Section_H_FRC_Phase_II_A00013.pdf

USCG Fast Response Cutter (FRC) Solicitation HSCG23-15-R-FRCPII Amendment #A00013

Part I - The Schedule Section H – Special Contract Requirements

TABLE OF CONTENTS

H.1 ACCESS TO THE CONTRACTOR’S FACILITY

H.2 ADDITIONAL CONTRACTOR RESPONSIBILITY

H.3 CUTTER CLASSIFICATION/CERTIFICATION REQUIREMENTS

H.4 CONFIGURATION MANAGEMENT

H.5 NOTIFICATION OF CONTRACT PROBLEMS

H.6 DELIVERY OF COMPLETED CUTTER

H.7 DOCUMENTATION OF REQUEST FOR EQUITABLE ADJUSTMENT

H.8 EQUITABLE ADJUSTMENTS: WAIVER AND RELEASE OF CLAIMS

H.9 ECONOMIC PRICE ADJUSTMENT

H.10 GOVERNMENT FURNISHED INFORMATION AVAILABILITY

H.11 SMALL BUSINESS PROGRAMS

H.12 INCORPORATION OF SECTION K BY REFERENCE

H.13 LIABILITY AND INSURANCE

H.14 PERFORMANCE AND PAYMENT BONDS

H.15 POST AWARD CONFERENCE

H.16 PREVENTION OF THE DISCHARGE OF OIL AND HAZARDOUS SUBSTANCES

H.17 PROHIBITION AGAINST FOREIGN SHIPYARDS

H.18 QUARTERLY PRODUCTION PROGRESS CONFERENCES

H.19 MAJOR SUBCONTRACTORS

H.20 STANDARDIZATION

H.21 TECHNICAL DATA EXCHANGE

H.22 VERIFICATION AND VALIDATION

H.23 WARRANTY

H.24 ORDERING OF SUPPLIES AND SYSTEM STOCK

H.25 COMMUNICATIONS WITH AMERICAN BUREAU OF SHIPPING (ABS)

H.26 REQUIREMENTS FOR CONTRACTS INVOLVING EXPORT-CONTROLLED ITEMS

H.27 DFARS 252.227-7027 DEFERRED ORDERING OF TECHNICAL DATA OR

COMPUTER SOFTWARE (APR 1988)

PART I, SECTION H H-1 Special Contract Requirements

H.28 DFARS 252.227-7025 LIMITATIONS ON THE USE OR DISCLOSURE OF

GOVERNMENT-FURNISHED INFORMATION MARKED WITH RESTRICTIVE

LEGENDS (MAR 2011)

H.29 DFARS 252.227-7013 RIGHTS IN TECHNICAL DATA-NONCOMMERCIAL ITEMS

(FEB 2014)

H.30 DFARS 252.227-7014 RIGHTS IN NONCOMMERCIAL COMPUTER SOFTWARE AND

NONCOMMERCIAL COMPUTER SOFTWARE DOCUMENTATION (FEB 2014)

H.31 DFARS 252.227-7015 TECHNICAL DATA—COMMERCIAL ITEMS (FEB 2014)

H.32 DFARS 252.227-7028 TECHNICAL DATA OR COMPUTER SOFTWARE

PREVIOUSLY DELIVERED TO THE GOVERNMENT (JUN 1995)

H.33 DFARS 252.227-7030 TECHNICAL DATA--WITHHOLDING OF PAYMENT (MAR

2000)

H.34 DFARS 252.227-7019 VALIDATION OF ASSERTED RESTRICTIONS—COMPUTER

SOFTWARE (SEP 2011)

H.35 DFARS 252.227-7037 VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL

DATA (JUN 2013)

H.36 NOTICE TO PROCEED WITH CONTRACT PERFORMANCE AFTER AWARD

H.37 USE OF CONTRACTOR ADVISORY AND ASSISTANCE SERVICES

PART I, SECTION H H-2 Special Contract Requirements

H.1 ACCESS TO THE CONTRACTOR’S FACILITY

H.1.1. Officers, employees, and associates of other prime contractors with the Government and their subcontractors, shall, as authorized by the Contracting Officer, have at all reasonable times, admission to the Contractor’s facility, where and as required, and be permitted within the Contractor’s facility to perform and fulfill their respective obligations to the Government. The Contractor shall make reasonable arrangements with the Government or contractors of the Government, as shall have been identified and authorized by the Contracting Officer, to be given admission to the Contractor’s facility, office space, work areas, storage or shop areas, or other facilities and services reasonable and necessary for the performance of the respective responsibilities involved. Reasonable access shall be provided to the Government to carry out its responsibilities under this contract.

H.2 ADDITIONAL CONTRACTOR RESPONSIBILITY

H.2.1. Inasmuch as the detailed design will be developed by the Contractor, the Contractor assumes responsibility for the detailed design's completeness, accuracy, adequacy, and compliance with the Circular of Requirements. In the event that there are any errors or omissions in the aforementioned design, or in the accompanying plans that affect the design and construction effort, the Contractor shall correct such errors and omissions and all necessary rework at the written direction of the Contracting Officer, regardless of whether such error or omission occurred during or after the Warranty period, with no increase in contract price or extension in FRC delivery date.

H.3 CUTTER CLASSIFICATION/CERTIFICATION REQUIREMENTS

H.3.1. Certificates of Inspection, Sanitary Construction, Deratting and other necessary certificates and documents demonstrating approval by regulatory bodies or indicating compliance with the contract specifications shall be obtained by the Contractor. Before delivery of each FRC, the original certificates/documents shall be mounted onboard the FRC as required either by the issuing regulatory body or as directed by the Contracting Officer.

H.4 CONFIGURATION MANAGEMENT

H.4.1. The Contractor shall develop and execute a Configuration Management Plan that provides and maintains configuration control. The Contractor shall prepare and submit engineering change proposals (ECP's) and requests for deviations (RFDs) together with supporting documentation, affecting or concerning the FRC(s) to be delivered under this contract, in accordance with the following: (1) this clause, (2) the CDRL reference in Section J of this contract, and (3) all other contractual documentation. In the event of any conflict or inconsistency between the above listed configuration requirements, they shall take precedence and govern in decreasing order of importance, from (1) through (3) above.

H.4.2. Baseline. For configuration control purposes, all contractual documentation in effect at the time of contract award shall constitute the Contract Baseline which shall be considered incorporated into the baseline documentation. The baseline includes all drawings and other documents, such as Government specifications, Government standards, Coast Guard standard drawings, and coordination drawings, which are referenced in the Circular of Requirements and which are mandatory in that compliance is required and no departure or deviation is allowed except with the approval of the Contracting Officer. Further, certain of these mandatory documents such as coordination drawings or interface control drawings may not be in existence on the effective date of this contract or may have to be revised for

PART I, SECTION H H-3 Special Contract Requirements application to the work under this contract, and are to be prepared or revised by the Contractor under this or any other contract, by the Government, or by another Contractor during the performance of this contract.

H.4.3. The baseline does not include drawings and other documents forming part of the specifications which illustrative, typical, or for guidance. Further, the baseline does not include drawings and other documents, such as working drawings and test memoranda, which are non-mandatory to the extent that, under the provisions of this contract, the Contractor mayuse and comply with such drawings and other documents in the performance of this contract, whether they are prepared or revised by the Contractor under this or any other contract, or obtained from a design sub-contractor and revised or not revised by the Contractor. However, this clause does not in any way modify or supersede other requirements of this contract for submission to, or approval by, the Government, or both, of drawings and other documents which are not included in the baseline and which are prepared or revised by the Contractor in connection with the performance of this contract, including revisions of or changes to such drawings or other documents subsequent to initial submission to, or approval by, the Government, or both.

H.4.4. ECP Requirement and Initiation. In addition to preliminary and formal ECPs which the Contractor may initiate and propose and in addition to changes which the Contracting Officer may issue pursuant to FAR 52.243-1 (Changes – Fixed Price)(Section I), the Contracting Officer, for purposes of arriving at a decision as to whether to incorporate an engineering change in this contract, may from time to time and at any time, in writing, require the Contractor to prepare and submit a formal ECP with respect to an engineering change initiated and proposed by the Contracting Officer within the general scope of this contract; or to revise any previously submitted formal ECP, whether initiated by the Contractor or the Contracting Officer; or to submit a formal ECP as the result of a preliminary ECP. Upon receipt of a written requirement, the Contractor shall submit an initial or revised formal ECP, including supporting data, within such time as the Contracting Officer may specify in view of the priority assigned to the ECP, or, if no time is specified, within 45 days, or such further time as the Contracting Officer may allow. The Contractor shall be reimbursed for preparation, submittal or modification to any ECP in accordance with the following:

H.4.4.1. In the event that an engineering change resulting from a formal ECP is incorporated in this contract, the equitable adjustment in contract price shall identify an amount on account of the cost of the engineering and other work of the Contractor in preparing or revising the ECP, or both.

H.4.4.2. In the event that an engineering change is not incorporated into this contract, the engineering and other work of the Contractor in preparing or revising the ECP, or both, shall be processed as if ordered by the Contracting Officer under FAR 52.243-1 (Changes—Fixed-Price)(Section I), and the Contractor shall be entitled to an equitable adjustment in contract price on account of such work but shall not be entitled to any adjustment in the delivery schedule; provided, however, that no adjustment in contract price shall be made with respect to any preliminary ECP or with respect to a formal ECP prepared and submitted by the Contractor which did not result from a requirement of the Contracting Officer or his representative designated by him in writing (i) to submit a formal ECP with respect to an engineering change proposed by the Government, (ii) to revise a formal ECP previously initiated, prepared and submitted by the Contractor or

(iii) to submit a formal ECP as a result of a preliminary ECP, as provided for in this paragraph.

PART I, SECTION H H-4 Special Contract Requirements

H.4.4.3. An ECP submitted by the contractor unilaterally without a request from the government is not eligible for equitable adjustment for ECP preparation costs, including Value Engineering Change Proposals.

H.4.5. "Firm Offer" and Contract Acceptance of ECPs. The Contractor's "Estimated Cost/Savings under Contract" for each ECP, whether submitted on the Contractor's own initiative or submitted in response to a requirement of the Contracting Officer as an initial or revised ECP shall constitute an irrevocable proposal or offer for sixty (60) days from receipt of the ECP by the Government unless such period of time is extended by mutual agreement.

During this period the Contracting Officer may:

H.4.5.1. Accept such proposal or offer by mailing or otherwise presenting to the Contractor a contract modification for execution by the Contractor, which modification shall reflect the engineering change(s) contained in the ECP, the consequent changes in the delivery schedule, if any, and the Contractor's estimated net increase or decrease in contract price, and the Contractor agrees to execute such a modification within five (5) working days after receipt; or

H.4.5.2. Conditionally accept such offer by mailing or otherwise presenting to the Contractor a contract modification for execution by the Contractor, except that it shall set forth the Contractor's estimate as a ceiling or a maximum change in contract price in the case of net increase and as a floor or a minimum change in the contract price in the case of a net decrease, and except that it may set forth the Contractor's proposed change in delivery schedule, if any, as a maximum extension or a minimum advance as the case may be; and the Contractor agrees to execute such a modification within fifteen (15) working days after receipt, and in the event of such a modification, the parties shall promptly negotiate an adjustment within 180 days after the issuance of the modification or upon completion of forty percent (40%) of the work to be performed by the modification, whichever occurs earlier, in the contract price and the delivery schedule, if involved; or

H.4.5.3. Begin negotiations leading to a contract modification which incorporates the engineering change(s) and such equitable adjustments as may be appropriate. In any event, the Contractor's estimate of net increase/decrease in the contract price or net cost of change, and the bilateral modification making the equitable adjustment, shall identify an amount or factor for any and all delays and disruptions that may result from incorporating in this contract the engineering change(s), whether initiated and proposed by the Contractor or by the Contracting Officer, priced out by the modification.

H.4.6. DD Form 1692 and Certificate. In addition to any submittal of an initial or revised formal ECP, the Contractor agrees to submit, on request of the Contracting Officer, a completed and signed DD Form 1692 "Engineering Change Proposal", in as many copies as the Contracting Officer may reasonably require and a signed "Certificate of Current Cost or Pricing Data."

H.4.7. Copies and Distribution of ECPs and Requests for Deviations. Each ECP for an engineering change and each request for a major or minor deviation; prepared by the Contractor shall be submitted in four copies to the Contracting Officer.

H.4.8. Necessity for Contract Modification and Release. Notwithstanding any approvals or other action respecting an ECP, no engineering change shall be effective unless and until a modification to this contract is executed as provided for in paragraph H.4.5 or the Contracting Officer issues a contract modification (including a release). Pending such a modification, the Contractor shall proceed diligently with contract performance without regard to the effect of any such proposed engineering change. Notwithstanding any

PART I, SECTION H H-5 Special Contract Requirements approvals or other action respecting a request for a major, or minor deviation, no such deviation shall be effective unless and until granted or authorized by a contract modification (including a release); provided, however, that a minor deviation which the Contracting Officer finds does not change the Contractor's cost of performance, or that the decrease in such cost is not more than the administrative cost to the Government of processing the necessary modification, may be granted, authorized, and effective by and upon the signing or cosigning by the Contracting Officer of the Approval Block (27b) of DD Form 1694 or upon the signing or cosigning by the Contracting Officer of the Approval Block of the Contractor's existing form(s) that present data which is equivalent to that which is required by DD Form 1694. In this case, a copy of the signed DD Form 1694, or its equivalent, shall be transmitted to the Contractor. Any such approved minor deviation, for each FRC, shall be incorporated into the contract by contract modification (including a release) prior to Government inspection and acceptance of each FRC.

H.5 NOTIFICATION OF CONTRACT PROBLEMS

H.5.1. The primary purpose of this requirement is to obtain prompt reporting of any contract problem. The parties acknowledge that proper administration of this contract requires that potential problems be identified and resolved as they arise.

H.5.2. The Contractor shall use Contract Problem Identification Reports (CPIR) to promptly notify the Government of actual or potential contract problems and for establishing an early dialogue between the Contractor and the Government with regard thereto.

H.5.3. As used in this clause, a "contract problem" is a fact, circumstance, or any conduct of which the Contractor is aware that does, will, or reasonably is anticipated to:

H.5.3.1. Have a significant or substantial impact on the delivery schedule or completion of contract performance, or the cost of performance of the contract, or

H.5.3.2. Require a modification to the contract or specification(s).

H.5.4. The Contractor shall report each contract problem promptly, and in no event later than ten

(10) calendar days, after the Contractor identifies such contract problem. A written CPIR (CDRL 000-003) shall be transmitted to the Contracting Officer at the address listed in Section G.1. Each CPIR shall be entitled "Contract Problem Identification Report", shall be dated, numbered sequentially, and shall set forth, on the basis of the best and most complete information then known to the Contractor to include but to not be limited to the following:

H.5.4.1. The nature of the contract problem;

H.5.4.2. The date on which the contract problem arose and the date on which the contract problem was identified as such;

H.5.4.3. The anticipated direct and consequential effects of the contract problem upon the delivery schedule or completion of contract performance or the cost of performance of the contract;

H.5.4.4. Identification of the supplies and/or services which are or may be affected; and, H.5.4.5. The Contractor's plan for resolution of the contract problem, including the intended course of action to mitigate or correct the problem.

H.5.5. Follow-up status reports of each contract problem, identified by the original CPIR number, shall be furnished monthly, or more frequently as required by the Contracting Officer. A final follow-up report shall be furnished immediately following resolution of each contract problem.

PART I, SECTION H H-6 Special Contract Requirements http://www.fastresponsecutter.net/cmssecure/CMSContractSectionsPreRedirect.htm?file=DD_1694.pdf http://www.fastresponsecutter.net/CMSSecure/CMSViewcontractreport.aspx?dataid=85&aid=16 http://www.fastresponsecutter.net/cmssecure/CMSContractSectionsPreRedirect.htm?file=FRC_SectionG.htm%23G_Address01

H.5.6. CPIR(s) shall not be submitted when notice of the same contract problem is required to be furnished to the Coast Guard pursuant to any other clause of this contract. The submission of a CPIR, however, does not relieve the Contractor of its obligations to provide notice required under any other clause of this contract.

H.5.7. Continued Performance. The Contractor shall take no action to implement any change resulting from a contract problem until advised by the Contracting Officer in writing. unless a change was previously directed by the Contracting Officer, in which case the Contractor shall conform to the previous direction. Nothing in this paragraph shall excuse the Contractor from proceeding with contract work other than implementation of a change or from proceeding in accordance with directions issued by the Contracting Officer.

H.5.8. Periodic Release of Government Liability for Untimely Identified Problems. Occasions may arise in which the Contractor does not provide notice within the time periods specified in H.5, above. Accordingly, prior to the end of the first and third quarters of each calendar year and continuously through the period of performance of this contract, beginning with the first quarter in which the performance period of this contractstarts, the Contractor shall deliver to the Government a proposed bilateral contract modification (Standard Form 30)(including a release of claims), in accordance with CDRL 000-005, covering the six (6) month period ending with the second and fourth quarters, respectively, of the preceding year, with such specific exceptions, if any, as are identified by the Contractor. The Contractor shall concurrently provide the Contracting Officer with a notice, containing the information set forth in paragraph H.5.4 of this requirement, for each item excepted from the release. The release shall not make unallowable any costs which are otherwise allowable under any other requirement of this contract.

H.5.8.1. The Contractor acknowledges that its failure to deliver the periodic release during the six

(6) month period to which the failure to deliver applies will be presumed to release the Government from any and all claims arising from or related to contract problems that existed during the quarter.

H.6 DELIVERY OF COMPLETED CUTTER

H.6.1. The term “cutter” as used in this clause refers to each cutter to be constructed and delivered under this contract.

H.6.2. The cutter shall not be presented for Preliminary Acceptance Trials (PAT) until it is determined by the Contracting Officer that the Contractor has satisfactorily carried out those parts of the shipboard tests and Builder’s At-Sea Trials for which the Contractor is responsible, and that the Contractor has satisfactorily corrected all deficiencies discovered before, during or after completion of all Builder’s At-Sea Trials, unless otherwise agreed to in writing by the Contracting Officer.

H.6.3. The Contractor shall be responsible for scheduling an interval between the satisfactory completion of PAT and delivery of the cutter during which the Contractor shall satisfactorily correct all deficiencies, whether discovered before, during, or after completion of the PAT.

This interval shall be a minimum of forty two (42) days for the cutters of the contract Base Period and a minimum of thirty five (35) days for all option cutters.

H.6.4. Upon satisfactory completion of Preliminary Acceptance Trials and the correction of deficiencies as provided in H.6.2 and H.6.3 above, the Contractor shall deliver the FRC to the Government for preliminary acceptance. The FRC shall be delivered to the location specified in Section F.6, and in the light ship condition (as defined in COR section 096) subject to the following: potable water tanks, shall be filled to 100% capacity prior to

PART I, SECTION H H-7 Special Contract Requirements departure from the Contractor’s facility to the delivery location specified in F.6; dirty oil tank and sewage tank shall be empty prior to departure from the Contractor’s facility to the delivery location specified in F.6; grey water tank shall be pumped out prior to arrival at the delivery location specified in F.6; fuel oil and lubricating oils shall be 95%, less that which is consumed during transit to the delivery location specified in F.6.

H.6.5. Following preliminary acceptance, the Government may, pursuant to the warranties, during the warranty period, make the cutter available to the Contractor, at the Contractor's plant, or require the Contractor to come to the cutter, (i) for correction of defects noted at the time of preliminary acceptance, or which are discovered during the warranty period, and (ii) for the performance of any additional work required by change orders issued pursuant to FAR 52.243-1 (Changes—Fixed-Price)(Section I) prior to the preliminary acceptance and not theretofore performed. If the Government elects to make the cutter available to the Contractor at the Contractor's plant or at the cutter’s location for the accomplishment of the above described work following preliminary acceptance, the Contractor agrees to accept the cutter(s) at the Contractor’s plant or travel to the cutter’s location and perform the work. If this repair period begins during but extends beyond the expiration of the warranty period, the Government may leave the cutter at the Contractor's plant or return the cutter thereto for the correction of defects not previously corrected and for the performance of any additional work required by change orders issued pursuant to FAR 52.243-1 (Changes—Fixed- Price)(Section I) prior to the preliminary acceptance and not theretofore performed.

H.6.6. The Contractor shall exercise reasonable care to protect the cutter at all times until the delivery of the cutter, and thereafter during such times as the cutter is at the Contractor's plant during the warranty period or during the repair period if the latter extends beyond the expiration of the warranty period, except for periods of time when the entire cutter is made available to the Government. During such periods, while the cutter is at the Contractor's plant, the Contractor shall provide assistance to protect and service the cutter, and shall effect any correction of defects or performance of incomplete work, to the extent permitted or required by the Government. After preliminary acceptance, the cutter’s crew, or portion thereof, will remain with the cutter.

H.6.7. In accordance with the inspection provisions of the contract, all actions of the Government pursuant to this clause shall be performed in such a manner as to not unduly delay the work.

H.7 DOCUMENTATION OF REQUEST FOR EQUITABLE ADJUSTMENT

H.7.1. For the purposes of this requirement, the term "change" includes not only a change that is made pursuant to a written order designated as a "change order" but also

H.7.1.1. an engineering change proposed by the Government or the Contractor, and

H.7.1.2. any request for equitable adjustment under FAR 52.243-1 (Changes—Fixed- Price)(Section I) or any other article or requirement of this contract.

H.7.2. Whenever the Contractor requests or proposes an equitable adjustment of $25,000.00 or more per ship, supporting such request shall contain the following information for each individual item or element of the request:

H.7.2.1. A description of the work required by the contract before the change, which has been deleted by the change;

H.7.2.2. A description of the work deleted by the change which already has been completed;

PART I, SECTION H H-8 Special Contract Requirements

H.7.2.3. A description of disruption attributable solely to the change; which description shall include a description of any measures taken to lessen the disruptive effect of the change;

H.7.2.4. A description of delay in delivery attributable solely to the change;

H.7.2.5. A description of other work or increased costs attributable to the change;

H.7.2.6. Supplementing the foregoing, a narrative statement of the "causal" relationship between the alleged Coast Guard act or omission and the claimed consequences therefore, cross-referenced to the detailed information provided as required above;

H.7.2.7. It is recognized that individual claims for equitable adjustment may not include all of the factors listed in subparagraphs H.7.2.1 through H.7.2.6 above, or that the Contractor may not be reasonably able to furnish all of the factors listed in subparagraphs H.7.2.1 through H.7.2.6 above. Accordingly, the Contractor is only required to set forth in his proposal, information with respect to those factors which are relevant in the individual claims for equitable adjustment, or which he is reasonably able to furnish.

H.7.3. In addition to any information required under paragraph H.7.2, each proposal submitted in support of a claim for equitable adjustment, under any clause of this contract, of $500,000 or more and shall contain a duly executed SF 1411 with respect to each individual claim item.

The information furnished shall be in sufficient detail to permit the Contracting Officer to cross-reference the claimed increased costs, or delay in delivery, or both, as appropriate, as set forth in the SF 1411, with the information submitted pursuant to subparagraphs H.7.2.1 through H.7.2.6 hereof.

H.8 EQUITABLE ADJUSTMENTS: WAIVER AND RELEASE OF CLAIMS.

H.8.1. Whenever the Contractor, after receipt of a change order issued pursuant to FAR 52.243-1 (Changes—Fixed Price)(Section I), submits any claim for equitable adjustment, such claim shall include all types of adjustments in the total amounts to which the contract entitles the Contractor, including but not limited to adjustments arising out of delays or disruptions or both caused by such change.

H.8.2. Further, the Contractor agrees (except as the parties may otherwise agree) that, if required by the Contracting Officer, he will execute a release, in form and substance satisfactory to the Contracting Officer, as part of the supplemental agreement setting forth the aforesaid equitable adjustment, and that such release shall discharge the Government, its officers, agents and employees, from any further claims including but not limited to further claims arising out of delays or disruptions or both, caused by the aforesaid change.

H.9 ECONOMIC PRICE ADJUSTMENT.

H.9.1. The contract prices agreed to by the parties reflect the price levels of the base period. It is anticipated that the contractor’s actual costs may vary from the price levels of the base period and the parties desire to provide for adjustment to reflect such variations. However, regardless of the actual variations in the cost experienced during the period of performance with the procedures specified herein determine Economic Price Adjustment for this contract.

H.9.2. The Base Period, and if exercised, optional cutter construction CLINs and the optional Insurance Spares CLINs, excluding profit components, are subject to economic price adjustment.

H.9.3. For the purpose of this clause, “Post Delivery Date” is defined as a date three months after the contractual delivery date of the CLIN/sub-CLIN as set forth in Section F clause entitled

PART I, SECTION H H-9 Special Contract Requirements

“Time of Delivery”. Also, for the purpose of this clause, a “monthly period” or “monthly period involved” shall mean the Contractor’s normal accounting month.

H.9.3.1. Pricing of Changes.

The costs subject to adjustment under this clause include the costs of performance of changes or other work for which the contract price is subject to equitable adjustment pursuant to the “Changes” clause, or pursuant to other provisions of the contract.

Accordingly, equitable adjustments to the contract price for the CLINs/sub-CLINs subject to economic price adjustment shall be determined on the basis of actual and/or projected direct material costs, direct labor costs, and indirect costs, de-escalated to price levels of the base periods identified in paragraph H.9.4 below. The method of de-escalation shall be the same as that set forth in paragraph H.9.5 below for determining economic price adjustments. Once costs are adjusted, they are fixed absent any retroactive change in indices.

H.9.3.2. Costs Subject to Economic Price Adjustment.

The intent of this clause is to provide for the monthly determination of economic price adjustments for construction of each applicable CLIN/sub-CLIN, on an individual CLIN/sub-CLIN basis. For payment, these monthly costs shall be submitted on a quarterly basis, as described elsewhere in this clause, for development of a Supplemental Agreement. Upon execution of the Supplemental Agreement stating the amount of the economic price adjustment, the Contractor may submit an invoice for the amount (if positive OR negative), subject to the provisions of this clause. Furthermore, it is the intent of this clause to end economic price adjustment in the monthly period in which the Post Delivery Date occurs, or when the cumulative sum of the costs for the CLIN/sub- CLIN reaches the price set forth in the contract (procedures defined below), whichever occurs first. However, economic price adjustment for Vessel Warranty Sub-CLINs will end 12 months after the Post Delivery date of the applicable vessel.

For the purpose of this clause, the total allowable costs in the following categories shall be subject to economic price adjustment:

H.9.3.2.1. Select employee benefits:

H.9.3.2.1.1. FICA (indirect costs).

H.9.3.2.1.2. State and Federal Workmen's Compensation (indirect costs).

H.9.3.2.1.3. Unemployment Compensation (indirect costs).

H.9.3.2.1.4. Disability (indirect costs).

H.9.3.2.1.5. Federally Mandated National Health Program (indirect costs).

H.9.3.2.1.6. Federally Mandated changes to hours of work per week or per day and changes to the payment of overtime (indirect and direct costs).

H.9.3.2.2. One hundred percent of the imputed cost of facilities capital (indirect cost).

H.9.3.2.3. One hundred percent of direct labor costs.

H.9.3.2.4. One hundred percent of direct material costs.

H.9.3.2.5. Ninety-five percent of indirect costs other than indirect costs already noted in this clause.

PART I, SECTION H H-10 Special Contract Requirements

H.9.3.3. Within 30 days after the end of each quarterly period with respect to the CLIN(s)/sub-

CLIN(s) within each CLIN, the Contractor shall submit to the Government: (i) a certified statement of the costs incurred for the CLIN(s)/sub-CLIN(s) within the CLINs during the three months (monthly costs) comprising the quarterly period, and (ii) a certified statement of the total cumulative costs incurred for the CLIN(s)/sub-CLIN(s) within the CLINs from the effective date of the contract to the end of that quarterly period (total costs). The quarterly statement shall separately identify the direct material costs, the direct labor costs, and the indirect costs for each month, and as a quarterly total. With respect to indirect costs, the statement of monthly costs shall state separately from all other indirect costs (i) the monthly incurred selected employee benefit costs of the type identified in subparagraph H.9.3.2.1 above, (ii) the monthly imputed cost of facilities capital allocated to the CLIN/sub-CLIN, and (iii) the ninety-five percent of indirect costs subject to economic price adjustment. Periodic recomputation of indices may be necessary for instances as described in paragraph H.9.4. In such cases when the applicable index for the monthly period involved has been made available or revised, the economic price adjustment for that monthly period shall be recomputed on the basis of the more recent BLS index, if different from the index previously used by the contractor.

The contractor shall be required annually (April) to review the most recent Bureau of Labor Statistics (BLS) indices available and consolidate any such Economic Price Adjustment revisions. Any additional payment to or repayment by the Contractor required by the net amount of such recomputations for the period shall be reflected annually along with the Economic Price Adjustment computations submitted each April.

The period for which the recomputations shall be applied is defined as the effective date of the contract to the end of the most recent month for which applicable BLS indices are available at the time of the annual review. There shall be a final recomputation submitted after the conclusion of the warranty period to adjust all revised BLS indices. The period for the final recomputation shall cover the effective date of the contract to the end of the warranty period. Submission of the final recomputation should occur within one month of the date for which applicable BLS indices covering the entire warranty period are made available to the contractor. There shall be no Economic Price Adjustment allowed, nor any revisions to Economic Price Adjustment allowed for any purpose beyond the Post Delivery Period.

H.9.3.4. The monthly selected employee benefit costs for the CLIN/sub-CLIN shall be the product obtained by multiplying the yard-wide total selected employee benefit costs of the type identified in subparagraph H.9.3.2 above by the amount of total overhead dollars, excluding the imputed cost of facilities capital, allocated to the CLIN/sub-CLIN for the monthly period involved and the product shall be divided by yard-wide total overhead dollars, excluding the imputed cost of facilities capital, for the monthly period involved.

H.9.3.5. For the purpose of this clause:

H.9.3.5.1. "Direct material costs," "direct labor costs," and "indirect costs" shall have the meaning set forth in FAR Part 31 in effect on the effective date of this contract

H.9.3.5.2. "Monthly costs," and "total costs" shall include only "incurred costs" and "allowable costs" which shall also have the meaning set forth in FAR Part 31 in effect on the effective date of this contract, except that "incurred costs" for material shall include the full amounts of all billings received from vendors during the monthly period involved irrespective of whether the Contractor has paid the full amount of such billings. Further, on this contract, the imputed cost of facilities capital shall be treated as an "incurred indirect cost."

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H.9.3.5.3. The costs identified in this paragraph shall be subject to audit and inspection by the

Contracting Officer.

H.9.4. Cost indices.

H.9.4.1. Economic Price Adjustment under paragraph H.9.5 below for selected employee benefits, imputed cost of facilities capital, 95 percent of indirect costs (other than indirect costs in subparagraph H.9.3.2.1.1 and H.9.3.2.1.2), and direct labor costs, shall be based on changes in the BLS Index "Labor Index of Straight-Time Average Hourly Earnings for Selected Shipyards for Steel Vessel Construction - All regions (Base: May 1987 = 100)”.

H.9.4.2. Economic Price Adjustment under paragraph H.9.5 below for direct material costs shall be based on the changes in the BLS Index "Material Index for Steel Vessel Contracts (Base: 2017 = 100)".

H.9.4.3. In the event that any of the specified indices for the monthly period involved are unavailable to the Contractor at the close of a quarterly period, economic price adjustments pursuant to this clause shall be based upon the average monthly changes in the applicable indices for the previous four (4) months for which indices are available.

The average of changes so calculated shall be added to the applicable index for the immediately preceding monthly period and the sum shall constitute the index for the monthly period involved. When the applicable index for the monthly period involved has been made available, the economic price adjustment for that monthly period shall be recomputed on the basis of such index in accordance with sub-paragraph H.9.3.3 of this clause.

H.9.4.4. In the event that any of the specified indices for any base period or any monthly period differs from the index previously available for that period, the economic price adjustment for the applicable monthly period(s) shall be recomputed on the basis of such revised index and any additional payment to or repayment by the Contractor required by such recomputation for that monthly period(s) shall be accomplished in accordance with subparagraph H.9.3.3 of this clause.

H.9.4.5. The Contractor shall be responsible for the calculations involving indices provided for in this paragraph, and said calculations shall be subject to verification and audit by the Government.

H.9.4.6. For the purpose of computing economic price adjustments under this clause, the base period index values are those final published values for May 2017. In the event that the Bureau of Labor Statistics discontinues determining the index cited herein, the Producer's Price Index as published in the Wall Street Journal shall become the substitute for the discontinued index.In the event that the Bureau of Labor Statistics alters its methods of calculating the index cited herein (including a change in the base period), appropriate adjustments in the affected index shall be agreed upon by the parties, to put it on a comparable basis with the index as calculated before the change.

H.9.4.8. In the event that the Bureau of Labor Statistics changes its method of publication of the index cited herein, but does not change its method of computing the index, the Contracting Officer will notify the Contractor of the revised method of publication. A change in agency responsibility for this index shall be considered to be a change in method of publication, and not a change in the method of computation.

PART I, SECTION H H-12 Special Contract Requirements

H.9.5. Computation of Economic Price Adjustment.

H.9.5.1. For the purpose of computing economic price adjustments under this clause, the following computations shall be used for all the categories of cost specified in sub-paragraph H.9.3.2. For each monthly period commencing prior to the Post Delivery Date of the CLIN/sub-CLIN, the amount of the applicable category of cost for the CLIN/sub- CLIN certified on the quarterly statement of monthly costs for that monthly period shall be multiplied by the difference between the value of the applicable index for that monthly period and the applicable base period index described in subparagraph H.9.4.6. above, and the product thereof shall be divided by the value of the applicable index for the base period and the result, the economic price adjustment for the applicable category of cost, shall be expressed to the nearest dollar. The calculation is as follows:

H.9.5.2. For any monthly period commencing subsequent to the Post Delivery Date of the CLIN/sub-CLIN, there shall be no economic price adjustment. In the event and to the extent that the contract delivery date for the CLIN/sub-CLIN is subsequently extended by contract modification, the Post Delivery Date for the CLIN/sub-CLIN shall be extended on a day-for-day basis. The Contractor shall submit such documentation necessary, in the same format as described herein, to be compensated for such extension of the CLIN/sub-CLIN contract delivery date.

H.9.5.3. For each monthly period commencing prior to the contractual delivery date of the CLIN/sub-CLIN, the economic price adjustments computed above for all categories of allowable cost for the CLIN/sub-CLIN shall be totaled and subtracted from the Total Monthly Cost for the CLIN/sub-CLIN, and the resulting difference shall constitute the Base Cost for the CLIN/sub-CLIN for that monthly period. No adjustment for economic price adjustment under this clause shall be made in the event that the cumulative sum of the "Base Costs" of the CLIN/sub-CLIN for all preceding monthly periods exceeds the price set forth in the contract; provided, further, that in the event the contract price thereafter is increased by modification to this contract, adjustment for economic price adjustment under this clause shall be made for each monthly period that the cumulative sum of the Base Costs for the vessel for all preceding monthly periods does not exceed such increased contract price.

H.9.5.4. No adjustment for economic price adjustment under this clause shall be made for any monthly period for any CLIN/sub-CLIN in the event that the specified indices for the monthly period involved are unavailable solely as a result of the failure by the Contractor to submit timely, accurate, and complete information to the BLS necessary for their calculation of the indices. Any amount withheld under the provisions of this paragraph shall be released following the Contractor's submission of such information.

H.9.5.5. The amount of adjustment in compensation for the CLIN/sub-CLIN determined as above (plus or minus) shall be set forth separately in a Supplemental Agreement to this contract, which also shall set forth the computation upon which each adjustment in compensation is based. The separate CLIN(s) established in the contract are for purposes of recording the initial and subsequent Supplemental Agreements. The Government also reserves the

PART I, SECTION H H-13 Special Contract Requirements right to obligate advance amounts for payment of economic price adjustments, without regard to the cumulative sum of previous Supplemental Agreements, in order to satisfy budgetary constraints.

H.9.5.6. In the event that any amount shown in any Supplemental Agreement pursuant to H.9.5.5 in respect to the CLIN/sub-CLIN is a negative amount, such amount shall be reflected as a negative invoice, and liquidated from the contract value.

H.9.6. Payment of Economic Price Adjustment.

H.9.6.1. Payments of amounts of economic price adjustment under this clause shall be made for the CLIN/sub-CLIN on the basis of monthly periods submitted by quarters. After execution of the Supplemental Agreement pursuant to paragraph H.9.5.1, in respect of a quarterly period, and upon submission of a proper invoice, the Contractor shall be paid or there shall be deducted for the CLIN/sub-CLIN the amount set forth in such Supplemental Agreement, subject to the limitations contained in paragraph H.9.6.2, and/or elsewhere in this contract.

H.9.6.2. Payments under this clause shall be 100 percent of the amount stated in the Supplemental Agreement determined above. After the close of the monthly period during which the CLIN/sub-CLIN is actually delivered, any remaining deferred payments for economic price adjustment shall, upon submission of proper invoices by the Contractor and upon verification thereof by the Contracting Officer, be promptly paid.

H.9.6.3. To facilitate budgeting forecasts the Contractor shall, 15 days after the end of each monthly period, separately submit draft computations for the economic price adjustment for that monthly period. These draft computations are not binding, nor need to be recalculated as described elsewhere in this clause, and shall only be used for the purpose described in this paragraph.

H.10 GOVERNMENT FURNISHED INFORMATION AVAILABILITY

H.10.1. All the data or information which the Government has provided or will provide to the Contractor is set forth in Section J.

H.10.2. The Contractor shall submit to the Contracting Officer a GFI Deficiency Report for GFI listed in Section J, within ten (10) days of:

H.10.2.1. Initial receipt, inspection and discovery of any defect or other significant problem which renders any item of data unsuitable for use.

H.10.2.2. Discovery that the data contained defects that may have existed at the time of delivery but could not reasonably have been discovered until the actual attempted use of the data.

H.10.2.3. The end of the month in which data was scheduled for delivery but has not been received.

H.10.3. The Contracting Officer may at any time by written order:

H.10.3.1. Delete, supersede, or revise, in whole or in part, data listed or specifically referenced inSection J or

H.10.3.2. Add items of data or information; or

H.10.3.3. Revise due dates for items of data or information.

H.10.4. If either (1) any action taken by the Contracting Officer pursuant to this clause, or (2) any deficiency reported pursuant to this clause causes an increase or decrease in the costs of or the time required for performance of any part of the work under this contract, the Contractor

PART I, SECTION H H-14 Special Contract Requirements may request an equitable adjustment in the contract price and/or delivery schedule in accordance FAR 52.243-1 (Changes—Fixed Price)(Section I); provided, however, that Project Peculiar Documents [See Section J, Attachment 10] are provided for guidance only [See COR 042-3.1.3], and the Contractor acknowledges that they are provided “as is” and that the Contractor may not request an equitable adjustment relating to any deficiency in them reported pursuant to this clause.

H.11 SMALL BUSINESS PROGRAMS

H.11.1. The Contractor shall comply with the Electronic Subcontracting Reporting System (eSRS) found at www.esrs.gov. This system provides for electronic report to substitute for the Standard Forms (SF) 294 and 295.

H.12 INCORPORATION OF SECTION K BY REFERENCE

H.12.1. In accordance with FAR 15.406-1(b), Part IV of the Uniform Contract Format shall not be physically included in the contract, but Section K, Representations, Certifications, and Other Statements of Offerors (as completed by the Contractor) shall be incorporated by reference in the contract.

H.13 LIABILITY AND INSURANCE

H.13.1. The Contractor shall exercise reasonable care and use their best efforts to prevent accidents, injury or damage to all employees, persons and property, on and about the work, and to the cutters(s) or parts thereof upon which work is done. Notwithstanding this clause, the Government does not assume any risk with respect to, and will not pay for any costs of the Contractor for the inspection, repair, replacement, or renewal of any defects in the cutter(s) or such materials and equipment for which the Contractor is responsible, in accordance with the clauses of the contract concerning quality assurance, warranty or inspection.

H.13.2. All policies under this Clause shall be delivered to the Contracting Officer for their approval and custody. The terms of the policies, the insurance companies and the underwriters shall at all times be satisfactory to the Contracting Officer. Policies not in conformance herewith shall be surrendered and cancelled upon the direction of the Contracting Officer, and new policies procured in conformance herewith.

H.13.3. In the event that the Contractor shall procure or maintain other insurance than that provided in C.9 Builder's Risk Insurance, upon any materials or other property upon which a lien exists in favor of the Government or to which the Government has title pursuant to the terms of this contract, the policy or policies shall contain a losses payable clause making losses payable to the contractor on behalf of the United States Coast Guard for repair or replacement of the damaged or destroyed item, or as referred to by the Contracting Officer.

Any payments thereunder shall inure to the benefit of the Government and to the Contractor as to any remaining balance.

H.13.4. The Contractor indemnifies and holds harmless the Government, its agencies and instrumentalities, against all suits, actions, claims, costs or demands, (including, without limitation, suits, actions, claims, costs or demands resulting from death, personal injury, and property damage) to which the Government, its agencies, instrumentalities, may be subject or put by reason of damage or injury (including death) to the property or person of anyone other than the Government, its agencies, instrumentalities and personnel, arising or resulting in whole or in part from the fault, negligence, wrongful act or wrongful omission of the Contractor, or other subcontractor, or their servants, agents or employees; provided, that the

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