DATE LAST REVISED: 8/9/99
LOCKHEED MARTIN AERONAUTICS COMPANY
SUPPLEMENTAL TERMS AND CONDITIONS
COST PLUS INCENTIVE FEE
These Supplemental Terms and Conditions apply to LM Aero- Palmdale Cost-Plus Incentive Fee
Purchase Orders and supplement the Contract Terms and Conditions Applicable to U.S.
Government Programs Governed by FAR
1.
ORDER OF PRECEDENCE
In the event of any inconsistency between the provisions of these Supplemental Terms and
Conditions, and LMSW's Contract Terms and Conditions, the provisions of this Supplement shall
prevail.
2.
STATEMENT OF WORK
The Statement of Work to which these Supplemental Terms and Conditions apply shall be as
specified by the applicable Contract.
3.
FUNDING
If Contracts to which this Supplement applies are not fully funded, the funds allotted to and available
for payment to Seller under such Contract and the limit of Buyer's obligation thereunder, unless such
funding is increased, shall be as specified by the applicable Contract.
4.
ALLOWABLE COST, INCENTIVE FEE, AND PAYMENT
(a) Payment. - For the performance of Contracts to which this Supplement applies, Buyer shall pay
to Seller:
(1) The cost thereof determined by Buyer or the Government to be allowable (hereinafter
referred to as "allowable cost") in accordance with the applicable Contract and Subpart 31.1
of the Federal Acquisition Regulation (FAR) in effect on the date of such Contract; and
(2) Such fee, if any, as may be provided for in such Contract, these terms and conditions, and
FAR 52.216-10 as modified by the following:
(i)
"Government" and "Contracting Officer" shall be "Buyer," "Contractor" shall be "Seller."
(ii) The Performance Criteria shall be as detailed on the Schedule. The Fees and Costs
shall be as follows:
Target Cost (TC): $_____________
Target Fee (TF): $_____________
Fee Payable (FP) when Total Allowable Cost is less than TC: FP = TF
+ _________ %
Fee Payable (FP) when Total Allowable Cost is greater than TC: FP =
TF - _________ %
Minimum Fee: _________ %
Maximum Fee: _________ %
(b) Invoicing.
(1) Buyer shall make payments to Seller when requested as work progresses, but not more
often than monthly, in amounts approved by Buyer upon submittal by Seller to Buyer of a
proper invoice, in such form and reasonable detail as Buyer may require, and supported by
a statement of the claimed allowable costs for performing such Contract. Such payment
shall be made promptly, except as otherwise provided in the Contract, subject to the Audit
paragraph below and the RELEASE PROVISIONS AND CLOSURE REQUIREMENT of this
Supplement.
(2) The original and two (2) copies of each invoice covering allowable costs bearing the
following certification and certified by an officer or other responsible official of Seller
authorized by it to certify such statements, shall be submitted to Buyer for approval.
"I certify that the above statement has been prepared from the books and records of the
above named Supplier in accordance with the Contract and to the best of my knowledge and
belief, is correct, and that all the costs are allocable and properly chargeable to the
Contract."
(c) Reimbursing costs.
(1) For the purpose of reimbursing allowable costs (except as provided in subparagraph (2)
below, with respect to pension, deferred profit sharing, and employee stock ownership plan
contributions, the term "costs" includes only:
(i)
Those recorded costs that, at the time of the request for reimbursement, Seller has paid
by cash, check, or other form of actual payment for items or services purchased directly
for the Contract;
(ii) When Seller is not delinquent in paying costs of contract performance in the ordinary
course of business, costs incurred, but not necessarily paid, for (A) materials issued
from Seller's inventory and placed in the production process for use on the Contract, (B)
direct labor, (C)direct travel, (D) other direct in-house costs, and (E) properly allocable
and allowable indirect costs, as shown in the records maintained by Seller for purposes
of obtaining reimbursement under Government contracts, and
(iii) The amount of progress payments that have been paid to Seller's subcontractors under
similar cost standards.
(2) Seller's contributions to any pension or other post retirement benefit, profit-sharing or
employee stock ownership plan funds that are paid quarterly or more often may be included
in indirect costs for payment purposes: Provided, that Seller pays the contribution to the fund
within 30 days after the close of the period covered. Payments made 30 days or more after
the close of a period shall not be included until Seller actually makes the payment. Accrued
costs for such contributions that are paid less often than quarterly shall be excluded from
indirect costs for payment purposes until Seller actually makes the payment.
(3) Costs incurred by Seller by reason of its use and occupancy of facilities furnished pursuant
to facilities contracts authorized for use in connection with Contracts to which this
Supplement Applies insofar as they are allocable to the performance of such Contracts shall
be allowable costs except to the extent that Seller is reimbursed for such costs under other
contracts or to the extent that provision is made apart from applicable Contracts or other
contracts for the payment of such costs by the Government or otherwise than by Seller, and
except to the extent that such costs are included in Seller's overhead.
(4) Appropriate credit shall be given to Buyer for disposal of scrap and salvage and any surplus
parts or material. Such credit may be applied to Seller's overhead, to the extent Seller's
recoverable scrap program is approved by the Contracting Officer. Buyer shall not be
charged for excessive procurement of material and parts.
(5) There shall be included as allowable indirect costs such overhead rates as may be
established of Seller and the cognizant Government Agency in accordance with the
principles of the Federal Acquisition Regulation and applicable FAR Supplement. Pending
establishment of final overhead rates for any period, Seller shall be reimbursed at billing
rates approved by the cognizant Government Agency, which billing rates may be revised
from time to time subject to such approval and subject to appropriate adjustment when the
final rates for that period are established.
(6) The restriction on payment more frequently than monthly and the requirement of prior
payment for items or services purchased directly for the Contract shall not apply where
Seller is a small business concern.
(7) Any statements in specifications or other documents incorporated in Contracts to which this
Supplement applies by reference designating performance of services or furnishing of
materials at Seller's expense or at no cost to Buyer shall be disregarded for purposes of
cost-reimbursement under this Article.
(d) Disallowance.
(1) Notwithstanding final payment under Contracts to which this Supplement applies, if any
amount actually paid by Buyer to Seller is disallowed to Buyer by Government Auditors, the
cognizant Contracting Officer or by the General Accounting Officer, as an item of cost under
the prime contract, or if Buyer is required because of any action of the Government to refund
or credit to the Government any amount with respect to an item of cost for which it has
reimbursed Seller, including any amounts offset pursuant to FAR 52.203-7 or the AntiKickback Act (41 USC 5(A-58)), Seller shall, on demand made by Buyer after such
disallowance or after Buyer shall have made such refund or given such credit, promptly
repay to Buyer the amount which Buyer has paid to Seller with respect to any such item or
items; provided, however, that to the extent such disallowance or such refund or credit is the
result of the performance by Seller of work authorized by Buyer but not authorized by the
prime contract, Seller shall not be required to repay Buyer the amount which Buyer has paid
to Seller with respect to the performance of such work. In the event Buyer shall recover any
amount so disallowed or so refunded or credited by it to the Government with respect to any
such item or items, Buyer shall pay the amount of such recovery to Seller if the same shall
not theretofore have been repaid to Seller.
(2) In the event that any department, agency or representative of the Government disallows any
cost granted under Contracts to which this Supplement applies, and in Buyer's opinion it
appears that such disallowance is inequitable and that such cost should be considered
allowable, then Buyer agrees to negotiate with such department, agency or representative of
the Government to obtain the reinstatement of such costs as allowable under the terms of
the applicable Contract..
(e) Audit.
At any time or times before final payment, Buyer or the Contracting Officer may have Seller's
invoices and statements of cost audited. Any payment may be (1) reduced by amounts found by
Buyer or the Contracting Officer not to constitute allowable costs or (2) adjusted for prior
overpayments or underpayments.
5.
ADDITIONAL FAR REQUIREMENTS FOR UNITED STATES GOVERNMENT PROGRAMS
The following FAR clauses are deleted from Article 36. (b) of the MMC Supplemental Terms and
Conditions Applicable to Contracts Issued Under U.S. Government Contracts:
FAR CLAUSE
TITLE
52.245-2
Government Property (Fixed Price Contracts)
52.245-17
Special Tooling (Fixed Price)
52.249-2
Termination (Fixed Price)
52.249-8
Default - Fixed Price Supplies and Services
The following FAR clauses are deleted from Article 36. (b) of the 3333MMC Supplemental Terms
and Conditions Applicable to Contracts Issued Under U.S. Government Contracts:
FAR CLAUSE
52.222-2
52.232-20
52.232-22
6.
TITLE
Payment for Overtime Premiums (No overtime is authorized for
Contracts to which this Supplement applies unless specifically agreed
upon and incorporated into the Contract to which it applies.
Limitation of Cost (Applies only to fully funded Contracts, except in
(b)(1) substitute 90 days for 60 days as the advance reporting period.)
Limitation of Funding (Applies only to incrementally funded Purchase
Orders, except in (c)(1) substitute 90 days for 60 days as the advance
reporting period.)
52.244-2
Subcontracts (Cost Reimbursement and Letter Alternate Contracts)
52.245-5
Government Property (Cost-Reimbursement) (Paragraph (g) is
deleted in its entirety and the following is substituted therefore: "(g)
Risk of Loss. Unless otherwise provided in this Contract, Seller upon
acquisition of any Government property, assumes the risk of, and
shall be responsible for, any loss thereof, or damge thereto, except for
reasonable wear and tear and except to the extent that such property
is consumed in the performance of this Contract.)"
52.246-3
Inspection of Supplies - Cost Reimbursement
52.246-8
Inspection of Research and Development - Cost Reimbursement (If
the Purchase Order is for Research and Development)
52.246-16
Responsibility for supplies
52.249-6
Termination (Cost Reimbursement) (Except that in paragraph (d) "1
year" is changed to "6 months," in paragraph (k) "90 days" is changed
to "45 days," and paragraph (i) is deleted.
52.249-14
Excusable Delays
MANAGEMENT REPORTING
(a) Seller shall provide monthly (unless otherwise specified by the applicable Contract) status
reports in a form acceptable to Buyer (as set forth in Supplier Data Requirements List (SDRL) or
Statement of Work (SOW) or as otherwise set forth by the Contract). These reports shall indicate
progress in terms of planned versus actual accomplishment of specific work tasks and shall be in
sufficient depth to highlight variances from the program plan (in technical, quality, schedule, cost,
etc. aspects) at the earliest possible date. This requirement is not intended to duplicate any
tasks required under the SOW.
(b) Each report shall also include an analysis of all significant variances which shall include the
effect of the variance on other program work elements and Seller's proposed plan for recovery to
achieve an on-schedule status, submitted and signed by Seller's executive management stating
that he/she has reviewed these reports in depth and agrees that they show the current status of
the program.
(c) If at any time it appears to Seller that the delivery Schedule cannot be met, Seller shall notify
Buyer as soon as possible as to the cause or causes thereof (including late or deficient
Government Furnished Equipment (GFE) or Buyer Furnished Equipment), action being taken to
remove such cause or causes, when On-Schedule status will be achieved. Notification under this
Article shall not limit Buyer's rights under the TERMINATION-STOP WORK Article nor relieve
Seller from any requirement contained in Contracts issued by Buyer.
7.
CHANGES
Delete the first sentence of the subparagraph (b) of Paragraph 11., Changes", of Buyer's Contract
Terms and Conditions, form "BASTC", and replace with the following:
"If any such change causes an increase or decrease in the estimated cost of, or the time required for,
performance of an part of the work under such Contract, whether or not changed by any such order,
or otherwise affects any other provision of such Contract, an equitable adjustment shall be made in
(1) the estimated cost or delivery schedule, or both, (2) the amount of any fee, and (3) other
provisions of the Contract as may be so affected, and the Contract shall be modified in writing
accordingly."
8.
SPECIAL TEST EQUIPMENT
(a) Seller may be required to acquire or fabricate Special Test Equipment as defined in paragraph
(a) of the clause set forth in FAR 52.245-18, but the items of such equipment to be so acquired
or fabricated have not yet been specified. Before acquiring or fabricating any such Special Test
Equipment or components thereof, having an item acquisition cost of $1,000 or more, Seller
shall give Buyer forty-five (45) days prior notice thereof including a full description of all such
items, a list of alternate items that could be used, and such further information as specified in
subparagraph (b) of the FAR clause referenced herein above.
(b) The aforesaid notice will be processed as indicated in paragraph (b) of the aforesaid FAR
clause. Within the notice period specified herein above, Buyer shall inform Seller of the election
to furnish the Special Test Equipment or any components thereof or authorize Seller to acquire
or fabricate such equipment or components. Buyer's obligation with respect to delivery, and the
limitations thereon, in the event it elects to furnish the Special Test Equipment or components,
are further indicated in paragraph (c) of the FAR clause referenced herein above.
(c) If Buyer or the Government so furnished Special Test Equipment or any components thereof,
any provision of Purchase Orders to which this Supplement applies affected thereby or by (i) the
delayed delivery of such equipment or components, (ii) the delivery thereof in a condition not
suitable for its intended use (except "as is" property), or (iii) a subsequent decrease or
substitution in whole or in part of such equipment or components, shall be equitably adjusted in
accordance with the CHANGES Article.
(d) The provisions of subparagraphs (d) and (e) of the FAR clause referenced herein above shall
apply to Contracts to which this Article applies, except that notification with respect to lower-tier
subcontracts shall be furnished to Buyer, who will appropriately advise its customer pursuant to
the obligations of its Prime Contract.
(e) Unless otherwise provided in Contracts to which this Supplement applies, Seller's use and
responsibility for Government owned Special Test Equipment shall be in accordance with the
GOVERNMENT PROPERTY Article herein.
9.
DELIVERY PRIOR TO QUALIFICATION
(a) This Article is applicable only if Seller has responsibility for design of the Work covered by
applicable Contracts to which this Supplement applies, and such Work is to be Qualification
Tested. In certain circumstances, it may become necessary for Buyer to accept delivery of items
prior to complete qualification. If such delivery becomes necessary, Seller is to accomplish any
repair, replacement, or retrofit of such items required as a result of qualification failure at no
additional fee to Buyer or the Government.
(b) Delivery to Buyer shall be made in accordance with the applicable delivery schedules. Where
Buyer has accepted delivery of items prior to complete qualification, retrofit shall be made in
accordance with the negotiated retrofit schedules and Seller shall not be penalized for late
delivery to the original delivery schedule.
10. RELEASE PROVISIONS AND CLOSURE REQUIREMENTS
(a) Final payment.
(1) Seller shall submit a completion invoice, designated as such, promptly upon completion of
the work, but no later than nine (9) months (or longer, as Buyer may approve in writing) from
the completion date. Upon approval of that invoice, and upon Seller's compliance with this
Article and all terms of the applicable Contract, Buyer shall promptly pay any balance of
allowable costs and that part of the fee (if any) not previously paid.
(2) Seller shall pay to Buyer any refunds, rebates, credits, or other amounts (including interest,
if any) accruing to or received by Seller or any assignee under the applicable Contract, to
the extent that those amounts are properly allocable to costs for which Seller has been
reimbursed by Buyer. Reasonable Expenses incurred by Seller for securing refunds,
rebates, credits, or other amounts shall be allowable costs if approved by Buyer. Before final
payment under the applicable Contract, Seller and each assignee whose assignment is in
effect at the time of final payment shall execute and deliver:
(i)
An assignment to Buyer, in form and substance satisfactory to Buyer, of refunds,
rebates, credits, or other amounts (including interest, if any) properly allocable to costs
for which Seller has been reimbursed by Buyer under the Contract; and
(ii) A release discharging the Government and Buyer, its officers, agents, and employees
from all liabilities, obligations, and claims arising out of or under the 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 Seller to
third parties arising out of the performance of the Contract; provided, that the claims are
not known to Seller on the date of the execution of the release, and that Seller gives
notice of the claims in writing to Buyer within five (5) years following the release date or
notice of final
(C) Claims for reimbursement of costs, including reasonable incidental expenses,
incurred by Seller under the patent clauses applicable to the Contract, excluding,
however, any expenses arising from Seller's indemnification of Buyer or the
Government against patent liability.
(b) Seller agrees that any refunds, rebates or credits (including any interest thereon) accruing to or
received by Seller or any assignments which arise out of the performance of Contracts to which
this Supplement applies and on account of which Seller has received reimbursement shall be
paid by Seller to Buyer.
(c) In addition to the release and the assignment required by paragraph (a) herein above, Seller
shall, prior to final payment, (i) comply with the provisions of the Patent Rights clause and the
Royalty Reporting clause, unless such clauses do not apply to the Contract, and (ii) submit the
following:
(1) An invoice which complies with the ALLOWABLE COST, INCENTIVE FEE AND PAYMENT
Article and is clearly labeled "Final Invoice;"
(2) A Cumulative Claim and Reconciliation;
(3) Inventory schedules required by FAR 52.245-5, "Government Property (CostReimbursement) and an inventory of Buyer property in such form as Buyer may direct;
(4) Any other certificate, report, or document called for in the applicable Contract and not
previously submitted.
(5) A letter setting forth the manner in which Seller complies with Security Requirements (if
applicable).
(d) All items required to be sent to Buyer by paragraphs (a) and (c) of this Article shall be addressed
to Buyer's authorized Purchasing Representative or closure activity representative designated in
writing by Buyer.