments received on this topic, the department reconsidered the time for rule familiarization and doubled its original estimates, increasing them to 1 hour for potentially affected firms and 30 minutes for independent contractors. the department believes that a longer time estimate would not be appropriate because this estimate represents an average of the firms who may spend more time for review, and those who will not spend any time reviewing the rule. some commenters also expressed concerns with the department's assumption that the rule would be read by a compensation, benefits, and job analysis specialist. for example, the coalition for workforce innovation stated, “businesses task their high level, well trained human resources workers, in house attorneys, and outside counsel with this responsibility at an hourly rate well exceeding $50.” the u.s. chamber of commerce wrote that the “department's selection of `compensation, benefits and job analysis specialist' as the model reviewer for its calculation of familiarization costs misunderstands and misrepresents the seriousness and complexity of the regulation being proposed.” the department acknowledges that in some cases, higher paid senior workers could be charged with reading this rule, but believes that the use of the compensation, benefits, and job analysis specialist hourly wage is consistent with other rules released by the wage and hour division and the department, including the 2021 ic rule.[623] the department notes that it did not receive any comments objecting to the use of this occupation in its rule familiarization calculation in the 2021 ic rule. some commenters asserted that the department did not properly consider all of the potential costs of the regulation. for example, commenters such as the financial services institute said that the department did not consider substantial costs of the rule, such as the cost that will arise from businesses being forced to provide health insurance and other benefits to their former independent contractors or the indirect costs of higher taxes. the department notes that these costs would be considered transfers and are discussed in section vii.e of this economic analysis. other commenters mentioned that the rule would lead to significant compliance costs for firms. for example, two fellows from the heritage foundation commented that in addition to familiarizing themselves with the rule, the firm would have to perform an individualized assessment of the economic relationship with each of their contractors, renegotiate or cancel existing contracts, spend time converting independent contractors into employees, engage with labor unions and elections, and deal with enforcement actions. the cetera financial group said that the ongoing cost of compliance for employers is considerable. they stated that applying this rule only to independent financial professionals would create an obligation for employers to track the earnings and hours worked for more than 140,000 independent financial professionals in the u.s. as discussed above, the department does not believe that this rule will lead to widespread reclassification (and additional tracking of hours and earnings), and for the limited cases in which reclassification could occur, many of these costs should already be incurred by firms. for example, as a matter of good practice, firms should already be assessing the economic relationship of contractors when they engage in business with them. other commenters wrote that the rule would actually reduce compliance costs. for example, the laborers' international union of north america (liuna) urged the department to consider reduced compliance costs as an important impact of the rule. they stated that the rule will improve public understanding of legal obligations because it codifies judicial precedent in a comprehensive, accessible, and reliable format. this rule presents a detailed analysis for determining employee or independent contractor status under the act that is more consistent with existing judicial precedent and the department's longstanding guidance prior to the 2021 ic rule. this analysis will provide more consistent guidance to employers in properly classifying workers as employees or independent contractors, as well as useful guidance to workers on whether they are correctly classified as employees or independent contractors. the analysis will provide a consistent approach for those businesses that engage (or wish to engage) independent contractors, who the department recognizes play an important role in the economy. the rule's consistency with judicial precedent could also help to reduce legal disputes. this rule will provide consistent guidance to employers in properly classifying workers as employees or independent contractors, as well as useful guidance to workers on whether they are correctly classified as employees or independent contractors. this clear guidance could help reduce the occurrence of misclassification. ( print page 1735) the prevalence of misclassification of employees as independent contractors is unclear, but the literature indicates it is substantial. a 2020 national employment law project (nelp) report, for example, reviewed state audits and concluded that “these state reports show that 10 to 30 percent of employers (or more) misclassify their employees as independent contractors.” [624] similarly, a 2000 department of labor study also found that among audits from nine states, “employers with misclassified workers ranged from approximately 10% to 30%.” [625] this same report found that depending on the state, between 1 percent and 9 percent of workers are misclassified as independent contractors. misclassification disproportionately affects black, indigenous, and people of color (bipoc) because of the disparity in occupations affected by misclassification.[626] commenters echoed these concerns and provided additional supporting information. for example, a joint comment from the lawyers committee for civil rights under law (lccrul) and the washington lawyer's committee for civil rights and urban affairs (wlc) stated, “[d]ue to occupational segregation, the sectors in which misclassification is most prevalent are comprised disproportionately [of] bipoc workers, especially black and immigrant workers.” [627] looking at 2021 bls data, lccrul and wlc noted that 41% of workers in the construction industry identify as black, asian, or hispanic. as discussed in the section below, research has shown that misclassification is prevalent in the construction industry. lccrul and wlc also point out, “[i]n gig based jobs, where the classification of workers as independent contractors is a defining characteristic of the industry, people of color and immigrants are also overrepresented: 30% of latinx adults, 20% of black adults, and 19% of asian adults work in such jobs, compared to 12% of white adults.” [628] nelp also agreed, stating, “[i]ndependent contractor misclassification by companies is also strikingly racialized, occurring disproportionately in occupations in which people of color, including black, latinx, and asian workers, are overrepresented.” nelp analyzed the march 2022 current population survey annual social and economic supplement (cps asec) data and found that workers of color comprise just over a third of workers overall but comprise between 47 and 91 percent of workers in industries such as construction, trucking, delivery, home care, agricultural, personal care, ride hail, and janitorial and building service.[629] misclassification contravenes one of the purposes of the flsa: eliminating “unfair method[s] of competition in commerce.” [630] when employers misclassify employees as independent contractors, they illegally cut labor costs, undermining law abiding competitors.[631] while the services offered may be comparable at face value, the employer engaging in misclassification is able to offer lower estimates and employers following the rules are left at a disadvantage. multiple commenters also provided data on the prevalence and harms of misclassification, specifically in the construction industry. for example, the illinois economic policy institute (ilepi), the national electrical contractors association (neca) and the international brotherhood of electrical workers (ibew), the united brotherhood of carpenters and joiners (ubc), and north america's building trades unions (nabtu), among others, all cite to a study from russell ormiston et al., which found that between 12 and 21 percent of the construction industry workforce were either misclassified as independent contractors or working “off the books.” [632] the paper notes that these results suggest that “between 1.30 and 2.16 million workers were misclassified or working in cash only arrangements.” although the impacts discussed in this study involve broader labor violations than independent contractor misclassification, its results are still useful for understanding the extent of the problem. commenters asserted that not only is misclassification prevalent in the construction industry, but it is also harmful to workers and to employers who do not misclassify their workers. for example, swacca noted that when construction companies misclassify their workers, they avoid costs such as overtime, workers' compensation, unemployment insurance, employment taxes, and compliance with health and safety requirements. they explained that when “high road” employers are unable to compete with contractors who are misclassifying their workers, it leads to a “race to the bottom,” which further degrades working conditions in construction. ubc discussed a report on the number of construction worker families in the u.s. enrolled in safety net programs, such as medicaid, temporary assistance for needy families (tanf), and the supplemental nutrition assistance program (snap). ubc noted that the report found, “[s]hockingly, 3 million families, or 39 percent of construction worker families, are enrolled in at least one safety net program, costing state and federal taxpayers $28 billion a year.” [633] they further explained that “[t]he authors of the report attributed the high degree of reliance on public assistance to a number of factors. chief among those were low pay, wage theft, misclassification as independent contractors, off the books payments, and `payroll fraud.' ” while the costs discussed in that report reflect a variety of factors, if misclassification contributes to just a share of this overall cost, the costs of misclassification could still be significant, especially for just one industry. if this final rule s then able to reduce a fraction of overall misclassification in the u.s., the ( print page 1736) department would anticipate benefits for affected workers and businesses in competition. misclassification of independent contractors culminates in a reduced social safety net starting with the individual and cascading out through the local, state, and federal programs. employees who are misclassified as independent contractors generally do not receive employer sponsored health and retirement benefits, potentially resulting in or contributing to long term financial insecurity. employees are more likely than independent contractors to have health insurance. according to the cws, 75.4 percent of independent contractors have health insurance, compared to 84.0 percent of employees. this gap between independent contractors and employees is also true for low income workers. using cws data, the department compared health insurance rates for workers earning less than $15 per hour and found that 71.0 percent of independent contractors have health insurance compared with 78.5 percent of employees. lastly, the department considered whether this gap could be larger for traditionally underserved groups or minorities. considering the subsets of independent contractors who are female, hispanic, or black, only the hispanic independent contractors have a statistically significant difference in the percentage of workers with health insurance (estimated to be about 18 percentage points lower).[634] additionally, a major source of retirement savings is employer sponsored retirement accounts. according to the cws, 55.5 percent of employees have a retirement account with their current employer; in addition, the bls employer costs for employee compensation (ecec) found that in 2022, employers paid 5.1 percent of employees' total compensation in retirement benefits on average ($2.16/$42.48).[635] a 2017 treasury study found that in 2014, while forty two percent of wage earners made contributions to an individual retirement account (ira) or employer plan, only eight percent of self employed individuals made any retirement contribution.[636] smaller retirement savings could result in a long term tax burden to all americans due to increased reliance upon social assistance programs. to the extent that this rule would reduce misclassification, it could result in transfers to workers in the form of employer provided benefits like health care and retirement benefits. the national retail federation questioned this assumption, asserting that “it does not take into account the myriad of insurance arrangements that are available to individuals and their families.” while some independent contractors do have health insurance, as evidenced in the data discussed above, they are insured at a lower rate than employees. as shown in table 3 below, using data from bls employer costs for employee compensation, the department has calculated the average cost to employers for various benefits as a percentage of the average cost to employers for wages and salaries. this share was then applied to the median weekly wage of both full time and part time independent contractors to estimate the value of these benefits to an average independent contractor if they were to begin receiving these benefits. the department estimated that the value of these benefits could average more than $15,000 annually for full time independent contractors and more than $6,000 annually for part time independent contractors. this example transfer estimate could be reduced if there is a downward adjustment in the worker's wage rate to offset a portion of the employer's cost associated with these new benefits. table 3 potential transfers associated with employer provided fringe benefits as self employed workers, independent contractors are legally obligated to pay both the employee and employer shares of the federal insurance contributions act (fica) taxes. thus, if workers' classifications change from independent contractors to employees, there could be a transfer in federal tax liabilities from workers to employers.[637] although this rule only addresses whether a worker is an employee or an independent contractor under the flsa, the department assumes in this analysis that employers are likely to keep the status of most workers the same across all benefits and requirements, including for tax ( print page 1737) purposes.[638] these payroll taxes include the 6.2 percent employer component of the social security tax and the 1.45 percent employer component of the medicare tax.[639] in sum, independent contractors are legally responsible for an additional 7.65 percent of their earnings in fica taxes (less the applicable tax deduction for this additional payment). some of this increased tax liability may be partially or wholly paid for by the individuals and companies that engage independent contractors, to the extent that the compensation paid to independent contractors accounts for this added tax liability. however, changes in compensation are discussed separately below. changes in benefits, tax liability, and earnings must be considered in tandem to identify how the standard of living may change. the coalition to promote independent entrepreneurs contended that the department's analysis of transfers is problematic and that the claim that employers are likely to keep the status of most workers the same across all benefits and requirements is legally incorrect. in the department's enforcement experience, employers generally classify workers as employees or independent contractors for all purposes. the department is not making any statement regarding employers' compliance with other laws that use different standards for employee classification than the flsa. in addition to affecting tax liabilities for workers, this rule could have an impact on state tax revenue and budgets. misclassification results in lost revenue and increased costs for states because states receive less tax revenue than they otherwise would from payroll taxes, and they have reduced funds to unemployment insurance, workers' compensation, and paid leave programs.[640] although it has not been updated more recently, the irs conducted a comprehensive worker misclassification estimate in 1984 using data collected by auditors. at the time, the irs found misclassification resulted in an estimated total tax loss of $1.6 billion in social security taxes, medicare taxes, federal unemployment taxes, and federal income taxes (for tax year 1984).[641 642] to the extent workers were incorrectly classified due to misapplication of the 2021 ic rule, that could have led to reduced tax revenues. generally, employer requirements pertaining to unemployment insurance, disability insurance, or worker's compensation are on behalf of employees, therefore independent contractors do not have access to those benefits. reduced unemployment insurance, disability insurance, and worker's compensation contributions result in reduced disbursement capabilities. misclassification of employees as independent contractors thus impacts the funds paid into such state programs. even if the misclassified worker is unaffected because they need no assistance, the employer has not paid into the programs as required. as a result, the state has diminished funds for those who require the benefits. for example, in tennessee, from september 2017 to october 2018, the uninsured employers fund unit “assessed 234 penalties against employers for not maintaining workers' compensation insurance, for a total assessment amount of $2,730,269.60.” [643] this amount represents only what was discovered by the taskforce in thirteen months and in just one state. by rescinding the 2021 ic rule, this rule could prevent this increased burden on government entities. when workers are properly classified as independent contractors, the minimum wage, overtime pay, and other requirements of the flsa no longer apply. the 2017 cws data indicate that independent contractors are more likely than employees to report earning less than the flsa minimum wage of $7.25 per hour (8 percent for self employed independent contractors, 5 percent for other independent contractors, and 2 percent for employees). concerning overtime pay, not only do independent contractors not receive the overtime pay premium, but the number of overtime hours worked (more than 40 hours in a workweek) by independent contractors is also higher. analysis of the cws data indicated that, before conditioning on covariates, primary self employed independent contractors are more likely to work overtime at their main job than employees, as 29 percent of self employed independent contractors reported working overtime versus just 17 percent for employees.[644] additionally, independent contractors who work overtime tend to work more hours of overtime than employees. according to the department's analysis of cws data, among those who usually work overtime, the mean usual number of overtime hours for independent contractors is 15.4 and the mean for employees is 11.8 hours. independent contractors are also not protected by other provisions in the flsa that are centered on ensuring that women are treated fairly at work, including employer provided accommodations for breastfeeding workers and protections against pay discrimination. as discussed above, compared to the 2021 ic rule, this rule could result in reduced misclassification of employees as independent contractors. any reduction in misclassification that occurs because of this rule would lead to an increase in the applicability of these flsa protections for workers and subsequently may result in transfers relating to minimum wage and overtime pay. specifically, to the extent misclassified workers were not earning the minimum wage, reduced misclassification would increase hourly wages for these workers to the federal minimum wage. similarly, to the extent misclassified workers were not receiving the applicable overtime pay, reduced misclassification would increase overtime pay for any overtime hours they continued to work. however, compared to the current economic and legal landscape where courts and parties outside the department are not necessarily using the 2021 ic rule's framework for analyzing employee or independent contractor classification ( print page 1738) and are instead continuing to use longstanding judicial precedent and guidance that the department was relying on prior to march of 2022, these transfers (and the other transfers discussed above) would be less likely to occur. in addition to increased compliance with minimum wage and overtime pay requirements, potential transfers may also result from this rulemaking as a consequence of differences in earnings between employees and independent contractors.[645] independent contractors are generally expected to earn a wage premium relative to employees who perform similar work to compensate for their reduced access to benefits and increased tax liability. however, this may not always be the case in practice. the department compared the average hourly wages of current employees and independent contractors to provide some indication of the impact on wages of a worker who is reclassified from an independent contractor to an employee. the department used an approach similar to katz and krueger (2018).[646] both regressed hourly wages on independent contractor status [647] and observable differences between independent contractors and employees ( e.g., occupation, sex, potential experience, education, race, and ethnicity) to help isolate the impact of independent contractor status on hourly wages. katz and krueger used the 2005 cws and the 2015 rand american life panel (alp) (the 2017 cws was not available at the time of their analysis). the department used the 2017 cws.[648] both analyses found similar results. a simple comparison of mean hourly wages showed that independent contractors tend to earn more per hour than employees ( e.g., $27.29 per hour for all independent contractors versus $24.07 per hour for employees using the 2017 cws). however, when controlling for observable differences between workers, katz and krueger found no statistically significant difference between independent contractors' and employees' hourly wages in the 2005 cws data. although their analysis of the 2015 alp data found that primary independent contractors earned more per hour than traditional employees, they recommended caution in interpreting these results due to the imprecision of the estimates.[649] the department found no statistically significant difference between independent contractors' and employees' hourly wages in the 2017 cws data. based on these results, the department believes it is inappropriate to conclude independent contractors generally earn a higher hourly wage than employees. the department ran another hourly wage rate regression including additional variables to determine if independent contractors in underserved groups are impacted differently by including interaction terms for female independent contractors, hispanic independent contractors, and black independent contractors. the results indicate that in addition to the lower wages earned by black workers in general, black independent contractors also earn less per hour than independent contractors of other races; however, this is not statistically significant at the most commonly used significance level.[650] a group of dc economists provided a comment discussing an analysis they performed using aggregate data and analysis from individual level irs tax data from washington, dc.[651] in their study, they found that taxpayers who switched from employment to self employment saw a decrease in income and vice versa. they found, “[b]etween 2013 2018 switching from a typical wage earning job to self employment, was associated with a 20 50 percent drop in income, while switching away from self employment was associated with an income increase of 65 85 percent.” they also note that low income tax filers who switched from self employment to a wage earning job approximately doubled their income from 2013 2018. however, this analysis is specifically focused on workers in washington, dc, and the definition of self employment may differ from independent contractor classification under the flsa. the coalition for workforce innovation asserted that the department failed to consider additional studies reconfirming that independent contractors earn more than traditional employees. they cite the upwork study, saying “[t]he number of freelancers who earn more by freelancing than in their traditional jobs continues to grow: 44% of freelancers say they earn more freelancing than with a traditional job in 2021, . . . up from 39% in 2020 and 32% in 2019.” [652] the department notes that even if 44% of freelancers say that they earn more than they would under traditional employment, that would still mean that a larger share of freelancers (56%) either report earning the same or less than with traditional employment. also, as discussed in section vii.b.1, the nature of this study and its definition of freelancing may not be applicable to how independent contracting is discussed in this rule. the economic policy institute (epi) also submitted a comment with a quantitative analysis of the difference in the value of a job to a worker who is classified as an independent contractor rather than as an employee. their analysis reviewed data for workers in 11 occupations identified as particularly vulnerable to misclassification: construction workers, truck drivers, janitors and cleaners, home health and personal care aides, retail sales workers, housekeeping cleaners, landscaping workers, call center workers, security guards, light truck delivery drivers, and manicurists and pedicurists. pursuant to its obligations under executive order 12866,[653] the department assessed four regulatory alternatives to this rule. the department had previously considered and rejected two of these alternatives in the 2021 ic rule adopting either a common law or abc test for determining employee or independent contractor status.[654] the department reaches the same ( print page 1739) conclusion in this final rule. section iv above discusses why legal constraints prevent the department from adopting either of these alternatives and the comments received regarding these alternatives. for a third alternative, the department considered a rule that would not fully rescind the 2021 ic rule and instead retain some aspects of that rule. as the department has noted throughout this final rule, there are multiple instances in which it is consistent or in agreement with the 2021 ic rule. however, the numerous ways in which the 2021 ic rule described the factors were in tension with judicial precedent and longstanding department guidance and narrowed the economic reality test by limiting the facts that may be considered as part of the test, facts which the department believes are relevant in determining whether a worker is economically dependent on the employer for work or in business for themself. for these reasons, and as discussed in sections iii and iv above, the department has ultimately concluded that a complete recission and replacement of the 2021 ic rule is needed. for a fourth alternative, the department considered rescinding the 2021 ic rule and providing guidance on employee and independent contractor classification through subregulatory guidance. for more than 80 years prior to the 2021 ic rule, the department primarily issued subregulatory guidance in this area and did not have generally applicable regulations on the classification of workers as employees or independent contractors. the department considered rescinding the 2021 ic rule and continuing to provide subregulatory guidance for stakeholders through existing documents (such as fact sheet #13) and new documents (for example a field assistance bulletin). rescinding the 2021 ic rule without issuing a new regulation would have lowered the regulatory familiarity costs associated with this rulemaking. as explained in sections iii, iv, and v above, however, the department continues to believe that replacing the 2021 ic rule with regulations addressing the multifactor economic reality test that more fully reflect the case law and continue to be relevant to the modern economy will be helpful for both workers and employers. specifically, issuing regulations with an explanatory preamble allows the department to provide in depth guidance. additionally, issuing regulations allowed the department to formally collect and consider a wide range of views from stakeholders by electing to use the notice and comment process. finally, because courts are accustomed to considering relevant agency regulations, providing guidance in this format may further improve consistency among courts regarding this issue. therefore, the department is not rescinding the 2021 ic rule and providing only subregulatory guidance. the regulatory flexibility act of 1980 (rfa), 5 u.s.c. 601 et seq., as amended by the small business regulatory enforcement fairness act of 1996, public law 104 121 (march 29, 1996), requires federal agencies engaged in rulemaking to consider the impact of their rules on small entities, consider alternatives to minimize that impact, and solicit public comment on their analyses. the rfa requires the assessment of the impact of a regulation on a wide range of small entities, including small businesses, not for profit organizations, and small governmental jurisdictions. agencies must perform a review to determine whether a proposed or final rule would have a significant economic impact on a substantial number of small entities. as discussed in section ii.c.3., on march 14, 2022, a district court in the eastern district of texas issued a decision vacating the department's delay and withdrawal of the 2021 ic rule and concluding that the 2021 ic rule became effective on march 8, 2021. the department believes that the 2021 ic rule does not fully comport with the flsa's text and purpose as interpreted by the courts and, had it been left in place, would have had a confusing and disruptive effect on workers and businesses alike due to its departure from decades of case law describing and applying the multifactor economic reality test. therefore, the department believes it is appropriate to rescind the 2021 ic rule and set forth an analysis for determining employee or independent contractor status under the act that is more consistent with existing judicial precedent and the department's longstanding guidance prior to the 2021 ic rule. the department is rescinding and replacing regulations addressing whether workers are employees or independent contractors under the flsa. of particular note, the regulations set forth in this final rule do not use “core factors” and instead return to a totality of the circumstances analysis of the economic reality test in which the factors do not have a predetermined weight and are considered in view of the economic reality of the whole activity. regarding the economic reality factors, this final rule returns to the longstanding framing of investment as a separate factor, and integral as an integral part of the potential employer's business rather than an integrated unit of production. the final rule also provides broader discussion of how scheduling, remote supervision, price setting, and the ability to work for others should be considered under the control factor, and it allows for consideration of reserved rights while removing the provision in the 2021 ic rule that minimized the relevance of retained rights. further, the final rule discusses exclusivity in the context of the permanency factor, and initiative in the context of the skill factor. the department also made several adjustments to the proposed regulations after consideration of the comments received, including revisions to the regulations regarding the investment factor and the control factor (specifically addressing compliance with legal obligations). the department believes that rescinding the 2021 ic rule and replacing it with regulations addressing the multifactor economic reality test in a way that both more fully reflects the case law and continues to be relevant to the evolving economy will be helpful for both workers and employers. the department believes this rule will help protect employees from misclassification while at the same time providing a consistent approach for those businesses that engage (or wish to engage) independent contractors as well as for those who wish to work as independent contractors. several commenters submitted feedback in response to the nprm's initial regulatory flexibility analysis (irfa) or otherwise addressing the potential impact of this rulemaking on small entities. commenters, including the small business administration office of advocacy (sba) contended that the department has severely underestimated the economic impacts of this rule on small businesses and independent contractors. for example, several commenters criticized the rule familiarization time estimates referenced in the irfa, with the independent electrical contractors, the small business & entrepreneurship ( print page 1740) council (“sbe council”), and sba citing the length of the nprm as evidence that the department was providing an underestimate. by contrast, the swacca asserted that the “well understood framework” of the nprm's proposed guidance would reduce regulatory familiarization costs for stakeholders “compared to the january 2021 rule's novel, untested weighted framework.” as explained in section vii.c., the department considered all of the comments received on this topic and has increased the regulatory familiarization cost estimate for this rule to 1 hour for firms and 30 minutes for independent contractors, who may be small businesses themselves. the department believes that this time estimate is appropriate because it represents an average, in which some small businesses will spend more time reviewing the rule and others will spend no time reviewing. some commenters asserted that the department failed to identify other potential costs of this rulemaking. for example, sba wrote that “dol has failed to estimate any costs for small businesses and independent contractors to reclassify workers as independent contractors, for lost work, and for business disruptions.” similarly, sbe council wrote that the irfa did “not include the cost to a small business or small entity if an independent contractor is determined to be `misclassified,' or if a small business or small entity loses business revenue due to the loss of human capital, or the cost to comply with the new rule, or if an independent contractor loses business due to potential or actual misclassification.” as discussed in greater detail in section iii(c) and vii(a), the department does not believe that this rule will lead to widespread reclassification. sba claimed that the irfa for failed to address certain employment related costs related to the reclassification of independent contractors as employees ( e.g., payroll tax obligations, employment benefits costs, etc.) that were mentioned in the nprm's regulatory impact analysis; see also american first legal foundation (“afl”) (“the department failed to consider that small businesses reclassifying independent contractors as employees under the proposed rule will substantially increase their respective tax burdens.”); engine (asserting that “startups that err on the side of caution and hire or shift to full time workers” may have to “offer more robust compensation packages” to compete with larger competitors). the department's regulatory impact analysis only provides a qualitative discussion of these potential transfers and explains that these transfers may result from reduced misclassification resulting from this rule. the department does not believe that coming into compliance with the law would be a “cost” for the purposes of the economic analyses of this rulemaking. sba also commented that “many independent contractors or freelance workers, who may also be small businesses, believe they will lose work because of this rule.” the department does not believe that this rule will lead to job losses because most workers who were properly classified as independent contractors before the 2021 ic rule will continue to retain their status as independent contractors. finally, afl was concerned about the department “treating small businesses the same as all other entities” and asserted that section 223 of the small business regulatory enforcement fairness act of 1996 (“sbrefa”) requires the department to creation an exemption waiving the application of civil money penalties for small entities “that will inevitably misapply the confusing and inconsistent `economic reality' test.” see also engine (“it is unclear how the proposed rule, if implemented, will be enforced consistent with sbrefa, if the department does not accommodate differing compliance requirements by waiving or reducing penalties when circumstances warrant.”). in response to these comments, the department notes that courts apply the same economic reality test when evaluating the flsa employment status of any worker alleged to be an independent contractor, regardless of the size of the potential employer.[655] similarly, the department is striving to provide a generally applicable regulation in this rulemaking. as with other enforcement related requests from commenters described in section ii.e., whether the department should reduce or waive certain civil money penalties for small entities found to have violated the flsa is an enforcement issue that is beyond the scope of this rulemaking. the department used the small business administration size standards, which determine whether a business qualifies for small business status, to estimate the number of small entities.[656] the department then applied these thresholds to the u.s. census bureau's 2017 economic census to obtain the number of establishments with employment or sales/receipts below the small business threshold in the industry.[657] these ratios of small to large establishments were then applied to the more recent 2019 statistics of united states businesses (susb) data on number of establishments.[658] next, the department estimated the number of small governments, defined as having population less than 50,000, from the 2017 census of governments.[659] in total, the department estimated there are 6.5 million small establishments or governments who could potentially have independent contractors, and who could be affected by this rulemaking. however, not all of these establishments will have independent contractors, and so only a share of this number will actually be affected. the impact of this rule could also differ by industry. as shown in table 2 of the regulatory impact analysis, the industries with the highest number of independent contractors are the professional and business services and construction industries. additionally, as discussed in section vii.b., the department estimates that there are 22.1 million independent contractors. some of these independent contractors may be considered small businesses and may also be impacted by this rule. this rule provides guidance for analyzing employee or independent contractor status under the flsa. it does not create any new reporting or ( print page 1741) recordkeeping requirements for businesses. in the regulatory impact analysis, the department estimates that regulatory familiarization to be one hour per entity and one half hour per independent contractor. the per entity cost for small business employers is the regulatory familiarization cost of $52.80, or the fully loaded median hourly wage of a compensation, benefits, and job analysis specialist multiplied by 1 hour. the per entity rule familiarization cost for independent contractors, some of whom would be small businesses, is $11.73 or the median hourly wage of independent contractors in the cws multiplied by 0.5 hour. the rfa requires agencies to discuss “any significant alternatives to the proposed rule which accomplish the stated objectives of applicable statutes and which minimize any significant economic impact of the proposed rule on small entities.” [660] as discussed earlier in section vii.f., the department does not believe that it has the legal authority to adopt either a common law or “abc” test to determine employee or independent contractor status under the flsa, foreclosing the consideration of these alternatives for purposes of the rfa. as explained in section vii.f., the department considered two other regulatory alternatives: a rule that would not fully rescind the 2021 ic rule and instead retain some aspects of that rule in the new rule; and completely rescinding the 2021 ic rule and providing guidance on employee or independent contractor classification through subregulatory guidance, as the department had done for over 80 years prior to the 2021 ic rule. the department believes that the overall economic impact of retaining some portions of the 2021 ic rule while issuing a rule to revise other portions of the rule would not minimize the economic impact on small entitles as they would incur costs to familiarize themselves with the new regulation. similarly, the department believes that the overall economic impact of fully rescinding the 2021 ic rule and providing subregulatory guidance, would not necessarily minimize the economic impact on small entities as they would incur some costs to familiarize themselves with any subregulatory guidance. moreover, as explained in sections iii, iv, and v above, the department believes that replacing the 2021 ic rule with regulations addressing the multifactor economic reality test that more fully reflect the case law and continue to be relevant to the modern economy will be helpful for both workers and employers, particularly over the long term. the unfunded mandates reform act of 1995, 2 u.s.c. 1532, requires agencies to prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing any unfunded federal mandate that may result in excess of $100 million (adjusted annually for inflation) in expenditures in any one year by state, local, and tribal governments in the aggregate, or by the private sector. adjusting the threshold for inflation using the gdp deflator, using a recent annual result (2021), yields a threshold of $165 million. therefore, this rulemaking is expected to create unfunded mandates that exceed that threshold. see section vii for an assessment of anticipated costs and benefits. the department has reviewed this rule in accordance with executive order 13132 regarding federalism and determined that it does not have federalism implications. the rule will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. this rule will not have tribal implications under executive order 13175 that require a tribal summary impact statement. the rule will not have substantial direct effects on one or more indian tribes, on the relationship between the federal government and indian tribes, or on the distribution of power and responsibilities between the federal government and indian tribes. for the reasons set out in the preamble, the wage and hour division, department of labor amends title 29 cfr chapter v, as follows: 1. the authority citation for part 780 continues to read as follows: authority: secs. 1 19, 52 stat. 1060, as amended; 75 stat. 65; 29 u.s.c. 201 219. pub. l. 105 78, 111 stat. 1467. 2. amend § 780.330 by revising paragraph (b) to read as follows: (b) in determining whether such individuals are employees or independent contractors, the criteria set forth in §§ 795.100 through 795.110 of this chapter are used. 3. the authority citation for part 788 continues to read as follows: authority: secs. 1 19, 52 stat. 1060, as amended; 29 u.s.c. 201 219. 4. amend § 788.16 by revising paragraph (a) to read as follows: (a) in determining whether individuals are employees or independent contractors, the criteria set forth in §§ 795.100 through 795.110 of this chapter are used. 5. add part 795 to read as follows: authority: 29 u.s.c. 201 219. this part contains the department of labor's (the department) general interpretations for determining whether workers are employees or independent ( print page 1742) contractors under the fair labor standards act (flsa or act). see 29 u.s.c. 201 19. these interpretations are intended to serve as a “practical guide to employers and employees” as to how the department will seek to apply the act. skidmore v. swift & co., 323 u.s. 134, 138 (1944). the administrator of the department's wage and hour division will use these interpretations to guide the performance of their duties under the act, unless and until the administrator is otherwise directed by authoritative decisions of the courts or the administrator concludes upon reexamination of an interpretation that it is incorrect. to the extent that prior administrative rulings, interpretations, practices, or enforcement policies relating to determining who is an employee or independent contractor under the act are inconsistent or in conflict with the interpretations stated in this part, they are hereby rescinded. the interpretations stated in this part may be relied upon in accordance with section 10 of the portal to portal act, 29 u.s.c. 251 262, notwithstanding that after any act or omission in the course of such reliance, the interpretation is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect. 29 u.s.c. 259. (a) relevance of independent contractor or employee status under the act. the act's minimum wage, overtime pay, and recordkeeping obligations apply only to workers who are covered employees. workers who are independent contractors are not covered by these protections. labeling employees as “independent contractors” does not make these protections inapplicable. a determination of whether a worker is an employee or independent contractor under the act focuses on the economic realities of the worker's relationship with the worker's potential employer and whether the worker is either economically dependent on the potential employer for work or in business for themself. (b) economic dependence as the ultimate inquiry. an “employee” under the act is an individual whom an employer suffers, permits, or otherwise employs to work. 29 u.s.c. 203(e)(1), (g). “employer” is defined to “include[ ] any person acting directly or indirectly in the interest of an employer in relation to an employee.” 29 u.s.c. 203(d). the act's definitions are meant to encompass as employees all workers who, as a matter of economic reality, are economically dependent on an employer for work. a worker is an independent contractor, as distinguished from an “employee” under the act, if the worker is, as a matter of economic reality, in business for themself. economic dependence does not focus on the amount of income the worker earns, or whether the worker has other sources of income. (a) economic reality test. (1) in order to determine economic dependence, multiple factors assessing the economic realities of the working relationship are used. these factors are tools or guides to conduct a totality of the circumstances analysis. this means that the outcome of the analysis does not depend on isolated factors but rather upon the circumstances of the whole activity to answer the question of whether the worker is economically dependent on the potential employer for work or is in business for themself. (2) the six factors described in paragraphs (b)(1) through (6) of this section should guide an assessment of the economic realities of the working relationship and the question of economic dependence. consistent with a totality of the circumstances analysis, no one factor or subset of factors is necessarily dispositive, and the weight to give each factor may depend on the facts and circumstances of the particular relationship. moreover, these six factors are not exhaustive. as explained in paragraph (b)(7) of this section, additional factors may be considered. (b) economic reality factors  (1) opportunity for profit or loss depending on managerial skill. this factor considers whether the worker has opportunities for profit or loss based on managerial skill (including initiative or business acumen or judgment) that affect the worker's economic success or failure in performing the work. the following facts, among others, can be relevant: whether the worker determines or can meaningfully negotiate the charge or pay for the work provided; whether the worker accepts or declines jobs or chooses the order and/or time in which the jobs are performed; whether the worker engages in marketing, advertising, or other efforts to expand their business or secure more work; and whether the worker makes decisions to hire others, purchase materials and equipment, and/or rent space. if a worker has no opportunity for a profit or loss, then this factor suggests that the worker is an employee. some decisions by a worker that can affect the amount of pay that a worker receives, such as the decision to work more hours or take more jobs when paid a fixed rate per hour or per job, generally do not reflect the exercise of managerial skill indicating independent contractor status under this factor. (2) investments by the worker and the potential employer. this factor considers whether any investments by a worker are capital or entrepreneurial in nature. costs to a worker of tools and equipment to perform a specific job, costs of workers' labor, and costs that the potential employer imposes unilaterally on the worker, for example, are not evidence of capital or entrepreneurial investment and indicate employee status. investments that are capital or entrepreneurial in nature and thus indicate independent contractor status generally support an independent business and serve a business like function, such as increasing the worker's ability to do different types of or more work, reducing costs, or extending market reach. additionally, the worker's investments should be considered on a relative basis with the potential employer's investments in its overall business. the worker's investments need not be equal to the potential employer's investments and should not be compared only in terms of the dollar values of investments or the sizes of the worker and the potential employer. instead, the focus should be on comparing the investments to determine whether the worker is making similar types of investments as the potential employer (even if on a smaller scale) to suggest that the worker is operating independently, which would indicate independent contractor status. (3) degree of permanence of the work relationship. this factor weighs in favor of the worker being an employee when the work relationship is indefinite in duration, continuous, or exclusive of work for other employers. this factor weighs in favor of the worker being an independent contractor when the work relationship is definite in duration, non exclusive, project based, or sporadic based on the worker being in business for themself and marketing their services or labor to multiple entities. this may include regularly occurring fixed periods of work, although the seasonal or temporary nature of work by itself would not necessarily indicate independent contractor classification. where a lack of permanence is due to operational characteristics that are unique or intrinsic to particular businesses or industries and the workers they employ, this factor is not necessarily indicative of independent contractor status unless the worker is ( print page 1743) exercising their own independent business initiative. (4) nature and degree of control. this factor considers the potential employer's control, including reserved control, over the performance of the work and the economic aspects of the working relationship. facts relevant to the potential employer's control over the worker include whether the potential employer sets the worker's schedule, supervises the performance of the work, or explicitly limits the worker's ability to work for others. additionally, facts relevant to the potential employer's control over the worker include whether the potential employer uses technological means to supervise the performance of the work (such as by means of a device or electronically), reserves the right to supervise or discipline workers, or places demands or restrictions on workers that do not allow them to work for others or work when they choose. whether the potential employer controls economic aspects of the working relationship should also be considered, including control over prices or rates for services and the marketing of the services or products provided by the worker. actions taken by the potential employer for the sole purpose of complying with a specific, applicable federal, state, tribal, or local law or regulation are not indicative of control. actions taken by the potential employer that go beyond compliance with a specific, applicable federal, state, tribal, or local law or regulation and instead serve the potential employer's own compliance methods, safety, quality control, or contractual or customer service standards may be indicative of control. more indicia of control by the potential employer favors employee status; more indicia of control by the worker favors independent contractor status. (5) extent to which the work performed is an integral part of the potential employer's business. this factor considers whether the work performed is an integral part of the potential employer's business. this factor does not depend on whether any individual worker in particular is an integral part of the business, but rather whether the function they perform is an integral part of the business. this factor weighs in favor of the worker being an employee when the work they perform is critical, necessary, or central to the potential employer's principal business. this factor weighs in favor of the worker being an independent contractor when the work they perform is not critical, necessary, or central to the potential employer's principal business. (6) skill and initiative. this factor considers whether the worker uses specialized skills to perform the work and whether those skills contribute to business like initiative. this factor indicates employee status where the worker does not use specialized skills in performing the work or where the worker is dependent on training from the potential employer to perform the work. where the worker brings specialized skills to the work relationship, this fact is not itself indicative of independent contractor status because both employees and independent contractors may be skilled workers. it is the worker's use of those specialized skills in connection with business like initiative that indicates that the worker is an independent contractor. (7) additional factors. additional factors may be relevant in determining whether the worker is an employee or independent contractor for purposes of the flsa, if the factors in some way indicate whether the worker is in business for themself, as opposed to being economically dependent on the potential employer for work. if any provision of this part is held to be invalid or unenforceable by its terms, or as applied to any person or circumstance, or stayed pending further agency action, the provision shall be construed so as to continue to give the maximum effect to the provision permitted by law, unless such holding shall be one of utter invalidity or unenforceability, in which event the provision shall be severable from this part and shall not affect the remainder thereof. signed this 2nd day of january, 2024. jessica looman, administrator, wage and hour division. 1. 29 u.s.c. 202. 2. 29 u.s.c. 203(d), (e)(1), (g). 3. 86 fr 1168. the office of the federal register did not amend the code of federal regulations (cfr) to include the regulations from the 2021 ic rule because, as explained elsewhere in this section, the department first delayed and then withdrew the 2021 ic rule before it became effective. a district court decision later vacated the department's rules to delay and withdraw the 2021 ic rule, and the department has (since that decision) conducted enforcement in accordance with that decision while the 2021 ic rule has been in effect. 4. id. at 1246 47 (§ 795.105(d)). 5. id. at 1246 (§ 795.105(c)). 6. id. at 1247 (§ 795.105(d)(2)). 7. id. at 1246 (§ 795.105(c)). 8. id. at 1246 47 (§ 795.105(d)(1) and (d)(2)(iii)). 9. id. at 1247 48 (§ 795.110). 10. see coal. for workforce innovation v. walsh, no. 1:21 cv 130, 2022 wl 1073346 (e.d. tex. mar. 14, 2022), appeal filed, no. 22 40316 (5th cir. may 13, 2022) (“ cwi v. walsh ”). 11. 87 fr 62218. 12. 87 fr 64749. 13. 29 u.s.c. 206(a), 207(a). 14. 29 u.s.c. 212. 15. 29 u.s.c. 203(m)(2)(b). 16. see29 u.s.c. 218d (added by the pump for nursing mothers act, public law 117 328, 136 stat. 4459 (dec. 29, 2022)). 17. 29 u.s.c. 211(c), 215(a)(3). 18. 29 u.s.c. 203(e)(1). 19. 29 u.s.c. 203(d). 20. 29 u.s.c. 203(g). 21. united states v. rosenwasser, 323 u.s. 360, 362, 363 n.3 (1945) (quoting 81 cong. rec. 7657 (statement of senator hugo black)). 22. nationwide mut. ins. v. darden, 503 u.s. 318, 326 (1992). 23. id.; see also, e.g.,walling v. portland terminal co., 330 u.s. 148, 150 51 (1947) (“[i]n determining who are `employees' under the act, common law employee categories or employer employee classifications under other statutes are not of controlling significance. this act contains its own definitions, comprehensive enough to require its application to many persons and working relationships, which prior to this act, were not deemed to fall within an employer employee category.”) (citation omitted). 24. portland terminal, 330 u.s. at 152. 25. see, e.g., rutherford food corp. v. mccomb, 331 u.s. 722, 729 (1947) (noting that “[t]here may be independent contractors who take part in production or distribution who would alone be responsible for the wages and hours of their own employees”). 26. id. 27. id. at 728. 28. courts invoke the concept of “economic reality” in flsa employment contexts beyond independent contractor status. however, as in prior rulemakings, this final rule refers to the “economic reality” analysis or test for independent contractors as a shorthand reference to the independent contractor analysis used by courts for flsa purposes. 29. in distinguishing between employees and independent contractors under the common law, courts evaluate “the hiring party's right to control the manner and means by which the product is accomplished.” community for creative non violence v. reid, 490 u.s. 730, 751 (1989). “among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.” id. (footnotes omitted). 30. 322 u.s. at 118 20; 29 u.s.c. 152(3). 31. id. at 123 25, 129. 32. 331 u.s. at 712 14. 33. id. at 716. 34. id. 35. id. 36. 331 u.s. at 727. 37. id. at 723 24. 38. id. at 730. 39. see id. 40. id. at 729 30. 41. 332 u.s. at 130. 42. id. 43. id. 44. id. 45. labor management relations (taft hartley) act, 1947, public law 80 101, sec. 101, 61 stat. 136, 137 38 (1947) (codified as amended at 29 u.s.c. 152(3)). 46. ssa of 1948, public law 80 642, sec. 2(a), 62 stat. 438 (1948) (codified as amended at 26 u.s.c. 3121(d)). 47. see nlrb v. united ins. co. of am., 390 u.s. 254, 256 (1968) (noting that “[t]he obvious purpose of” the amendment to the definition of employee under the nlra “was to have the board and the courts apply general agency principles in distinguishing between employees and independent contractors under the act”). 48. 366 u.s. at 33 (quoting from silk, 331 u.s. at 713, and rutherford, 331 u.s. at 729). 49. id. at 32. 50. darden, 503 u.s. at 325 26. 51. usery v. pilgrim equip. co., 527 f.2d 1308, 1311 (5th cir. 1976) (quoting bartels, 332 u.s. at 130). 52. see brock v. superior care, inc., 840 f.2d 1054, 1058 59 (2d cir. 1988); donovan v. dialamerica mktg., inc., 757 f.2d 1376, 1382 83 (3d cir. 1985); mcfeeley v. jackson street ent., llc, 825 f.3d 235, 241 (4th cir. 2016); pilgrim equip., 527 f.2d at 1311; acosta v. off duty police servs., inc., 915 f.3d 1050, 1055 (6th cir. 2019); sec'y of labor, u.s. dep't of labor v. lauritzen, 835 f.2d 1529, 1534 35 (7th cir. 1987); walsh v. alpha & omega usa, inc., 39 f.4th 1078, 1082 (8th cir. 2022); real v. driscoll strawberry assocs., inc., 603 f.2d 748, 754 (9th cir. 1979); acosta v. paragon contractors corp., 884 f.3d 1225, 1235 (10th cir. 2018); scantland v. jeffry knight, inc., 721 f.3d 1308, 1311 12 (11th cir. 2013); morrison v. int'l programs consortium, inc., 253 f.3d 5, 11 (d.c. cir. 2001). 53. see, e.g., parrish v. premier directional drilling, l.p., 917 f.3d 369, 380 (5th cir. 2019) (stating that it “is impossible to assign to each of these factors a specific and invariably applied weight”) (quoting hickey v. arkla indus., inc., 699 f.2d 748, 752 (5th cir. 1983)); scantland, 721 f.3d at 1312 n.2 (the relative weight of each factor “depends on the facts of the case”) (quoting santelices v. cable wiring, 147 f. supp. 2d 1313, 1319 (s.d. fla. 2001)); martin v. selker bros., 949 f.2d 1286, 1293 (3d cir. 1991) (“it is a well established principle that the determination of the employment relationship does not depend on isolated factors . . . neither the presence nor the absence of any particular factor is dispositive.”). 54. scantland, 721 f.3d at 1311 12. 55. id. at 1312 n.2. 56. see pilgrim equip., 527 f.2d at 1311. 57. see hobbs v. petroplex pipe & constr., inc., 946 f.3d 824, 836 (5th cir. 2020) (considering “the extent to which the pipe welders' work was `an integral part' of petroplex's business”). every other federal court of appeals that has decided an flsa case involving alleged independent contractors includes the “integral part” factor among the list of enumerated economic reality factors. see the cases cited supra at n.52 other than pilgrim equipment. 58. see, e.g., franze v. bimbo bakeries usa, inc., 826 f. app'x 74, 76 (2d cir. 2020); superior care, 840 f.2d at 1058 59. the d.c. circuit has adopted the second circuit's articulation of the factors, including treating opportunity for profit or loss and investment as one factor. see morrison, 253 f.3d at 11 (citing superior care, 840 f.2d at 1058 59). 59. whd op. ltr. (june 23, 1949). 60. id. 61. see, e.g., whd op. ltr. (oct. 12, 1965) (discussing degree of independent business organization); whd op. ltr. (feb. 18, 1969) (same); whd op. ltr. flsa 314 (dec. 21, 1982) (discussing three of the silk factors); whd op. ltr. flsa 164 (jan. 18, 1990) (discussing four of the silk factors). 62. see, e.g., whd op. ltr. flsa 106 (feb. 8, 1956); whd op. ltr. (july 20, 1965); whd op. ltr. (sept. 1, 1967); whd op. ltr. (feb. 18, 1969); whd op. ltr. flsa 31 (aug. 10, 1981); whd op. ltr. (june 5, 1995). 63. see27 fr 8032; 29 u.s.c. 213(b)(28) (previously codified at 29 u.s.c. 213(a)(15)). 64. 27 fr 8033 (29 cfr 788.16(a)). 65. id. 66. 27 fr 8033 34 (29 cfr 788.16(a)). 67. see37 fr 12084, 12102 (introducing 29 cfr 780.330(b)). 68. id. 69. see62 fr 11734 (amending 29 cfr 500.20(h)(4)); see also29 u.s.c. 1802(5) (“the term `employ' has the meaning given such term under section 3(g) of the [flsa]”). 70. 29 cfr 500.20(h)(4). 71. see whd fact sheet #13 (1997) https:/web.archive.org/web/19970112162517/http:/www.dol.gov/​dol/​esa/​public/​regs/​compliance/​whd/​whdfs13.htm). whd made minor revisions to fact sheet #13 in 2002 and 2008, before a more substantial revision in 2014. in 2018, whd reverted back to the 2008 version of fact sheet #13, which apart from the addition of an advisory note referring to the 2021 ic rule is identical to the current march 2022 version (available at https://www.dol.gov/​agencies/​whd/​fact sheets/​13 flsa employment relationship). 72. ai 2015 1 is available at 2015 wl 4449086 (withdrawn june 7, 2017). 73. see news release 17 0807 nat, “us secretary of labor withdraws joint employment, independent contractor informal guidance” (june 7, 2017), https://www.dol.gov/​newsroom/​releases/​opa/​opa20170607 (last visited november 20, 2023). 74. see whd op. ltr. flsa2019 6, 2019 wl 1977301 (apr. 29, 2019) (withdrawn feb. 19, 2021). 75. see id. at *4. opinion letter flsa2019 6's “extent of the integration” factor was a notable recharacterization of the factor traditionally considered by courts and the department regarding the extent to which work is “an integral part” of an employer's business. 76. see note at https://www.dol.gov/​agencies/​whd/​opinion letters/​search?​flsa (last visited november 20, 2023). 77. see86 fr 1168. the department initially published a nprm soliciting public comment on september 25, 2020. see85 fr 60600. the final rule adopted “the interpretive guidance set forth in the [nprm] largely as proposed.” 86 fr 1168. 78. 86 fr 1246 48. 79. id. at 1246. 80. id. at 1172, 1240. 81. id. at 1172 75. 82. id. at 1246 (§ 795.105(a) (b)). 83. id. at 1246 47 (§ 795.105(c) and (d)(2)(iv)). 84. id. at 1246 (§ 795.105(c)). 85. id. at 1246 47 (§ 795.105(d)(1)(i)). 86. id. 87. id. (§ 795.105(d)(1)(ii)). 88. id. (§ 795.105(d)(2)). 89. id. at 1246 (§ 795.105(c)). 90. id. at 1247 48 (§§ 795.110 .115). 91. id. at 1246 (§ 795.100). 92. see https://www.dol.gov/​agencies/​whd/​opinion letters/​search?​flsa (last visited november 20, 2023), noting the withdrawal of opinion letters flsa2021 8 and flsa2021 9. 93. 86 fr 8326. 94. 86 fr 12535. 95. 86 fr 14027. 96. 86 fr 24303. 97. id. at 24320. 98. cwi v. walsh, 2022 wl 1073346. 99. id. at *9. the court specifically faulted the department's use of a shortened 19 day comment period in its proposal to delay of the 2021 ic rule's original effective date (instead of 30 days), and for failing to consider comments beyond its proposal to delay the 2021 ic rule's effective date. id. at *7 10. 100. id. at *11. 101. id. at *13. 102. id. at *20. 103. see fifth circuit no. 22 40316 (appeal filed, may 13, 2022). 104. see87 fr 62218. 105. 87 fr 64749. although several commenters requested a longer extension or otherwise objected that the comment period was inadequately short, the resulting 61 day comment period was more than twice as long as the 30 day comment period for the nprm for the 2021 ic rule, when the department initially proposed regulatory guidance on employee and independent contractor status under the flsa. see85 fr 60600. the department declined several requests to extend the comment period for the 2020 nprm. see https://www.regulations.gov/​document/​whd 2020 0007 0193. 106. campaign comments, both in favor and opposed to the proposal, were received from a variety of groups, including, for example, court reporters, construction industry employers, doordash workers, professional translators, truckers, financial advisors, and healthcare professionals. 107. see, e.g., whd fact sheet #71: internship programs under the fair labor standards act (describing the analysis applied by courts and the department to evaluate the flsa employment status of students and interns). 108. workers who are employees under the flsa but are misclassified as independent contractors remain legally entitled to the act's wage and hour protections and are protected from retaliation for attempting to assert their rights under the act. see29 u.s.c. 215(a)(3). however, many misclassified employees may not be aware that such rights and protections apply to them or face obstacles when asserting those rights. 109. 29 u.s.c. 202; see also tony & susan alamo found. v. sec'y of labor, 471 u.s. 290, 302 (1985) (noting that allowing workers who are employees under the act to work as non employees “would affect many more people than those workers directly at issue . . . and would be likely to exert a general downward pressure on wages in competing businesses”). 110. 86 fr 1225; see also id. at 1206 07. 111. see86 fr 24307 18. 112. see87 fr 62226 (citing fcc v. fox television stations, inc., 556 u.s. 502, 515 (2009)). 113. id. (citing 86 fr 1172 75). 114. id. (citing 86 fr 1175). 115. see86 fr 1246 (§ 795.105(b) (“an employer suffers or permits an individual to work as an employee if, as a matter of economic reality, the individual is economically dependent on that employer for work.”); see also infra section v.b.; 29 cfr 795.105(b) (“an `employee' under the act is an individual whom an employer suffers, permits, or otherwise employs to work. . . . [this is] meant to encompass as employees all workers who, as a matter of economic reality, are economically dependent on an employer for work. . . . economic dependence does not focus on the amount of income earned, or whether the worker has other sources of income.”). 116. see86 fr 1172 73. 117. 86 fr 1175. 118. see87 fr 62227 29. the department had previously identified and discussed these three concerns in its 2021 withdrawal rule. see86 fr 24307 15. 119. 87 fr 62227 (citing 86 fr 1246 (§ 795.105(c) and (d))). 120. 86 fr 1246 (§ 795.105(c)); see also id. at 1201 (advising that other factors would only outweigh the two core factors “in rare cases”). 121. id. at 1246 (§ 795.105(c)). 122. see86 fr 1196 98. 123. id. at 1196. 124. for example, although some commenters cited walsh v. medical staffing of america, that case explicitly stated that “[n]o single factor in the six factor test is dispositive as `the test is designed to capture the economic realities of the relationship between the worker and the putative employer.' ” 580 f. supp. 3d 216, 229 (e.d. va. 2022) (quoting mcfeeley, 825 f.3d at 241). the medical staffing court's reference to smith v. csra, 12 f.4th 396, 413 (4th cir. 2021), is unpersuasive since that case addressed employment status under the americans with disabilities act, not the flsa. see csra, 12 f.4th at 412 13. other cases cited by commenters in support of core factors are inapposite. see brown v. bcg attorney search, no. 12 c 9596, 2013 wl 6096932, at *1 (n.d. ill. nov. 20, 2013) (citing knight v. united farm bureau mut. ins. co., 950 f.2d 377, 378 (7th cir. 1991), which concerned title vii not the flsa); meyer v. u.s. tennis ass'n, no. 1:11 cv 06268 (alc)(mhd), 2014 wl 4495185, at *6 (s.d.n.y. sept. 11, 2014) (citing wadler v. eastern coll. athletic conference, no. 00 civ 5671, 2003 wl 21961119, at *2 (s.d.n.y. aug. 14, 2003), a title vii case not an flsa case); see also herman v. rsr sec. servs. ltd., 172 f.3d 132, 135 (2d cir. 1999) (joint employment not worker classification); zheng v. liberty apparel co. inc., 355 f.3d 61 (2d cir. 2003) (joint employment not worker classification); razak v. uber technologies, inc., 951 f.3d 137, 145 (3d cir. 2020) (making the uncontroversial statement that the control factor “is highly relevant to the flsa analysis” while also reaffirming the third circuit's statement that “neither the presence nor absence of any particular factor is dispositive” and that “courts should examine the circumstances of the whole activity” (quoting dialamerica, 757 f.2d at 1382)). 125. rutherford, 331 u.s. at 730; see also silk, 331 u.s. at 716, 719 (denying the existence of “a rule of thumb to define the limits of the employer employee relationship” and determining employment status based on “the total situation”). 126. see, e.g., parrish, 917 f.3d at 380 (“and, obviously, the factors should not `be applied mechanically.' ”) (quoting brock v. mr. w fireworks, inc., 814 f.2d 1042, 1043 44 (5th cir. 1987)); superior care, 840 f.2d at 1059 (“since the test concerns the totality of the circumstances, any relevant evidence may be considered, and mechanical application of the test is to be avoided.”). 127. parrish, 917 f.3d at 380 (quoting hickey, 699 f.2d at 752); see also scantland, 721 f.3d at 1312 n.2 (“the weight of each factor depends on the light it sheds on the putative employee's dependence on the alleged employer, which in turn depends on the facts of the case.”) (quoting santelices, 147 f. supp. 2d at 1319)). 128. see, e.g., silk, 331 u.s. at 716 (explaining that “[n]o one [factor] is controlling” in the economic realities test); morrison, 253 f.3d at 11 (“no one factor standing alone is dispositive and courts are directed to look at the totality of the circumstances and consider any relevant evidence.”); dole v. snell, 875 f.2d 802, 805 (10th cir. 1989) (“it is well established that no one of these factors in isolation is dispositive; rather, the test is based upon a totality of the circumstances.”); lauritzen, 835 f.2d at 1534 (“certain criteria have been developed to assist in determining the true nature of the relationship, but no criterion is by itself, or by its absence, dispositive or controlling.”); selker bros., 949 f.2d at 1293 (“it is a well established principle that the determination of the employment relationship does not depend on isolated factors . . . neither the presence nor the absence of any particular factor is dispositive.”). 129. see mcfeeley, 825 f.3d at 241 (“while a six factor test may lack the virtue of providing definitive guidance to those affected, it allows for flexible application to the myriad different working relationships that exist in the national economy. in other words, the court must adapt its analysis to the particular working relationship, the particular workplace, and the particular industry in each flsa case.”). 130. the 2021 ic rule referenced on several occasions a review of appellate case law since 1975 to justify its elevation of two “core” factors. see 86 fr at 1194, 1196 97, 1198, 1202, 1240. 131. 85 fr 60619. 132. federal courts of appeals have repeatedly cautioned against the “mechanical application” of the economic reality factors, including in the cases cited in support of the predetermined elevation of core factions. see, e.g., saleem v. corp. transp. grp., ltd., 854 f.3d 131, 139 (2d cir. 2017) (“relevant flsa precedent, despite endorsing the silk factors, cautions against their `mechanical application.' ”) (quoting superior care, 840 f.2d at 1059). and as explained herein, courts of appeals make clear that the analysis should draw from the totality of circumstances, with no single factor being determinative by itself. 133. see, e.g., hobbs, 946 f.3d at 829 (“no single factor is determinative. rather, each factor is a tool used to gauge the economic dependence of the alleged employee, and each must be applied with this ultimate concept in mind.”) (quotation marks omitted) (citing hopkins v. cornerstone am., 545 f.3d 338, 343 (5th cir. 2008)); parrish, 917 f.3d at 380 (noting that no one factor is determinative and “obviously, the factors should not `be applied mechanically' ”) (quoting mr. w fireworks, 814 f.2d at 1043); saleem, 854 f.3d at 139 40 (explaining that employment relationships are determined by the circumstances of the whole activity); mcfeeley, 825 f.3d at 241 (“no single factor is dispositive, all six are part of the totality of circumstances presented.”) (citing baystate alternative staffing, inc. v. herman, 163 f.3d 668, 675 (1st cir. 1998)) (internal citation and quotation marks omitted); barlow v. c.r. england, inc., 703 f.3d 497, 506 (10th cir. 2012) (“ `none of the factors alone is dispositive; instead, the court must employ a totality of the circumstances approach.' ”) (citing baker v. flint eng'g & const. co., 137 f.3d 1436, 1440 (10th cir. 1998)); schultz v. capital int'l sec., inc., 466 f.3d 298, 305 (4th cir. 2006) (“no single factor is dispositive; again, the test is designed to capture the economic realities of the relationship between the worker and the putative employer.”). 134. see86 fr 1196 97. 135. unsurprisingly, most of the cases cited in support of the core factor analysis had multiple factors pointing in the same direction, not only control and opportunity for profit or loss. see, e.g., hobbs, 946 f.3d at 830 36 (all factors pointing in same direction); verma v. 3001 castor, inc., 937 f.3d 221, 230 32 (3d cir. 2019) (control, profit or loss, integral, skill, and investment all pointing in same direction); gayle v. harry's nurses registry, inc., 594 f. app'x 714, 717 18 (2d cir. 2014) (control, profit or loss, and integral all pointing in same direction); schultz, 466 f.3d at 307 09 (control, profit or loss, investment, permanence, integral all pointing in same direction); parrish, 917 f.3d at 379 388 (control, profit or loss, skill, permanence all pointing same direction); saleem, 854 f.3d at 140 48 (control, profit or loss, investment, permanence all pointing same direction); mid atl. installation servs., 16 f. app'x at 106 08 (control, profit or loss, investment, skill all pointing same direction); off duty police, 915 f.3d at 1059 1062 (profit or loss, investment, permanence, skill, and integral all pointing in same direction); mcfeeley, 825 f.3d at 243 44 (control, profit or loss, investment, skill, and integral all pointing in same direction); eberline v. media net, l.l.c., 636 f. app'x 225, 228 29 (5th cir. 2016) (control, profit or loss, investment, and skill all pointing in same direction). 136. id. at 1246 47 (§ 795.105(c), (d)). 137. the department previously identified this concern as one of the primary reasons for the withdrawal rule. see86 fr 24311. 138. see darden, 503 u.s. at 324 26; portland terminal, 330 u.s. at 150 51; and rutherford, 331 u.s. at 728. 139. 86 fr 1246 47 (§ 795.105(d)(1)(i)). 140. id. at 1247 (§ 795.105(d)(1)(ii)) (“while the effects of the individual's exercise of initiative and management of investment are both considered under this factor, the individual does not need to have an opportunity for profit or loss based on both for this factor to weigh towards the individual being an independent contractor.”). 141. id.; see also id. at 1188 (“[t]he department reaffirms its position that comparing the individual worker's investment to the potential employer's investment should not be part of the analysis of investment.”). 142. id. at 1247 (§ 795.105(d)(2)(iii)); see also id. at 1248 (noting through an example in § 795.115(b)(6)(ii) that “[i]t is not relevant . . . that the writing of articles is an important part of producing newspapers”); accord id. at 1195 (responding to commenters regarding the department's decision to shift to an “integrated unit of production” analysis). 143. see id. at 1246 47 (advising, in § 795.105(d)(1)(i), that the control factor indicates employment status if a potential employer “ exercises substantial control over key aspects of the performance of the work”) (emphasis added); id. at 1247 (advising, in § 795.110, that “a business' contractual authority to supervise or discipline an individual may be of little relevance if in practice the business never exercises such authority”); see also id. at 1203 04 (same in response to commenters). 144. see86 fr 1247 (§ 795.105(d)(2)(iii)). 145. id. at 1168. 146. see supra section iii.a. 147. see generally87 fr 62229. 148. see generally id. 149. a far larger number of commenters including those both supportive and critical of the nprm asserted that any regulatory guidance issued by the department addressing employee or independent contractor status under the flsa would be a non binding “interpretive rule,” given the department's lack of explicit rulemaking authority on the topic. see, e.g., club for growth; cwc; nelp; winebrake & santillo, llc; wpi. 150. see wallen v. tendonova corp., no. 20 cv 790 se, 2022 wl 17128983, at *4 (d.n.h. nov. 22, 2022) (noting that the 2021 ic rule “is not controlling . . . and may not be valid”); harris v. diamond dolls of nevada, llc, no. 3:19 cv 00598 rcj cbc, 2022 wl 4125474, at *2 (d. nev. july 26, 2022) (denying defendants' motion to reconsider the court's earlier ruling that plaintiffs were flsa covered employees in part because the 2021 ic rule is “not binding”); badillo rubio v. rf constr., llc, no. 18 cv 1092, 2022 wl 821421, at *13 (m.d. la. mar. 17, 2022) (rejecting plaintiff's argument that the court should apply the 2021 ic rule's “integrated production” factor as “unnecessary” in determining that plaintiff was an employee). the wallen decision is notable because, as the court explained, the first circuit has neither adopted nor rejected a particular test, and thus the court was not bound by any prior circuit level precedent. still, the wallen court declined to apply the 2021 ic rule and applied “the standard six factor test.” 2022 wl 17128983, at *3 4. 151. see, e.g., acevedo v. mccalla, no. mjm 22 1157, 2023 wl 1070436, at *3 5 (d. md. jan. 27, 2023) (relying on the fourth circuit's economic reality test to find that the worker failed to state a claim for relief under the flsa without reference to 2021 ic rule); brunet v. gb premium octg servs. llc, no. 4:21 cv 1600, 2022 wl 17730576, at *5 10 (s.d. tex. dec. 1, 2022) (applying the fifth circuit's economic reality test without reference to 2021 ic rule), report and recommendation adopted, 2023 wl 2186441 (feb. 23, 2023); ajquiixtos v. rice & noodles, inc., no. 4:21 cv 01546, 2022 wl 7055396, at *2 4 (s.d. tex. oct. 12, 2022) (relying on the fifth circuit's economic reality test and not referencing the 2021 ic rule to conclude that a worker was an employee and not an independent contractor); black v. 7714 ent., corp., no. 21 cv 4829, 2022 wl 4229260, at *6 8 (e.d.n.y. july 29, 2022), report and recommendation adopted, 2022 wl 3643969 (e.d.n.y. aug. 24, 2022) (relying on the second circuit's economic reality test to conclude that a worker is an employee and not an independent contractor without reference to the 2021 ic rule); hill v. pepperidge farm, inc., no. 3:22 cv 97 heh, 2022 wl 3371321, at *2 5 (e.d. va. aug. 16, 2022) (relying on the fourth circuit's economic reality test to find that the worker has stated a claim for relief under the flsa without reference to 2021 ic rule). 152. see supra section iii.a.1. 153. see supra n.52. 154. see infra, section v.c.5. 155. 331 u.s. at 716. as discussed earlier, the second and d.c. circuit courts of appeals describe “investment” and “opportunity for profit or loss” as a single factor in the economic reality test. see supra n.58. 156. 87 fr 62275 (proposed § 795.110(b)(4)). 157. 87 fr 62275 (proposed § 795.110(b)(2)). 158. see infra, section v.c. 159. to the extent that there was any uncertainty around outcomes when applying federal appellate case law beyond what would be expected from any fact specific test, the standard that courts and the department would apply prior to the 2021 ic rule was known. and with this rulemaking, the department hopes to decrease any uncertainty around outcomes by providing detailed guidance about the application of each factor that is consistent with the case law, as opposed to the new concepts that the 2021 ic rule introduced. 160. the department acknowledges that the 2021 ic rule includes several important principles from the case law, such as: economic dependence is the ultimate inquiry, the list of economic reality factors is not exhaustive, and no single factor is determinative. however, as explained herein, the 2021 ic rule was, on balance, a departure from the case law to an extent that it introduced uncertainty. 161. the 2021 ic rule explained that it rejected commenter requests to “state that if the two core factors point towards the same classification, there is no need to consider any other factors” because “in some circumstances, the core factors could be outweighed by particularly probative facts related to other factors.” 86 fr 1202. 162. the 2021 ic rule explained that “there may be circumstances where one or more of the non core factors, upon consideration, has little or no probative value.” 86 fr 1202 (emphasis added). 163. cf.86 fr 1201 (“[t]he rule's standard for employment remains broader than the common law.”); see also id. at 1239 (rejecting the adoption of a common law control test in the analysis of regulatory alternatives). 164. see87 fr 62230 (describing commenter feedback from the withdrawal rule asserting that “misclassification is rampant in low wage, labor intensive industries where women and people of color, including black, latinx, and aapi workers, as overrepresented”). 165. id. 166. see87 fr 62266 (citing a 2020 study from nelp estimating that “10 to 30 percent of employers (or more) misclassify their employees as independent contractors). 167. the 2021 ic rule asserted that “legal uncertainty arising from . . . shortcomings of the multifactor economic reality test may deter innovative, flexible work arrangements,” but declined to provide any evidence in response to comments questioning that claim, explaining it was “unclear what empirical data could measure innovation that is not occurring due to legal uncertainty.” 86 fr 1175. 168. see generally87 fr 62230. 169. see supra, nn.63 and accompanying text. 170. 86 fr 1176. 171. id. 172. see jessica looman, “misclassification of employees as independent contractors under the fair labor standards act,” u.s. department of labor blog (june 3, 2022), https://blog.dol.gov/​2022/​06/​03/​misclassification of employees as independent contractors under the fair labor standards act. 173. “[a]n agency need not indeed cannot base its every action upon empirical data; depending upon the nature of the problem, an agency may be entitled to conduct . . . a general analysis based on informed conjecture.” chamber of com. of u.s. v. sec, 412 f.3d 133, 142 (d.c. cir. 2005) (internal quotation and citation omitted). 174. see87 fr 62219. 175. an agency's reliance on “its own and its staff's experience, the many comments received, and other evidence, in addition to [ ] limited and conflicting empirical evidence” meets apa requirements. chamber of com., 412 f.3d at 142. 176. 87 fr 62230. 177. id. (citing 86 fr 1238). 178. see generally id. at 62231. 179. see generally id. at 62231 32. 180. see generally id. at 62232. 181. a number of commenters discussed the common law test in their comments, but not in the context of consideration of the common law test as an alternative. instead, these commenters, for example, compared the analysis in the 2021 ic rule to the common law test or compared the economic realities test generally to the common law test. 182. see, e.g.,darden, 503 u.s. at 326; portland terminal, 330 u.s. at 150 51. 183. see tony & susan alamo, 471 u.s. at 301 (“the test of employment under the act is one of `economic reality.' ”); whitaker house, 366 u.s. at 33 (“ `economic reality' rather than `technical concepts' is . . . the test of employment” under the flsa) (citing silk, 331 u.s. at 713; rutherford, 331 u.s. at 729). 184. rutherford, 331 u.s. at 730. 185. silk, 331 u.s. at 716. 186. see supra section ii.b. 187. the assertions of la fed & teamsters locals that supreme court precedent could have been interpreted differently and that the six traditional economic realities factors could be “fit within the three elements of the abc test” are unavailing considering how supreme court precedent has actually been interpreted and applied for decades. 188. liuna endorsed nabtu's recommendation. smacna similarly recommended that “[i]n the construction industry, the dol should create a rebuttable presumption that `laborers and mechanics' are `employees' of the engaging business.” 189. in any event, there are arguably some similarities between an abc test and most alternative analyses under the flsa. for example, the 2021 ic rule provided that two factors were “core” factors and gave them near dispositive weight if they both indicated the same status, which was a step away from a multifactor totality of the circumstances analysis and a step closer to a test (like an abc test) where each factor is dispositive. and the 2021 ic rule considered control like an abc test and considered control to be a “core” factor, giving it more weight and making it closer to the dispositive factor that it is under the abc test. 190. in addition, discussing alternatives that an agency may be legally constrained from adopting is permissible and encouraged under omb guidance. omb circular a 4 advises that agencies “should discuss the statutory requirements that affect the selection of regulatory approaches. if legal constraints prevent the selection of a regulatory action that best satisfies the philosophy and principles of executive order 12866, [agencies] should identify these constraints and estimate their opportunity cost. such information may be useful to congress under the regulatory right to know act.” 191. the 2021 ic rule, which wpi urged be permitted by the department “to remain in effect,” considered only one viable alternative if the commenter's logic applied. see86 fr 1238 (considering three alternatives: “[c]odification of the common law control test,” codification of a “six factor `economic reality' balancing test,” and “[c]odification of the `abc' test”). 192. 2022 wl 1073346, at *18 (internal quotation marks and citation omitted). 193. as a general matter, agency action must be upheld in the face of an arbitrary and capricious challenge if the agency “articulate[s] a satisfactory explanation for [the] action including a rational connection between the facts found and the choice made.” little sisters of the poor saints peter & paul home v. pennsylvania, 140 s. ct. 2367, 2383 (2020) (citation omitted); see also city of abilene v. epa, 325 f.3d 657, 664 (5th cir. 2003) (“if the agency's reasons and policy choices conform to minimal standards of rationality, then its actions are reasonable and must be upheld.”) (citation omitted). 194. 87 fr 62232. 195. id. 196. id. 197. see city of abilene, 325 f.3d at 664; see also california v. azar, 950 f.3d 1067, 1096 (9th cir. 2020) (when reviewing agency action under the arbitrary and capricious standard, a court “cannot `ask whether a regulatory decision is the best one possible or even whether it is better than the alternatives' ” and is “prohibited from `second guessing the [agency]'s weighing of risks and benefits and penalizing [it] for departing from the . . . inferences and assumptions' of others.”) (citations omitted). 198. 87 fr at 62232. 199. the department in its 2021 ic rule also reached the same conclusion that the department is reaching here: relying solely on subregulatory guidance is not the preferable alternative. 200. 29 cfr 500.20(h)(1), (4). 201. comments regarding this aspect of the nprm are discussed in section v.f. below. 202. 87 fr 62233 (proposed § 795.100). 203. 87 fr 62233 (proposed § 795.105(a), (b)). 204. 87 fr 62233 (proposed § 795.105(b)). 205. 86 fr 1178. 206. see id. at 1172 73; see also cornerstone am., 545 f.3d at 343 (“to determine if a worker qualifies as an employee, we focus on whether, as a matter of economic reality, the worker is economically dependent upon the alleged employer or is instead in business for himself.”); flint eng'g, 137 f.3d at 1440 (noting that “the economic realities of the relationship govern, and the focal point is whether the individual is economically dependent on the business to which he renders service or is, as a matter of economic fact, in business for himself”); superior care, 840 f.2d at 1059 (“the ultimate concern is whether, as a matter of economic reality, the workers depend upon someone else's business . . . or are in business for themselves.”). 207. scantland, 721 f.3d at 1312 (quoting mednick v. albert enters., inc., 508 f.2d 297, 301 02 (5th cir. 1975)). 208. dialamerica, 757 f.2d at 1385. 209. see86 fr 1173; see also mclaughlin v. seafood, inc., 861 f.2d 450, 452 (5th cir. 1988), modified on reh'g, 867 f.2d 875 (5th cir. 1989) (reasoning that “[l]aborers who work for two different employers on alternate days are no less economically dependent than laborers who work for a single employer”); halferty v. pulse drug co., inc., 821 f.2d 261, 267 68 (5th cir. 1987) (rejecting the employer's argument that the worker's wages were too little to constitute dependence). 210. see halferty, 821 f.2d at 268. 211. 87 fr 62234 37 (proposed § 795.110). 212. id. 213. 87 fr 62234. 214. 29 u.s.c. 203(d), (e)(1), (g). 215. 88 f.3d 925, 929 n.5 (11th cir. 1996). 216. see, e.g., darden, 503 u.s. at 326 (noting that “employ” is defined with “striking breadth” (citing rutherford, 331 u.s. at 728)); rosenwasser, 323 u.s. at 362 (“a broader or more comprehensive coverage of employees . . . would be difficult to frame.”); robicheaux v. radcliff material, inc., 697 f.2d 662, 665 (5th cir. 1983) (“the term `employee' is thus used `in the broadest sense `ever . . . included in any act.” ” (quoting donovan v. am. airlines, inc., 686 f.2d 267, 271 (5th cir. 1982))). 217. 29 u.s.c. 202. 218. id.; see also rosenwasser, 323 u.s. at 361 62; pilgrim equip., 527 f.2d at 1311 (“given the remedial purposes of the legislation, an expansive definition of `employee' has been adopted by the courts.”). 219. brief for the administrator at 10, rutherford food corp. v. mccomb, 331 u.s. 722 (1947) (no. 562), 1947 wl 43939, at *10 (quoting portland terminal, 330 u.s. at 150 51). 220. id. at *10 11. 221. some commenters contended that the department's discussion in this section of cases where the supreme court repeatedly recognized that the definitions of “employ,” “employee,” and “employer” that establish who is entitled to the flsa's protections were written broadly and have been appropriately interpreted broadly, failed to properly account for the court's more recent decision in encino motorcars v. navarro, 138 s. ct. 1134 (2018), which overturned a rule of interpretation that applied to exemptions. see u.s. chamber; fsi. in encino, the supreme court addressed an exemption from the flsa's overtime pay requirements and ruled that the “narrow construction” principle that flsa exemptions should be narrowly construed should no longer be used. the court explained that instead, such exemptions should be given a fair reading, stating “[b]ecause the flsa gives no textual indication that its exemptions should be construed narrowly, there is no reason to give [them] anything other than a fair (rather than a narrow) interpretation.” encino, 138 s. ct. at 1142 (internal quotations and citation omitted). though this decision did not apply to the act's definitions (which have not been interpreted under the “narrow construction” principle), the department recognizes that some courts have gone beyond encino and extended the “fair reading” principle to other parts of the act or to the act generally. see, e.g., mckay v. miami dade cnty., 36 f.4th 1128, 1133 (11th cir. 2022). there is no need to rely on the “fair reading” principle here because there is a clear textual indication in the act's definitions, by the inclusion of the “suffer or permit” language, that broad coverage under the act was intended. see29 u.s.c. 203(g). thus, even if it were applied, such broad coverage would be a “fair” interpretation under encino because the broad scope of who is an employee under the flsa comes from the definitions themselves and not any “narrow construction” principle. see id. moreover, encino did not hold that the flsa's remedial purpose may never be considered, it simply noted that it is a “flawed premise that the flsa `pursues' its remedial purpose ` at all costs.' ” id. at 1142 (quoting am. express co. v. italian colors rest., 570 u.s. 228, 234 (2013)) (emphasis added). indeed, other courts have appropriately continued to consider the purpose of the act. see, e.g., uronis v. cabot oil & gas corp., 49 f.4th 263, 269 (3d cir. 2022) (“as a remedial statute, the flsa . . . is broadly construed, and `must not be interpreted or applied in a narrow, grudging manner.' ”) (quoting brock v. richardson, 812 f.2d 121, 124 (3d cir. 1987)). the department does not agree with the commenters' views that any pre  encino case law discussing the remedial purpose of the act has been abrogated, and it notes that courts have not changed their application of the economic reality test to determine employee status based on encino. finally, the department reiterates that, to the extent that the language in the 2021 ic rule preamble implied that the act's remedial purpose can never be considered, including when determining whether an individual is an employee or an independent contractor under the flsa, the department clarifies that it believes that this would be an unwarranted extension of the supreme court's decision. see, e.g.,86 fr 1207 08 (discussing encino' s application in response to commenters' concerns that the 2021 ic rule conflicted with the flsa's remedial purpose). 222. cornerstone am., 545 f.3d at 343 (citing darden, 503 u.s. at 326; herman v. express sixty minutes delivery serv., inc., 161 f.3d 299, 303 (5th cir. 1998)). 223. rutherford, 331 u.s. at 728 30. 224. rosenwasser, 323 u.s. at 362. 225. see silk, 331 u.s. at 716 18 (applying the test under the ssa); rutherford, 331 u.s. at 730 (same under the flsa). 226. rutherford, 331 u.s. at 729; see also whitaker house, 366 u.s. at 31 32 (describing the same as it relates to homeworkers). 227. cornerstone am., 545 f.3d at 343 (citing express sixty minutes, 161 f.3d at 303). 228. id.; see also pilgrim equip., 527 f.2d at 1311 12 (“[t]he final and determinative question must be whether the total of the testing establishes the personnel are so dependent upon the business with which they are connected that they come within the protection of [the] flsa or are sufficiently independent to lie outside its ambit.”). 229. see, e.g., flint eng'g, 137 f.3d at 1441 (explaining that “[n]one of the factors alone is dispositive; instead, the court must employ a totality of the circumstances approach”). 230. 331 u.s. at 716. 231. id. 232. see id. 233. rutherford, 331 u.s. at 729 30. 234. pilgrim equip., 527 f.2d at 1311. 235. id. 236. off duty police, 915 f.3d at 1055 (alterations and internal quotations omitted). 237. see generally supra n.52. 238. see, e.g., cornerstone am., 545 f.3d at 344 (discussing relative investments); superior care, 840 f.2d at 1060 (discussing the use of skill as it relates to business like initiative). 239. 86 fr 1170; see also saleem, 854 f.3d at 139 40; cornerstone am., 545 f.3d at 343; keller v. miri microsystems llc, 781 f.3d 799, 807 (6th cir. 2015); flint eng'g, 137 f.3d at 1440 41. 240. superior care, 840 f.2d at 1058 59; dialamerica, 757 f.2d at 1382 83; mcfeeley, 825 f.3d at 241; off duty police, 915 f.3d at 1055; lauritzen, 835 f.2d at 1534 35; alpha & omega, 39 f.4th at 1082; driscoll, 603 f.2d at 754 55; paragon, 884 f.3d at 1235; scantland, 721 f.3d at 1311 12; morrison, 253 f.3d at 11. 241. see, e.g., superior care, 840 f.2d at 1058 59; morrison, 253 f.3d at 11 (citing superior care, 840 f.2d at 1058 59). 242. see, e.g., hobbs, 946 f.3d at 836. 243. see, e.g., scantland, 721 f.3d at 1312 (quoting mednick, 508 f.2d at 301 02); see also saleem, 854 f.3d at 139 140; mr. w fireworks, 814 f.2d at 1054 55. 244. see, e.g., scantland, 721 f.3d at 1312 (the economic reality factors “serve as guides, [and] the overarching focus of the inquiry is economic dependence”); pilgrim equip., 527 f.2d at 1311 (the economic reality factors “are aids tools to be used to gauge the degree of dependence of alleged employees on the business with which they are connected. it is dependence that indicates employee status. each test must be applied with that ultimate notion in mind.”). 245. see, e.g., lauritzen, 835 f.2d at 1534 (referring to the economic reality factors and stating that “[c]ertain criteria have been developed to assist in determining the true nature of the relationship, but no criterion is by itself, or by its absence, dispositive or controlling.”). 246. independent contractors are not “employees” for purposes of the flsa. see generally portland terminal, 330 u.s. at 152 (stating that the “definition `suffer or permit to work' was obviously not intended to stamp all persons as employees”). 247. silk, 331 u.s. at 716. 248. barrentine v. arkansas best freight sys., inc., 450 u.s. 728, 740 (1981) (listing cases). 249. brooklyn sav. bank v. o'neil, 324 u.s. 697, 706 (1945). 250. tony & susan alamo, 471 u.s. at 302 (citing barrentine, 450 u.s. 728 and brooklyn sav., 324 u.s. 697). 251. jewell ridge coal corp. v. umwa local 6167, 325 u.s. 161, 167 (1945). 252. id. (internal quotation marks omitted). 253. 29 u.s.c. 202(a); brooklyn sav., 324 u.s. at 710. 254. see generally87 fr 62274 75 (proposed § 795.110(b)(1)). 255. see generally id. at 62237 39. 256. id. at 62274 75 (proposed § 795.110(b)(1)). 257. id. at 62238; see also scantland, 721 f.3d at 1316 17. 258. 29 cfr 795.110(a)(1) (2). 259. fight for freelancers commented that the department does “not define what constitutes marketing and advertising” (one of the listed facts) and asked: “what, specifically, must we do to satisfy your definition of marketing and advertising?” the department believes that the terms “marketing” and “advertising” are well understood, and engaging in marketing or advertising are just examples of types of managerial skill that may be relevant when applying this factor. no worker needs to “satisfy” any of these facts; all facts relevant to the worker's opportunity for profit or loss depending on managerial skill should be considered. 260. 87 fr 62238 (citing, inter alia, franze, 826 f. app'x at 76 78; flint eng'g, 137 f.3d at 1441; superior care, 840 f.2d at 1058 59; snell, 875 f.2d at 810). 261. id. 262. id. at 62239 (citing off duty police, 915 f.3d at 1059; flint eng'g, 137 f.3d at 1441; selker bros., 949 f.2d at 1294; snell, 875 f.2d at 810; lauritzen, 835 f.2d at 1536; dialamerica, 757 f.2d at 1386). 263. 87 fr 62239. 264. id. (citing karlson v. action process serv. & private investigations, llc, 860 f.3d 1089, 1095 (8th cir. 2017)); express sixty minutes, 161 f.3d at 304). 265. id. (citing off duty police, 915 f.3d at 1059; scantland, 721 f.3d at 1316 17; capital int'l, 466 f.3d at 308; snell, 875 f.2d at 810). 266. 87 fr 62237 38 (citing, inter alia, franze, 826 f. app'x at 76 78; razak, 951 f.3d at 146; verma, 937 f.3d at 229 (citing selker bros., 949 f.2d at 1293); off duty police, 915 f.3d at 1059; iontchev v. aaa cab serv., inc., 685 f. app'x 548, 550 (9th cir. 2017); mcfeeley, 825 f.3d at 241 (citing capital int'l, 466 f.3d at 304 05); keller, 781 f.3d at 812; scantland, 721 f.3d at 1312; flint eng'g, 137 f.3d at 1441; snell, 875 f.2d at 810; superior care, 840 f.2d at 1058 59; lauritzen, 835 f.2d at 1535; driscoll, 603 f.2d at 754 55). 267. cpie discussed technical proficiency and commented: “an individual's ability to maximize the profitability attributable to the individual's technical proficiency will depend on the individual's managerial skill and ability to persuasively communicate to a potential client the value of such proficiency.” the department generally agrees with this statement to the extent that it focuses the inquiry on the worker's managerial skill. 268. see generally87 fr 62275 (proposed § 795.110(b)(2)). 269. see generally id. at 62240 41. 270. see generally id. at 62241 43. 271. nelp additionally commented that “[c]larifying the relationship between [the investments and opportunity for profit or loss] factors will help identify situations (like the personal vehicle example . . .) where a corporation may be transferring the cost of doing business to its workers, who are required to make expenditures that are not independent decisions impacting their businesses' profits or losses.” the department believes that its discussion in this paragraph and the following paragraph, as well as its discussion below regarding the investments factor as it relates to the opportunity for profit or loss factor, provide additional clarity. 272. on the other hand, where a driver has “the means to engage in the freight hauling business only because [the employer] advanced a truck, equipment, and many other resources up front on [the employer's] own credit” and is charged for those costs, the investment factor indicates employee status. brant v. schneider nat'l, 43 f.4th 656, 671 (7th cir. 2022). 273. ibt commented that, “[a]s it is currently written, this proposed factor could be misinterpreted as it unintentionally excludes from consideration, many of the conditions workers who work for platform based companies are subject to.” ibt added: “by overemphasizing workers' ability to increase earnings through minimal investment or personal initiative, the proposed rule risks inviting employers to engage in further tactics to exclude more of their workers from the flsa's protections.” the department disagrees with this characterization, especially considering the modifications that it has made to the investments factor. for all of the reasons explained herein, the department believes that it has struck the right balance by focusing on the nature of the worker's investment (it should be capital or entrepreneurial to indicate independent contractor status) and by qualitatively comparing the worker's investments to the employer's investments to determine if the worker is making similar types of investments as the employer to suggest that the worker is in business for themself. 274. see, e.g.,dialamerica, 757 f.2d at 1382; mcfeeley, 825 f.3d at 241; hobbs, 946 f.3d at 829; off duty police, 915 f.3d at 1055; brant, 43 f.4th at 665; alpha & omega, 39 f.4th at 1082; driscoll, 603 f.2d at 754; paragon, 884 f.3d at 1235; scantland, 721 f.3d at 1311. 275. see, e.g., whd op. ltr. (aug. 13, 1954); whd op. ltr. flsa 795 (sept. 30, 1964); whd op. ltr. (oct. 12, 1965); whd op. ltr. (sept. 12, 1969); whd op. ltr. wh 476, 1978 wl 51437, at *1 (oct. 19, 1978); whd op. ltr., 1986 wl 1171083, at *1 (jan. 14, 1986); whd op. ltr., 1986 wl 740454, at *1 (june 23, 1986); whd op. ltr., 1995 wl 1032469, at *1 (mar. 2, 1995); whd op. ltr., 1995 wl 1032489, at *1 (june 5, 1995); whd op. ltr., 1999 wl 1788137, at *1 (july 12, 1999); whd op. ltr., 2000 wl 34444352, at *1 (july 5, 2000); whd op. ltr., 2000 wl 34444342, at *3 (dec. 7, 2000); whd op. ltr., 2002 wl 32406602, at *2 (sept. 5, 2002); whd fact sheet #13, “employment relationship under the fair labor standards act (flsa)” (july 2008); ai 2015 1,available at 2015 wl 4449086 (withdrawn june 7, 2017). 276. see, e.g.,franze, 826 f. app'x at 76; superior care, 840 f.2d at 1058 59; morrison, 253 f.3d at 11 (citing superior care, 840 f.2d at 1058 59). 277. 825 f.3d at 243. 278. id. at 241. 279. id. at 243 (“these two factors thus fail to tip the scales in favor of classifying the dancers as independent contractors.”). 280. 331 u.s. at 716. whether the court in silk actually analyzed the two factors together is questionable, particularly with respect to the “driver owners.” the court concluded that “[i]t is the total situation, including the risk undertaken [a reference to the facts that they “own their own trucks” and “hire their own helpers”], the control exercised, the opportunity for profit from sound management, that marks these driver owners as independent contractors.” id. at 718. 281. 917 f.3d at 382 85. 282. cromwell v. driftwood elec. contractors, inc., 348 f. app'x 57, 60 61 (5th cir. 2009). 283. 775 f. app'x at 624 25. 284. 721 f.3d at 1316 18. 285. 86 fr 1247 (“this factor weighs towards the individual being an independent contractor to the extent the individual has an opportunity to earn profits or incur losses based on his or her exercise of initiative (such as managerial skill or business acumen or judgment) or management of his or her investment in or capital expenditure on, for example, helpers or equipment or material to further his or her work.”). 286. id. 287. 87 fr 62275 (proposed § 795.110(b)(2)). 288. see 835 f.2d at 1537. 289. id. 290. 884 f.3d at 1236 (quoting snell, 875 f.2d at 810). 291. see mr. w fireworks, 814 f.2d at 1052; pilgrim equip., 527 f.2d at 1314. 292. see off duty police, 915 f.3d at 1056 (quoting donovan v. brandel, 736 f.2d 1114, 1118 19 (6th cir. 1984)). 293. 331 u.s. at 717 18. 294. id. at 719. 295. 331 u.s. at 725. 296. 87 fr at 62241 (citing paragon, 884 f.3d at 1236 (quoting snell, 875 f.2d at 810); lauritzen, 835 f.2d at 1537). 297. id. at 62275 (proposed § 795.110(b)(2)). 298. id. as explained above, the department is modifying this provision in response to comments to add “and costs that are unilaterally imposed by the potential employer on the worker.” 299. id. at 62241. 300. id. 301. n/ma, while commenting on this statement regarding personal vehicles, gave as an example a “photographer who purchases more sophisticated special camera equipment expecting that he or she will use it in their work.” again, purchasing specialized equipment for use in work can be an investment that is capital or entrepreneurial in nature. 302. 781 f.2d at 1318. 303. off duty police, 915 f.3d at 1056. 304. 814 f.2d at 1052. 305. express sixty minutes, 161 f.3d at 304; see also keller, 781 f.3d at 810 11 (fact that equipment could be used “for both personal and professional tasks” weakens the indication of independent contractor status). 306. wpi stated that “the nprm posits that a worker buying a car is an immaterial investment for purposes of independent contractor classification if they also use the car for personal reasons.” the commenter, however, mischaracterized the nprm's statement, which addressed a personal vehicle that the worker already owns (and thus invested in for reasons other than a business purpose) and then uses to perform work. in the different scenario posited by the commenter, a car purchased by a worker may be an investment of a capital or entrepreneurial nature if purchased for a business purpose even if the worker also uses the car for personal reasons. coalition of business stakeholders similarly mischaracterized the nprm's statement, saying that the nprm “presumptively declares that a vehicle, should be considered `generally not an investment that is capital or entrepreneurial in nature' ” (quoting the nprm). the nprm's statement, however, addressed only a vehicle already owned by a worker that the worker then uses to perform work. 307. 87 fr 62275 (proposed § 795.110(b)(2)). 308. id. 309. hobbs, 946 f.3d at 831 32 (quoting cornerstone am., 545 f.3d at 344). in parrish, the fifth circuit compared the relative investments as part of its analysis but accorded the relative investment factor “little weight in the light of the other summary judgment record evidence supporting ic status.” 917 f.3d at 382 83. this does not support the conclusion that this factor is not useful; instead, it simply reflects the fifth circuit's faithful application in that case of a totality of the circumstances approach considering many factors, no one of which was dispositive. 310. off duty police, 915 f.3d at 1056 (quoting keller, 781 f.3d at 810). 311. mcfeeley, 825 f.3d at 243. 312. verma, 937 f.3d at 231 (summarizing how courts have viewed this factor in cases examining the employment status of exotic dancers: “all concluded that `a dancer's investment is minor when compared to the club's investment' ”) (quoting the district court's decision). 313. driscoll, 603 f.2d at 755 (strawberry growers' investment in light equipment, including hoes, shovels, and picking carts was “minimal in comparison” with employer's total investment in land and heavy machinery). 314. paragon, 884 f.3d at 1236 (“to analyze this factor, we compare the investments of the worker and the alleged employer.”); flint eng'g, 137 f.3d at 1442 (“in making a finding on this factor, it is appropriate to compare the worker's individual investment to the employer's investment in the overall operation.”). 315. 2015 wl 4449086, at *8 (withdrawn june 7, 2017). 316. id. 317. see whd op. ltr., 2002 wl 32406602, at *1 2 (sept. 5, 2002) (workers' “hand tools, which can cost between $5,000 and $10,000,” were “small in comparison to [the employer's] investment,” but the “amount is none the less substantial” and “thus indicative of an independent contractor relationship”); whd op. ltr., 2000 wl 34444342, at *4 (dec. 7, 2000) (comparing “the relative investments” of the worker and the employer is the correct approach). 318. flex stated that the department's proposal to compare the worker's and the employer's relative investments “directly contradicts the department's subregulatory guidance in fact sheet #13, which for decades has advised that `the amount of the alleged contractor's investment in facilities and equipment' is not only relevant to a worker's status but tends to support classification as an independent contractor.” fact sheet #13 has been revised several times over the past years and will be revised to reflect this final rule. regardless, there is no basis for flex's characterization that the version of fact sheet #13 available at the time of the nprm advised that this factor “tends to support classification as an independent contractor” as that language is not in the fact sheet. 319. comparing the investments qualitatively also addresses the eighth circuit's ruling in karlson that the district court was correct to allow evidence of the worker's and the employer's relative investments, but also correct to not allow the worker to ask the employer about the dollar amount of its investment in order to simply compare the dollar value of the employer's investment to the worker's investment. see 860 f.3d at 1096. 320. this hypothetical and the hypotheticals offered by club for growth foundation, flex, and other commenters overlook the totality of the circumstances nature of the economic realities analysis. no one fact or factor (including comparing the worker's investments to the employer's investments) will necessarily determine a worker's status as an employee or independent contractor. 321. acli commented that “[n]othing in the proposed rule explains whether the [relative investments] analysis is focused on investments that the company made in the specific worker's business ( i.e., paying for the worker's staff, rent, tools or equipment) or whether the analysis focuses on the overall investment of the company in the entirety of its separate business operations ( i.e., advertisements, branding, overhead for headquarters, etc.).” see also american securities association (“it is unclear whether the analysis is focused on investments that the company made in the specific worker's business ( i.e., purchasing tools or equipment for the individual worker) or whether the analysis focuses on the overall investment of the company in its business operations ( i.e., branding, marketing campaigns, etc.).”). the proposed and final regulatory text, however, clearly indicate that the worker's investments should be considered on a relative basis with “the employer's investments in its overall business.” 29 cfr 795.110(b)(2). the acli also requested that the department “clarify how the relative investments of the worker and the employer would be measured.” see also cpie (“the nprm offers no guidance on how to distinguish between those arrangements for which its proposed comparison of an individual's investment with a company's investment in its overall businesses would be relevant and those arrangements for which its proposed comparison should be disregarded.”). the department has provided additional guidance in the discussion above and by modifying the regulatory text to convey that “the focus should be on comparing the investments qualitatively” more than by “comparing dollar values of investments or the sizes of the worker and the employer.” 29 cfr 795.110(b)(2). cpie and iba suggested modifying the relative investments analysis to “measure an individual's investment in the specific items the individual requires to perform the individual's services, or compare the relative investment in those specific items by an individual and the company.” these commenters state that such a modification would avoid the need to address the relative size and magnitude of the worker and the employer and would be consistent with the ultimate inquiry of economic dependence. for all of the reasons explained above, however, the department believes that those goals are better accomplished by focusing relative investments on a qualitative comparison. 322. see generally87 fr 62243 45, 62275 (proposed § 795.110(b)(3)). 323. see87 fr 62243; 86 fr 1192 (citing a variety of federal appellate case law: razak, 951 f.3d at 142; hobbs, 946 f.3d at 829; karlson, 860 f.3d at 1092 93; mcfeeley, 825 f.3d at 241; keller, 781 f.3d at 807; scantland, 721 f.3d at 1312); see also whd op. ltr., 2002 wl 32406602, at *3 (sept. 5, 2002); whd op. ltr., 2000 wl 34444342, at *5 (dec. 7, 2000) ; whd fact sheet #13. 324. snell, 875 f.2d at 811 (citing donovan v. sureway cleaners, 656 f.2d 1368, 1372 (9th cir. 1981)); see also keller, 781 f.3d at 807 (same); whd op. ltr., 2002 wl 32406602, at *3 (sept. 5, 2002) (same). 325. see, e.g., parrish, 917 f.3d at 386 87 (noting that one of the relevant considerations under the permanency factor is the total length of the working relationship between the parties); capital int'l, 466 f.3d at 308 09 (in analyzing the degree of permanency of the working relationship, the “more permanent the relationship, the more likely the worker is to be an employee”); dialamerica, 757 f.2d at 1385 (finding that “the permanence of working relationship factor indicates that the home researchers were `employees' ” because they “worked continuously for the defendant, and many did so for long periods of time”); pilgrim equip., 527 f.2d at 1314 (“the permanent nature of the relations between [the employer] and these operators indicates dependence”); see also reyes v. remington hybrid seed co., 495 f.3d 403, 408 (7th cir. 2007) (describing an independent contractor as an individual who “appears, does a discrete job, and leaves again”); reich v. circle c. invs., inc., 998 f.2d 324, 328 (5th cir. 1993) (“[a]lthough not determinative, the impermanent relationship between the dancers and the [employer] indicates non employee status”). 326. see, e.g., superior care, 840 f.2d at 1060 61; see also ai 2015 1, 2015 wl 4449086, at *10 (withdrawn june 7, 2017). 327. superior care, 840 f.2d at 1060 61 (citing mr. w fireworks, 814 f.2d at 1053 54); see also flint eng'g, 137 f.3d at 1442 (finding short duration of work relationships in oil and gas pipeline construction work to be intrinsic to the industry rather than a “choice or decision” on the part of the workers). 328. as noted in the nprm, agriculture is an industry where courts often view permanency as working continuously for the duration of a harvest season or returning in multiple years. see, e.g., paragon, 884 f.3d at 1237 (permanence factor favored employee status because the worker was hired temporarily for the harvest season “[b]ut his employment was permanent for the duration of each harvest season”); lauritzen, 835 f.2d at 1537 (agricultural harvesters' relationship with employer was “permanent and exclusive for the duration of that harvest season” and permanency was also indicated by the fact that many of the same migrant workers returned for the harvest each year; the court noted that “[m]any seasonal businesses necessarily hire only seasonal employees, but that fact alone does not convert seasonal employees into seasonal independent contractors”). 329. one of the cases relied on by these commenters is donovan v. brandel, 736 f.2d 1114, 1117 (6th cir. 1984), where the court determined that migrant farmworker families who sometimes returned annually to harvest pickles during a 30 40 day harvest season and “considered their jobs as migrant farm laborers to be opportunities for supplementing their income if their family situation allowed” were engaged in a “mutually satisfactory arrangement” that was “no more indicative of the employment relationship than when a businessman repeatedly uses the same subcontractors due to satisfaction with past performance.” the department is careful to note that brandel is not necessarily representative of the way courts have viewed the permanence factor or employment status of agricultural workers who perform seasonal work, nor were these commenters specifically criticizing the regulatory language proposed by the department that was almost identical to the language in the 2021 ic rule recognizing that the short duration of seasonal work such as in agriculture would not necessarily indicate independent contractor classification. see86 fr 1247 (§ 795.105(d)(2)(ii)); see also, e.g., lauritzen, 835 f.2d at 1536 37 (noting that brandel has been “narrowed and distinguished”); cavazos v. foster, 822 f. supp. 438, 441 42 (w.d. mich. 1993) (collecting decisions issued after brandel holding that migrant farmworkers are employees). 330. see, e.g., flint eng'g, 137 f.3d at 1442 (temporary rig welders exhibited sufficient permanency because such temporary work was intrinsic in the industry rather than a “choice or decision” by the workers); superior care, 840 f.2d at 1061 (lack of permanence did not preclude temporary nurses from being employees because this reflected “the nature of their profession and not their success in marketing their skills independently”), mr. w fireworks, 814 f.2d at 1054 (“in applying the silk factors courts must make allowances for those operational characteristics that are unique or intrinsic to the particular business or industry, and to the workers they employ”). 331. see87 fr 62244 45; see, e.g., parrish, 917 f.3d at 386 87 (noting that one of the relevant considerations under the permanency factor is whether any plaintiff worked exclusively for the potential employer); keller, 781 f.3d at 807 (noting that “even short, exclusive relationships between the worker and the company may be indicative of an employee employer relationship”); scantland, 721 f.3d at 1319 (noting that “[e]xclusivity is relevant” to the permanency of the work relationship); see also whd op. ltr., 2002 wl 32406602, at *3 (sept. 5, 2002) (considering exclusivity under permanence factor); whd op. ltr., 2000 wl 34444342, at *5 (dec. 7, 2000) (same). 332. see, e.g., lauritzen, 835 f.2d at 1537 (agricultural harvesters' relationship with employer was “permanent and exclusive for the duration of that harvest season”); mr. w fireworks, 814 f.2d at 1054 (the “proper test for determining the permanency of the relationship” in a seasonal industry is “whether the alleged employees worked for the entire operative period of a particular season”); see also flint eng'g, 137 f.3d at 1442 (temporary rig welders' relationship with employer was “ `permanent and exclusive for the duration of' the particular job for which they [were] hired”) (quoting lauritzen, 835 f.2d at 1537). 333. see87 fr 62244 45. 334. see, e.g., hobbs, 946 f.3d at 835; henderson v. inter chem coal co., inc., 41 f.3d 567, 570 (10th cir. 1994); carrell v. sunland constr., inc., 998 f.2d 330, 332, 334 (5th cir. 1993); superior care, 840 f.2d at 1060 61; lauritzen, 835 f.2d at 1537; dialamerica, 757 f.2d at 1384. 335. see, e.g., parrish, 917 f.3d at 382, 386 87; keller, 781 f.3d at 807 09, 814; scantland, 721 f.3d at 1314, 1319; cornerstone am., 545 f.3d at 344, 346. 336. see, e.g., razak, 951 f.3d at 145 46; saleem, 854 f.3d at 141. 337. see, e.g., whd op. ltr., 2002 wl 32406602, at *3 (sept. 5, 2002); whd op. ltr., 2000 wl 34444342, at *5 (dec. 7, 2000). 338. the 2021 ic rule also recognized that some courts analyze the exclusivity of the work relationship as part of the permanence factor, 86 fr 1192, and the department considered in its nprm for that rule whether to include exclusivity under the permanence factor and change the articulation to “permanence and exclusivity of the working relationship” in order “to be more accurate,” 85 fr 60616, ultimately rejecting an approach that would “blur[ ] the lines” between the factors, 86 fr 1193. as explained, upon further consideration of the importance of a totality of the circumstances test where all relevant facts inform the economic dependence determination, the department believes it is more accurate to consider the exclusivity of the work relationship under both permanence and control factors, especially as it may contribute to a fuller understanding of the parties' work relationship. see keller, 781 f.3d at 807 09, 814 (explaining that consideration of the control exercised by the business that precluded the worker's ability to work for others “informs our analysis of the permanency and exclusivity of the relationship”); scantland, 721 f.3d at 1319 (“looking through the lens of economic dependence vel non, long tenure, along with control, and lack of opportunity for profit, point strongly toward economic dependence”). courts may find exclusivity to be relevant under other factors as well, consistent with the totality of the circumstances approach. see, e.g., hobbs, 946 f.3d at 833, 835 (finding that the work schedule imposed by the employer prevented workers from engaging in outside work, which was relevant under the opportunity for profit or loss factor as well as the permanence factor). 339. keller, 781 f.3d at 807 09, 814 15. 340. liuna recognized that the department might be concerned that “more emphatically stating the relationship between permanency and exclusivity would risk suggesting that a non exclusive working relationship never supports employee status,” which it noted would be inaccurate, as the department discussed in the nprm. the department concurs that this would be inaccurate for the reasons discussed in the nprm and herein, and that clarifying this aspect should not be understood to require an exclusive relationship in order to establish employee status. 341. nichols kaster also requested that the department include additional language from the preamble in the final regulatory text. the department declines this suggestion in the interest of providing succinct statements regarding each factor of the economic reality test in this final rule. the department notes, however, that the preamble will be accessible for additional information regarding the rule. 342. see, e.g., henderson, 41 f.3d at 570 (facts that supported an inference that a mechanic was economically dependent on the employer included that he “primarily, if not exclusively” worked for the employer for over three years rather than being hired for a specific repair project); carrell, 998 f.2d at 332, 334 (finding welders to be independent contractors where they worked for multiple employers on a project by project basis rather than exclusively for one employer); ai 2015 1, 2015 wl 4449086, at *10 (withdrawn june 7, 2017). 343. 331 u.s. at 706. 344. id. at 718. 345. superior care, 814 f.2d at 1060; see also saleem, 854 f.3d at 142 n.24 (“it is certainly not unheard of for an individual to maintain two jobs at the same time, and to be an `employee' in each capacity.”); keller, 781 f.3d at 808 (agreeing with the second circuit that “employees may work for more than one employer without losing their benefits under the flsa”); circle c invs., 998 f.2d at 328 29 (noting that “[t]he transient nature of the work force is not enough here to remove the dancers from the protections of the flsa”); mclaughlin v. seafood, inc., 867 f.2d 875, 877 (5th cir. 1989) (per curiam) (“the only question, therefore, is whether the fact that the workers moved frequently from plant to plant and from employer to employer removed them from the protections of the flsa. we hold that it did not.”); hart v. rick's cabaret int'l, inc., 967 f. supp. 2d 901, 921 (s.d.n.y. 2013) (noting that “countless workers . . . who are undeniably employees under the flsa for example, waiters, ushers, and bartenders” work for multiple employers). 346. superior care, 814 f.2d at 1060; see also halferty, 821 f.2d at 267 68 (“it is not dependence in the sense that one could not survive without the income from the job that we examine, but dependence for continued employment”); dialamerica, 757 f.2d at 1385 (noting that “[t]here is no legal basis” to say that work that constitutes a second source of income indicates a worker's lack of economic dependence on a job because the proper analysis is “whether the workers are dependent on a particular business or organization for their continued employment”). 347. off duty police, 915 f.3d at 1058. the 2021 ic rule correctly noted that a handful of cases improperly conflate having multiple sources of income with a lack of economic dependence on the potential employer. see 86 fr 1173, 1178. the 2021 ic rule characterized such a “dependence for income” analysis as incorrect and a “dependence for work” analysis as correct. id. at 1173. this critique continues to be valid, as is the observation that “[i]t is possible for a worker to be an employee in one line of business and an independent contractor in another.” id. at 1178 n.19. 348. see, e.g., brant, 43 f.4th at 672 (stating that “[a]utomatic [contract] renewal would weigh more heavily in favor of employee status”); scantland, 721 f.3d at 1318 (finding one year contracts that were automatically renewed to “suggest substantial permanence of relationship”); pilgrim equip., 527 f.2d at 1314 (finding laundry operators' one year contracts that were routinely renewed indicated employee status); acosta v. senvoy, llc, no. 3:16 cv 2293 pk, 2018 wl 3722210, at *9 (d. or. july 31, 2018) (noting that one year contracts that automatically renew are “evidence that a worker is an employee”); solis v. velocity exp., inc., no. cv 09 864 mo, 2010 wl 3259917, at *9 (d. or. aug. 12, 2010) (the fact that package delivery drivers understood their contracts to be of indefinite duration and that contracts were routinely renewed without renegotiation indicated employee status). 349. see86 fr 1246 47 (§ 795.105(d)(1)(i)). 350. id. at 1247 (§ 795.105(d)(1)(i)). 351. see supra section iii.a. 352. 86 fr 1180; 87 fr 62275 (proposed § 795.110(b)(4)). 353. in its nprm, the department explicitly addressed this scenario, stating that “if an employer requires all individuals to wear hard hats at a construction site for safety reasons, that is less probative of control.” 87 fr 62248. 354. several commenters, such as the pennsylvania motor truck association for example, included a number of contractual provisions in their comment and stated that the department “has a duty to address each one in the context of any final rule as to whether it amounts to control.” the department cannot opine on a particular employer's discrete contractual provisions in a final rule. as stated in the 2021 ic rule, “it is not possible and would be counterproductive to identify in the regulatory text every type of control (especially industry specific types of control) that can be relevant when determining under the flsa whether a worker is an employee or independent contractor.” 86 fr 1182. 355. see, e.g., whd op. ltr. (aug. 13, 1954) (applying six factors, of which control was one, that are very similar to the six economic reality factors currently used by almost all courts of appeals); shultz v. hinojosa, 432 f.2d 259, 264 65 (5th cir. 1970) (affirming judgment in favor of secretary of labor that slaughterhouse worker was an employee under the flsa under a multifactor economic reality test of which control was one of the factors). 356. parrish, 917 f.3d at 380 (quotation marks and citation omitted). the federal courts of appeals have taken this position for decades. see also, e.g., scantland, 721 f.3d at 1312 n.2 (the relative weight of each factor “depends on the facts of the case”) (citation omitted); selker bros., 949 f.2d at 1293 (“it is a well established principle that the determination of the employment relationship does not depend on isolated factors . . . [, and] neither the presence nor the absence of any particular factor is dispositive.”). 357. reid, 490 u.s. at 751. 358. see house report no. 871, 89th cong., 1st sess., at 43 (1965). it is clear that congress was referring to a potential employer by the use of the term “principal” because its articulation of the integral factor in the same section stated: “the extent to which the services rendered are an integral part of the principal's business. ” in contrast, its articulation of the initiative factor stated: “the initiative, judgment, or foresight exercised by the one who performs the services.” id. (emphases added). 359. whd op. ltr. june 25, 1968; “employment relationship under the fair labor standards act”, whd publication 1297, february 1973; whd fact sheet #13 (july 2008). 360. see, e.g., cornerstone am., 545 f.3d at 343 44 (finding that control weighs in favor of employee status even where the employer disclaims control over “day to day affairs” of the workers because the employer controlled the meaningful economic aspects of the work). other elements may also be included in this examination of control, such as those identified by the supreme court in whitaker house. they include whether the worker could sell their products or services “on the market for whatever price they can command;” whether the worker's compensation was dictated by the employer; and whether management could fire the worker for failure to obey its regulations. 366 u.s. at 32 33. 361. cornerstone am., 545 f.3d at 343 44. 362. id. at 343. 363. verma, 937 f.3d at 230. 364. see, e.g., scantland, 721 f.3d at 1314 (finding workers to be employees, in part, because they “were subject to meaningful supervision and monitoring by” their employer). 365. see, e.g., mr. w fireworks, 814 f.2d at 1049 (“[t]he lack of supervision over minor regular tasks cannot be bootstrapped into an appearance of real independence.”) (citation omitted); antenor, 88 f.3d at 934 (noting in flsa joint employment case that the act reaches even those employers who “[do] not directly supervise the activities of putative employees”). this has been the department's perspective for almost 6 decades. see whd op. ltr., flsa 795, at 3 (sept. 30, 1964) (determining that professional divers were employees of a diving corporation, despite the lack of control over their work, by noting “that persons may be employees within the meaning of the act even though they are unsupervised in their work, are not required to devote any particular amount of time to their work, [and] are under no restriction not to work for competitors of the employer”). 366. for example, in driscoll, the ninth circuit described the control factor as the “degree of the alleged employer's right to control the manner in which the work is to be performed” but then concluded that the employer possessed “substantial control over important aspects” of the workers' work. 603 f.2d at 755. 367. 29 cfr 795.110(b)(4). 368. the department also received comments urging it to delete this sentence of the proposed regulatory text. see nelp; outten & golden. these commenters expressed concern that the concluding sentence suggested a relative weighing of facts relevant to control in lieu of a “totality of the circumstances” analysis, and that this “implies a simple arithmetic tallying of the various listed facts” that would “invite an unnecessary contest that threatens to overshadow the purpose of the factor.” the department declines to delete this sentence because it believes that considering the various indicia of control and whether they weigh in favor of employee or independent contractor status can be a helpful analytical tool. however, the department agrees that the correct analysis is an overall, qualitative analysis, and that the considerations described within the control factor should not be used as a checklist or in a “tallying” fashion, just as the economic reality factors should not be tallied but rather considered based on the totality of the circumstances. 369. 86 fr 1247 (§ 795.105(d)(1)(i)). 370. as the eleventh circuit explained in scantland, the “economic reality inquiry requires us to examine the nature and degree of the alleged employer's control, not why the alleged employer exercised such control.” 721 f.3d at 1316 (emphasis added). the court continued to explain that if “the nature of a business requires a company to exert control over workers to the extent that [the employer] has allegedly done, then that company must hire employees, not independent contractors.” id.; see also schultz v. mistletoe express serv., inc., 434 f.2d 1267, 1271 (10th cir. 1970) (noting that “arguments that an independent contractor relationship is shown by . . . the need to comply with the regulations of federal and state agencies do not persuade us” before affirming the conclusion that workers were employees under the flsa). 371. for example, in a 2014 administrator's interpretation “joint employment of home care workers in consumer directed, medicaid funded programs by public entities under the fair labor standards act” (withdrawn in 2020), the department stated that “under an economic realities analysis, all of the facts and circumstances of the relationship between a provider and the state must be evaluated, and no single factor is determinative. relevant factors that must be considered when evaluating whether a state administering a consumer directed program is an employer include the various legal requirements with which consumer directed programs must comply, and how programs choose to comply with those requirements.” see administrator's interpretation 2014 2, available at 2014 wl 2816951, at *5; see also administrator's interpretation 2015 1, available at 2015 wl 4449086, at *12 (“some employers assert that the control that they exercise over workers is due to the nature of their business, regulatory requirements, or the desire to ensure that their customers are satisfied. however, control exercised over a worker, even for any or all of those reasons, still indicates that the worker is an employee.”). 372. for example, a court can consider control exerted over workers to comply with safety obligations as not indicative of control and nevertheless conclude upon consideration of all of the factors that such workers were employees under the flsa. see rick's cabaret, 967 f. supp. 2d at 916, 922. 373. 87 fr 62275 (proposed § 795.110(b)(4)). 374. 86 fr 1246 47 (§ 795.105(d)(1)(i)). 375. see, e.g., franze, 826 f. app'x at 77 (noting that schedule flexibility “weigh[s] in favor of independent contractor status”); karlson, 860 f.3d at 1094 96 (affirming a jury verdict finding a process server to be an independent contractor, in part, because the worker “was not required to report for work[,] . . . did not punch a time clock,” and did not have a set schedule, report a daily schedule to the employer, or face discipline for not working); express sixty minutes, 161 f.3d at 303 (determining that the employer “had minimal control” over the delivery drivers in part because the drivers “set their own hours and days of work” and could reject deliveries “without retaliation,” which was evidence that the worker was an independent contractor). 376. 87 fr 62249 (citing saleem, 854 f.3d at 146 (finding drivers who were able to set schedules that “were entirely of their making” were properly found to be independent contractors where, among other factors, drivers could select routes, there was no incentive structure for them to drive at certain times, and they could exercise business like initiative)). 377. see, e.g., verma, 937 f.3d at 230, 232 (finding the ability to set hours, select shifts, stay beyond a shift, and accept or reject work to be “narrow choices” when evaluated against other types of control exerted by the employer and that a “holistic assessment” of all factors showed that the workers were not, “as a matter of economic reality, operating independent businesses for themselves”); paragon, 884 f.3d at 1235 38 (finding that even though a worker could set his own schedule, he was an employee, in part, because his flat rate of pay did not allow him profit based on his performance); dialamerica, 757 f.2d at 1384 86 (finding telephone survey workers who set their own hours and were free from supervision to be employees); sureway, 656 f.2d at 1370 71 (“circumstances of the whole activity” show that laundry company “exercises control over the meaningful aspects of the cleaning [work]” despite the fact that workers could set their own hours). 378. 87 fr 62248 (citing flint eng'g, 137 f.3d at 1441 (“the record indicates rig welders cannot perform their work on their own schedule; rather, pipeline work has assembly line qualities in that it requires orderly and sequential coordination of various crafts and workers to construct a pipeline.”); doty v. elias, 733 f.2d 720, 723 (10th cir. 1984) (“since plaintiffs could wait tables only during the restaurant's business hours, [the employer] essentially established plaintiffs' work schedules.”)). 379. see, e.g., verma, 937 f.3d at 230 (the third circuit found the ability to set hours, select shifts, stay beyond a shift, and accept or reject work to be “narrow choices” when evaluated against other types of control by the employer, such as setting the price for services); hill v. cobb, no. 3:13 cv 045 sa saa, 2014 wl 3810226, at *4 5 (n.d. miss. aug. 1, 2014) (finding that even though workers had no specific hours or schedule and could “come and go as [they] pleased” the employer “maintained extensive control over the remaining aspects” of the business such that the control factor weighed in favor of employee status); wilson v. guardian angel nursing, inc., no. 3:07 0069, 2008 wl 2944661, at *15 16 (m.d. tenn. july 31, 2008) (finding that although nurses could accept or reject shifts the employer exercised substantial control in other respects, such as over the manner in which nurses conducted their duties). 380. 87 fr 62249 (citing snell, 875 f.2d at 806) (emphasis added); see also circle c. invs., 998 f.2d at 327 (finding that the employer had “significant control” over dancers indicating employee status even though they had “input . . . as to the days that they wish to work”); doty, 733 f.2d at 723 (“a relatively flexible work schedule alone, however, does not make an individual an independent contractor rather than an employee.”); walling v. twyeffort, inc., 158 f.2d 944, 947 (2d cir. 1946) (holding that workers who “are at liberty to work or not as they choose” were employees under flsa). 381. 331 u.s. at 706, 718. 382. 87 fr 62249; see, e.g., off duty police, 915 f.3d at 1060 62 (noting that “[a]lthough workers could accept or reject assignments, multiple workers testified that [the employer] would discipline them if they declined a job,” which supported a finding that the control factor favored employee status for one set of workers; testimony that another set of workers may not have been punished for declining work did not clearly support either employee or independent contractor status under the control factor '); see also parrish, 917 f.3d at 382 (ability to turn down projects without negative repercussion was among the reasons the control factor weighed in favor of independent contractor status). 383. see, e.g., mr. w fireworks, 814 f.2d at 1048 (noting that work schedules compelled by the employer were, among other considerations within control, evidence that, “[a]s a matter of economic reality” the employer “exercise[d] great control” over the workers and thus, ultimately employee status). 384. see87 fr 62249 (citing collinge, 2015 wl 1299369, at *4 (finding that the fact that on demand “[d]rivers are free to wait at home for their first delivery of the day, and . . . are free to `kill time' on a computer or run personal errands” in between jobs did not demonstrate lack of control “because [it] merely show[s] that [the employer] is unable to control its drivers when they are not working, an irrelevant point.”) (footnotes omitted)). 385. the comment noted specific practices that erode the benefit of scheduling flexibility, such as app based platforms offering first access to premium deliveries or allowing workers first access to select shifts on the condition that they have accepted enough jobs in the prior month. 386. see, e.g., express sixty minutes, 161 f.3d at 303 (determining that the employer “had minimal control” over the delivery drivers in part because the drivers “set their own hours and days of work” and could reject deliveries “without retaliation,” which was evidence that the worker was an independent contractor). 387. see, e.g., verma, 937 f.3d at 230 (ability to set hours, select shifts, stay beyond a shift, and accept or reject work were “narrow choices” when evaluated against other types of control by the employer, such as setting the price for services); off duty police, 915 f.3d at 1060 (“although workers could accept or reject assignments, multiple workers testified that [the employer] would discipline them if they declined a job,” which was evidence of the employer's ultimate control); flint eng'g, 137 f.3d at 1441 (“the record indicates rig welders cannot perform their work on their own schedule; rather, pipeline work has assembly line qualities in that it requires orderly and sequential coordination of various crafts and workers to construct a pipeline.”). 388. 86 fr 1247 48. 389. see, e.g., pilgrim equip., 527 f.2d at 1312 (“in the total context of the relationship neither the [workers'] right to hire employees nor the right to set hours indicates such lack of control by [the employer] as would show these operators are independent from it.”) (emphasis added). 390. 87 fr 62275. 391. for discussion of this issue generally, see section v.c.4(a). 392. id. 393. 87 fr 62275 (proposed § 795.110(b)(4)). 394. id. at 62249. 395. see, e.g., driscoll, 603 f.2d at 756 (farmworkers could be employees of a strawberry farming company even where the potential employer exercised little direct supervision over them); twyeffort, 158 f.2d at 947 (rejecting an employer's contentions that its tailors are independent contractors because they are “free from supervision, are at liberty to work or not as they choose, and may work for other employers if they wish”). 396. 87 fr 62249 n.393 (noting that the legislative history of the flsa supports this point directly, since the definition of “employ” was explicitly intended to cover as employment relationships those relationships where the employer turned a blind eye to labor performed for its benefit) (citing antenor, 88 f.3d at 934)). 397. 915 f.3d at 1061 62 (quoting peno trucking, inc. v. comm'r of internal revenue, 296 f. app'x 449, 456 (6th cir. 2008)). 398. id. at 1061. 399. id. at 1062. 400. 757 f.2d at 1383 84. see also mccomb v. homeworkers' handicraft coop., 176 f.2d 633, 636 (4th cir. 1949) (“it is true that there is no supervision of [homeworkers'] work; but it is so simple that it requires no supervision.”). 401. superior care, 840 f.2d at 1060; cf. antenor 88 f.3d at 933 n.10 (explaining in an flsa joint employment case that “courts have found economic dependence under a multitude of circumstances where the alleged employer exercised little or no control or supervision over the putative employees”). 402. 781 f.3d at 814. 403. id. 404. 917 f.3d at 381 (quoting pilgrim equip., 527 f.2d at 1312) (alteration in original)). 405. nieman, 775 f. app'x at 624 25. 406. 87 fr 62250. 407. id. (citing, for example, ruiz v. affinity logistics corp., 754 f.3d 1093, 1102 03 (9th cir. 2014) (finding in a state wage and hour case that techniques used by an employer to monitor its furniture delivery drivers were a form of supervision that made it more likely that the drivers were employees; as the court noted, the employer “closely monitored and supervised” the drivers by, among other things, “conducting `follow alongs'; requiring that drivers call their . . . supervisor after every two or three stops; monitoring the progress of each driver on the `route monitoring screen'; and contacting drivers if . . . [they] were running late or off course”). see also scantland, 721 f.3d at 1314 (finding “meaningful supervision and monitoring” in part because the employer required cable installers to log in and out of a service on their cell phones to record when they arrived on a job, when they completed a job, and what their estimated time of arrival was for their next job). 408. see id. (relying on the department's enforcement experience in this area). for example, an employer's use of electronic visitor verification (“evv”) systems can be evidence of an employment relationship, especially in those instances where the employer uses the systems to set schedules, discipline staff, or run payroll systems, for example. see domestic service final rule frequently asked questions (faqs), u.s. department of labor (march 20, 2023, 4:30 p.m.), https://www.dol.gov/​agencies/​whd/​direct care/​faq#g11 (discussing evv systems at question #10 in relation to an flsa joint employment analysis). 409. see section v(d). 410. see generally superior care, 840 f.2d at 1060 (finding that the employer's reserved right to perform in person supervision of nursing staff was relevant to the economic reality analysis). 411. see, e.g., chao v. mid atlantic installation servs., inc., 16 f. app'x 104, 106 08 (4th cir. 2001) (agreeing with the district court's analysis that the ability to complete jobs in any order, conduct personal affairs, and work independently is evidence that leans toward identifying a worker as an independent contractor). 412. see, e.g., superior care, 840 f.2d at 1060 (“an employer does not need to look over his workers' shoulders every day in order to exercise control.”); driscoll, 603 f.2d at 756 (farmworkers could be employees of a strawberry farming company even where the employer exercised little direct supervision over them); twyeffort, 158 f.2d at 947 (rejecting an employer's contention that its tailors are independent contractors because they are “free from supervision, are at liberty to work or not as they choose, and may work for other employers if they wish”). 413. the comment noted, for example, that distributors of perishable goods like food and medicine use technological monitoring “to ensure product integrity, compliance with customer and regulatory commitments, and even the safety of the public at large,” not necessarily to exercise control over the worker as an employee. 414. for discussion of comments related to actions taken to comply with regulatory requirements see section v(c)(4)(a). 415. 87 fr 62275 (proposed § 795.110(b)(4)). 416. 87 fr 62250. 417. id. 418. whitaker house, 366 u.s. at 32. 419. id. 420. 87 fr 62250 51 (citing verma, 937 f.3d at 230 (identifying, among other things, the employer's setting the price and duration of private dances as indicative of “overwhelming control” over the performance of the work); off duty police, 915 f.3d at 1060 (concluding that certain security guards were employees, in part, because “[the employer] set the rate at which the workers were paid”); mcfeeley, 825 f.3d at 241 42 (affirming that a nightclub owner was exercising significant control because, among other things, it set the fees for private dances); cornerstone am., 545 f.3d at 343 44 (finding the control factor weighed in favor of employee status where employer controlled “meaningful” economic aspects of the work, including pricing of products sold); selker bros., 949 f.2d at 1294 (finding that, among other things, the fact that the employer set the price of cash sales of gasoline reflected the employer's “pervasive control” over the workers); agerbrink v. model serv., llc, 787 f. app'x 22, 25 26 (2d cir. 2019) (determining that there were material facts in dispute regarding the worker's “ability to negotiate her pay rate,” which related to the degree of control exerted by the employer, and rejecting the employer's contention that the worker had control over her pay rate simply because she could either work for the amount offered or not work for that amount, stating that this “says nothing of the power to negotiate a rate of pay”); karnes v. happy trails rv park, llc, 361 f. supp. 3d 921, 929 (w.d. mo. 2019) (finding park managers to be employees in part because the park owners “set all the prices”); hurst v. youngelson, 354 f. supp. 3d 1362, 1370 (n.d. ga. 2019) (finding relevant to the control analysis that the plaintiff was not free to set the prices she charged customers and had no ability to waive or alter cover charges for her customers). 421. id. at 62251. 422. 636 f. app'x 225, 227 (5th cir. 2016); see also nelson v. texas sugars, inc., 838 f. app'x 39, 42 (5th cir. 2020) (finding that because “the dancers set their own schedule, worked for other clubs, chose their costume and routine, decided where to perform (onstage or offstage), kept all the money that they earned, and even chose how much to charge customers for dances, a reasonable jury could conclude that the club did not exercise significant control over them”) (emphasis added). 423. 87 fr 62251. 424. id. n. 410 (quoting mcfeeley, 825 f.3d at 242 43). 425. id. (citing scantland, 721 f.3d at 1315 (reversing summary judgment for the employer based in part on evidence that the workers “could not bid for jobs or negotiate the prices for jobs”)). 426. 87 fr 62275 (proposed § 795.110(b)(4)). 427. mcfeeley, 825 f.3d at 241. 428. whitaker house, 366 u.s. at 32. 429. 87 fr 62275 (proposed § 795.110(b)(4)). 430. see86 fr 1247 (§ 795.105(d)(1)(i)). 431. 87 fr 62251 52. 432. see parrish, 917 f.3d at 382 (noting that the non disclosure agreement did not require exclusive employment, and was therefore not an element of control that indicated employee status); off duty police, 915 f.3d at 1060 61 (non compete clause preventing workers from working for employer's customers for two years after leaving employment was among evidence supporting finding that control factor indicated employee status); express sixty minutes, 161 f.3d at 303 (“independent contractor agreement” did not contain a “covenant not to compete” and drivers could work for other courier delivery providers, which indicated independent contractor status); see also whd op. ltr., 2000 wl 34444342, at *1, 4 (dec. 7, 2000) (workers were required to sign an agreement that prohibited them from working for other companies while driving for the employer, which suggested employee status); but cf. faludi v. u.s. shale sols., llc, 950 f.3d 269, 276 77 (5th cir. 2020) (a non compete clause “does not automatically negate independent contractor status”); franze, 826 f. app'x at 76 77 (although a non compete provision prohibited drivers from driving routes and carrying products for competing companies, facts showed that the drivers “controlled the overall scope of their delivery operations” because of their control over distribution territories, ability to hire others, schedule flexibility, and lack of oversight). 433. see, e.g., keller, 781 f.3d at 813 14 (although worker was not prohibited from working for other companies, “a reasonable jury could find that the way that [the employer] scheduled [the worker's] installation appointments made it impossible for [the worker] to provide installation services for other companies”); scantland, 721 f.3d at 1313 15 (finding even if workers were not prohibited from working for other installation contractors their long hours and inability to turn down work suggested that the employer controlled whether they could work for others, which was in part why the control factor favored employee status); cromwell, 348 f. app'x at 61 (“although it does not appear that [the workers] were actually prohibited from taking other jobs while working for [the employers], as a practical matter the work schedule established by [the employers] precluded significant extra work.”); flint eng'g, 137 f.3d at 1441 (finding the hours the company required of the workers, coupled with driving time between home and remote work sites every day, made it “practically impossible for them to offer services to other employers”). 434. see brant, 43 f.4th at 669 70 (despite having the contractual ability to haul freight for other carriers, a driver alleged that the company maintained a “system for approving and monitoring trips made for other carriers” that was “so complex and onerous that drivers could not, as a practical matter, carry loads for anyone other than” the company, which the court determined weighed in favor of employee status). 435. 721 f.3d at 1313 15. 436. id. at 1315. 437. see, e.g., razak, 951 f.3d at 145 46 (discussing disputed facts regarding whether drivers could drive for other services uber contended drivers could drive for other services but drivers contended that they could not accept rides from other platforms while online for uber; drivers also noted that uber's driver deactivation policy stated that soliciting rides outside the uber system leads to deactivation and that activities conducted outside the uber system, like “anonymous pickups,” were prohibited); paragon, 884 f.3d at 1235 (finding control factor favored independent contractor status in part because worker could and did work for other employers); saleem, 854 f.3d at 141 43 (drivers' ability to work for business rivals and transport personal clients showed less control by and economic dependence on the employer); express sixty minutes, 161 f.3d at 303 (control factor “point[ed] toward independent contractor status” in part because the “independent contractor agreement” did not contain a covenant not to compete and drivers could work for other courier delivery providers). 438. 87 fr 62252. 439. reich v. priba corp., 890 f. supp. 586, 592 (n.d. tex. 1995) (citing mednick, 508 f.2d at 300, 301 02). 440. 331 u.s. at 706, 718. 441. seafood, inc., 867 f.2d at 877. 442. 861 f.2d at 451 53. 443. seafood, inc., 867 f.2d at 877. 444. off duty police, 915 f.3d at 1058. 445. see supra, section v.b. 446. saleem, 854 f.3d at 141. 447. 29 cfr 795.110(b)(4). 448. see, e.g., razak, 951 f.3d at 145 46 (discussing disputed facts regarding whether drivers could drive for other services simultaneously uber contended drivers could drive for other services, but drivers contended that they could not accept rides from other platforms while online for uber). 449. see supra, section v.c.3. 450. brant, 43 f.4th at 669 70. 451. id. 452. id. (analyzing the driver's ability to haul freight for other carriers under the opportunity for profit or loss factor because it was relevant to whether the driver could exercise his managerial skill to increase profits by selecting more favorable loads or by driving for other carriers) (internal quotation marks omitted). 453. 87 fr 62275 (proposed § 795.110(b)(4)). 454. see, e.g., flint eng'g, 137 f.3d at 1441 (“none of the factors alone is dispositive; instead, the court must employ a totality of the circumstances approach.”). 455. 87 fr 62275 (proposed § 795.110(b)(5)). 456. id. at 62253. 457. id. at 62254; rutherford, 331 u.s. at 729. 458. 87 fr 62254; see silk, 331 u.s. at 716 (unloaders were “an integral part of the business[] of retailing coal”); see also off duty police, 915 f.3d at 1055; mcfeeley, 825 f.3d at 244; scantland, 721 f.3d at 1319; flint eng'g, 137 f.3d at 1443; superior care, 840 f.2d at 1060 61; lauritzen, 835 f.2d at 1537 38; dialamerica, 757 f.2d at 1385; driscoll, 603 f.2d at 755. 459. 331 u.s. at 716. 460. id.; see supra section ii.b.2. 461. see, e.g., whd fact sheet #13 (july 2008) (listing “[t]he extent to which the services rendered are an integral part of the principal's business” as a factor). 462. 87 fr 62254. 463. id. at 62253. 464. see, e.g., off duty police, 915 f.3d at 1055 (rejecting employer's argument that it was merely an agent between its customers and the officers because the company “could not function without the services its workers provide”); mcfeeley, 825 f.3d at 244 (“[e]ven the clubs had to concede the point that an `exotic dance club could [not] function, much less be profitable, without exotic dancers.' ”) (quoting secretary of labor's amicus br. in supp. of appellees at 24); capital int'l, 466 f.3d at 309 (finding security guards were integral to a business where company “was formed specifically for the purpose of supplying” private security); cf. johnson, 371 f.3d at 730 (upholding jury verdict finding independent contractor status for security guards working for government housing authority and noting, with regard to integral factor, that the housing authority “had functioned for years before and after the program” under which security guards were hired). 465. 87 fr 62253. see, e.g., brock v. lauritzen, 624 f. supp. 966, 969 (e.d. wis. 1985), aff'd, 835 f.2d 1529 (7th cir. 1987) (finding that cucumber harvesters were integral to cucumber farmer's business and were “economically dependent upon lauritzen's business for their work during the cucumber harvest season”). 466. see, e.g., alpha & omega, 39 f.4th at 1085 (noting that this factor “turns `on whether workers' services are a necessary component of the business' ”) (quoting paragon, 884 f.3d at 1237); flint eng'g, 137 f.3d at 1443 (finding rig welders' work to be “an important, and indeed integral, component of oil and gas pipeline construction work” because their work is a critical step on every transmission system construction project); lauritzen, 835 f.2d at 1537 38 (“it does not take much of a record to demonstrate that picking the pickles is a necessary and integral part of the pickle business[.]”); cf. paragon, 884 f.3d at 1237 (“because [the worker]'s management of the pecan grove was not integral to the bulk of paragon's [construction] business, this factor supports consideration of [the worker] as an independent contractor.”). 467. see, e.g., superior care, 840 f.2d at 1059 (for business that provided on demand health care personnel, the nurses provided were themselves integral to the business). 468. see, e.g., keller, 781 f.3d 799 at 815 (“the more integral the worker's services are to the business, then the more likely it is that the parties have an employer employee relationship.”); dialamerica, 757 f.2d at 1385 (“workers are more likely to be `employees' under the flsa if they perform the primary work of the alleged employer”). 469. 87 fr 62254. see, e.g., montoya v. s.c.c.p. painting contractors, inc., 589 f. supp. 2d 569, 581 (d. md. 2008) (explaining that “this factor does not turn on whether the individual worker was integral to the business; rather, it depends on whether the service the worker performed was integral to the business”). 470. 87 fr 62254 (giving the example of one operator among many in a call center). 471. 87 fr 62254. 472. 331 u.s. at 716. 473. see supra section ii.b.2. 474. see e.g., superior care, 840 f.2d at 1058 59; dialamerica, 757 f.2d at 1382 83; mcfeeley, 825 f.3d at 241; off duty police, 915 f.3d at 1055; lauritzen, 835 f.2d at 1537 38; alpha & omega, 39 f.4th at 1082; driscoll, 603 f.2d at 754; sureway, 656 f.2d at 1368; paragon, 884 f.3d at 1235; scantland, 721 f.3d at 1311 12; morrison, 253 f.3d at 11. 475. see, e.g., hobbs, 946 f.3d at 836. 476. see whd op. ltr. (june 23, 1949); 27 fr 8033; whd fact sheet #13 (1997); whd fact sheet #13 (july 2008); ai 2015 1, available at 2015 wl 4449086. 477. whd op. ltr. (june 23, 1949). 478. 196 f.2d 547, 550 (8th cir. 1952) (analyzing whether timber haulers and wood workers were “an integrated part of defendant's production set up”). 479. id. 480. alpha & omega, 39 f.4th at 1082 (stating “[w]e assume without deciding that the economic realities test is appropriate in determining whether a worker is an employee or independent contractor under the flsa” and articulating the sixth relevant factor as “the degree to which the alleged employee's tasks are integral to the employer's business.”). 481. see, e.g., meyer, 607 f. app'x at 123 (“although tennis umpires are an integral part of the u.s. open,” other factors supported determination that umpires were independent contractors.); perdomo v. ask 4 realty & mgmt., inc., no. 07 20089, 2007 wl 9706364, at *4 (s.d. fla. dec. 19, 2007) (construction worker's work was integral to remodeling business, but economic reality factors as a whole indicated independent contractor status). 482. 87 fr 62231. 483. 87 fr 62253. 484. see generally87 fr 62275 (proposed § 795.110(b)(6)). 485. see generally id. at 62254 57. 486. see id. (citing cases). 487. see, e.g., perez v. howes, 7 f. supp.3d 715, 724 25 (w.d. mich. 2014), aff'd, 790 f.3d 681 (6th cir. 2015). 488. the first sentence was at 87 fr 62255 (quoting superior care, 840 f.2d at 1060); the second sentence was at 87 fr 62256. 489. see29 cfr 795.110(a)(2) (“consistent with a totality of the circumstances analysis, no one factor or subset of factors is necessarily dispositive, and the weight to give each factor may depend on the facts and circumstances of the particular case.”). scalia law clinic further commented that, “[w]hile the 2021 [ic] rule did not prohibit considering a worker's skill, [it] rightly excluded skill from its `core factors.' ” as explained in this final rule and as the regulatory text provides, however, the department is rejecting the concept of “core” factors in favor of not giving a predetermined weight to any factor. see id. the 2021 ic rule stated (and scalia law clinic reiterated in its comment) that skill should be given lesser weight because highly skilled workers can be employees and comparatively lesser skilled workers can be independent contractors. the department believes, however, that this is better addressed by reintegrating initiative into the skill factor for the reasons explained in the nprm and herein and by reinforcing that all factors determine a worker's status. 490. see, e.g., hobbs, 946 f.3d at 834; parrish, 917 f.3d at 385; cornerstone am., 545 f.3d at 345; express sixty minutes, 161 f.3d at 305 (“the district court did not discuss initiative during its evaluation of this factor. we agree with the secretary that the skill and initiative factor points toward employee status.”); flint eng'g, 137 f.3d at 1443 (quoting selker bros., 949 f.2d at 1295); circle c. invs., 998 f.2d at 328; superior care, 840 f.2d at 1060; dialamerica, 757 f.2d at 1387. 491. see, e.g., scantland, 721 f.3d at 1318; flint eng'g, 137 f.3d at 1443; selker bros., 949 f.2d at 1295; superior care, 840 f.2d at 1060; dialamerica, 757 f.2d at 1387. 492. see87 fr 62256 57. 493. 334 u.s. at 718. 494. id. at 719. 495. see also, e.g.,razak, 951 f.3d at 147; off duty police, 915 f.3d at 1055 56; iontchev, 685 f. app'x at 550; walsh v. em protective servs. llc, no. 3:19 cv 00700, 2021 wl 3490040, at *7 (m.d. tenn. aug. 9, 2021); acosta v. new image landscaping, llc, no. 1:18 cv 429, 2019 wl 6463512, at *6 (w.d. mich. dec. 2, 2019); acosta v. wellfleet commc'ns, llc, no. 2:16 cv 02353 gmn gwf, 2018 wl 4682316, at *7 (d. nev. sept. 29, 2018), aff'd sub nom. walsh v. wellfleet commc'ns, no. 20 16385, 2021 wl 4796537 (9th cir. oct. 14, 2021); perez v. super maid, llc, 55 f. supp. 3d 1065, 1077 78 (n.d. ill. 2014); harris v. skokie maid & cleaning serv., ltd., no. 11 c 8688, 2013 wl 3506149, at *8 (n.d. ill. july 11, 2013); campos v. zopounidis, no. 3:09 cv 1138 (vlb), 2011 wl 2971298, at *7 (d. conn. july 20, 2011); solis v. int'l detective & protective serv., ltd., 819 f. supp. 2d 740, 752 (n.d. ill. 2011). 496. 87 fr 62255 (“a landscaper, for example, may perform work that does not require specialized skills, but application of the other factors may demonstrate that the landscaper is an independent contractor (for example, the landscaper may have a meaningful role in determining the price charged for the work, make decisions affecting opportunity for profit or loss, determine the extent of capital investment, work for many clients, and/or perform work for clients for which landscaping is not integral).”). dsa's statement that the examples of welders in the nprm's discussion of the skill and initiative factor do not include the scenario where “there is no specialized skill, but the ability to independently market a business” overlooked the landscaper example that addresses that scenario. 497. see also iontchev, 685 f. app'x at 550 51 (finding that the “service rendered by the drivers did not require a special skill,” but concluding that, “[u]nder the totality of the circumstances, the drivers were not economically dependent upon [the employer]” and thus independent contractors). 498. see, e.g.,razak, 951 f.3d at 147 (noting that it “is generally accepted that `driving' is not itself a `special skill' ” in determining that the skill factor weighs in favor of employee status); off duty police, 915 f.3d at 1055 56 (noting that “[t]he skills required to work for odps are far more limited than those of a typical independent contractor” in finding that the skill factor weighed in favor of employee status for security guards and traffic control workers); iontchev, 685 f. app'x at 550 (“the service rendered by the [taxi drivers] did not require a special skill.”); em protective servs., 2021 wl 3490040, at *7 (traffic control officers require “relatively little skill” and security guards require “minimal skill,” indicating employee status); new image landscaping, 2019 wl 6463512, at *6 (facts that “little or no skill was required” and “prior landscaping experience” was not required meant that skill factor favored employee status for landscapers); wellfleet commc'ns, 2018 wl 4682316, at *7 (explaining that skill factor favored employee status for call center workers because “all that defendants required was the ability to communicate well and read a script”); super maid, 55 f. supp. 3d at 1077 78 (noting, in finding that skill factor favored employee status, that “[m]aintenance work, such as cleaning, sweeping floors, mowing grass, unclogging toilets, changing light fixtures, and cleaning gutters, does not necessarily involve such specialized skills as would support independent contractor status,” and that “cleaning services, although difficult and demanding, were even less complex than those maintenance services”) (internal quotation marks omitted); skokie maid, 2013 wl 3506149, at *8 (“the maids' work may be difficult and demanding, but it does not require special skill,” indicating employee status.); campos, 2011 wl 2971298, at *7 (“there is no evidence that campos's job as a delivery person required him to possess any particular degree of skill. campos did not need education or experience to perform his job. although he needed a driver's license in order to legally drive his vehicle for deliveries, the possession of a driver's license and the ability to drive an automobile is properly characterized as a `routine life skill' that other courts have found to be indicative of employment status rather than independent contractor status.”); int'l detective & protective serv., 819 f. supp. 2d at 752 (finding that the “vast majority of the guards' work . . . did not require any special skills”). 499. nrf & nccr commented that “[t]he fact that many people have regular driver's licenses should not be viewed as in any way negating or reducing the likelihood that a contractor who meets the other factors will be properly treated as an independent contractor.” as the department has clearly and repeatedly stated, no one fact will determine a worker's status as an employee or independent contractor. 500. 29 cfr 795.110(a)(1) and (a)(2), respectively. 501. 86 fr 1247. 502. 87 fr 62275 (proposed § 795.110(b)(7)). 503. id. at 62257. 504. id. 505. 331 u.s. at 716 (“no one [factor] is controlling nor is the list complete.”). 506. see generally87 fr 62257; infra n.512. 507. 87 fr 62257. 508. id. 509. the department notes that it included the additional factors provision in the 2021 ic rule in response to the national restaurant association's comment in that rulemaking expressing concern about the lack of a specific regulatory provision acknowledging that additional factors could be relevant. specifically, as explained in the 2021 ic rule, the restaurant association contended that “facts and factors” that were not listed in the department's 2020 proposal, which included two core factors and three additional factors, “may be relevant to the question of economic dependence even if they would not be as probative as the two core factors.” they expressed “concern that future courts may ignore these unlisted but potentially relevant considerations in response to this rulemaking” and “requested that the department revise the regulatory text to explicitly recognize that unlisted factors may be relevant.” 86 fr 1196. 510. 331 u.s. at 716. 511. see sureway, 656 f.2d at 1370 (stating that “the courts have identified a number of factors that should be considered” when determining if an individual is an employee under the flsa but noting that “the list is not exhaustive”); razak, 951 f.3d at 143 (noting that the third circuit agreed with sureway “that `neither the presence nor absence of any particular factor is dispositive' ” and explaining that “ `courts should examine the circumstances of the whole activity,' determining whether, `as a matter of economic reality, the individuals are dependent upon the business to which they render service' ”) (internal citation omitted); hobbs, 946 f.3d at 836 (stating that “[b]ecause the silk factors are non exhaustive, we will also look to other factors to help gauge the economic dependence of the pipe welders”); parrish, 917 f.3d at 387 (stating that the “ silk factors being `non exhaustive', other relevant factors may be in play in an employee vel non analysis”); karlson, 860 f.3d at 1092 (“no one [factor] is controlling nor is the list complete.”) (quoting silk, 331 u.s. at 716) (internal quotations omitted); scantland, 721 f.3d at 1312 (“we note, however, that these six factors are not exclusive and no single factor is dominant.”); lauritzen, 835 f.2d at 1534 (“certain criteria have been developed to assist in determining the true nature of the relationship, but no criterion is by itself, or by its absence, dispositive or controlling.”); superior care, 814 f.2d at 1043 (explaining that “[t]hese factors are not exhaustive” and “must always be aimed at an assessment of the `economic dependence' of the putative employees, the touchstone for this totality of the circumstances test”) (internal citation omitted). 512. saleem, 854 f.3d at 140 (quoting barfield v. new york city health & hospitals corp., 537 f.3d 132, 141 (2008) quoting goldberg, 366 u.s. at 33, and rutherford, 331 u.s. at 730)) (internal quotation marks omitted). 513. see whd fact sheet #13 (july 2008). 514. 2015 wl 4449086, at *3 n.4 (withdrawn june 7, 2017). 515. 87 fr 62236. 516. see whd fact sheet #13 (july 2008). 517. see, e.g., safarian v. american dg energy inc., 622 f. app'x 149, 151 (3d cir. 2015) (even where “the parties structure[ ] the relationship as an independent contractor, . . . the caselaw counsels that, for purposes of the worker's rights under the flsa, we must look beyond the structure to the economic realities”). 518. whd fact sheet #13 (july 2008). 519. 87 fr 62257. 520. 86 fr 1247 (§ 795.110). 521. 87 fr 62258. 522. id. 523. see generally87 fr 62258. 524. 87 fr 62258. 525. 86 fr 1205. 526. rosenwasser, 323 u.s. at 362 63. 527. darden, 503 u.s. at 326. 528. 87 fr 62258. 529. id. in silk, the supreme court described this standard as “power of control, whether exercised or not, over the manner of performing service to the industry.” 331 u.s. at 713 (citing restatement of the law, agency, sec. 220). 530. 87 fr 62258. 531. id. 532. darden, 503 u.s. at 323 (common law employment test considers “the hiring party's right to control the manner and means by which the product is accomplished”) (quoting reid, 490 u.s. at 751 52); restatement (third) of agency, sec. 7.07, comment (f) (2006) (“for purposes of respondeat superior, an agent is an employee only when the principal controls or has the right to control the manner and means through which the agent performs work.”). 533. 87 fr 62223. 534. id. 535. ai 2015 1, 2015 wl 4449086, at *11 (withdrawn june 7, 2017). additionally, ai 2015 1 cited, among other cases, superior care, for the proposition that “[a]n employer does not need to look over his workers' shoulders every day in order to exercise control.” in superior care, even though the parties stipulated that actual practice of the parties was to have infrequent supervisory visits, the second circuit found more probative of control the fact that the employer “unequivocally expressed the right to supervise the nurses' work, and the nurses were well aware that they were subject to such checks as well as to regular review of their nursing notes.” superior care, 840 f.2d at 1060. 536. see whd op. ltr. (june 23, 1949) (“ordinarily a definite decision as to whether one is an employee or an independent contractor under the [flsa] cannot be made in the absence of evidence as to his actual day to day working relationship with his principal.”). 537. see infra n.541. 538. see discussion regarding the seventh circuit's decision in brant v. schneider nat'l, infra. 539. see off duty police, 915 f.3d at 1060 61 (finding that, among other things, officers' testimony that they were disciplined for turning down assignments, despite having the right to do so, supported employee status). 540. see, e.g., parrish, 917 f.3d at 387 (“[t]he analysis is focused on economic reality, not economic hypotheticals.”); saleem, 854 f.3d at 142 (“[p]ursuant to the economic reality test, it is not what [workers] could have done that counts, but as a matter of economic reality what they actually do that is dispositive.”) (internal quotation marks and citation omitted); sureway, 656 f.2d at 1371 (“[t]he fact that sureway's `agents' possess, in theory, the power to set prices, determine their own hours, and advertise to a limited extent on their own is overshadowed by the fact that in reality the `agents' work the same hours, charge the same prices, and rely in the main on sureway for advertising.”). 541. see superior care, 840 f.2d at 1060. 542. see, e.g., flint eng'g, 137 f.3d at 1441 (“none of the factors alone is dispositive; instead, the court must employ a totality of the circumstances approach.”); superior care, 840 f.2d at 1059 (“since the test concerns the totality of the circumstances, any relevant evidence may be considered, and mechanical application of the test is to be avoided.”). 543. see, e.g., parrish, 917 f.3d at 388. 544. 43 f.4th 656 (7th cir. 2022). 545. id. at 666. 546. see superior care, 840 f.2d at 1060 (“though visits to the job sites occurred only once or twice a month, superior care unequivocally expressed the right to supervise the nurses' work, and the nurses were well aware that they were subject to such checks as well as to regular review of their nursing notes. an employer does not need to look over his workers' shoulders every day in order to exercise control.”) 547. 86 fr 1204 (“as emphasized in the nprm, and as the plain language of § 795.110 makes clear, unexercised powers, rights, and freedoms are not irrelevant in determining the employment status of workers under the economic reality test.”). 548. 87 fr 62222; see, e.g., scantland, 721 f.3d at 1312 n.2 (the relative weight of each factor “depends on the facts of the case”) (quoting santelices, 147 f. supp. 2d at 1319); selker bros., 949 f.2d at 1293 (“it is a well established principle that the determination of the employment relationship does not depend on isolated factors . . . neither the presence nor the absence of any particular factor is dispositive.”). 549. see discussion regarding the seventh circuit's decision in brant v. schneider nat'l, supra. 550. see, e.g., faludi 950 f.3d at 275 76 (determining that an attorney was an independent contractor even though facts “point[ed] in both directions,” such as the attorney's fairly lengthy tenure, even though he had the right to leave whenever he wanted upon giving 15 days' notice, and a non compete clause under which the attorney worked exclusively for the company, but which the court found “does not automatically negate independent contractor status”). 551. see section v.c.4.a (discussing why the control factor is discussed from the employer's perspective). 552. see superior care, 840 f.2d at 1059 (“since the test concerns the totality of the circumstances, any relevant evidence may be considered, and mechanical application of the test is to be avoided.”). 553. 87 fr 62259. 554. id. 555. the department notes that it has edited the investment example to omit the reference to a “freelance graphic designer.” while the department recognizes that indendent contractors may go by many names, its intent is to ensure that the examples reflect consistent terminology. because the department used the phrase “independent contractor” throughout the examples. 556. 87 fr 62253. 557. id. 558. id. 559. 87 fr 62254. 560. id. at 62255. 561. 87 fr 62275 (proposed § 795.115). 562. id. 563. id. at 62259. 564. see generally id. at 62233. 565. see, e.g., carlson v. postal regulatory comm'n, 938 f.3d 337, 351 (d.c. cir. 2019). 566. 87 fr 62274. 567. see88 fr 21879 (apr. 11, 2023); 58 fr 51735, 51741 (oct. 4, 1993). 568. see76 fr 3821 (jan. 21, 2011). 569. see86 fr 1168. 570. see cwi v. walsh, 2022 wl 1073346. 571. omb circular a 4 notes that when agencies are developing a baseline, “[it] should be the best assessment of the way the world would look absent the proposed action.” 572. the department uses the term “misclassification” throughout this analysis to refer to workers who have been classified as independent contractors but who, as a matter of economic reality, are economically dependent on their employer for work. these workers' legal status would not change under the 2021 ic rule or this rule they would properly be classified as employees under both rules. the department notes that sources cited in this analysis may use other misclassification standards which may not align fully with the department's use of the term. 573. “new study finds millions could lose work if u.s. reclassifies contractors,” april 6, 2022. https://progresschamber.org/​new study finds millions could lose work if u s reclassifies contractors/​. 574. the department uses the term “independent contractor” throughout this analysis to refer to workers who, as a matter of economic reality, are not economically dependent on their employer for work and are in business for themselves. the department notes that sources cited in this analysis may use other definitions of independent contractors that may not align fully with the department's use of the term. 575. bureau of labor statistics, “contingent and alternative employment arrangements may 2017,” usdl 18 0942 (june 7, 2018), https://www.bls.gov/​news.release/​pdf/​conemp.pdf. 576. the variables used are pes8ic=1 for self employed and pes7=1 for other workers. 577. while self employed independent contractors are identified by the worker's main job, other independent contractors answered yes to the cws question about working as an independent contractor last week. although the survey question does not ask explicitly about the respondent's main job, it follows questions asked about the respondent's main job. 578. even among independent contractors, failure to report multiple jobs in response to survey questions is common. for example, katz and krueger (2019) asked amazon mechanical turk participants the cps style question “last week did you have more than one job or business, including part time, evening, or weekend work?” in total, 39 percent of respondents responded affirmatively. however, these participants were asked the follow up question “did you work on any gigs, hits or other small paid jobs last week that you did not include in your response to the previous question?” after this question, which differs from the cps, 61 percent of those who indicated that they did not hold multiple jobs on the cps style question acknowledged that they failed to report other work in the previous week. as katz and krueger write, “if these workers are added to the multiple job holders, the percent of workers who are multiple job holders would almost double from 39 percent to 77 percent.” see l. katz and a. krueger, “understanding trends in alternative work arrangements in the united states,” rsf: the russell sage foundation journal of the social sciences 5(5), p. 132 46 (2019). 579. k. lim, a. miller, m. risch, and e. wilking, “independent contractors in the u.s.: new trends from 15 years of administrative tax data,” department of treasury, p. 61 (jul. 2019), https://www.irs.gov/​pub/​irs soi/​19rpindcontractorinus.pdf. from table 5, the total number of independent contractors across all categories is 13.81 million. the number of independent contractors in the categories where these workers earn the majority of their labor income from independent contractor earnings is 6.63 million. 6.63 million ÷ 13.81 million = 0.48. 580. washington department of commerce, “independent contractor study,” p. 21 (jul. 2019), https://deptofcommerce.app.box.com/​v/​independent contractor study. 581. in any given week, the total number of independent contractors would have been roughly the same, but the identity of the individuals who do it for less than the full year would likely vary. thus, the number of unique individuals who work at some point in a year as independent contractors would exceed the number of independent contractors who work within any 1 week period as independent contractors. 582. d. farrell and f. greig, “paychecks, paydays, and the online platform,” jpmorgan chase institute (2016), https://papers.ssrn.com/​sol3/​papers.cfm?​abstract_​id=​2911293. the authors define the online platform economy as “economic activities involving online intermediaries.” this includes “labor platforms” that “connect customers with freelance or contingent workers” and “capital platforms” that “connect customers with individuals who rent assets or sell goods peer to peer.” as such, this study encompasses data on income sources that the department acknowledges might not be a one to one match with independent contracting and could also include work that is part of an employment relationship. however, the department believes that including data on income earned through online platforms is useful when discussing the potential magnitude of independent contracting. 583. b. collins, a. garin, e. jackson, d. koustas, and m. payne, “is gig work replacing traditional employment? evidence from two decades of tax returns,” irs soi joint statistical research program (2019) (unpublished paper), https://www.irs.gov/​pub/​irs soi/​19rpgigworkreplacingtraditionalemployment.pdf. 584. see l. katz and a. krueger, “the rise and nature of alternative work arrangements in the united states, 1995 2015,” (2018). 585. id. at 49. the estimate is 9.6 percent without correcting for overrepresentation of self employed workers or multiple job holders. id. at 31. 586. id. at addendum (“reconciling the 2017 bls contingent worker survey”). 587. note that they estimate 6.7 percent of employed workers are independent contractors using the cws, as opposed to 6.9 percent as estimated by the bls. this difference is attributable to changes to the sample to create consistency. 588. in addition to the use of proxy responses, this difference is also due to cyclical conditions. the impacts of these two are not disaggregated for independent contractors, but if we applied the relative sizes reported for all alternative work arrangements, we would get 0.36 percentage point difference due to proxy responses. additionally, this may not entirely be a bias. it stems from differences in independent contracting reported by proxy respondents and actual respondents. as katz and krueger explain, this difference may be due to a “mode” bias or proxy respondents may be less likely to be independent contractors. id. at addendum p. 4. 589. k. abraham, b. hershbein, and s. houseman, “contract work at older ages,” nber working paper 26612 (2020), http://www.nber.org/​papers/​w26612. 590. the department believes that including data on what is referred to in some studies as “informal work” is useful when discussing the magnitude of independent contracting, although not all informal work is done by independent contractors. the survey of household economics and decision making asked respondents whether they engaged in informal work sometime in the prior month. it categorized informal work into three broad categories: personal services, on line activities, and off line sales and other activities, which is broader than the scope of independent contractors. these categories include activities like house sitting, selling goods online through sites like ebay or craigslist, or selling goods at a garage sale. the department acknowledges that the data discussed in this study might not be a one to one match with independent contracting and could also include work that is part of an employment relationship, but it nonetheless provides some useful data for this purpose. 591. k. abraham, and s. houseman, “making ends meet: the role of informal work in supplementing americans' income,” rsf: the russell sage foundation journal of the social sciences 5(5): 110 31 (2019), https://www.jstor.org/​stable/​10.7758/​rsf.2019.5.5.06. 592. see, e.g., u.s. gov't accountability off., gao 09 717, employee misclassification: improved coordination, outreach, and targeting could better ensure detection and prevention 10 (2008) (“although the national extent of employee misclassification is unknown, earlier national studies and more recent, though not comprehensive, studies suggest that employee misclassification could be a significant problem with adverse consequences.”). 593. including, but not limited to: mckinsey global institute, “independent work: choice, necessity, and the gig economy” (2016), https://www.mckinsey.com/​featured insights/​employment and growth/​independent work choice necessity and the gig economy; kelly services, “agents of change” (2015), https://www.kellyservices.com/​global/​siteassets/​3 kelly global services/​uploadedfiles/​3 kelly_​global_​services/​content/​sectionless_​pages/​kocg1047720freeagent20whitepaper20210x21020final2.pdf; robles and mcgee, “exploring online and offline informal work: findings from the enterprising and informal work activities (eiwa) survey” (2016); upwork, “freelancing in america” (2019); washington department of commerce, “independent contractor study,” (jul. 2019), https://deptofcommerce.app.box.com/​v/​independent contractor study; d. farrell and f. greig, “paychecks, paydays, and the online platform,” jpmorgan chase institute (2016), https://papers.ssrn.com/​sol3/​papers.cfm?​abstract_​id=​2911293;​ mbo partners, “state of independence in america” (2016); abraham et al., “measuring the gig economy: current knowledge and open issues” (2018), https://www.nber.org/​papers/​w24950; b. collins, a. garin, e. jackson, d. koustas, and m. payne, “is gig work replacing traditional employment? evidence from two decades of tax returns,” irs soi joint statistical research program (2019) (unpublished paper), https://www.irs.gov/​pub/​irs soi/​19rpgigworkreplacingtraditionalemployment.pdf; gitis et al., “the gig economy: research and policy implications of regional, economic, and demographic trends,” american action forum (2017), https://www.americanactionforum.org/​research/​gig economy research policy implications regional economic demographic trends/​#ixzz5ipbjp79a; dourado and koopman, “evaluating the growth of the 1099 workforce,” mercatus center (2015), https://www.mercatus.org/​publication/​evaluating growth 1099 workforce. 594. see l. katz and a. krueger, “the rise and nature of alternative work arrangements in the united states, 1995 2015,” (2018). 595. “gallup's perspective on the gig economy and alternative work arrangements,” gallup (2018), https://www.gallup.com/​workplace/​240878/​gig economy paper 2018.aspx. 596. see abraham et al., “measuring the gig economy: current knowledge and open issues” (2018), https://www.nber.org/​papers/​w24950, table 4. 597. e. jackson, a. looney, and s. ramnath, “the rise of alternative work arrangements: evidence and implications for tax filing and benefit coverage,” ota working paper 114 (2017), https://www.treasury.gov/​resource center/​tax policy/​tax analysis/​documents/​wp 114.pdf. 598. k. lim, a. miller, m. risch, and e. wilking, “independent contractors in the u.s.: new trends from 15 years of administrative tax data,” department of treasury, p. 61 (jul. 2019), https://www.irs.gov/​pub/​irs soi/​19rpindcontractorinus.pdf. 599. in comparison to household survey data, tax data may reduce certain types of biases (such as recall bias) while increasing other types (such as underreporting bias). because the department is unable to quantify this tradeoff, it could not determine whether, on balance, survey or tax data are more reliable. 600. consumer and community research section of the federal reserve board's division of consumer and community affairs, “economic well being of u.s. households in 2021,” board of governors of the federal reserve system (2022). reports from all years available at https://www.federalreserve.gov/​publications/​report economic well being us households.htm. 601. the report defines gig work as including “three types of non traditional activities: offline service activities, such as child care or house cleaning; offline sales, such as selling items at flea markets or thrift stores; and online services or sales, such as driving using a ride sharing app or selling items online.” consumer and community research section of the federal reserve board's division of consumer and community affairs, “economic well being of u.s. households in 2017,” board of governors of the federal reserve system (may 2018). 602. mbo partners, “the great realization: 11th annual state of independence,” (2021). annual reports are available at https://www.mbopartners.com/​state of independence/​previous reports/​. 603. “upwork study finds 59 million americans freelancing amid turbulent labor market,” upwork, december 8, 2021. https://www.upwork.com/​press/​releases/​upwork study finds 59 million americans freelancing amid turbulent labor market. full study available at https://www.upwork.com/​research/​freelance forward 2021. 604. their report defines freelancers as “[i]ndividuals who have engaged in supplemental, temporary, project  or contract based work, within the past 12 months.” while many of these workers could be independent contractors, some workers engaged in supplemental or temporary work could likely be considered employees. 605. the department used the generational breakdown used in the mbo partners 2017 report, “the state of independence in america.” “millennials” were defined as individuals born 1981 1996, “generation x” were defined as individuals born 1965 1980, and “baby boomers and matures” were defined as individuals born before 1965. 606. k. abraham, and s. houseman, “making ends meet: the role of informal work in supplementing americans' income,” rsf: the russell sage foundation journal of the social sciences 5(5): 110 31 (2019), https://www.aeaweb.org/​conference/​2019/​preliminary/​paper/​qreaas2h. note that this informal work may be broader than what would be considered independent contracting and includes activities like babysitting/housesitting and selling goods online through sites like ebay and craigslist. 607. this data comes from the 2021 edition of the mbo partners report, “the state of independence in america.” while maintaining the generational breakdown used in the 2017 edition, “generation z” was additionally defined as individuals born 1997 2012. https://info.mbopartners.com/​rs/​mbo/​images/​mbo_​2021_​state_​of_​independence_​research_​report.pdf. 608. garin, a. and koustas, d., “the distribution of independent contractor activity in the united states: evidence from tax filings,” (2021). https://www.irs.gov/​pub/​irs soi/​21 rp independent contractor activity.pdf. 609. id. 610. these numbers are calculated by the department and based on the cws respondents who state that their race is “white only” or “black only” as opposed to identifying as multi racial. 611. k. abraham, and s. houseman, “making ends meet: the role of informal work in supplementing americans' income,” rsf: the russell sage foundation journal of the social sciences 5(5): 110 31 (2019), https://www.aeaweb.org/​conference/​2019/​preliminary/​paper/​qreaas2h. 612. id. 613. annabel utz, julie yixia cai, & dean baker, “the pandemic rise in self employment: who is working for themselves now,” center for economic and policy research. (august 2022). https://cepr.net/​the pandemic rise in self employment who is working for themselves now/​. 614. an establishment is commonly understood as a single economic unit, such as a farm, a mine, a factory, or a store, that produces goods or services. establishments are typically at one physical location and engaged in one, or predominantly one, type of economic activity for which a single industrial classification may be applied. an establishment contrasts with a firm, or a company, which is a business and may consist of one or more establishments. see bls, “quarterly census of employment and wages: concepts,” https://www.bls.gov/​opub/​hom/​cew/​concepts.htm. 615. u.s. census bureau, 2019 susb annual datasets by establishment industry. https://www.census.gov/​data/​datasets/​2019/​econ/​susb/​2019 susb.html. 616. u.s. census bureau, 2017 census of governments. https://www.census.gov/​data/​tables/​2017/​econ/​gus/​2017 governments.html. 617. lim et al., supra n.512, table 10: firm sample summary statistics by year (2001 2015), https://www.irs.gov/​pub/​irs soi/​19rpindcontractorinus.pdf. 618. a compensation/benefits specialist ensures company compliance with federal and state laws, including reporting requirements; evaluates job positions, determining classification, exempt or non exempt status, and salary; plans, develops, evaluates, improves, and communicates methods and techniques for selecting, promoting, compensating, evaluating, and training workers. see bls, “13 1141 compensation, benefits, and job analysis specialists,” https://www.bls.gov/​oes/​current/​oes131141.htm. 619. the 2021 ic rule used the mean wage rate to calculate rule familiarization costs, but the department has used the median wage rate here, because it is more consistent with cost analyses in other wage and hour division rulemakings. the department used the median wage rate in the withdrawal rule. 86 fr 24321. generally, the department uses median wage rates to calculate costs, because the mean wage rate has the potential to be biased upward by high earning outlier wage observations. 620. calculated using bls employer costs for employee compensation data. the department took the average of the most recent four quarters of total benefits per hour worked for civilian workers (series id cmu1030000000000d) divided it by the average of the most recent four quarters of wages and salaries cost per hour worked for civilian workers (series id cmu1020000000000d). https://www.bls.gov/​ncs/​data.htm. 621. based on department calculations using the individual level data. the department also calculated the mean hourly wage for independent contractors using the cws data and found that the mean wage in 2017 was $27.29, which would be $32.92 updated to 2022 dollars using the gdp deflator. 622. in the 2021 ic rule the department included an additional 45 percent for benefits and 17 percent for overhead. these adjustments have been removed here, because independent contractors do not usually receive employer provided benefits and generally have overhead costs built into their hourly rate. 623. 86 fr 1228 (“the department assumes that a compensation, benefits, and job analysis specialist (soc 13 1141) (or a staff member in a similar position) will review the rule.”). 624. nelp, “independent contractor misclassification imposes huge costs on workers and federal and state treasuries,” (oct. 2020), https://www.nelp.org/​publication/​independent contractor misclassification imposes huge costs workers federal state treasuries update october 2020. 625. lalith de silva, adrian millett, dominic rotondi, and william f. sullivan, “independent contractors: prevalence and implications for unemployment insurance programs” report of planmatics, inc., for u.s. department of labor employment and training administration (2000), https://wdr.doleta.gov/​owsdrr/​00 5/​00 5.pdf. 626. nelp, independent contractor misclassification imposes huge costs on workers and federal and state treasuries, (oct. 2020) (describing how misclassification rates are higher in certain industries such as construction, trucking, janitorial, and home care work), https://www.nelp.org/​publication/​independent contractor misclassification imposes huge costs workers federal state treasuries update october 2020. 627. marina zhavoronkova et al., occupational segregation in america, center for american progress (mar. 29, 2022), https://www.americanprogress.org/​article/​occupational segregation in america/​. 628. risa gelles watnick & monica anderson, racial and ethnic differences stand out in the u.s. gig workforce, pew rsch. ctr. (dec. 15, 2021), https://www.pewresearch.org/​fact tank/​2021/​12/​15/​racial and ethnic differencesstand out in the u s gig workforce/​. 629. nelp analysis of march 2022 current population survey annual social and economic supplement microdata. for underlying data, see cps annual social and economic supplement, u.s. census bureau, https://data.census.gov/​mdat/​#/​search?​ds=​cpsasec2022. 630. 29 u.s.c. 202(a), (b). 631. id. 632. russel ormiston, dale belman, & mark erlich, “an empirical methodology to estimate the incidence and costs of payroll fraud in the construction industry,” (jan. 2020), available at https://stoptaxfraud.net/​wp content/​uploads/​2020/​03/​national carpenters study methodology for wage and tax fraud report final.pdf. 633. ken jacobs, kuichih huang, jenifer macgillvary and enrique lopezlira, “the public cost of low wage jobs in the us construction industry,” uc berkeley labor center (january 2022), https://laborcenter.berkeley.edu/​the public cost of low wage jobs in the us construction industry/​. 634. to measure if the difference between these proportions is statistically significant, the department used the replicate weights for the cws. at a 0.05 significance level, the proportion of hispanic independent contractors with any health insurance is lower than the proportion for all independent contractors. 635. bls employer costs for employee compensation december 2022. https://www.bls.gov/​news.release/​pdf/​ecec.pdf. 636. jackson, e., looney, a., & ramnath, s., department of treasury, the rise of alternative work arrangements: evidence and implications for tax filing and benefit coverage, working paper #114 (jan. 2017), https://home.treasury.gov/​system/​files/​131/​wp 114.pdf. as discussed in the 2021 ic rule, this study defines retirement accounts as “employer sponsored plans,” which may not encompass all of the possible long term saving methods. see86 fr 1217. 637. see86 fr 1218. 638. courts have noted that the flsa has the broadest conception of employment under federal law. see, e.g., darden, 503 u.s. at 326. to the extent that businesses making employment status determinations base their decisions on the most demanding federal standard, a rulemaking addressing the standard for determining classification of worker as an employee or an independent contractor under the flsa may affect the businesses' classification decisions for purposes of benefits and legal requirements under other federal laws. 639. internal revenue service, “publication 15, (circular e), employer's tax guide” (2023 https://www.irs.gov/​publications/​p15. the social security tax has a wage base limit of $160,200 in 2023. there is no wage base limit for medicare tax. 640. see, e.g., lisa xu and mark erlich, economic consequence of misclassification in the state of washington, harvard labor and worklife program, 2 (2019), https://lwp.law.harvard.edu/​files/​lwp/​files/​wa_​study_​dec_​2019_​final.pdf; karl a. racine, issue brief and economic report, illegal worker misclassification: payroll fraud in the district's construction industry, 13 (september 2019), https://oag.dc.gov/​sites/​default/​files/​2019 09/​oag illegal worker misclassification report.pdf. 641. treasury inspector general for tax inspection 2013, employers do not always follow internal revenue service worker determination rulings, https://www.oversight.gov/​sites/​default/​files/​oig reports/​tigta/​201330058fr_​0.pdf. 642. adjusted for inflation using the cpi u, the current value of this tax loss would be $4.5 billion. 643. nelp, supra n.553. 644. the department based this calculation on the percentage of workers in the cws data who respond to the pehrusl1 variable (“how many hours per week do you usually work at your main job?”) with hours greater than 40. workers who answer that hours vary were excluded from the calculation. the department also applied the exclusion criteria used by katz and krueger (exclude workers reporting weekly earnings less than $50 and workers whose calculated hourly rate (weekly earnings divided by usual hours worked per week) is either less than $1 or more than $1,000). 645. the discussion of data on the differences in earnings between employees and independent contractors in the 2021 ic rule was potentially confusing and included some evidence that was not statistically significant, so the findings and methodology are discussed again here. 646. l. katz and a. krueger, “the rise and nature of alternative work arrangements in the united states, 1995 2015,” (2018). 647. on call workers, temporary help agency workers, and workers provided by contract firms are excluded from the base group of “traditional” employees. 648. in both katz and krueger's regression results and the department's calculations, the following outlying values were removed: workers reporting earning less than $50 per week, less than $1 per hour, or more than $1,000 per hour. choice of exclusionary criteria from katz and krueger (2018). 649. see top of page 20, “given the imprecision of the estimates, we recommend caution in interpreting the estimates from the [alp].” the standard error on the estimated coefficient on the independent contractor variable in katz and kreuger's regression based on the 2015 alp is more than 2.5 times larger than the standard error of the coefficient using the 2017 cws. 650. the coefficient for black independent contractors was negative and statistically significant at a 0.10 level (with a p value of 0.067). however, a significance level of 0.05 is more commonly used. 651. this analysis can also be found at: https://ora cfo.dc.gov/​blog/​self employment income drop. 652. “upwork study finds 59 million americans freelancing amid turbulent labor market,” upwork, december 8, 2021, https://www.upwork.com/​press/​releases/​upwork study finds 59 million americans freelancing amid turbulent labor market. full study available at https://www.upwork.com/​research/​freelance forward 2021. 653. e.o. 12866 section 6(a)(3)(c)(iii), 58 fr 51741. 654. see86 fr 1238. 655. see, e.g., rutherford, 331 u.s. at 724 (noting that the slaughterhouse involved in the case “had one hourly paid employee” prior to hiring the alleged independent contractors at issue); silk, 331 u.s. at 706 (describing the employer at issue as an individual named “albert silk, doing business as the albert silk coal co.,” who “owns no trucks himself, but contracts with workers who own their own trucks to deliver coal”). 656. sba, summary of size standards by industry sector, 2017, https://www.sba.gov/​sites/​default/​files/​2018 05/​size_​standards_​table_​2017.xlsx. the most recent size standards were issued in 2022. however, the department used the 2017 standards for consistency with the older economic census data. 657. the 2017 data are the most recently available with revenue data. 658. for this analysis, the department excluded independent contractors who are not registered as small businesses, and who are generally not captured in the economic census, from the calculation of small establishments. 659. 2017 census of governments. https://www.census.gov/​data/​tables/​2017/​econ/​gus/​2017 governments.html. 660. 5 u.s.c. 603(c). [fr doc. 2024 00067 filed 1 9 24; 8:45 am] billing code 4510 27 p

official website of the commonwealth of pennsylvania local, state, and federal government websites often end in .gov. commonwealth of pennsylvania government websites and email systems use "pennsylvania.gov" or "pa.gov" at the end of the address. before sharing sensitive or personal information, make sure you're on an official state website.
supported by a data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model. by chris hamby chris hamby has been investigating the lucrative business of out of network medical claims. the chairmen of two senate committees overseeing health policy, concerned about companies “padding their own profits” at the expense of patients, are looking into the practices of a data analytics firm that works with big insurers to cut payments to medical providers. the firm, multiplan, recommends what it says are fair payments for medical care, but the firm and the insurers can collect higher fees when payouts are lower. this business model could “result in an improper conflict of interest,” the chairmen of the two committees, ron wyden of oregon and bernie sanders of vermont, wrote in a letter to the firm’s chief executive that was released on tuesday. the senators called on multiplan to meet with the committees’ staffs to discuss an investigation last month by the new york times that found the firm’s pricing tools could leave patients with unexpectedly large bills when they see doctors outside their health plans’ networks. “our committees are engaged in ongoing legislative work to put a stop to practices by plan service providers that drive up health care costs for consumers while padding their own profits,” the letter to travis dalton, the multiplan chief executive, said. in a statement, multiplan said it was working with the senate committees “to address their questions and explain the cost and complexity patients can face” when choosing high priced care outside their networks. “we are committed to helping make health care transparent, fair and affordable for all,” the statement said. the committees’ inquiry reflects growing scrutiny of the new york based firm, which has largely remained out of the limelight even as it has staked out a dominant position in a lucrative corner of health care.

 supported by local governments often face extra fees when employees get out of network medical care, but some don’t track the insurance charges or even know about them. by chris hamby lawmakers are zeroing in on multiplan, a firm that has helped insurers cut payments while sometimes leaving patients with large bills. by chris hamby multiplan has helped big health insurers make billions by reducing reimbursements for medical bills, but its business model is now being questioned. by chris hamby a data analytics firm that helps insurers collect big fees while leaving some patients with unpaid bills has been summoned to explain its business model. by chris hamby a data analytics firm has helped big health insurers cut payments to doctors, raising concerns about possible price fixing. by chris hamby have your out of network insurance bills skyrocketed? chris hamby, an investigative reporter for the times, may have an explanation. by josh ocampo a little known data firm helps health insurers earn more when less of an out of network claim gets paid. patients can be on the hook for the difference. by chris hamby, claire hogan and james surdam a private equity backed firm has helped drive down payments to medical providers, drive up patients’ bills and earn billions for insurers.