348 APPENDIX 3 



[Alternative Purchase Price Readjustment Provisions] 



I. [For use in cases wherein there is to be no profit] 



(b) Basis for Readjustment. The Vendor represents that the purchase price (i) 

 w^as computed by estimating the cost of manufacturing and supplying the subject 

 articles and (ii) includes no profit. Subsequent to final delivery and prior to final 

 payment hereunder, the Vendor shall submit to the Contracting Officer a state- 

 ment, itemized and substantiated as required by the Contracting Officer, of its 

 actual costs hereunder as determined by an accounting method consistent with 

 the principles approved in the War Department-Navy Department booklet en- 

 titled "Explanation of Principles for Determination of Costs under Government 

 Contracts." The Vendor shall also preserve its records and accounts for a period 

 of four years from the date of final delivery for any audit deemed necessary by 

 the Government. 



(c) Adjustment Downward. If upon the basis of such statement or any such 

 audit the Contracting Officer determines that said actual costs have been less than 

 the purchase price, (i) the purchase price shall be reduced to the amount of said 

 actual costs and (ii) the Vendor shall return to the Government any payments 

 in excess of said actual costs. 



(d) Cost Escape. Notwithstanding any other provision hereof, when and if 

 said actual costs incurred or obligated in manufacturing or supplying the subject 

 articles equal the purchase price, the Vendor shall not be required to incur or 

 obligate further said actual costs hereunder unless and until the Government shall 

 first agree in writing to an appropriate increase in the purchase price. 



II. [For use in cases wherein a profit is to be provided] 



(b) Basis for Readjustment. The Vendor represents that the purchase price is 

 the sum of (i) the total estimated cost of the subject articles in the amount of 



dollars ($ ) plus (ii) a fixed profit of dollars ($ ), 



an amount equal to per cent ( %)* of said total estimated cost. Subse- 



quent to final delivery and prior to final payment hereunder, the Vendor shall 

 submit to the Contracting Officer a statement, itemized and substantiated as re- 

 quired by the Contracting Officer, of its actual costs hereunder as determined by 

 an accounting method consistent with the principles approved in the War Depart- 

 ment-Navy Department booklet entided "Explanation of Principles for Deter- 

 mination of Costs under Government Contracts." The Vendor shall also preserve 

 its records and accounts for a period of four years from the date of final delivery 

 for any audit deemed necessary by the Government. 



(c) Adjustment Downward. If upon the basis of any such statement or any 

 such audit the Contracting Officer determines that the Vendor's actual profits 

 hereunder have exceeded said fixed profit of dollars ($ ), (i) the 

 purchase price shall be reduced to an amount equal to the sum of said actual 

 costs plus said fixed profit and (ii) the Vendor shall return to the Government 

 any payment in excess of said amount. 



(d) Cost Escape. Notwithstanding any other provision hereof, when and if 



* Never to exceed seven per cent (7%) of said total estimated cost, exclusive of the 

 fixed profit. 



