DOCUMENT NO. THAAD0121/1/05

Prime Contract MI0100012, MEADS Risk Reduction Effort

Full Text Clauses

Article 10, Subcontracts (Sep 2001) (Applicable to all purchase orders/subcontracts)

10.1Unless otherwise specified in the Contract, the Contractor shall impose on Subcontractors listed in Annex J the same conditions and requirements, where they are appropriate, as are included in this Contract, unless the object of the subcontracts is a commercial item or service. Should the Contractor in any instance not impose the same conditions and requirements, he shall report it to the Contracting Authority at least 10 calendar days prior to planned award date, provide rationale and obtain approval prior to award. This approval shall not relieve the Contractor of any assigned responsibility. Contractor and Subcontractors shall comply with national rules and regulations with regard to the work performed in that country.

10.2It is the Contracting Authority's requirement that second and lower level subcontracts shall be subjected to competitive tendering between competent bidders to the maximum extent possible, where reasonable and practical.

10.3On request, the Contractor shall make available to the Contracting Authority copies of subcontracts and supporting documents (e.g. copies of offers made by Subcontractors).

10.4The Contractor shall remain responsible for performance of the requirements of the Contract notwithstanding any failure to perform by subcontractors except as may be excused by other provision of this Contract.

10.5The 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 Contracting Authority of any items or process (including computer software) made or furnished by the Subcontractor under this Contract.

10.6The Contractor states to the Contracting Authority that he or his Subcontractors are not subject to any licenses or agreements that restrict his freedom to disclose information or permit its use.

The Contractor or his Subcontractors shall not enter into any new agreements that will result in restrictions without the prior approval by the Contracting Authority.

10.7If the Contractor/Subcontractors intend to award a Fixed Price contract, they must notify this intention to the Contracting Authority in due time in order to allow price investigation. This notification is required for contracts above 100,000 equivalent USD.

Article 17, Prices in Subcontracts (Sep 2001). (Applicable to all purchase orders/subcontracts)

17.1The subcontract price will be established in accordance with national price regulations and practices relating to government contracts of this kind in those countries.

17.2To the extent that national price regulations and practices leave pricing to free arrangements between the contracting parties, the Contractor undertakes to include in subcontracts terms which are not less favorable to the Contracting Authority than those contained in this Contract.

Article 18, Taxes, Customs, Duties and Similar Dues (Sep 2001). (Applicable to all purchase orders/subcontracts)

18.1 The Contractor undertakes to make as far as it is cost-effective full use of any legal provisions contained in the national laws concerning the waiving, reduction or reimbursement of taxes and customs duties to the benefit of the MEADS Program.

18.2In the event the Contractor cannot be relieved and a waiver cannot be obtained for taxes, and customs duties, set forth below and charged to the Contractor/Subcontractors in accordance with the applicable national laws and regulations, Art. 16.2 will apply. The Contractor undertakes to ensure that appropriate records are kept of the taxes, customs and duties set out below:

a.Sales Taxes/Value Added Taxes;

b.Customs, Duties, and Similar Dues.

18.3Cost of appeal against any decision of the Tax or Custom Authorities will be reimbursed only if previously agreed upon by amendment to the contract in accordance to Art. 16.2 If the appeal has been agreed by amendment to the Contract, the Contracting Authority shall be bound to the outcome of such an appeal. The time to give notice of such an appeal shall be observed.

18.4Where the Contractor fails by intentional act or gross negligence to meet his obligations under Articles 18.2 and 18.3, or where an appeal in accordance with Article 18.3 has become necessary for reasons for which the Contractor is responsible, any financial liability resulting therefrom will be borne by him.

18.5The Contractor shall permit the examination, by representatives of the national audit agencies on behalf of the Contracting Authority, of any records or documents in relation to taxes, customs and duties to establish whether the obligations imposed in Articles 18.2 and 18.3 have been complied with.

Article 20, Capital Investments (Sep 2001). (Applicable if you will be making any capital investments under this contract)

20.1Capital Investments are facilities such as machines, equipment and buildings provided by the Contractor and/or his Subcontractors at their own expense, for the purpose of creating additional facilities which are not Special To Type, and which are not replacement of consumed assets needed to meet the Contracting Authority's requirements. It is not the intent of the Contracting Authority to approve the construction of buildings and/or manufacturing of plants.

20.2Capital investments which are necessary for the performance of the work under the Contract and which the Contractor wishes to include under Article 20.5 below must not be made by the Contractor and/or his Subcontractors before the Contracting Authority has given his approval. If the Contractor wishes to create fixed capital assets (e.g. buildings) he shall advise in his request for approval whether these or similar assets exist in any of the participating countries.

20.3Capital investments which will be approved will be reported in Annex L. The record is to be updated if occasions demand.

20.4The costs of capital investments shall be charged proportionately to this Contract in the Contractor's and/or his Subcontractor's overhead accounts, in accordance with the depreciation rates generally recognized in accordance with national accounting conventions for government contracts, according to the service life of use.

20.5Subject to the yearly funding limitations set in Article 23.3, in case of termination and/or discontinuance of funding of the Contract, the unrecovered depreciation allowances with respect to capital investments approved under Article 20.2 shall be reimbursed without profit and interest as a charge to the residual claim in accordance with Articles 32, and 14.2 but excluding any allowances claimable under national tax laws.

20.6The Contractor shall not be entitled to reimbursement of unrecovered depreciation allowances according to the Article 20.5 above, if:

20.6.1He can use the capital investment to fulfill orders already placed at the date of termination of contract by another customer;

20.6.2He sells, after prior consent by the Contracting Authority, the capital investment at a price which covers the unrecovered amount. In the event that the net recovery from such sale is less than the amount of unrecovered depreciation, than he shall be reimbursed by the Contracting Authority the difference between such amounts without profit and interest;

20.6.3In the event that the Contractor sells, or makes use of such capital investment for any order other than MEADS, after payment of the unrecovered depreciation he shall reimburse the Contracting Authority proportionately the depreciation proceeds recovered under such sales or orders.

20.7Title to the capital investment, the value of which has been fully reimbursed by the Contracting Authority with respect to the Article 20.5, shall be transferred by the Contractor to the Contracting Authority at the latter's request free of any third party rights.

Article 21, Ascertainment of Costs, Price Investigation, Accounts, Examination of Records, and Discretionary Audit (Sep 2001). (Applicable to all purchase orders/subcontracts)

21.1The Contractor shall grant the Contracting Authority the right to ascertain costs and investigate prices through the relevant National Audit Services. The Contractor shall ensure that proper accounts and records are kept of the cost of the work and of all expenditures or commitments made by the Contractor or authorized representatives in connection therewith and of invoices, receipts and vouchers relating thereto. Such accounts, records, invoices, receipts and vouchers shall at all reasonable times be open to audit and inspection as required by the Contracting Authority utilizing the relevant national organizations in the Contractor's or Subcontractor's country. The Contractor shall furnish the national organizations and its authorized representatives with all such information as it may, from time to time, require with reference to such accounts, records, invoices, receipts and vouchers. The Contractor shall not, without the consent of the Contracting Authority, dispose of any such accounts, records, invoices, receipts and vouchers but shall preserve and keep the same available for audit and inspection in accordance with applicable national laws, but at least until Contract close-out (Article 67.)

21.2The Contractor shall comply with the relevant country’s accounting and national pricing regulations and practices, of the country where the work package is allocated. Any audit or price assessment will be conducted by the National Audit Services on behalf of the Contracting Authority. Ascertainment of costs, price investigation and pricing shall be carried out in accordance with the National Price Regulations and Practices applicable in the Participating Governments. Ascertainment of costs and price investigation may be undertaken:

a.with respect to work performed within the Federal Republic of Germany by Bundesamt fuer Wehrtechnik und Beschaffung, Koblenz;

b.with respect to work performed within the Republic of Italy by Ministero della Difesa - DGAT, Roma;

c.with respect to work performed within the United States by the Defense Contract Audit Agency;

d.with respect to work performed in countries other than those of the Participating Governments by authorities which the Contracting Authority will name to the Contractor.

21.3The right of the National Price Auditing Authority acting on behalf of the Contracting Authority to ascertain costs and investigate prices shall be included in any subcontracts and subcontracts' amendments, in accordance with Article 10. All sub-contracts shall contain the following clause: "If during a price investigation of the prices of the Contractor, the National Price Auditing Authority needs cost or pricing information from the sub-contractors, this information may be directly furnished to the relevant National Price Auditing Authority".

21.4All detailed rate information disclosed during the conduct of an audit shall remain with the national audit authorities.

21.5Without prejudice to the right of the Contracting Authority to audit the Contractor at any time, during the Risk Reduction Effort the Contractor will be audited after one year from Contract award and before Contract close-out.

Article 28, Intellectual Property Rights (Sep 2001). (Applicable to all purchase orders/subcontracts)

28.1The Contractor warrants that the Personnel employed by the Contractor who undertake work under the Contract are employed on terms which do not prohibit the Contractor from using copyright, patents or other intellectual proprietary rights with respect to any work produced in the course of their employment with the Contractor. This requirement will be flowed down to the applicable subcontractors.

28.2The Contractor shall grant the Contracting Authority a non-exclusive transferable right free of charge to:

a.use and to have used on his behalf for the MEADS Program, and

b.authorize the Governments of the Federal Republic of Germany, the Republic of Italy and the United States, separately or jointly, to use and have used on their behalf for the MEADS Weapon System Program, all domestic and foreign patents, patent applications, designs, processes, software, data and information owned or controlled by the Contractor and used in or arising from the undertaking of the work under the Contract, except for such items which are the proprietary property of the Contractor or subcontractors at any tier.

28.3The Contractor shall provide all necessary information, documentation and assistance necessary for the exercise of the Contracting Authority's and participating Government rights under Article 28.2.

28.4 Should the Contracting Authority or one of the Governments of the Federal Republic of Germany, the Republic of Italy and the United States wish a third party to undertake work employing the Contracting Authority's or the Participating Government's right in accordance with the Articles of the Contract, the Contracting Authority or the Participating Government shall, before authorizing such work, advise the Contractor of their intentions. The Contracting Authority and Contractor shall agree to a fair and reasonable price for the transfer of all documentation and information and provision of assistance necessary for a third party to undertake the Contracting Authority's or Participating Governments requirements.

28.5When authorizing a third party to undertake such work the Contracting Authority or Participating Government shall impose on the third party the obligation to use the information and documentation provided for the sole purpose of carrying out the work so authorized. The third party may not use this information for any other purpose; any deviation from these provisions shall be subject to special agreement with the Contractor.

28.6Subject to the provisions of this Article and Article 51, and as specified in this Contract, the Contractor shall own title, subject to the reservation of rights set forth in paragraph 49.1.1, to all Project Foreground Information generated in the performance of the Contract.

28.7If the Contractor decides not to apply for a patent for a project invention, the Contractor shall provide the information related to the project invention to the Contracting Authority so that the participating Governments can apply for a patent on that project invention.

Article 33, Ownership and Vesting (Sep 2001). (Applicable to all purchase orders/subcontracts)

33.1Within the meaning of this Article, property, the title to which will pass to the Contracting Authority, consists of all items or services (including possible material) which the Contractor allocates as a direct cost for the performance of the Contract.

33.2Insofar as items are designated, created or manufactured by the Contractor, title in these items shall vest in the Contracting Authority as soon as the services or materials or parts are completed.

33.2.1Insofar as items are procured by the Contractor, title shall vest in the Contracting Authority as soon as they are allocated for the performance of the Contract. The Contractor shall ensure by payment of the purchase price that any rights held by third parties with respect to the above items are extinguished as soon as possible.

33.2.2In the event that title to any of these items has not yet been transferred to the Contractor by third parties, the right of future title to item shall also vest in the Contracting Authority.

33.2.3Title to property as provided for in this Article shall not vest in the Contracting Authority so long as he has not met his obligations to pay for the items concerned in accordance with the provisions of the Contract.

33.2.4If the Contracting Authority's ownership of any items is lost owing to the combination or incorporation or, if the Contracting Authority becomes the co-owner of the unified item, the Contractor shall transfer his ownership or co-ownership of such item to the Contracting Authority.

33.2.5Actual hand-over to the Contracting Authority necessary for transferring title to property or right of future title shall be replaced by the Contractor taking charge of such items for the Contracting Authority.

33.3The Contractor shall maintain the items or services segregated from his own stocks and duly marked in accordance with their approved property management system as property of the Contracting Authority. Any costs thereby incurred will be allocated under this Contract in accordance with the Contractor's established national rules, regulations and practices in respect to the method of cost allocation for Government work.

The Contractor shall ensure that the items are registered by his sub-contractors in accordance with their approved property management system with the dates of their arrival or completion of manufacture. The Contractor shall ensure that such records and other supporting documents are made available to the Contracting Authority or his authorized representative. All handling and marking of items in which the Contracting Authority/Governments have a property interest within the framework of this Contract will be handled in accordance with the Contractor's approved Property Management System.

33.4The Contractor transfers to the Contracting Authority any rights which he may have against third parties with respect to deliveries of aforesaid items for which the Contractor has made advance payments, and has been reimbursed in accordance with the payment provisions of the Contract. The respective contract for these deliveries and their value are to be registered in a "list of transferred rights in deliveries" or any suitable accounting record. The list or record is to be submitted to all persons authorized by the Contracting Authority with a written confirmation that no other advance payments have been made for such items which are to be supplied to the Contracting Authority or which are to be used for the manufacture of items to be supplied to the Contracting Authority.

33.5Insofar as national administration regulations contain provisions which depart from those specified in Articles 33.1 to 33.4, the parties may agree to replace the provisions laid down in this Article with the national administration regulations.

33.6 The above principles shall not apply to subcontracting below the second level, relative to the Contractor, except in special cases where the Contracting Authority may determine otherwise and due notice has been given in writing to the Contractor.

33.7 In the event of the rejection of any deliverable item or of any materials or things otherwise destined for the Contracting Authority, title to said item, material so rejected shall forthwith revert to the contractor. This fact will be substantiated by removal of markings, labels and/or book entries to the contrary.

33.8 In the event of a termination of the contract by the Contracting Authority under Article 32, title in any deliverable item which has not been accepted by the Contracting Authority and in any materials and things which have not been incorporated in an item which has been accepted, shall vest in the Contractor from the date that termination takes effect.