Defense Federal Acquisition Regulation Supplement; U.S. European Command Supplement

Federal RegisterJun 20, 1996

Ask Donna

What actually matters in this document.

Text

DEPARTMENT OF DEFENSE

48 CFR Parts 216, 222, 225, 227, 228, 229, 232, 233, 236, 246, and

252

[DFARS Case 94-D001]

Defense Federal Acquisition Regulation Supplement; U.S. European

Command Supplement

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

-----------------------------------------------------------------------

SUMMARY: The Department of Defense is proposing revisions to the

Defense Federal Acquisition Regulation

[[Page 31491]]

Supplement (DFARS) to incorporate certain text and clauses presently

contained in the U.S. European Command (EUCOM) Supplement. The proposed

rule generally applies only to requirements which will be performed

wholly or in part in a foreign country.

DATES: Comments on the proposed rule and/or the associated information

collection requirement should be submitted in writing to the address

shown below on or before August 19, 1996, to be considered in the

formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to:

Defense Acquisition Regulations Council, ATTN: Ms. Amy Williams, PDUSD

(A&T) DP (DAR), 3062 Defense Pentagon, Washington, D.C. 20301-3062.

Telefax number (703) 602-0350. Please cite DFARS Case 94-D001 in all

correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:

Ms. Amy Williams, (703) 602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

Firms awarded Department of Defense contracts to be performed in

foreign countries must meet requirements imposed by the host country's

government concerning local business, labor, environmental, tax, and

other laws in addition to meeting the requirements of the U.S.

Government and obtaining all customs and tax exemptions to which

contractors with the U.S. Government are entitled. The proposed DFARS

revisions elevate text and clauses presently contained in the U.S.

EUCOM Supplement to provide uniformity in the implementation of these

requirements overseas.

B. Regulatory Flexibility Act

The proposed DFARS rule is not expected to have a significant

economic impact on a substantial number of small entities within the

meaning of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq.,

because the rule only applies to contracts to be solicited, awarded, or

performed overseas. More than 90 percent of such contracts are awarded

to foreign firms. Those U.S. firms performing contracts overseas are

not generally ``small entities.'' Under 5 U.S.C. 601 (3), the

definition of ``small entity'' is the same as the definition of ``small

business,'' contained in Section 3 of the Small Business Act (15 U.S.C.

631 et seq.), as implemented in 13 CFR 121.403. Section 121.403(a)

states that a ``business concern eligible for assistance as a small

business is a business entity organized for profit, with a place of

business located in the United States and which makes a significant

contribution to the U.S. economy through payment of taxes and/or use of

American products, materials and/or labor.'' The proposed rule applies

only to contracts which will be awarded or performed, wholly or in

part, in foreign countries. Firms which compete for such procurements

must meet requirements imposed by the host country's government

concerning local business, labor, environmental, tax, and other laws,

and obtain permits to operate, hire the mix of employees needed, etc.,

which are unique to conducting business within a particular country.

The nature of these procurements limits the competition for U.S.

requirements to those firms which are authorized by the local

governments to conduct business within that country. There are only a

few small businesses that qualify as ``invited contractors'' under the

Status of Forces Agreements. An Initial Regulatory Flexibility Analysis

has, therefore, not been performed. Comments are invited from small

entities and other interested parties. Comments from small entities

concerning the affected DFARS subparts will also be considered in

accordance with Section 610 of the Act. Such comments must be submitted

separately and cite DFARS Case 94-D001 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies

because the proposed rule contains reporting and recordkeeping

requirements. Necessary requests for approval of the information

collection requirements in the proposed rule, as well as extension of

existing requirements in Part 216 and related clauses, have been

submitted to the Office of Management and Budget under Section 3507(d)

of the Act. Information collection requirements relating to retention

of records and making books available are already covered under OMB

Clearance 9000-0034 (i.e., DFARS 252.216-7003(c) and 252.222-7004(a)).

Invoicing requirements are covered under OMB Clearance 0704-0248 (i.e.,

DFARS 252.229-7001(b), 252.229-7003(d), 252.229-7007, and 252.229-

7008(c)). Insurance requirements are covered in OMB Clearance 0704-0216

(i.e., 252.228-7007(c)).

1. Comments

Comments are invited. Particular comments are solicited on:

a. Whether the collection of information is necessary for the

proper performance of the functions of the agency, including whether

the information will have practical utility;

b. The accuracy of the agency's estimate of the burden of the

information collection;

c. Ways to enhance the quality, utility, and clarity of the

information to be collected; and

d. Ways to minimize the burden of the information collection on

respondents, including the use of automated collection techniques or

other forms of information technology.

2. Title, Associated Form, and OMB Number

a. Approval of the information collection requirements under

proposed DFARS 252.216-7003(b)(1) has been requested as a revision and

extension to ``Defense FAR Supplement, Part 216, Types of Contracts,

and Related Clauses in Part 252.216,'' OMB Number 0704-0259.

b. Approval of the information collection requirements in proposed

DFARS 252.229-710 (b) and (c) has been requested as a new clearance,

``Defense FAR Supplement Part 229, Taxes, and Related Clauses at

252.229.'' This information collection is an existing collection in use

in the U.S. European Command Supplement without an OMB control number,

which is now being incorporated in the DFARS.

3. Needs and Uses

a. The information collection required by the existing clauses,

DFARS 252.216-7000(c) and DFARS 252.216-7001, and the proposed clause,

DFARS 252.216-7003(b)(1), is necessary to enable the contracting

officer to make a prompt modification to the contract, changing

contract unit prices when appropriate. The information is used by

contracting officers to evaluate the need for price adjustments.

b. The information collection required by proposed clause DFARS

252.229-7010 is necessary to permit Her Majesty's (HM) Customs to

determine the amount of tax relief to be granted and to inform the

contracting officer that an attempt to obtain relief has been

initiated. After the Contractor obtains tax relief, the contracting

officer appropriately adjusts the contract price. If the Contractor

does not attempt to obtain relief within the time specified, the

contracting officer may deduct from the contract price the amount of

relief that would have been allowed if HM Customs and Excise had

favorably considered a request for relief.

4. Affected Public. Businesses or other for profit.

[[Page 31492]]

------------------------------------------------------------------------

Extension New

------------------------------------------------------------------------

252.216-700/7001 252.216-7003 252.229-7010

------------------------------------------------------------------------

240 48......................... 1568 96

20 6........................... 196 24

3 1............................ 2 1

60 6........................... 392 24

4 8............................ 4 4

------------------------------------------------------------------------

5. Annual Burden Hours: 1952.

6. Number of Respondents: 246.

7. Responses per Respondent: 2.

8. Number of Responses: 482.

9. Average Burden per Response: 4.

10. Frequency: On occasion.

11. Supplementary Information. a. i. DFARS 252.216-7000(c), for

which DoD is requesting extension of the existing paperwork burden

clearance, requires contractors to notify contracting officers of the

amount and effective date of each decrease in any established catalog

or market price and permits contractors to submit a written request to

increase their established prices.

ii. DFARS 252.216-7001(f), for which DoD is also requesting

extension of the paperwork burden clearance, requires contractors,

within 30 days of final delivery, to identify the correctness of the

hourly earnings of their employees that are relevant to the

computations of various labor indices and, upon request, make available

all records used in the computation of those indices.

iii. The proposed clause at DFARS 252.216-7003(b)(1) requires the

contractor to provide a written request for contract adjustment within

10 days of the increase in established wage rates or material prices,

in order for the increase in contract unit price to be effective on the

same date that the host government increases the applicable wage rates

or material prices.

b. The proposed clause at DFARS 252.229-7010, Relief from Customs

Duty (United Kingdom), requires contractors, whose contracts are

awarded in the United Kingdom and which require the use of certain

fuels and lubricants during performance, to provide specific

information to Her Majesty's (HM) Customs and Excise and to provide the

contracting officer with evidence that an attempt to obtain relief from

customs duty on fuels and lubricants has been initiated.

Lists of Subjects in 48 CFR Parts 216, 222, 225, 227, 228, 229, 232,

233, 236, 246, and 252

Government procurement.

Michele P. Peterson,

Executive Editor, Defense Acquisition Regulations Council.

Therefore, 48 CFR Parts 216, 222, 225, 227, 228, 229, 232, 233,

236, 246, and 252 are proposed to be amended as follows:

1. The authority citation for 48 CFR Parts 216, 222, 225, 227, 228,

229, 232, 233, 236, 246, and 252 continues to read as follows:

Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 216--TYPES OF CONTRACTS

2. Section 216.203-4-70 is amended by adding paragraph (c) to read

as follows:

216.203-4-70 Additional clauses.

* * * * *

or material prices. (1) The price adjustment clause at 252.216-7003,

Economic Price Adjustment--Foreign Government Controlled Wages or

Materials, may be used in fixed-price supply and service contracts

when--

(i) The contract is to be performed wholly or in part in a foreign

country; and

(ii) A foreign government controls wages or material prices and

may, during contract performance, impose a mandatory change in wages or

prices of material.

(2) Verify the base wage rates and material prices prior to

contract award and prior to making any adjustment in the contract

price.

PART 222--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

3. Subpart 222.72 is added to read as follows:

Subpart 222.72--Compliance With Host Country Labor Laws

Sec.

222.7200 Scope of subpart.

222.7201 Contract clauses.

222.7200 Scope of subpart.

This subpart prescribes contract clauses, with respect to host

country labor laws, for use when contracting for services or

construction within the host country.

222.7201 Contract clauses.

(a) Use the clause at 252.222-7002, Compliance with Local Labor

Laws (Overseas), in solicitations and contracts for services or

construction to be performed outside the United States, its

possessions, or Puerto Rico.

(b) Use the clause at 252.222-7003, Permit from Italian

Inspectorate of Labor, in solicitations and contracts for porter,

janitorial, or ordinary facility and equipment maintenance services to

be performed in Italy.

Security Laws and Regulations, in solicitations and contracts for

services or construction when contract performance will be in Spain.

PART 225--FOREIGN ACQUISITION

4. Subpart 225.9 is added to read as follows:

Subpart 225.9--Additional Foreign Acquisition Clauses

Sec.

225.970 Correspndence in English.

225.971 Authorization to Perform.

225.970 Correspondence in English.

Use the clause at 252.225-7041, Correspondence in English, in

solicitations and contracts when contract performance will be wholly or

in part in a foreign country.

225.971 Authorization to perform.

Use the clause at 252.225-7042, Authorization to Perform, in

solicitations and contracts when contract performance will be wholly or

in part in a foreign country.

PART 227--PATENTS, DATA, AND COPYRIGHTS

5. Section 227.676 is added to read as follows:

227.676 Foreign patent interchange agreements.

(a) Patent interchange agreements between the United States and

foreign governments provide for the use of patent rights, compensation,

free licenses, and the establishment of committees to review and make

recommendations on these matters. The

[[Page 31493]]

agreements also may exempt the United States from royalty and other

payments. The contracting officer shall ensure that royalty payments

are consistent with patent interchange agreements.

(b) Assistance with patent rights and royalty payments in the

United States European Command (USEUCOM) area of responsibility is

available from: HQ USEUCOM, ATTN; ECLA, Unit 30400, Box 1000, APO AE

09128, Telephone No: DSN: 430-7474, Commercial: 49-0711-680-7474,

Telefax No: 49-0711-680-7408.

PART 228--BONDS AND INSURANCE

6. Section 228.370 is amended by adding paragraph (f) to read as

follows:

228.370 Contract clauses.

* * * * *

(f) Use the clause at 252.228-7008, Compliance with Spanish Laws

and Insurance, in solicitations and contracts for services or

construction to be performed in Spain by other than Spanish contractors

or subcontractors.

PART 229--TAXES

7. Section 229.101 is amended by redesignating paragraphs (d)(i),

(d)(ii) and (d)(iii) as (d)(iii), (d)(iv) and (d)(v); and by adding new

paragraphs (d)(i), (d)(ii), and (d)(vi) to read as follows:

229.101 Resolving tax problems.

* * * * *

(d)(i) Tax relief agreements between the United States and foreign

governments in Europe which exempt the United States from payment of

specific taxes on purchases made for common defense purposes are

maintained by the United States European Command (USEUCOM). For further

information contact--HQ USEUCOM, ATTN: ECLA, Unit 30400, Box 1000, APO

AE 09128, Telephone No: DSN: 430-7474, Commercial: 49-0711-680-7474,

Telefax No: 49-0711-680-7408.

(ii) Tax relief also may be available in countries which have not

signed tax relief agreements. The potential for such relief should be

explored in accordance with paragraph (d)(iii) of this section.

* * * * *

(vi) See also subpart 229.70 for special procedures for obtaining

tax relief and duty-free import privileges when conducting United

States acquisitions in foreign countries with foreign contractors.

8. Subpart 229.4 is added to read as follows:

Subpart 229.4--Contract Clauses

Sec.

229.402 Foreign contracts.

229.402-1-70 Foreign fixed-price contracts.

229.402-70 Additional clauses.

229.402 Foreign contracts.

229.402-1-70 Foreign fixed-price contracts.

Use the clause at 252.229-7000, Invoices Exclusive of Taxes or

Duties, in solicitations and contracts when a fixed-price contract will

be awarded to a foreign contractor.

229.402-70 Additional clauses.

(a) Use the clause at 252.229-7001, Tax Relief, in solicitations

and contracts when a contract will be awarded to a foreign contractor

in a foreign country. When contract performance will be in Germany, use

the clause with its Alternate I.

(b) Use the clause at 252.229-7002, Customs Exemptions (Germany),

in solicitations and contracts requiring the import of United States

manufactured products into Germany.

solicitations and contracts when contract performance will be in Italy.

(d) Use the clause at 252.229-7004, Status of Contractor as a

Direct Contractor (Spain), in solicitations and contracts requiring the

import of supplies for construction, development, maintenance, and

operation of Spanish-American installations and facilities.

(e) Use the clause at 252.229-7005, Tax Exemptions (Spain), in

solicitations and contracts when contract performance will be in Spain.

(f) Use the clause at 252.229-7006, Value Added Tax Exclusion

(United Kingdom), in solicitations and contracts when contract

performance will be in the United Kingdom.

(g) Use the clause at 252.229-7007, Verification of United States

Receipt of Goods, in solicitations issued and contracts awarded in the

United Kingdom.

(h) Use the clause at 252.229-7008, Relief from Import Duty (United

Kingdom), in solicitations issued and contracts awarded in the United

Kingdom.

(i) Use the clause at 252.229-7009, Relief from Customs Duty and

Value Added Tax on Fuel (Passenger Vehicles) (United Kingdom) in

solicitations issued and contracts awarded in the United Kingdom for

fuels (gasoline or diesel) and lubricants used in passenger vehicles

(excluding taxis).

(j) Use the clause at 252.229-7010, Relief from Customs Duty on

Fuel (United Kingdom), in solicitations issued and contracts awarded in

the United Kingdom calling for the use of fuels (gasoline or diesel)

and lubricants in taxis or vehicles other than passenger vehicles.

9. Subpart 229.70 is added to read as follows:

Subpart 229.70--Special Procedures for Overseas Contracts

Sec.

229.7000 Scope of subpart.

229.7001 Tax exemption in Europe.

229.7002 Tax exemption in Spain.

229.7003 Tax exemption in the United Kingdom.

229.7003-1 Value added tax.

229.7003-2 Import duty.

229.7003-3 VAT/Duty problem resolution.

229.7003-4 Information required by HM Customs and Excise.

229.7000 Scope of subpart.

This subpart prescribes procedures to be used by contracting

officers to obtain tax relief and duty-free import privileges when

conducting United States Government acquisitions in foreign countries

with foreign contractors.

229.7001 Tax exemption in Europe.

When standard commercial items or services are being acquired, the

contracting officer shall require the contractor to identify and

separately state the tax amount from which the United States is exempt

and which has been excluded from the contract price. The contracting

officer will compare the excluded amount with the tax relief authorized

by tax relief agreements to ensure that the United States Government is

accorded the full benefit of all tax exemptions (see also 229.402-70(a)

and the clause at 252.229-7001).

229.7002 Tax exemption in Spain.

(a) The Joint United States Military Group (JUSMG), Spain Policy

Directive 400.4, or subsequent directive, applies to all United States

contracting offices contracting for services or supplies in Spain which

require the introduction of material or equipment into Spain.

(b) Upon award of a contract with a ``Direct Contractor,'' as

defined in the clause at 252.229-7004, the contracting officer will

notify JUSMG-MAAG Madrid, Spain, and HQ 16AF/LGTT and forward three

copies of the contract to JUSMG-MAAG, Spain.

import of equipment or materials is urgent, the contracting officer

will send JUSMG-MAAG three copies of the ``Letter of Intent'' or a

similar document indicating the pending award. In these cases,

authorization for duty-free import will

[[Page 31494]]

be issued by the Government of Spain. Upon formal award, the

contracting officer will forward three copies of the completed contract

to JUSMG-MAAG, Spain.

(d) The contracting officer will notify JUSMG-MAAG, Spain, and HQ

16AF/LGTT of ports-of-entry and identify the customs agents who will

clear property on their behalf. Additional documents required for port-

of-entry and customs clearance can be obtained by contacting HQ 16AF/

LGTT. This information will be passed to the Secretaria General Tecnica

del Ministerio de Hacienda (Technical General Secretariat of the

Ministry of Finance). A list of customs agents may be obtained from the

600 ABG, APO AE 09646.

229.7003 Tax exemption in the United Kingdom.

This section contains procedures to be followed in securing relief

from the British Value Added Tax (VAT) and import duties.

229.7003-1 Value added tax.

(a) United States Government purchases qualifying for tax relief

are equipment, materials, facilities, and services for the common

defense effort and for foreign aid programs.

(b) In order to facilitate the resolution of issues concerning

specific waivers of import duty or tax exemption for United States

Government purchases (see 229.7003-3), contracting offices shall

provide the name and activity address of personnel who have been

granted warranted contracting authority to Her Majesty's (HM) Customs

and Excise at the following address: HM Customs and Excise,

International Customs Division G, Branch 4, Adelaide House, London

Bridge, London EC4R 9DB.

229.7003-2 Import duty.

No import duty shall be paid by the United States and contract

prices shall be exclusive of duty, except when the administrative cost

compared to the low dollar value of a contract makes it impracticable

to obtain relief from contract import duty. In this instance, the

contracting officer shall document the contract file with a statement

that

(1) The administrative burden of securing tax relief under the

contract was out of proportion to the tax relief involved;

(2) It is impracticable to secure tax relief;

(3) Tax relief is therefore not being secured; and

(4) The acquisition does not involve the expenditure of any funds

to establish a permanent military installation.

229.7003-3 VAT/Duty problem resolution.

In the event a VAT or import duty problem cannot be resolved at the

contracting officer's level, refer the issue to HQ Third Air Force,

Staff Judge Advocate, Unit 4840, Box 45, APO AE 09459. Direct contract

with HM Customs and Excise in London is prohibited.

229.7003-4 Information required by HM Customs and Excise.

(a) School bus contracts. Provide one copy of the contract and all

modifications to HM Customs and Excise.

(b) Road fuel contracts. For contracts which involve an application

for relief from duty on the road fuel used in performance of the

contract provide--

(1) To HM Customs and Excise--

(i) Contract number;

(ii) Name and address of contractor;

(iii) Type of work (e.g., laundry, transportation);

(iv) Area of work; and

(v) Period of performance.

(2) To the Regional Office of HM Customs and Excise to which the

contractor applied for relief from the duty on road fuel--one copy of

the contract.

information when requested by HM Customs and Excise.

PART 232--CONTRACT FINANCING

10. Section 232.806-70 is added to read as follows:

Sec. 232.806-70 Alternate contract clause for overseas contracting.

Use the clause at 252.232-7008, Assignment of Claims (Overseas), in

place of FAR clause 52.232-23, Assignment of Claims, in solicitations

and contracts when contract performance will be in a foreign country.

PART 233--PROTESTS, DISPUTES, AND APPEALS

11. Section 233.215-70 is added to read as follows:

Sec. 233.215-70 Additional contract clause.

Use the clause at 252.233-7001, Choice of Law (Overseas), in

solicitations and contracts when contract performance will be outside

of the United States, its possessions, or Puerto Rico, unless otherwise

provided for in a Government-to-Government agreement.

PART 236--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

12. Section 236.570 is amended by adding paragraph (c) to read as

follows:

Sec. 236.570 Additional provisions and clauses.

* * * * *

construction contracts to be performed in Germany.

PART 246--QUALITY ASSURANCE

13. Section 246.710 is amended by adding paragraph (4) to read as

follows:

Sec. 246.710 Contract clauses.

* * * * *

(4) Use the clause at 252.246-7002, Warranty of Construction

(Germany), in solicitations and contracts for construction when a

fixed-price contract will be awarded and contract performance will be

in Germany.

PART 252--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

14. Section 252.216-7003 is added to read as follows:

Sec. 252.216-7003 Economic Price Adjustment--Foreign Government

Controlled Wages or Materials.

As prescribed in 216.203-4-70(c), use the following clause:

Economic Price Adjustment--Foreign Government Controlled Wages or

Materials (XXX XXXX)

(a) The Contractor represents that the prices set forth in this

contract--

(1) Are based on the wage rate(s) or material price(s)

established and controlled by the Government or ____________

(Contractor--insert name of host country); and

(2) Do not include contingency allowances to pay for possible

increases in wage rates or material prices.

(b) If wage rates or material prices are revised by the

Government named in paragraph (a) of this clause, the Contracting

Officer shall make an equitable adjustment in the contract price and

shall modify the contract to the extent that the Contractor's actual

costs of performing this contract are increased or decreased, as a

direct result of the revision, subject to the following:

(1) For increases in established wage rates or material prices,

the increase in contract unit price(s) shall be effective on the

same date that the host government increased the applicable wage

rate(s) or material price(s), but only if the Contracting Officer

receives the Contractor's written request for contract adjustment

within 10 days of the change. If the Contractor's request is

received later, the effective date shall be the date that the

Contracting Officer receives the Contractor's request.

[[Page 31495]]

(2) For decreases in established wage rates or material prices,

the decrease in contract unit price(s) shall be effective on the

same date that the host government decreased the applicable wage

rate(s) or material price(s). The decrease in contract unit price(s)

shall apply to all items delivered on and after the effective date

of the host government's rate or price decrease.

executed until the Contracting Officer has verified the applicable

change in the rates/prices set by the host government. The

Contractor shall make available its books and records which support

a requested change in contract price.

(d) Failure to agree to any adjustment shall be a dispute under

the Disputes clause of this contract.

(End of clause)

15. Section 252.222-7002 is added to read as follows:

Sec. 252.222-7002 Compliance with Local Labor Laws (Overseas).

As prescribed in 222.7201(a), use the following clause:

Compliance With Local Labor Laws (Overseas) (XXX XXXX)

(a) The Contractor shall comply with all--

(1) Local laws, regulations, and labor union agreements

governing work hours; and

(2) Labor regulations including collective bargaining

agreements, workers' compensation, working conditions, fringe

benefits, and labor standards or labor contract matters.

(b) The Contractor indemnifies and holds harmless the United

States Government from all claims arising out of the requirements of

this clause. This indemnity includes the Contractor's obligation to

handle and settle, without cost to the United States Government, any

claims or litigation concerning allegations that the Contractor or

the United States Government, or both, have not fully complied with

local labor laws or regulations relating to the performance of work

required by this contract.

with Federal Acquisition Regulation 31.205-15(a) and 31.205-47(d),

the Contractor will be reimbursed for the costs of all fines,

penalties, and reasonable litigation expenses incurred as a result

of compliance with specific contract terms and conditions or written

instructions from the Contracting Officer.

(End of clause)

16. Section 252.222-7003 is added to read as follows:

252.222-7003 Permit from Italian Inspectorate of Labor.

As prescribed in 222.7201(b), use the following clause:

Permit From Italian Inspectorate of Labor (XXX XXXX)

Prior to the date set for commencement of work and services

under this contract, the Contractor shall obtain the prescribed

permit from the Inspectorate of Labor having jurisdiction over the

work site, in accordance with Article 5g of Italian Law Number 1369,

dated October 23, 1960. The Contractor shall ensure that a copy of

the permit is available at all reasonable times for inspection by

the Contracting Officer or an authorized representative. Failure to

obtain such permit may result in termination of the contract for the

convenience of the United States Government, at no cost to the

United States Government.

(End of clause)

17. Section 252.222-7004 is added to read as follows:

252.222-7004 Compliance with Spanish Social Security Laws and

Regulations.

As prescribed in 222.7201(c), use the following clause:

Compliance With Spanish Social Security Laws and Regulations (XXX XXXX)

(a) The Contractor shall comply with all Spanish Government

social security laws and regulations. Within 30 calendar days after

the start of contract performance, the Contractor shall ensure that

copies of the documents identified in paragraph (a)(1) through

(a)(5) of this clause are available at all reasonable times for

inspection by the Contracting Officer or an authorized

representative. The Contractor shall retain the records in

accordance with the Audit and Records clause of this contract.

(1) TC1--Certificate of Social Security Payments;

(2) TC2--List of employees;

(3) TC2/1--Certificate of Social Security Payments for Trainees;

(4) Nominal (pay statements) signed by both the employee and

Contractor; and

(5) INFORMA DE SITUACION DE EMPRESA (Report of the condition of

the enterprise) from the Ministerio de Trabajo y S.S., Tesoreria

General de la Seguridad Social (annotated with the pertinent

contract number(s) next to the employee's name).

(b) All TC1's, TC2's, and TC2/1's, shall contain a

representation that they have been paid by either the Social

Security Administration Office or the Contractor's bank or savings

institution. Failure by the Contractor to comply with the

requirements of this clause may result in termination of the

contract under the clause entitled ``Default.''

(End of clause)

18. Section 252.225-7041 is added to read as follows:

252.225-7041 Correspondence in English.

As prescribed in 225.970, use the following clause:

Correspondence in English (XXX XXXX)

The Contractor shall ensure that all contract correspondence

which is addressed to the United States Government is submitted in

English or with an English translation.

(End of clause)

19. Section 252.225-7042 is added to read as follows:

252.225-7042 Authorization to Perform.

As prescribed in 225.971, use the following clause:

Authorization To Perform (XXX XXXXX)

The Contractor represents that it has been duly authorized to

operate and do business in the country or countries in which this

contract is to be performed. The Contractor also represents that it

will fully comply with all laws, decrees, labor standards, and

regulations of such country or countries, during the performance of

this contract.

(End of clause)

20. Section 252.228-7008 is added to read as follows:

252.228-7008 Compliance with Spanish Laws and Insurance.

As prescribed at 228.370(f), use the following cause:

Compliance With Spanish Laws and Insurance (XXX XXXXX)

(a) The Contractor shall, without additional expense to the

United States Government, comply with all applicable Spanish

Government laws pertaining to sanitation, traffic, security,

employment of labor and all other laws relevant to the performance

of this contract. The Contractor shall hold the United States

Government harmless and free from any liability resulting from the

Contractor's failure to comply with such laws.

(b) The Contractor shall, at its own expense, provide and

maintain during the entire performance of this contract, all

workmen's compensation, employees' liability, bodily injury

insurance, and other required insurance adequate to cover the risk

assumed by the Contractor. The Contractor shall indemnify and hold

harmless the United States Government from liability resulting from

all claims for damages as a result of death or injury to personnel

or damage to real or personal property related to the performance of

this contract.

Contracting Officer, prior to commencement of work and not later

than 15 days after the date of the ``Notice to Proceed,'' that the

Contractor has obtained the required types of insurance in the

following minimum amounts. The representation shall also state that

the Contractor will promptly notify the Contracting Officer of any

notice of cancellation of insurance or material change in insurance

coverage which could affect the United States Government's

interests.

[[Page 31496]]

----------------------------------------------------------------------------------------------------------------

Type of insurance Coverage/person Coverage/accident Property damage

----------------------------------------------------------------------------------------------------------------

Comprehensive.......................................... $300,000.00 $1,000,000.00 $100,000.00

General Liability

----------------------------------------------------------------------------------------------------------------

(d) The Contractor shall provide the Contracting Officer with a

similar representation for all subcontractors who will perform work

under this contract.

(e) Insurance policies required herein shall be purchased from

Spanish insurance companies or other insurance companies legally

authorized to conduct business in Spain. Such policies shall conform

to Spanish laws and regulations and shall--

(1) Contain provisions requiring submission to Spanish law and

jurisdiction of any problem that may arise with regard to the

interpretation or application of the clauses and conditions of the

insurance policy;

(2) Contain a provision authorizing the insurance company, as

subrogee of the insured entity, to assume and attend to directly,

with respect to any person damaged, the legal consequences arising

from the occurrence of such damages;

(3) Contain a provision worded as follows: ``The insurance

company waives any right of subrogation against the United States of

America which may arise by reason of any payment under this

policy'';

(4) Not contain any deductible amount or similar limitation; and

(5) Not contain any provisions requiring submission to any type

of arbitration.

(End of clause)

21. Section 252.229-7000 is added to read as follows:

252.229-7000 Invoices Exclusive of Taxes or Duties.

As prescribed at 229.402-1-70, use the following clause:

Invoices Exclusive of Taxes or Duties (XXX XXXX)

Invoices submitted in accordance with the terms and conditions

of this contract shall be exclusive of all taxes or duties for which

relief is available.

(End of clause)

22. Section 252.229-7001 is added to read as follows:

252.229-7001 Tax Relief.

As prescribed at 229.402-70(a), use the following clause:

Tax Relief (XXX XXXX)

(a) Prices set forth in this contract are exclusive of all taxes

and duties from which the United States Government is exempt by

virtue of tax agreements between the United States Government and

the Contractor's Government. The following taxes or duties have been

excluded from the contract prices.

NAME OF TAX:-----------------------------------------------------------

(Contractor insert)

RATE (PERCENTAGE):-----------------------------------------------------

(Contractor insert)

(b) The Contractor's invoice shall separately list the gross

price, amount of tax deducted, and the net price charged.

specifications are being acquired, the Contractor shall identify the

materials or components intended to be imported in order to ensure

that relief from import duties is obtained. If the Contractor

intends to use imported products from inventories on hand, the price

of which includes a factor for import duties, the Contractor shall

still ensure the United States Government's exemption from these

taxes. The Contractor may obtain a refund of the import duties from

its government or request the duty-free import of an amount of

supplies or components corresponding to that used from inventory for

this contract.

(End of clause)

Alternate I. (XXX XXXX)

As prescribed at 229.402-70(a), add the following paragraph (d)

to the basic clause (Note: The ``Offshore Steuerabkommen'' refers to

the agreement on tax relief at 252.229-7010):

(d) Tax relief will be claimed in Germany pursuant to the United

States-German Tax Agreement (Offshore Steuerabkommen). The

Contractor shall use ``Abwicklungsschein fuer abgabenbeguenstigte

Lieferungen/Leistungen nach dem Offshore Steuerabkommen''

(Performance certificate for tax-free deliveries/performance

according to the offshore tax relief agreement) or other documentary

evidence acceptable to the German tax authorities. All purchases

made and paid for on a tax-free basis during a 30-day period may be

accumulated, totaled, and reported as tax-free.

23. Section 252.229-7002 is added to read as follows:

252.229-7002 Customs Exemptions (Germany)

As prescribed at 229.402-70(b), use the following clause:

Customs Exemptions (Germany) (XXX XXXX)

Imported products required for the direct benefit of the United

States Forces are authorized to be acquired duty-free by contractors

in accordance with the provisions of the ``Agreement Between the

United States of America and Germany Concerning Tax Relief to be

Accorded by Germany to United States Expenditures in the Interest of

Common Defense.''

(End of clause)

24. Section 252.229-7003 is added to read as follows:

252.229-7003 Tax Exemptions (Italy).

As prescribed at 229.402-70(c), use the following clause:

Tax Exemptions (Italy) (XXX XXXX)

(a) The Contractor represents that the contract prices,

including the prices in subcontracts awarded hereunder, do not

include taxes from which the United States Government is exempt.

(b) The United States Government is exempt from payment of

Imposta Valore Aggiunto (IVA) tax in accordance with Article 72 of

the IVA implementing decree on all supplies and services sold to

United States Military Commands in Italy.

(1) Upon receipt of the invoice, the paying office will stamp

the following statement on one copy of the invoice:

``I represent that this invoice is true and correct and reflects

expenditures made in Italy for the Common Defense by the United

States Government pursuant to international agreements. The amount

to be paid does not include the IVA tax because this transaction is

not subject to the tax in accordance with Article 72 of Decree Law

633 of 26 October 1972.''

(2) The copy with the representation, signed by an authorized

Government official, will be returned together with payment to the

Contractor. The payment will not include the amount of the IVA tax.

(3) The Contractor must retain this copy of the invoice with the

representation to substantiate non-payment of the IVA tax.

Forces in Italy are exempt from the following taxes:

(1) Imposta di Fabbricazione (Production Tax for Petroleum

Products).

(2) Imposta di Consumo (Consumption Tax for Electrical Power).

(3) Dazi Doganali (Customs Duties).

(4) Tassa di Sbarco e d'Imbarco sulle Merci Transportate per Via

Aerea e per Via Marittima (Port Fees).

(5) Tassa de Circolazione sui Veicoli (Vehicle Circulation Tax).

(6) Imposta di Registro (Registration Tax).

(7) Imposta di Bollo (Stamp Tax).

(d) The Contractor's administrative procedures for claiming and

validating the exemptions are as follows:

(1) Contract offer price shall not reflect IVA or any other tax

or duty.

(2) Contract number must be set forth on Contractor invoices,

which should state the exemptions claimed pursuant to Art. 72,

Decree No. 633, dated October 26, 1972, for IVA exemption.

(3) Fiscal code for payments made by Aviano Air Base

Appropriated Funds is: 91000190933.

(4) Questions may be addressed to the Ministry of Finance, 11th

District, Room (06) 5910982.

(End of clause)

25. Section 252.229-7004 is added to read as follows:

[[Page 31497]]

252.229-7004 Status of Contractor as a Direct Contractor (Spain).

As prescribed at 229.402-70(d), use the following clause:

Status of Contractor as a Direct Contractor (Spain) (XXX XXXX)

(a) ``Direct Contractor'' means an individual, company, or

entity with whom an agency of the United States Department of

Defense has executed a written agreement which allows duty-free

import of equipment, materials and supplies into Spain for the

construction, development, maintenance, and operation of Spanish-

American installations and facilities.

(b) The Contractor is hereby designated a ``Direct Contractor''

under the provisions of Complementary Agreement 5, articles 11, 14,

15, 17, and 18 of the Agreement on Friendship, Defense and

Cooperation between the United States Government and the Kingdom of

Spain, dated July 2, 1982. The Agreement relates to contracts to be

performed in whole or part in Spain, the provisions of which are

hereby incorporated into and made a part of this contract by

reference.

authorities for approval of status as a ``Direct Contractor'' in

order to complete duty-free import of non-Spanish materials and

equipment represented as necessary for contract performance by the

Contracting Officer. Material/equipment orders placed prior to

official notifications of such approval shall be at the Contractor's

own risk. The Contractor must submit its documentation in sufficient

time to assure processing by the appropriate United States and

Spanish Government agencies prior to the arrival of material/

equipment in Spain. Seasonal variations in processing times are

common and the Contractor should program its projects accordingly.

Any delay or expense arising directly or indirectly from this

process shall not excuse untimely performance (except as expressly

allowed in other provisions), constitute a direct or constructive

change, or otherwise provide a basis for additional compensation or

adjustment of any kind.

(d) To ensure that all duty-free imports are properly accounted

for, exported, or disposed of, in accordance with Spanish law, the

Contractor shall obtain a written bank letter of guaranty payable to

the Treasurer of the United States, or such other authority as may

be designated by the Contracting Officer, in the amount set forth in

paragraph (g) of this clause, prior to effecting any duty-free

imports for the performance of this contract.

(e) If the Contractor fails to obtain the required guaranty, the

Contractor agrees that the Contracting Officer may withhold a

portion of the contract payments in order to establish a fund, in

the amount set forth in paragraph (g) of this clause. The fund shall

be used for the payment of import taxes in the event that the

Contractor fails to properly account for, export, or dispose of

equipment, materials, or supplies imported duty-free.

(f) The amount of the bank letter of guaranty or size of the

fund required under paragraphs (d) or (e) of this clause shall

normally be 5 percent of the contract value. However, if the

Contractor demonstrates to the Contracting Officer's satisfaction

that the amount retained by the United States Government or

guaranteed by the bank is excessive, the amount shall be reduced to

an amount commensurate with contingent import tax and duty-free

liability. This bank guaranty or fund shall not be released to the

Contractor until the Spanish General Directorate of Customs verifies

the accounting, export, or disposition of the equipment, material,

or supplies imported on a duty-free basis.

(g) The amount required under paragraph (d), (e), or (f) of this

clause is ____________________

(Contracting Officer insert amount at time of contract award.

(h) The Contractor agrees to insert the provisions of this

clause, including this paragraph (h), in all subcontracts.

(End of clause)

26. Section 252.229-7005 is added to read as follows:

252.229-7005 Tax Exemptions (Spain).

As prescribed at 229.402-70(e), use the following clause:

Tax Exemptions (Spain) (XXX 1995)

(a) The Contractor represents that the contract prices,

including subcontract prices, do not include the taxes identified

herein, or any other taxes from which the United States Government

is exempt.

(b) In accordance with tax relief agreements between the United

States Government and the Spanish Government and because the

incumbent contract arises from the activities of the United States

Forces in Spain, the contract will be exempt from the following

excise, luxury, and transaction taxes:

(1) Derechos de Aduana (Customs Duties).

(2) Impuesto de Compensacion a la Importacion (Compensation Tax

on Imports)

(3) Transmissiones Patrionomiales (Property Transfer Tax).

(4) Impuesto Sobre el Lujo (Luxury Tax).

(5) Actos Juridocos Documentados (Legal Official Transactions).

(6) Impuesto Sobre el Trafico de Empresas (Business Trade Tax).

(7) Impuestos Especiales de Fabricacion (Special Products Tax).

(8) Impuesto Sobre el Petroleo y Derivados (Tax on Petroleum and

its by-products when CAMPSA coupons are used).

(9) Impuesto Sobre el Uso de Telefona (Telephone Tax).

(10) Impuesto General Sobre la Renta de Sociedades y demas

Entidades Juridicas (General Corporation Income Tax).

(11) Impuesto Industrial (Industrial Tax).

(12) Impuesto de Rentas sobre el Capital (Capital Gains Tax).

(13) Plus Vailia (Increase on Real Property).

(14) Contribucion Territorial Urbana (Metropolitan Real Estate

Tax).

(15) Contribucion Territorial Rustica y Pecuaria (Farmland Real

Estate Tax).

(16) Impuestos de la Diputacion (County Service Charges).

(17) Impuestos Municipal y Tasas Parafiscales (Municipal Tax and

Charges).

(End of clause)

27. Section 252.229-7006 is added to read as follows:

252.229-7006 Value Added Tax Exclusion (United Kingdom).

As prescribed at 229.402-70(f), insert the following clause:

Value Added Tax Exclusion (United Kingdom) (XXX XXXX)

The supplies or services identified in this contract or purchase

order are to be delivered at a price exclusive of Value Added Tax

under arrangements between the appropriate United States authorities

and Her Majesty's Customs and Excise (Reference Priv 46/7). By

executing this contract, the Contracting Officer certifies that

these supplies and/or services are being purchased for United States

Government official purposes only.

(End of clause)

28. Section 252.229-7007 is added to read as follows:

252.229-7007 Verification of United States Receipt of Goods.

As prescribed at 229.402-70(g), use the following clause:

Verification of United States Receipt of Goods (XXX XXXX)

The Contractor shall insert the following statement on all

Material Inspection and Receiving Reports (DD Form 250 series) for

Contracting Officer approval:

``I represent that the items listed on this invoice have been

received by the United States.''

(End of clause)

29. Section 252.229-7008 is added to read as follows:

252.229-7008 Relief from Import Duty (United Kingdom).

As prescribed at 229.402-70(h), use the following clause:

Relief From Import Duty (United Kingdom) (XXX XXXX)

Any import dutiable articles, components, or raw materials

supplied to the United States Government under this contract shall

be exclusive of any United Kingdom import duties. Any imported items

supplied for which import duty has already been paid will be

supplied at a price exclusive of the amount of import duty paid. The

Contractor is advised to contact Her Majesty's (HM) Customs and

Excise in order to obtain a refund upon completion of the contract

(Reference HM Customs and Excise Notice No. 431, February 1973,

entitled ``Relief from Customs Duty and/or Value Added Tax on United

States Government Expenditures in the United Kingdom.'')

(End of clause)

30. Section 252.229-7009 is added to read as follows:

[[Page 31498]]

252.229-7009 Relief from Customs Duty and Value Added Tax on Fuel

(Passenger Vehicles) (United Kingdom).

As prescribed at 229.402-70(i), use the following clause:

Relief From Customs Duty and Value Added Tax on Fuel (Passenger

Vehicles) (United Kingdom) (XXX XXXX)

(a) Pursuant to an agreement between the United States

Government and Her Majesty's (HM) Customs and Excise, fuels and

lubricants used by passenger vehicles (except taxis) in the

performance of this contract will be exempt from customs duty and

value added tax. Therefore, the procedures outlined in HM Customs

and Excise Notice 431B dated August 1982, and any amendment thereto,

shall be used to obtain relief from both Customs Duty and value

added tax for fuel used under the contract. These procedures shall

apply to both loaded and unloaded miles. The unit prices should be

based on the recoupment by the Contractor of Customs Duty in

accordance with the following allowances:

(1) Vehicles (except taxis) with a seating capacity of less than

29, one gallon for every 27 miles.

(2) Vehicles with a seating capacity of 29-53, one gallon for every

13 miles.

(3) Vehicles with a seating capacity of 54 or more, one gallon for

every 10 miles.

(b) In the event the mileage of any route is increased or decreased

within 10 percent, resulting in no change in route price, the Customs

Duty shall be reclaimed from HM Customs and Excise on actual mileage

performed.

(End of clause)

31. Section 252.229-7010 is added to read as follows:

252.229-7010 Relief from Customs Duty on Fuel (United Kingdom).

As prescribed at 229.402-70(j), use the following clause:

Relief From Customs Duty on Fuel (United Kingdom (XXX 1995)

(a) Pursuant to an agreement between the United States

Government and Her Majesty's (HM) Customs and Excise, it is possible

to obtain relief from customs duty on fuels and lubricants used in

support of certain contracts. If vehicle fuels and lubricants are

used in support of this contract, the Contractor shall seek relief

from customs duty in accordance with HM Customs Notice No. 431,

February 1973, entitled ``Relief from Customs Duty and/or Value

Added Tax on United States Government Expenditures in the United

Kingdom.'' Application should be sent to the contractor's local

Customs and Excise Office.

(b) Specific information should be included in the request for

tax relief, such as the number of vehicles involved, types of

vehicles, rating of vehicles, fuel consumption, estimated mileage

per contract period, and any other information which will assist HM

Customs and Excise in determining the amount of relief to be

granted.

Contractor shall provide the Contracting Officer with evidence that

an attempt to obtain such relief has been initiated. In the event

the Contractor does not attempt to obtain relief within the time

specified, the Contracting Officer may deduct from the contract

price the amount of relief that would have been allowed if HM

Customs and Excise had favorably considered the request for relief.

(d) The amount of any rebate granted by HM Customs and Excise

shall be paid in full to the United States Government. Checks shall

be made payable to the Treasurer of the United States and forwarded

to the Administrative Contracting Officer.

(End of clause)

32. Section 252.232-7008 is added to read as follows:

252.232-7008 Assignment of Claims (Overseas).

As prescribed at 232.806-70, use the following clause:

Assignment of Claims (Overseas) (XXX XXXX)

(a) No claims for monies due, or to become due, shall be

assigned by the Contractor unless--

(1) Approved in writing by the Contracting Officer;

(2) Made in accordance with the laws and regulations of the

United States of America; and

(3) Permitted by the laws and regulations of the Contractor's

country.

(b) In no event shall copies of this contract or of any plans,

specifications, or other similar documents relating to work under

this contract, if marked ``Top Secret,'' ``Secret,'' or

``Confidential'' be furnished to any assignee of any claim arising

under this contract or to any other person not entitled to receive

such documents. However, a copy of any part or all of this contract

so marked may be furnished, or any information contained herein may

be disclosed, to such assignee upon the Contracting Officer's prior

written authorization.

payable under this contract and not already paid, and shall not be

made to more than one party, except that any such assignment may be

made to one party as agent or trustee for two or more parties

participating in such financing. On each invoice or voucher

submitted for payment under this contract to which any assignment

applies, and for which direct payment thereof is to be made to an

assignee, the Contractor shall--

(1) Identify the assignee by name and complete address; and

(2) Acknowledge the validity of the assignment and the right of

the named assignee to receive payment in the amount invoiced or

vouchered.

(End of clause)

33. Section 252.233-7001 is added to read as follows:

252.233-7001 Choice of Law (Overseas).

As prescribed at 233.215-70, use the following clause:

Choice of Law (Overseas) (XXX XXXX)

This contract shall be construed and interpreted in accordance

with the substantive laws of the United States of America. By the

execution of this contract, the Contractor expressly agrees to waive

any rights to invoke the jurisdiction of local national courts where

this contract is performed and agrees to accept the exclusive

jurisdiction of the United States Armed Services Board of contract

appeals and the United States court of Federal claims for the

hearing and determination of any and all Disputes which may arise

under the Disputes clause of this contract.

(End of clause)

34. Section 252.246-7002 is added to read as follows:

252.246-7002 Warranty of Construction (Germany).

As prescribed at 246.710(4), use the following clause:

Warranty of Construction (Germany) (XXXX)

(a) In addition to any other representations in this contract,

the Contractor represents, except as provided in paragraph (j) of

this clause, that the work performed under this contract conforms to

the contract requirements and is free of any defect of 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 the period(s) specified in

Section 13, VOB, Part B, commencing from the date of final

acceptance of the work under this contract. If the Government takes

possession of any part of the work before final acceptance, this

warranty shall continue for the period(s) specified in Section 13,

VOB, Part B, from the date the Government takes possession.

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.

(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

[[Page 31499]]

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 as

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 Contractor's negligence, or

the negligence of a 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 the repair of any

damage resulting form any defect in Government-furnished material or

design.

(j) This warranty shall not limit the Government's right under

the Inspection clause of this contract, with respect to latent

defects, gross mistakes, or fraud.

(End of clause)

[FR Doc. 96-15222 Filed 6-19-96; 8:45 am]

BILLING CODE 5000-04-M

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.