01_USC-9_Exhibit_2_Additional_ClausesDRAFT.pdf

DRAFT

Universal Service Contract - 9 Exhibit 2

1. Contractor Protection from Competition

1.1 Contractor Protection

A Contractor receiving an initial base period award or an option period award for this contract shall, during the respective base or option period of this contract, be protected from the subsequent competition of other Contractors after that initial award within the limitations of the Cargo Preference Act of 1904. This Contractor protection encourages initial competition among vessel owning or controlling contactors, protects the integrity of the contracting process, facilitates a streamlined acquisition process, promotes DOD’s sealift readiness goals implemented in the Voluntary Intermodal Sealift Agreement (VISA) priorities, and complies with applicable law.

The Cargo Preference Act of 1904 also has the effect of establishing a ceiling price; it states that charges to the U.S.

Government may not be higher than the charges for transporting like goods for private persons.

1.2 Cargo Preference

The availability of U.S. flag service shall be evaluated at the time of Task Order (booking) award based on Carrier submitted vessel schedules located in IBS. Additional contracts may be awarded to Contractors at any time during the contract to Carriers offering a higher level of flag-service on a specific lane.

1.3 VISA Status

In that VISA status relates to a Contractor’s VISA commitment and whereas VISA Priority relates to both VISA commitment of the Contractor and flag status of a particular service, the VISA status of an offeror shall be evaluated at the time of Task Order (booking) award based on Carrier submitted vessel schedules in IBS.

1.4 Late Rates

1.4.1 USTRANSCOM shall not accept proposals of service and rates from Contractors that were not awarded any contracts as a result of this solicitation unless the Contractor is offering U.S. flag service or combination U.S.

flag service that cannot otherwise be obtained from Contractors that were awarded contracts. In such case, Exhibit 2, paragraph 1.2 applies.

1.4.2 The Contracting Officer shall negotiate rates when capacity from Contractors with initially awarded rates is not available to meet requirements or a new service will provide a higher U.S. flag service or combinations of U.S.

flag service than otherwise available to the U.S. Government under initially awarded rates. Rates for ocean and single factor service accepted after initial award will be marked as late and used only when the late rates involve a service with a higher U.S. flag service than the service otherwise available to the U.S. Government under initially awarded rates; or capacity from Contractors with initially awarded rates is not available to meet the requirement.

1.5 Option Years Rate Additions

Contractors awarded a contract during the basic contract period may offer rates on additional routes during the option year rate refresh on routes they do not have accepted rates on for the basic contract period. Contractors who had accepted rates on these routes during the basic contract period are not protected from this new competition on those routes during any option period; the protection described in Exhibit 2, section 1.4 above does not apply to this situation. All Contractors with accepted rates on the same routes for an option period and any extension shall compete equally for all cargo volumes based on procedures outlined in Exhibit 4, Ordering Procedures. A similar ability to offer new service on a route shall not exist at the time of contract extension, if any; the offer of new rate at time of contract extension would be processed under Exhibit 2, paragraph 1.4.2.

2. Maritime Clauses

2.1 Liability for Lost or Damaged Cargo.

2.1.1 Application of Carriage of Goods by Sea Act (COGSA). For containers, the United States Carriage of Goods by Sea Act 46 U.S.C. 1300 et seq. (hereinafter “COGSA” or “the Act”) is incorporated and shall apply to the ocean transportation of all goods, including goods in containers stowed on deck, under any Shipping Order with the same force and effect as if the Act applied to such carriage by express provision therein. For the purpose of interpreting Section 4 of the Act, "Limitation of Liability", the act of loading cargo into, or upon, a container shall not transform such containerized cargo into a single COGSA “package” (as defined herein). For example, the act of loading multiple boxes, bundles, or pieces of cargo into a container does not convert all boxes, bundles, or pieces of cargo into a single COGSA “package.” The limitation of liability set out in Section 4 of the Act shall apply to each package in a container and the government packing list itemizing the cargo in the container is prima facie the controlling document for determining how many “packages” are in a container. The Government packing list is the document completed by the origin shipper listing the items in a container.

For breakbulk, COGSA is incorporated and shall apply to the ocean transportation of all goods, under any Shipping Order with the same force and effect as if the Act applied to such carriage by express provision therein. The COGSA limitation of liability for cargo not in packages is to each measurement ton of cargo. If the Government through its booking system (currently IBS) indicates an order is being shipped “breakbulk,” the COGSA limitation of liability will be valued by the measurement ton of breakbulk cargo regardless of whether other shipping documents (i.e.

shipping manifest, etc.) refer to the breakbulk cargo as a single “piece,” “unit,” or other single item. The IBS booking document indicating “breakbulk” is the controlling document between the parties.

For all cargo, container and breakbulk, the carriage of cargo under any Shipping Order issued pursuant to this contract shall not be deemed or construed to be the carriage of cargo pursuant to special terms and conditions as provided for in Section 6 of the Act; and nothing in this solicitation is intended to relieve the contractor or the vessel from liability for loss or damage to or in connection with the goods arising from negligence, fault or failure in the duties and obligations provided by the Act or to lessen such liability otherwise than as provided therein.

COGSA shall apply from the point of delivery to the Contractor to the point of delivery to the Consignee whether in connection with intermodal or ocean-only transportation under this Contract. Accordingly, COGSA shall apply in determining the limits of a Contractor’s liability, as set forth above, for loss or damage to cargo booked under this Contract arising at any time in the custody of the Contractor.

When the application of COGSA would not result in a limitation on liability, this contract also excludes any limitation on liability.

Upon U.S. Senate ratification of the United Nations Commission on International Trade Law (UNCITRAL) Convention on the Carriage of Goods Wholly or Partly by Sea (the Convention) or entry into force of the Convention (whichever event occurs first), the package limitation provisions of the Convention shall substitute for or otherwise stand in the place of the COGSA package limitation for the purpose of determining the limits of a Contractor’s liability for loss or damage to US Government cargo arising at any time in the custody of the Contractor.

Government claims shall be submitted to the contractor within 3 years of the accrual of a claim.However, the Government will take all reasonable steps to provide notice of loss as soon as it is discovered.

2.1.2 Application of COGSA for Non-Government Owned Cargo.

For containers, the United States Carriage of Goods by Sea Act 46 U.S.C. 30701 et seq. (hereinafter "COGSA" or "the Act") is incorporated and shall apply to the ocean transportation by the Contractor of all goods, including goods in containers stowed on deck, owned by a non-government cargo owner under any Shipping Order with the same force and effect as if the Act applied to such carriage by express provision therein. For the purpose of interpreting Section 4 of the Act, "Limitation of Liability", the act of loading cargo into, or upon, a container shall not transform such containerized cargo into a single COGSA “package” (as defined herein) For example, act of loading multiple boxes, bundles, or pieces of cargo into a container does not convert all boxes, bundles, or pieces of cargo into a single COGSA “package.” The limitation of liability set out in Section 4 of the Act shall apply to each package in a container and the shipper or government packing list itemizing the cargo in the container is prima facie the controlling document for determining how many “packages” are in a container. The shipper packing list is the document completed by the origin shipper listing the items in a container.

For breakbulk, COGSA is incorporated and shall apply to the ocean transportation of all goods, under any Shipping Order with the same force and effect as if the Act applied to such carriage by express provision therein. The COGSA limitation of liability for cargo not in packages is to each measurement ton of cargo. If the shipper through its booking system indicates an order is being shipped “breakbulk,” the COGSA limitation of liability will be valued by the measurement ton of breakbulk cargo regardless of whether other shipping documents (i.e. shipping manifest, etc.) refer to the breakbulk cargo as a single “piece,” “unit,” or other single item. The shipper booking document indicating “breakbulk” is the controlling document between the parties and will determine whether cargo is valued as a “package” or by the measurement ton.

For all cargo, container and breakbulk, the carriage of cargo under any Shipping Order issued pursuant to this contract shall not be deemed or construed to be the carriage of cargo pursuant to special terms and conditions as provided for in Section 6 of the Act; and nothing in this solicitation is intended to relieve the contractor or the vessel from liability to the non-government cargo owner for loss or damage to or in connection with the goods arising from negligence, fault or failure in the duties and obligations provided by the Act or to lessen such liability otherwise than as provided therein. COGSA shall apply from the point of delivery to the Contractor to the point of delivery to the Consignee whether in connection with intermodal or ocean-only transportation under this Contract. Accordingly, COGSA shall apply in determining the limits of a Contractor’s liability, as set forth above, for loss or damage to cargo booked under this Contract arising at any time in the custody of the Contractor.

When the application of COGSA would not result in a limitation on liability, this contract also excludes any limitation on liability.

Upon U.S. Senate ratification of the United Nations Commission on International Trade Law (UNCITRAL) Convention on the Carriage of Goods Wholly or Partly by Sea (the Convention) or entry into force of the Convention (whichever event occurs first), the package limitation provisions of the Convention shall substitute for or otherwise stand in the place of the COGSA package limitation for the purpose of determining the limits of a Contractor’s liability for loss or damage to US Government cargo arising at any time in the custody of the Contractor.

Government claims shall be submitted to the contractor within 3 years of the accrual of a claim.However, the Government will take all reasonable steps to provide notice of loss as soon as it is discovered.

2.1.3 Application of COGSA for Barge Service.

If the Contractor provides service via a barge system, the following additional provisions apply. The Contractor will be liable for cargo claims in accordance with the Carriage of Goods by Sea Act, 46 USC 1300 et seq. from the time the cargo is loaded on a barge to the time the cargo is discharged from the barge. On any voyage, the Contractor will not invoke limitation of ship owner’s liability under 46 USC 183 for aggregate losses or damages to cargo in barges to a value less than the limitation value of the tug(s) and barges at time of completion of the voyage. A barge will not be deemed to be a package within the meaning of the five hundred (500) dollar package limitation in Section 1304 of Title 46 of the United States Code. All containerized cargo in or on barges will be considered to be stowed underdeck.

The Government will not be liable for any damage sustained by a barge or tug while alongside a loading or discharging facility, except to the extent that it would be liable for such damage to an oceangoing vessel alongside such facility under the law and other terms of this contract. All barges will be equipped with sufficient battery-operated mooring lights, when required.

When the application of COGSA would not result in a limitation on liability, this contract also excludes any limitation on liability.

Upon U.S. Senate ratification of the United Nations Commission on International Trade Law (UNCITRAL) Convention on the Carriage of Goods Wholly or Partly by Sea (the Convention) or entry into force of the Convention (whichever event occurs first), the package limitation provisions of the Convention shall substitute for or otherwise stand in the place of the COGSA package limitation for the purpose of determining the limits of a Contractor’s liability for loss or damage to US Government cargo arising at any time in the custody of the Contractor.

Government claims shall be submitted to the contractor within 3 years of the accrual of a claim.However, the Government will take all reasonable steps to provide notice of loss as soon as it is discovered.

2.1.4 The COGSA liability limitations are not applicable to the Government’s recovery from the Contractor for the cost of non-conforming transportation for pilfered or stolen cargo, including, but not limited, to enhanced ITV or enhanced security. This recovery is limited to the amount paid for the services by the Government.

2.1.5 Increased Liability for Lost or Damaged Cargo

Lost or Damaged Cargo. The contractor is required to deliver cargo to final destination in the same condition it was tendered by the shipper. The contractor is liable for cargo that is lost, damaged, or in any way altered from the tendered condition. For all bookings, the contractor is liable for lost or damaged cargo up to the liability limitation, or the actual amount of the loss or damage to the cargo, whichever is less. Should a shipper desire to declare the value of its booked cargo in an amount greater than the liability limitation, the shipper will order the “increased value” at the time of booking and a one time only (OTO) modification will be solicited in accordance with Exhibit Four for the additional coverage. .

2.1.6 Increased liability for lost or damaged cargo will be solicited and ordered in accordance with Exhibit 3, PWS, paragraph 2.A.2.

2.1.7 A “booking” covers all cargo booked under a single PCFN and the contractor is liable to the shipper for lost or damaged cargo up to the amount declared in the booking, or the actual value of the lost cargo, whichever is less.

2.1.8 Notice. Government claims shall be submitted to the contractor within 3 years of the accrual of a claim.However, the Government will take all reasonable steps to provide notice of loss as soon as it is discovered.

2.2 Scope of Voyage (Liberties). U.S. Government cargo, by its very nature, may require special diligence in the prosecution of a voyage at sea. In some cases, the highly sensitive nature of military cargo may require extraordinary handling to ensure the safety and security of the cargo as well as that of our warfighters in the field.

Accordingly, the diversion of U.S. Government cargo at sea requires the unique conditions set forth below.

2.2.1 Diversion of Cargo. In any situation, whatsoever or wheresoever occurring and whether existing or anticipated before commencement of or during the voyage, which in the judgment of the contractor or master of the vessel is likely to give rise to capture, seizure, detention, damage, delay or disadvantage to or loss of the vessel or any part of her cargo, or to make it unsafe, imprudent, or unlawful for any reason to begin or continue the voyage or to enter or discharge the goods at the port of discharge, or to give rise to delay or difficulty in arriving, discharging at or leaving the port of discharge or the usual place of discharge in such port, the master, whether or not proceeding toward or entering or attempting to enter the port of discharge or reaching or attempting to reach the usual place of discharge therein or attempting to discharge U.S. Government Cargo (the Cargo) may, upon notification to the Contracting Officer as described in Exhibit 2, paragraph 2.2.1.1 below, discharge the Cargo into another port, depot, lazarette, craft, or other place, or retain the goods on board until the return trip or until such other time as would be prudent in the ordinary course of the Contractor’s business.

2.2.1.1 Notice of Diversion. The Notice described in Exhibit 2, paragraph 2.2.1 above shall include, at a minimum, a description of the cargo to be diverted (container number, Transportation Control Number, etc.), the conditions giving rise to the Contractor’s planned diversion of the Cargo, the diversion planned and any other measures deemed necessary by the Contractor to protect the Cargo. The Contractor or his designated representative shall provide such Notice in a manner and place consistent with the provisions of this agreement (e.g., electronic mail), but it is understood that such notice may be delayed if it would put the vessel, her crew or cargo at risk of loss, damage or injury.

2.2.1.2 Equitable Adjustment, Carrier Proposed Course of Action. After notification to the Contracting Officer and approval by the Contracting Officer of the Contractor’s proposed course of action, the contractor may submit a request for an equitable adjustment to the contract for the reasonable, allocable, incurred costs to implement the approved course of action. It is understood that the contractor may be required to act before Contracting Officer approval to prevent risk of loss, damage or injury to the vessel, her crew or cargo. If the contractor acts before notice to and approval by the Contracting Officer, the contractor shall nonetheless be entitled to reasonable, allocable, incurred costs if the Contracting Officer finds that the actions were prudent and necessary for the security and protection of government cargo. In no case shall an equitable adjustment duplicate compensation provided in a USC9 rate, accessorial charge or similar charge or otherwise reimburse the Contractor for costs chargeable (by the Contractor) to or otherwise allocable to a non-USC9shipper. If the Contractor has been paid for delivery to destination, the Contracting Officer will consider this fact in evaluating any request for an equitable adjustment or potential government claim for a windfall to the Contractor.

2.2.1.3 Mutual Agreement. Where the Contracting Officer determines that the Contractor’s planned diversion of the Cargo is not in the best interest of the U.S. Government, the Contracting Officer shall so advise the Contractor as soon as practicable. Thereafter, the Contracting Officer and the Contractor shall, with all due diligence and good faith, endeavor to mutually agree upon the prudent disposition of the Cargo.

2.2.1.4 Responsibility for the Cargo. Where the Contracting Officer determines that the Contractor's planned diversion of the Cargo is not in the best interest of the U.S. Government and the Contracting Officer and the Contractor cannot timely agree upon the disposition of the Cargo, the Contractor shall comply with the Contracting Officer’s direction to the Contractor to deliver the cargo to a port of the U.S. Government's choice and to make any other arrangements for the cargo the Contracting Officer deems necessary to protect the Government's interest.

2.2.1.5 Equitable Adjustment for U.S. Government Directed Course of Action. The Contractor may submit a request for an equitable adjustment to the contract for reasonable, allocable costs incurred to carry out the Contracting Officer’s direction if such costs are caused by the need to respond to the special situation and would not have been incurred in performing the contract of carriage except for the special situation. This equitable adjustment includes costs associated with cargo on the vessel that is not transported under this contract to the extent these costs exceed costs allocable to any non-USC9 shipper under any Scope of Voyage (Liberties) or similar clause in any contract between the Contractor and a non-USC9 shipper. In no case shall an equitable adjustment duplicate compensation provided in a USC9 freight rate, accessorial charge or similar charge or otherwise reimburse the Contractor for costs chargeable (by the Contractor) to or otherwise allocable to a non-USC9 shipper. If the Contractor has been paid for delivery to destination, the Contracting Officer will consider this fact in evaluating any request for an equitable adjustment or any government claim for a windfall to the Contractor.

2.2.1.6 In any event, the Contractor shall at all times be responsible to assure the security and protection of the cargo until relieved of such responsibility by the U.S. Government or its designated agent.

2.2.2 Liberties. The Contractor, the master and the vessel shall have liberty to comply with any orders or directions as to loading, departure, arrival, routes, ports of call, stoppages, discharge, destination, delivery or otherwise howsoever given by the government of any nation or department thereof or any person acting or purporting to act with the authority of such government or of any department thereof (or by any committee or person having, under the terms of the war risk insurance on the vessel, the right to give such orders or directions). Delivery or other disposition of the goods in accordance with such orders or directions shall excuse delay in performance to the extent that such order or direction persists in prevention of performance. (See compensable Delay Clause below in Para 6.) The vessel may carry seized contraband, explosives, munitions, warlike stores, hazardous cargo, and may sail armed or unarmed and with or without convoy.

2.2.3 The vessel shall have the liberty to deviate for the purpose of saving life and property, to tow or to be towed, to sail with or without pilots, or to go into dry dock or into ways with or without cargo on board. However, in no case shall the Contractor be entitled to extra compensation for such a deviation and the Contractor shall not be relieved of responsibility for delivery of cargo to the destination named in the Shipping Order.

2.3 Strikes

2.3.1 Loading Port – In the event the vessel or the loading of the vessel is delayed by reason of strikes or stoppage of work, the Contractor may, at the loading port dispatch the vessel with such portion of the cargo as may then be on board.

2.3.2 Discharge Port – In the event the vessel or discharge of the vessel is delayed by reason of strikes or stoppage of work, the Contractor at the discharge port may discharge the cargo still on board or with the approval of the U.S. Government dispose of the cargo or any part of it at the U.S. Government’s risk and expense.

2.4 Amended Jason Clause

In the event of accident, danger, damage, or disaster, before or after commencement of the voyage resulting from any cause whatsoever, whether due to negligence or not, for which, or for the consequence of which, the contractor is not responsible, by statute, contract, or otherwise, the goods, Shippers, consignees, or owners of the goods shall contribute with the contractor in general average to the payment of any sacrifices, losses or expenses of a general average nature that may be made or incurred, and shall pay salvage and special charges incurred in respect of the goods. If a salvaging vessel is owned or operated by the contractor, salvage shall be paid for as fully as if such salvaging vessel or vessels belonged to strangers.

2.5 General Average

General average shall be adjusted, stated and settled, according to York-Antwerp Rules 2004 and subsequent Amendments, if any, thereto at such port or place in the United States as may be selected by the contractor, and as to matters not provided for by those Rules, according to the laws and usages at the Port of New York. In such adjustment, disbursements in foreign currencies shall be exchanged into United States money at the rate prevailing on the dates made and allowances for damage to cargo claimed in foreign currency shall be converted at the rate prevailing on the last day of discharge at the port or place of final discharge of such damaged cargo from the ship.

2.6 Liens

2.6.1 Seizure of Cargo: The Contractor agrees that it will not assert any type of lien, including a maritime lien, on any cargo shipped by the U.S. Government under this Contract. The Contractor further agrees that it will not take any action to seize, arrest, hold, or otherwise detain such cargo through any judicial process in the U.S. or any foreign country. The Contractor agrees to insert this clause in all subcontracts at any level and to expend any resources necessary to expeditiously enforce the provisions of this clause against such subcontractors.

2.6.2 Freight: There shall be no liens, including maritime liens, asserted on any freights payable by the U.S.

Government under this contract. The Contractor agrees to insert this clause in all subcontracts at any level and to expend any resources necessary to expeditiously enforce the provisions of this clause against such subcontractors.

2.7 Force Majeure

The acts of God, enemies, fire, restraint of princes, rulers of people, and all dangers and accidents of the seas, rivers, machinery, boilers and steam navigation, and errors of navigation throughout this Contract are mutually excepted.

In other words, such situations excuse delay in performance (similar to paragraph (f) of FAR 52.212-4) by either party to this contract to the extent that the situation persists in preventing performance. This clause does not address liability for loss/damage to cargo (see, instead, “Liability for Lost or Damaged Cargo” section), liability for costs/damages resulting from delay in performance, or matters other than excusable delay.

3. War Risk

3.1 Compensation

In the event it is necessary for the Contractor to pay additional premiums to extend the coverage of crew, hull and machinery, protection and indemnity insurance and insurance covering the loss and damage of cargo while aboard the vessel at sea (not applicable to inland cargo) to include war risks, or to pay crew war risk bonuses as a result of the vessel entering the war risk area, the Contractor shall include any and all costs associated with war risk in the appropriate ocean rate when the normal routing of one or more of the vessels carrying the shipment involves transiting a Listed Area designated by Lloyd's Market Association's Joint War Committee.

In the event that a new war risk location is designated to the Joint War Committee’s designation list after the final award of approved contract rates the Government will resolve the difference by either a rate refresh to the appropriate ocean lane, request for equitable adjustment (REA), or the addition of an accessorial surcharge. The

Contracting Officer’s approach to resolve the new designation will depend on the circumstances surrounding the event.

3.2 Alternatives

If Commercial Marine, War Risk, and Liability Insurance is not available or if Marine, War Risk, and Liability Insurance through the Secretary of Transportation under Sections 1202-1205 of the Merchant Marine Act of 1936, 46 App. U.S.C. 1282-1285, is available at a lesser rate, the Contracting Officer reserves the right to require Contractors to obtain the necessary Marine, War Risk, and Liability Insurance from the Secretary of Transportation.

Further, in the event that the Secretary of Defense, or his/her authorized designee, is authorized to provide and does provide indemnification to the Secretary of Transportation under Section 1205 of the Merchant Marine Act, 1936, 46 App. U.S.C. 1285, for Marine, War Risk, and Liability coverage without premium, the Contracting Officer reserves the right to require the Contractor to obtain such insurance from the Department of Transportation and no premiums as set forth in Exhibit 2, paragraph 3.1 above will be paid to the Contractor by the U.S. Government.

4. Cargo Claims The Government will process cargo claims in accordance with the Defense Transportation Regulation, Volume II, Chapter 210, and the Contractor agrees to cooperate with Government efforts to resolve claims for loss or damage to Government cargo.

5. Rejection and Price Reduction for Non-Conforming Transportation Services

5.1 The Contractor recognizes that the Contracting Officer ordinarily must reject services that are non-conforming in a major or critical aspect or are otherwise incomplete. To the extent the transportation of cargo results in loss or damage of cargo, the purpose of the transportation is frustrated and the non-conformance in the transportation service is major/critical.

5.2 The Contracting Officer may evaluate the conformity of transportation to contract requirements in addition to evaluating whether lost/damaged cargo complies with contract requirements. If cargo is found to be lost or damaged, either before or after acceptance by the Government of the cargo, and the loss/damage is due to fault or liability of the Contractor under the contract, the Contracting Officer may - in addition to any action related to the lost/damaged cargo - take any of the following actions related to non-conforming transportation:

a) Notify the Contractor of the non-conforming transportation;

b) Request the Contractor to address fault or liability for loss or damage to cargo and corresponding non-conforming transportation;

c) Reject the non-conforming transportation in whole or in part, as may be warranted;

d) Seek a price reduction or other consideration in whole or in part, to the extent the transportation is non-conforming.

5.3 The Contracting Officer shall not revoke acceptance of transportation services, reject transportation services, or implement a price reduction until the Contractor has been provided notice and an opportunity to demonstrate that the transportation services conformed to the contract of carriage as booked.

6. Compensable Delays

6.1 Other clauses in this contract (such as FAR 52.212-4 paragraph f; Exhibit 2, section 2.7 force majeure;

Exhibit 2, paragraph 2.2 Scope of Voyage (Liberties); etc.) cover delay in performance or frustration of performance in certain situations. Exhibit 2, Section 2.2 Scope of Voyage (Liberties) provides for monetary equitable adjustment, but only in the case of maritime (not in-land) transportation where attempted delivery to the destination port has been abandoned.

6.2 Situations where the U.S. Government Causes a Delay. This clause addresses compensation/financial liability in other situations. Specifically, to the extent action or inaction by the U.S. Government in either its contractual or sovereign capacity, causes a delay in Contractor performance, the Contractor shall be entitled to an equitable adjustment for costs incurred directly related to the safety and security of U.S. Government cargo or related to efforts to deliver the cargo as contracted. Such cost shall be reasonable, supported by appropriate documentation and subject to audit. The Contractor shall be entitled to such equitable adjustment under this contract to the extent that:

a) The U.S. Government action or inaction is otherwise not compensable under other provisions of this contract; and

b) The U.S. Government action or inaction interferes with or prevents performance of a contractual obligation by a reasonable Contractor; and

c) The Contractor’s actions or inactions have not contributed to the Government caused delay; and

d) The Contractor has exercised due diligence to mitigate the delay or the financial consequences of such delay.

6.2.1 In no case shall an equitable adjustment duplicate compensation provided in a USC9 freight rate, accessorial charge or similar charge or otherwise reimburse the Contractor for costs chargeable (by the Contractor) to or otherwise allocable to a non-USC9 shipper.

6.3 Situations where neither the Contractor nor the U.S. Government Cause Delay. To the extent delays in Contractor performance are caused by third parties, natural causes, or any cause other than those within the control of either the Contractor or the U.S. Government, this clause apportions risk. In such situations, the Contractor may be entitled to an equitable adjustment for costs incurred directly related to the safety and security of U.S.

Government cargo or related to efforts to deliver the cargo as contracted. Such cost shall be reasonable, supported by appropriate documentation and subject to audit. The Contractor shall be entitled to an equitable adjustment to the extent that:

a) The subject delay is caused by an extraordinary event not within the control of either the U.S.

Government or the Contractor. An extraordinary event is uncommon or unusual and beyond the control of a reasonable Contractor exercising customary foresight and sound business practices; and

b) The extraordinary event is otherwise not compensable under other provisions of this contract; and

c) The extraordinary event interferes with or prevents performance of a contractual obligation by a reasonable Contractor; and

d) The Contractor has exercised due diligence to mitigate the delay or the financial consequences of such delay.

6.4 Exigency Areas. With respect to declared Exigency Areas (contained in Exhibit 3, PWS, Exigency Annex), the scope of equitable adjustment is hereby broadened to the extent that action or inaction by any government, not just the U.S. Government, delays Contractor performance in a declared Exigency Area or at the border of a declared Exigency Areas. In all other respects, the terms of Paragraph 6.2 above shall apply to Exigency Areas.

6.4.1 In no case shall an equitable adjustment duplicate compensation provided in a USC9 freight rate, or otherwise reimburse the Contractor for costs chargeable (by the Contractor) is allocable to a non-USC9 shipper.

7. Equitable Adjustments

7.1 Where the Government causes delay, or where neither the Contractor nor the U.S. Government cause the delay, and the Contractor accrues costs due to the delay, pursuant the Compensable Delays clause Exhibit 2, section 6, these costs shall not be invoiced under Attachment 6 as pass-through charges. These alleged additional costs, charges, or third-party reimbursement costs shall be submitted in accordance with FAR 52.212-4(c) and (d).

7.2 Examples of costs that shall be submitted in accordance with FAR 52.212-4(c) and (d) include, but are not limited to, Government-caused delay costs, customs delay costs, border delay costs, destination delay costs, gate delay costs, and costs relating to a requested Contract modification and/or costs relating to an alleged Contract change.

7.3 Contractor claims and requests for equitable adjustments shall be submitted to the Contracting Officer for a decision within 3 years of the accrual of a claim or request for equitable adjustment.

8. Claims Timeline Contractor claims shall be submitted to the Contracting Officer for a decision within 3 years of the accrual of a claim.

9. Fuel Surcharge, FAR 252.247-7003 Exception: This contract contains the clause 252.247-7003, Pass- Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer. Carriers are excepted from the requirements of 252.247-7003 if its subcontracts with motor carriers effectively pass the equivalent Fuel Adjustment Factor provided in this contract, regarding fuel-related surcharge adjustments, to the person, corporation, or entity that directly bears the cost of fuel for shipments transported under this contract. Carriers shall provide, upon request, copies of subcontracts demonstrating a fuel surcharge clause is included in the subcontract.