APPENDIX 3 349 



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

 articles, plus said fixed profit, 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 pur- 

 chase price, but shall fulfill its obligations hereunder by delivering the subject 

 articles in the degree of completion at that time. 



ARTICLE 4. Accelerated Termination. At any time prior to final delivery, the 

 Contracting Officer may terminate the work hereunder by giving to the Vendor 

 seven (7) days' notice in writing. Upon receipt of such notice, the Vendor shall 

 exercise all reasonable diligence to obtain the cancellation of its outstanding com- 

 mitments hereunder. If such termination causes a material decrease in the amount 

 or character of the work hereunder, or in the time required for its performance, 

 an equitable adjustment in the amount of the purchase price shall be made, and 

 such equitable adjustment shall include an amount reflecting ** all reasonable 

 cancellation charges and all reasonable losses upon outstanding commitments 

 which the Vendor is unable to cancel. If the parties fail to agree upon such adjust- 

 ment, the dispute shall be determined as provided in Article 13; Provided, That 

 the Government shall nevertheless pay the Vendor any undisputed balance due 

 it hereunder. 



ARTICLE 5. Subcontracts. No subcontract executed hereunder shall provide 

 for (i) payment on a cost-plus-a-percentage-of-cost basis or (ii) the payment of a 

 fixed fee in excess of seven per centum of the estimated cost of the subcontract, 

 exclusive of the fee. The Vendor shall not enter into subcontracts involving any 

 research or development in connection with the subject articles without obtaining 

 the written approval of the Contracting Officer as to the substance and form 

 thereof. The Vendor shall refer each prospective subcontract that might involve 

 such research or development to the Contracting Officer or an authorized repre- 

 sentative, who shall determine whether or not such research or development is 

 involved. 



ARTICLE 6. Default of the Vendor. In the event of the Vendor's default, the 

 Government may procure the subject articles from other sources and charge to 

 the Vendor any excess cost occasioned the Government thereby, except where such 

 delay is due to unforeseeable causes beyond the control and without the fault or 

 negligence of the Vendor. If public necessity requires the use of subject articles 

 whose rejection would be justified, payment therefor shall be made at an equita- 

 ble reduction in the purchase price. 



ARTICLE 7. Purchase of Facilities. [For use only in relevant cases.] 

 In addition to paying the purchase price, the Government shall reimburse the 

 Vendor, upon the submission of public vouchers supplied by the Government and 

 approved by the Contracting Officer, for the actual cost to the Vendor in an 

 amount not exceeding dollars ($ ) of necessary equipment or 



facilities especially acquired for the manufacture of the subject articles. The 

 Vendor represents that the purchase price includes no charge for the acquisition 

 or depreciation of any equipment or facilities for the cost of which reimburse- 



** For profit contracts insert "a reasonable profit." 



