B.08 W912HN23R5006.docx

W912HN23R5006

Section B - Supplies or Services and Prices

Puerto Rico Power TransmissionFFP and Distribution (T&D) Repair Services FOB: Destination

NET AMT

Section C - Descriptions and Specifications

PERFORMANCE WORK STATEMENT

PERFORMANCE WORK STATEMENT

Puerto Rico Power System Stabilization, Transmission and Distribution MATOC 1 Introduction The Contractor shall be responsible for providing Transmission and Distribution (T&D) services to customers of the U.S. Army Corps of Engineers. The T&D services will correct a wide variety of deficiencies at power generation, transmission, and distribution facilities throughout the Commonwealth of Puerto Rico that are owned or operated by Puerto Rico Electric Power Authority (PREPA) or LUMA Energy (LUMA). PREPA and LUMA facilities typically generate power at medium voltages such as 13.8 kilovolt (KV) and typically connect to the power grid at 28 KV, 115 KV and/or 230 KV. Task orders issued under this contract may include, but are not limited to: testing, assessment, diagnosing, repair, replacement, addition, commissioning, of any inoperable, unreliable, undersized, or otherwise deficient components that are necessary for the reliable generation and transmission of power at these facilities.

1.1 Scope

The Contractor shall furnish all materials, equipment, supplies, personnel, and all other services required to perform the T&D services outlined in this statement of work and as specifically identified in the individual task orders. The services required by this contract are expected to be limited to the territory of Puerto Rico. Task orders will use performance-based work statements. A PWS structures all aspects of an acquisition around the purpose of the work to be performed and does not dictate how the work is to be accomplished. It is written to ensure that Contractors are given the freedom to determine how to meet the Government’s performance objectives and provides for payment only when the results meet or exceed these objectives. It maximizes Contractor control of work processes and allows for innovation in approaching various work requirements. A PWS emphasizes performance that can be contractually defined so that the results of the Contractor’s effort can be measured in terms of technical and quality achievement, schedule progress, or cost performance.

A PWS will be prepared for each individual task order. The PWS will include specific performance objectives and performance elements. The time frame and specific procedures for each item of work will be described in the individual task order. The description of stated herein provides a general understanding of the Contractor functions to be performed. Individual task orders will contain the specific requirements. Technical requirements described herein in no way limit the activities that may be required under the terms of this contract.

2 General Requirements The Contractor must have the capability and experience to perform or provide a wide range of T&D testing, assessment, diagnosing, repair, replacement, and repair services required to support the USACE power mission.

2.1 Non-Personal Services

The Government shall neither supervise Contractor employees nor control the method by which the Contractor performs the required tasks. Under no circumstances shall the Government assign tasks to, or prepare work schedules for, individual Contractor employees. It shall be the responsibility of the Contractor to manage its employees and to guard against any actions that are of the nature of personal services or give the perception of personal services. If the Contractor believes that any actions constitute, or are perceived to constitute personal services, it shall be the Contractor's responsibility to notify the Procuring Contracting Officer (PCO) immediately.

2.2 Business Relations

The Contractor shall successfully integrate and coordinate all activity needed to execute the requirement. The Contractor shall manage the timeliness, completeness, and quality of problem identification. The Contractor shall provide corrective action plans, proposal submittals, timely identification of issues, and effective management of subcontractors. The Contractor shall seek to ensure customer satisfaction and professional and ethical behavior of all Contractor personnel.

2.3 Contract Administration and Management

The following subsections specify requirements for contract, management, and personnel administration.

2.3.1 Contract Management

The Contractor shall establish clear organizational lines of authority and responsibility to ensure effective management of the resources assigned to the requirements specified in each task order. The Contractor must maintain continuity between the support operations and the Contractor's corporate offices.

2.3.2 Contract Administration

The Contractor shall establish processes and assign appropriate resources to effectively administer the requirement. The Contractor shall respond to Government requests for Contractual actions in a timely fashion. The Contractor shall have a single point of contact between the Government and Contractor personnel assigned to support contracts or task orders.

2.3.3 Personnel Administration

The Contractor shall provide the following management and support as required. The Contractor shall provide for employees during designated Government non-workdays or other periods where Government offices are closed due to weather or security conditions. The Contractor shall maintain the training currency of their employees by providing initial and refresher training as required to meet the scope requirements. The Contractor shall make necessary travel arrangements for employees. The Contractor shall provide necessary infrastructure to support contract tasks. The Contractor shall provide administrative support to employees in a timely fashion (time keeping, leave processing, pay, emergency needs). Time expended on contract tasks by Contractor personnel will be reported weekly to the Task Leader and may be requested for review by the COR, or Government POC for the specific Contractor.

2.4 Subcontract Management

The Contractor shall be responsible for any subcontract management necessary to integrate work performed on this requirement and shall be responsible and accountable for subcontractor performance on this requirement. The prime contractor will manage work distribution to ensure there are no Organizational Conflict of Interest (OCI) considerations. Contractors may add subcontractors to their team after Contracting Officer’s notification and approval.

2.5 Contractor Personnel, Disciplines, and Specialties

The Contractor shall accomplish the assigned work by employing and utilizing qualified personnel with appropriate combinations of education, training, and experience. The Contractor shall match personnel skills to the work or task with a minimum of under/over employment of resources. The Contractor shall ensure the labor categories, labor rates, and man-hours utilized in the performance of each task order issued hereunder will be the minimum necessary to accomplish the task. The Contractor shall provide the necessary resources and infrastructure to manage, perform, and administer the contract.

2.6 Location and Hours of Work

Accomplishment of the results contained in this SOW requires work within territory of Puerto Rico. Specific locations for the work will be determined at the task order level. Normal workdays are Monday through Friday except US Federal Holidays. Workers typically work eight (8) hours per day, 40 hours per week.

Work will be required outside of typical work hours (up to 24 hours a day, 7 days a week) and additional detail will be provided at the task order level.

2.7 Travel / Temporary Duty (TDY)

Travel to other government facilities or other Contractor facilities may be required and will be specified at the task order level. All travel requirements (including plans, agenda, itinerary, or dates) shall be pre-approved by the government (subject to local policy procedures). Travel costs will be negotiated for each task order as applicable. The Contractor shall use government vehicles when requested, authorized, and determined to be advantageous to the government. This will be specified at the task order level. It is understood that the Contractor’s liability insurance will cover all contract personnel operating government vehicles. If not specified, the Contractor shall provide all necessary transportation to fulfill the requirements of the contract.

3 Scope Requirements The following section specifies the objectives, requirements and services under the Puerto Rico Power System Stabilization, T&D Services MATOC. Contractor shall provide all labor, materials, and supplies necessary to correct a wide variety of deficiencies at power generation, transmission, and distribution facilities throughout the Commonwealth of Puerto Rico that are owned or operated by PREPA or LUMA. This contract will not include work on components or systems located outside of PREPA or LUMA facilities (such as along roadways or other utility rights of way). PREPA and LUMA facilities typically generate power at medium voltages such as 13.8KV and typically connect to the power grid at 38 KV, 115 KV, and/or 230 KV.

Task orders issued under this contract may include, but are not limited to: testing, assessment, diagnosing, repair, replacement, addition, and/or commissioning of any inoperable, unreliable, undersized, or otherwise deficient components that are necessary for the reliable generation and transmission of power at these facilities. Examples of deficient components include, but are not limited to, the following:

· Paralleling gear

· Battery banks

· Rectifier battery chargers

· Power conductors, both insulated and open air

· Electrical grounding and lightning protection systems

· Control and communication conductors, including fiber optic

· Poles and standoff insulators for mounting conductors

· Conduits and cable trays

· Transformers, including generator step up and substation

· Oil circuit breakers

· Vacuum circuit breakers

· Gas Circuit Breakers

· Switches

· Enclosed switchgear

· Paralleling gear

· Potential Transformers (PT’s) and Current Transformers (CT’s)

· Line traps

· Protective and control relays

· Generator and substation control systems (hardware and software) Work may also include the repair, replacement, or addition of ancillary systems at these facilities that support power generation, transmission, and distribution such as metering, monitoring, communications, and site civil services (to include fencing, equipment pads, gravel, etc.).

3.1 The Contractor shall perform repairs associated with T&D infrastructure and equipment.

Contractor shall be capable of performing T&D repairs to equipment on the Puerto Rico grid, including existing T&D infrastructure and components identified in Section 3. Inspect/Evaluate/Implement actions necessary to repair and place system components into operation. Provide damage and/or deficiency reports, projected schedules for power restoration (for assigned areas), and bills of material. At completion of this task, perform functional tests to ensure operability. Functional test results shall be documented and submitted for government review. Contractor shall ensure coordination of protective devices in accordance with PREPA documented relay settings and fuse sizing requirements. Where documented settings are unavailable, contractor shall perform protective device calculations to ensure coordination in accordance with IEEE 242.

3.2 Substation Restoration

Contractor shall be capable of performing equipment evaluation (testing, as required), repair, reenergization, and recommissioning of substations and switching stations. Tasks may include (but are not limited to) component repair, replacement, battery charging/replacement, rectifier-charger functional testing, control power, relay calibration/settings, fuse replacement, etc. Perform inspections and testing of power equipment to include transformers and breakers according to manufacturer recommendations after installation or placement of the equipment. Contractor shall ensure coordination of protective devices in accordance with PREPA documented settings. Where documented settings are unavailable, contractor shall perform setting calculations to ensure coordination in accordance with IEEE 242.

3.3 Telecommunications and Supervisory Control and Data Acquisition Systems (SCADA) Contractor shall be capable of performing repair, replacement, and recommissioning of telecommunications (e.g., RF, fiber optic) and SCADA equipment for the electric power system. At completion of this task, perform functional tests/recommissioning on all elements to ensure operability. Functional test results shall be documented and submitted for government/PREPA/LUMA review.

4 Special Requirements This section describes the special requirements for this contract. The following sub-sections provide details of various considerations on this contract.

4.1 Security and Safety

This is not a classified procurement. The primary security considerations associated with this acquisition are Contractor employee identification and physical access to the power plants, which will have varying access and safety requirements to be identified at the task order level.

4.2 Status Reports and Invoices

The Contractor shall submit, according to each task order, a narrative status report and an invoice, in electronic format, at a frequency determined for the task order (expected to be no less frequently than monthly). This report and a payment invoice are expected to be provided for approval by the 10th working day of the month following the month in which the services were performed, unless stated otherwise in the task order. The status report shall include project break-out by hours for each task performed and a brief summary of each task and shall be in Microsoft Word and PDF format to the authorized Contracting Officers Representative (COR). COR's will be assigned at the task order level. Generally invoicing procedures will be tailored at the task order level.

4.3 Government Furnished Materials

If applicable, Government Furnished Information related to the required services will be provided at the task order level.

4.4 Environmental Requirements

The Contractor, the Contractor’s subcontractors, and the Contractor’s suppliers shall perform all work in full compliance with applicable Federal, State, and Local environmental laws and regulations. Nothing in this contract shall relieve the Contractor of his responsibility to comply with laws and regulations.

Any incidents of spills, releases, or noncompliance with regulations noted by the Contractor shall immediately be brought to the attention of the Contracting Officer and Contracting Officer’s Representative, with written notice provided as soon as possible thereafter.

4.5 Applicable Directives

The Contractor shall comply with all documents listed as mandatory and referenced IAW the instructions as outlined per individual task order.

4.6 Quality Control

This section describes the Quality Control components for this effort. The following sub-sections provide details of various considerations on this effort.

4.6.1 Quality Control Plan (QCP)

The Contractor shall develop a task order-level QCP and maintain an effective quality control program to ensure services are performed in accordance with the MATOC and each individual PWS. The Contractor shall develop and implement procedures to identify, prevent, and ensure non-recurrence of defective services. The Contractor’s QCP is the means by which it assures the work complies with the requirement of the contract. The finalized QCP will be reviewed by the Government at the time of the award of the task order. The Contracting Officer may notify the Contractor of required modifications to the plan during the period of performance. The Contractor then shall coordinate suggested modifications and obtain acceptance of the plan by the Contracting Officer. Any modifications to the program during the period of performance shall be provided to the Contracting Officer for review no later than 10 working days prior to effective date of the change. The QCP shall be subject to the Governments review and approval. The Government may find the QCP "unacceptable" whenever the Contractors procedures do not accomplish quality control objective(s). The Contractor shall revise the QCP within 10 working days from receipt of notice that QCP is found "unacceptable."

4.6.2 Quality Assurance Surveillance Plan (QASP)

The Government shall monitor the Contractors performance under each task order in accordance with the Government’s QASP (provided at the task order level).

5 Deliverables The Contractor shall provide deliverables as described in subsequent task orders. Deliverables shall be specified by the Government.

6 Related Documents Related documents will be provided at the task order level, as required for that particular project.

Section E - Inspection and Acceptance

INSPECTION AND ACCEPTANCE TERMS

Supplies/services will be inspected/accepted at:

CLAUSES INCORPORATED BY REFERENCE

Section F - Deliveries or Performance

DELIVERY INFORMATION

30-OCT-2028

FOB: Destination

Section H - Special Contract Requirements

SPECIAL CONTRACT REQUIREMENTS

WAGE DETERMINATIONS

The contractor must adhere to all applicable Wage Determinations. The following wage determinations are applicable to the respective counties within the project area. Wage Determinations are periodically udated, and A full text of the wage determinations may be found at www.sam.gov. The applicable Wage Determinations will be attached to the resulting contract.

SCA = Service Contract Act DBA = Construction Commonwealth of Puerto Rico

· SCA WD # 2015-5695 (Rev. 19)

· SCA WD # 2015-5697 (Rev. 19)

· SCA WD # 2015-5699 (Rev. 19)

· SCA WD # 2015-5701 (Rev. 19)

· SCA WD # 2015-5703 (Rev. 19)

· SCA WD # 2015-5705 (Rev. 18)

· SCA WD # 2015-5707 (Rev. 20)

· SCA WD # 2015-5711 (Rev. 20)

· SCA WD # 2015-5713 (Rev. 20)

Section I - Contract Clauses

CLAUSES INCORPORATED BY FULL TEXT

52.219-1 SMALL BUSINESS PROGRAM REPRESENTATIONS (MAR 2023)

(a) Definitions. As used in this provision--

Economically disadvantaged women-owned small business (EDWOSB) concern means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the United States and who are economically disadvantaged in accordance with 13 CFR part 127, and the concern is certified by SBA or an approved third-party certifier in accordance with 13 CFR 127.300. It automatically qualifies as a women-owned small business concern eligible under the WOSB Program.

Service-disabled veteran-owned small business concern--

(1) Means a small business concern--

(i) Not less than 51 percent of which is owned by one or more service-disabled veterans or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more service-disabled veterans; and

(ii) The management and daily business operations of which are controlled by one or more service-disabled veterans or, in the case of a service-disabled veteran with permanent and severe disability, the spouse or permanent caregiver of such veteran.

(2) Service-disabled veteran means a veteran, as defined in 38 U.S.C. 101(2), with a disability that is service-connected, as defined in 38 U.S.C. 101(16).

Small business concern--

(1) Means a concern, including its affiliates, that is independently owned and operated, not dominant in its field of operation, and qualified as a small business under the criteria in 13 CFR part 121 and the size standard in paragraph (b) of this provision.

(2) Affiliates, as used in this definition, means business concerns, one of whom directly or indirectly controls or has the power to control the others, or a third party or parties control or have the power to control the others. In determining whether affiliation exists, consideration is given to all appropriate factors including common ownership, common management, and contractual relationships. SBA determines affiliation based on the factors set forth at 13 CFR 121.103.

Small disadvantaged business concern, consistent with 13 CFR 124.1002, means a small business concern under the size standard applicable to the acquisition, that--

(1) Is at least 51 percent unconditionally and directly owned (as defined at 13 CFR 124.105) by--

(i) One or more socially disadvantaged (as defined at 13 CFR 124.103) and economically disadvantaged (as defined at 13 CFR 124.104) individuals who are citizens of the United States, and

(ii) Each individual claiming economic disadvantage has a net worth not exceeding $750,000 after taking into account the applicable exclusions set forth at 13 CFR 124.104(c)(2); and

(2) The management and daily business operations of which are controlled (as defined at 13 CFR 124.106) by individuals who meet the criteria in paragraphs (1)(i) and (ii) of this definition.

Veteran-owned small business concern means a small business concern--

(1) Not less than 51 percent of which is owned by one or more veterans (as defined at 38 U.S.C. 101(2)) or, in the case of any publicly owned business, not less than 51 percent of the stock of which is owned by one or more veterans; and

(2) The management and daily business operations of which are controlled by one or more veterans.

Women-owned small business concern means a small business concern--

(1) That is at least 51 percent owned by one or more women; or, in the case of any publicly owned business, at least 51 percent of the stock of which is owned by one or more women; and

(2) Whose management and daily business operations are controlled by one or more women.

Women-owned small business (WOSB) concern eligible under the WOSB Program (in accordance with 13 CFR part 127) means a small business concern that is at least 51 percent directly and unconditionally owned by, and the management and daily business operations of which are controlled by, one or more women who are citizens of the United States, and the concern is certified by SBA or an approved third-party certifier in accordance with 13 CFR 127.300.

(b)(1) The North American Industry Classification System (NAICS) code for this acquisition is [221121].

(2) The small business size standard is [500 employees].

(3) The small business size standard for a concern that submits an offer, other than on a construction or service acquisition, but proposes to furnish an end item that it did not itself manufacture, process, or produce (i.e., nonmanufacturer), is 500 employees, or 150 employees for information technology value-added resellers under NAICS code 541519, if the acquisition--

(i) Is set aside for small business and has a value above the simplified acquisition threshold;

(ii) Uses the HUBZone price evaluation preference regardless of dollar value, unless the offeror waives the price evaluation preference; or

(iii) Is an 8(a), HUBZone, service-disabled veteran-owned, economically disadvantaged women-owned, or women-owned small business set-aside or sole-source award regardless of dollar value.

(c) Representations.

(1) The offeror represents as part of its offer that--

(i) It [ ___ ] is, [ ___ ] is not a small business concern; or

(ii) It [ ___ ] is, [ ___ ] is not a small business joint venture that complies with the requirements of 13 CFR 121.103(h) and 13 CFR 125.8(a) and (b). [The offeror shall enter the name and unique entity identifier of each party to the joint venture: ___ .]

(2) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents that it [ ___ ] is, [ ___ ] is not, a small disadvantaged business concern as defined in 13 CFR 124.1002.

(3) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents as part of its offer that it [ ___ ] is, [ ___ ] is not a women-owned small business concern.

(4) Women-owned small business (WOSB) joint venture eligible under the WOSB Program. The offeror represents as part of its offer that it [ ___ ] is, [ ___ ] is not a joint venture that complies with the requirements of 13 CFR 127.506(a) through (c). [The offeror shall enter the name and unique entity identifier of each party to the joint venture: ___ .]

(5) Economically disadvantaged women-owned small business (EDWOSB) joint venture. The offeror represents as part of its offer that it [ ___ ] is, [ ___ ] is not a joint venture that complies with the requirements of 13 CFR 127.506(a) through (c). [The offeror shall enter the name and unique entity identifier of each party to the joint venture: ___ .]

(6) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents as part of its offer that it [ ___ ] is, [ ___ ] is not a veteran-owned small business concern.

(7) [Complete only if the offeror represented itself as a veteran-owned small business concern in paragraph (c)(6) of this provision.] The offeror represents as part of its offer that--

(i) It [ ___ ] is, [ ___ ] is not a service-disabled veteran-owned small business concern; or

(ii) It [ ___ ] is, [ ___ ] is not a service-disabled veteran-owned joint venture that complies with the requirements of 13 CFR 125.18(b)(1) and (2). [The offeror shall enter the name and unique entity identifier of each party to the joint venture: ___ .] Each service-disabled veteran-owned small business concern participating in the joint venture shall provide representation of its service-disabled veteran-owned small business concern status.

(8) [Complete only if the offeror represented itself as a small business concern in paragraph (c)(1) of this provision.] The offeror represents, as part of its offer, that--

(i) It [ ___ ] is, [ ___ ] is not a HUBZone small business concern listed, on the date of this representation, as having been certified by SBA as a HUBZone small business concern in the Dynamic Small Business Search and SAM, and will attempt to maintain an employment rate of HUBZone residents of 35 percent of its employees during performance of a HUBZone contract (see 13 CFR 126.200(e)(1)); and

(ii) It [ ___ ] is, [ ___ ] is not a HUBZone joint venture that complies with the requirements of 13 CFR 126.616(a) through (c). [The offeror shall enter the name and unique entity identifier of each party to the joint venture: ___ .] Each HUBZone small business concern participating in the HUBZone joint venture shall provide representation of its HUBZone status.

(d) Notice. Under 15 U.S.C. 645(d), any person who misrepresents a firm's status as a business concern that is small, HUBZone small, small disadvantaged, service-disabled veteran-owned small, economically disadvantaged women-owned small, or women-owned small eligible under the WOSB Program in order to obtain a contract to be awarded under the preference programs established pursuant to section 8, 9, 15, 31, and 36 of the Small Business Act or any other provision of Federal law that specifically references section 8(d) for a definition of program eligibility, shall—

(1) Be punished by imposition of fine, imprisonment, or both;

(2) Be subject to administrative remedies, including suspension and debarment; and

(3) Be ineligible for participation in programs conducted under the authority of the Act.

(End of provision)

52.232-12 ADVANCE PAYMENTS (MAY 2001)

(a) Requirements for payment. Advance payments will be made under this contract (1) upon submission of properly certified invoices or vouchers by the Contractor, and approval by the administering office, , or (2) under a letter of credit. The amount of the invoice or voucher submitted plus all advance payments previously approved shall not exceed to be determined on a task order basis. If a letter of credit is used, the Contractor shall withdraw cash only when needed for disbursements acceptable under this contract and report cash disbursements and balances as required by the administering office. The Contractor shall apply terms similar to this clause to any advance payments to subcontractors.

(b) Special account. Until (1) the Contractor has liquidated all advance payments made under the contract and related interest charges and (2) the administering office has approved in writing the release of any funds due and payable to the Contractor, all advance payments and other payments under this contract shall be made by check payable to the Contractor marked for deposit only in the Contractor's special account with the to be determined on a task order basis [insert the name of the financial institution]. None of the funds in the special account shall be mingled with other funds of the Contractor. Withdrawals from the special account may be made only by check of the Contractor countersigned by the Contracting Officer or a Government countersigning agent designated in writing by the Contracting Officer.

(c) Use of funds. The Contractor may withdraw funds from the special account only to pay for properly allocable, allowable, and reasonable costs for direct materials, direct labor, and indirect costs. Other withdrawals require approval in writing by the administering office. Determinations of whether costs are properly allocable, allowable, and reasonable shall be in accordance with generally accepted accounting principles, subject to any applicable subparts of Part 31 of the Federal Acquisition Regulation.

(d) Repayment to the Government. At any time, the Contractor may repay all or any part of the funds advanced by the Government. Whenever requested in writing to do so by the administering office, the Contractor shall repay to the Government any part of unliquidated advance payments considered by the administering office to exceed the Contractor's current requirements or the amount specified in paragraph (a) above. If the Contractor fails to repay the amount requested by the administering office, all or any part of the unliquidated advance payments may be withdrawn from the special account by check signed by only the countersigning agent and applied to reduction of the unliquidated advance payments under this contract.

(e) Maximum payment. When the sum of all unliquidated advance payments, unpaid interest charges, and other payments exceed to be determined on a task order basis percent of the contract price, the Government shall withhold further payments to the Contractor. On completion or termination of the contract, the Government shall deduct from the amount due to the Contractor all unliquidated advance payments and all interest charges payable. If previous payments to the Contractor exceed the amount due, the excess amount shall be paid to the Government on demand. For purposes of this paragraph, the contract price shall be considered to be the stated contract price of $ to be determined on a task order basis, less any subsequent price reductions under the contract, plus (1) any price increases resulting from any terms of this contract for price redetermination or escalation, and (2) any other price increases that do not, in the aggregate, exceed $ to be determined on a task order basis. Any payments withheld under this paragraph shall be applied to reduce the unliquidated advance payments. If full liquidation has been made, payments under the contract shall resume.

(f) Interest.

(1) The Contractor shall pay interest to the Government on the daily unliquidated advance payments at the daily rate specified in subparagraph (f)(3) below. Interest shall be computed at the end of each calendar month for the actual number of days involved. For the purpose of computing the interest charge--

(i) Advance payments shall be considered as increasing the unliquidated balance as of the date of the advance payment check;

(ii) Repayments by Contractor check shall be considered as decreasing the unliquidated balance as of the date on which the check is received by the Government authority designated by the Contracting Officer; and

(iii) Liquidations by deductions from Government payments to the Contractor shall be considered as decreasing the unliquidated balance as of the date of the check for the reduced payment.

(2) Interest charges resulting from the monthly computation shall be deducted from payments, other than advance payments, due the Contractor. If the accrued interest exceeds the payment due, any excess interest shall be carried forward and deducted from subsequent payments. Interest carried forward shall not be compounded. Interest on advance payments shall cease to accrue upon satisfactory completion or termination of the contract for the convenience of the Government. The Contractor shall charge interest on advance payments to subcontractors in the manner described above and credit the interest to the Government. Interest need not be charged on advance payments to nonprofit educational or research subcontractors for experimental, developmental, or research work.

(3) If interest is required under the contract, the Contracting Officer shall determine a daily interest rate based on the higher of (i) the published prime rate of the financial institution (depository) in which the special account is established or (ii) the rate established by the Secretary of the Treasury under Pub. L. 92-41 (50 U.S.C. App. 1215(b)(2)). The Contracting Officer shall revise the daily interest rate during the contract period in keeping with any changes in the cited interest rates.

(4) If the full amount of interest charged under this paragraph has not been paid by deduction or otherwise upon completion or termination of this contract, the Contractor shall pay the remaining interest to the Government on demand.

(g) Financial institution agreement. Before an advance payment is made under this contract, the Contractor shall transmit to the administering office, in the form prescribed by the administering office, an agreement in triplicate from the financial institution in which the special account is established, clearly setting forth the special character of the account and the responsibilities of the financial institution under the account. The Contractor shall select a financial institution that is a member bank of the Federal Reserve System, an ``insured'' bank within the meaning of the Federal Deposit Insurance Corporation Act (12 U.S.C. 1811), or a credit union insured by the National Credit Union Administration.

(h) Lien on Special Account. The Government shall have a lien upon any balance in the special bank account paramount to all other liens. The Government lien shall secure the repayment of any advance payments made under this contract and any related interest charges.

(i) Lien on property under contract.

(1) All advance payments under this contract, together with interest charges, shall be secured, when made, by a lien in favor of the Government, paramount to all other liens, on the supplies or other things covered by this contract and on all material and other property acquired for or allocated to the performance of this contract, except to the extent that the Government by virtue of any other terms of this contract, or otherwise, shall have valid title to the supplies, materials, or other property as against other creditors of the Contractor.

(2) The Contractor shall identify, by marking or segregation, all property that is subject to a lien in favor of the Government by virtue of any terms of this contract in such a way as to indicate that it is subject to a lien and that it has been acquired for or allocated to performing this contract. If, for any reason, the supplies, materials, or other property are not identified by marking or segregation, the Government shall be considered to have a lien to the extent of the Government's interest under this contract on any mass of property with which the supplies, materials, or other property are commingled. The Contractor shall maintain adequate accounting control over the property on its books and records.

(3) If, at any time during the progress of the work on the contract, it becomes necessary to deliver to a third person any items or materials on which the Government has a lien, the Contractor shall notify the third person of the lien and shall obtain from the third person a receipt in duplicate acknowledging the existence of the lien. The Contractor shall provide a copy of each receipt to the Contracting Officer.

(4) If, under the termination clause, the Contracting Officer authorizes the Contractor to sell or retain termination inventory, the approval shall constitute a release of the Government's lien to the extent that--

(i) The termination inventory is sold or retained; and

(ii) The sale proceeds or retention credits are applied to reduce any outstanding advance payments.

(j) Insurance. (1) The Contractor shall maintain with responsible insurance carriers—

(i) Insurance on plant and equipment against fire and other hazards, to the extent that similar properties are usually insured by others operating plants and properties of similar character in the same general locality;

(ii) Adequate insurance against liability on account of damage to persons or property; and

(iii) Adequate insurance under all applicable workers' compensation laws.

(2) Until work under this contract has been completed and all advance payments made under the contract have been liquidated, the Contractor shall--

(i) Maintain this insurance;

(ii) Maintain adequate insurance on any materials, parts, assemblies, subassemblies, supplies, equipment, and other property acquired for or allocable to this contract and subject to the Government lien under paragraph (i) of this clause; and

(iii) Furnish any evidence with respect to its insurance that the administering office may require.

(k) Default.

(1) If any of the following events occurs, the Government may, by written notice to the Contractor, withhold further withdrawals from the special bank account and further payments on this contract:

(i) Termination of this contract for a fault of the Contractor.

(ii) A finding by the administering office that the Contractor has failed to--

(A) Observe any of the conditions of the advance payment terms;

(B) Comply with any material term of this contract;

(C) Make progress or maintain a financial condition adequate for performance of this contract;

(D) Limit inventory allocated to this contract to reasonable requirements; or

(E) Avoid delinquency in payment of taxes or of the costs of performing this contract in the ordinary course of business.

(iii) The appointment of a trustee, receiver, or liquidator for all or a substantial part of the Contractor's property, or the institution of proceedings by or against the Contractor for bankruptcy, reorganization, arrangement, or liquidation.

(iv) The service of any writ of attachment, levy of execution, or commencement of garnishment proceedings concerning the special account.

(v) The commission of an act of bankruptcy.

(2) If any of the events described in subparagraph (1) above continue for 30 days after the written notice to the Contractor, the Government may take any of the following additional actions:

(i) Withdraw by checks payable to the Treasurer of the United States, signed only by the countersigning agency, all or any part of the balance in the special bank account and apply the amounts to reduce outstanding advance payments and any other claims of the Government against the Contractor.

(ii) Charge interest, in the manner prescribed in paragraph (f) above, on outstanding advance payments during the period any event described in subparagraph (1) above.

(iii) Demand immediate repayment by the Contractor of the unliquidated balance of advance payments.

(iv) Take possession of and, with or without advertisement, sell at public or private sale all or any part of the property on which the Government has a lien under this contract and, after deducting any expenses incident to the sale, apply the net proceeds of the sale to reduce the unliquidated balance of advance payments or other Government claims against the Contractor.

(3) The Government may take any of the actions described in subparagraphs (k)(1) and (2) of this clause it considers appropriate at its discretion and without limiting any other rights of the Government.

(l) Prohibition against assignment. Notwithstanding any other terms of this contract, the Contractor shall not assign this contract, any interest therein, or any claim under the contract to any party.

(m) Information and access to records. The Contractor shall furnish to the administering office (1) monthly or at other intervals as required, signed or certified balance sheets and profit and loss statements together with a report on the operation of the special account in the form prescribed by the administering office; and (2) if requested, other information concerning the operation of the Contractor's business. The Contractor shall provide the authorized Government representatives proper facilities for inspection of the Contractor's books, records, and accounts.

(n) Other security. The terms of this contract are considered to provide adequate security to the Government for advance payments; however, if the administering office considers the security inadequate, the Contractor shall furnish additional security satisfactory to the administering office, to the extent that the security is available.

(o) Representations. The Contractor represents the following:

(1) The balance sheet, the profit and loss statement, and any other supporting financial statements furnished to the administering office fairly reflect the financial condition of the Contractor at the date shown or the period covered, and there has been no subsequent materially adverse change in the financial condition of the Contractor.

(2) No litigation or proceedings are presently pending or threatened against the Contractor, except as shown in the financial statements.

(3) The Contractor has disclosed all contingent liabilities, except for liability resulting from the renegotiation of defense production contracts, in the financial statements furnished to the administering office.

(4) None of the terms in this clause conflict with the authority under which the Contractor is doing business or with the provision of any existing indenture or agreement of the Contractor.

(5) The Contractor has the power to enter into this contract and accept advance payments, and has taken all necessary action to authorize the acceptance under the terms of this contract.

(6) The assets of the Contractor are not subject to any lien or encumbrance of any character except for current taxes not delinquent, and except as shown in the financial statements furnished by the Contractor. There is no current assignment of claims under any contract affected by these advance payment provisions.

(7) All information furnished by the Contractor to the administering office in connection with each request for advance payments is true and correct.

(8) These representations and warranties shall be continuing and shall be considered to have been repeated by the submission of each invoice for advance payments.

(p) Covenants. To the extent the Government considers it necessary while any advance payments made under this contract remain outstanding, the Contractor, without the prior written consent of the administering office, shall not--

(1) Mortgage, pledge, or otherwise encumber or allow to be encumbered, any of the assets of the Contractor now owned or subsequently acquired, or permit any preexisting mortgages, liens, or other encumbrances to remain on or attach to any assets of the Contractor which are allocated to performing this contract and with respect to which the Government has a lien under this contract;

(2) Sell, assign, transfer, or otherwise dispose of accounts receivable, notes, or claims for money due or to become due;

(3) Declare or pay any dividends, except dividends payable in stock of the corporation, or make any other distribution on account of any shares of its capital stock, or purchase, redeem, or otherwise acquire for value any of its stock, except as required by sinking fund or redemption arrangements reported to the administering office incident to the establishment of these advance payment provisions;

(4) Sell, convey, or lease all or a substantial part of its assets;

(5) Acquire for value the stock or other securities of any corporation, municipality, or governmental authority, except direct obligations of the United States;

(6) Make any advance or loan or incur any liability as guarantor, surety, or accommodation endorser for any party;

(7) Permit a writ of attachment or any similar process to be issued against its property without getting a release or bonding the property within 30 days after the entry of the writ of attachment or other process;

(8) Pay any remuneration in any form to its directors, officers, or key employees higher than rates provided in existing agreements of which notice has been given to the administering office; accrue excess remuneration without first obtaining an agreement subordinating it to all claims of the Government; or employ any person at a rate of compensation over $ a year;

(9) Change substantially the management, ownership, or control of the corporation;

(10) Merge or consolidate with any other firm or corporation, change the type of business, or engage in any transaction outside the ordinary course of the Contractor's business as presently conducted;

(11) Deposit any of its funds except in a bank or trust company insured by the Federal Deposit Insurance Corporation or a credit union insured by the National Credit Union Administration;

(12) Create or incur indebtedness for advances, other than advances to be made under the terms of this contract, or for borrowings;

(13) Make or covenant for capital expenditures exceeding $ in total;

(14) Permit its net current assets, computed in accordance with generally accepted accounting principles, to become less than $ ; or

(15) Make any payments on account of the obligations listed…