ARTICLE VII: FINANCIAL MANAGEMENT

ARTICLE VII, CL. 1 - COSTS AND EXPENSES (SEP 1991) * - DEAR 970.5204-13

(a) Compensation for contractor's services. Except for the provisions of Article XVII, "Litigation, Claims and Indemnification," payment for the allowable costs as hereinafter defined shall constitute full and complete compensation for the performance of the work under this contract.

(b) (Not applicable)

(c) Allowable costs. The allowable cost of performing the work under this contract shall be the costs and expenses that are actually incurred by the contractor in the performance of the contract work in accordance with its terms, that are necessary or incident thereto, and are determined to be allowable pursuant to this paragraph (c). The determination of the allowability of cost hereunder shall be based on: (1) Reasonableness, including the exercise of prudent business judgment, as defined in paragraph (f) of this clause; (2) consistent application of generally accepted accounting principles and practices that result in equitable charges to the contract work; and (3) recognition of all exclusions and limitations set forth in this clause or as elsewhere provided in this contract as to types or amounts of items of cost. Allowable costs shall not include the cost of any item described as unallowable in paragraph (e) of this clause except as indicated therein. Failure to mention an item of cost specifically in paragraph (d) or paragraph (e) shall not imply either that it is allowable or that it is unallowable.

(d) Items of allowable cost. Subject to the other provisions of this clause, the following items of cost of work done under this contract shall be allowable to the extent indicated:

(1) Bonds and insurance (including self-insurance), as required by Article IX, Clause 6, "Required Bonds and Insurance-Exclusive of Government Property," and indemnification as provided in Article XVII "Litigation, Claims and Indemnification," of this contract.

(2) Communication costs, including telephone services, local and long-distance calls, telegrams, cablegrams, postage, and similar items.

(3) Consulting services (including legal and accounting), and related expenses, as approved by the Contracting Officer, except as made unallowable by paragraphs (e)(16) and (e)(26).

(4) Litigation and claims expenses, costs and judgments including interest thereon, incurred in accordance with Article XVII, Clause 1, "Litigation and Claims," and Article XVII, Clause 4, "General Indemnity," of this contract.

(5) Losses and expenses (including settlements made with the consent of the Contracting Officer) sustained by the University in the performance of this contract, except the losses and expenses expressly made unallowable under other provisions of this contract.

(6) Materials, supplies, and equipment, including freight transportation, material handling, inspection, storage, salvage, and other usual expenses incident to the procurement, use and disposition thereof, subject to approvals required under other provisions of this contract.

(7) Patents, purchased design, and royalty payments to the extent expressly provided for under other provisions in this contract or as approved by the Contracting Officer, and preparation of invention disclosures, reports and related documents, and searching the art to the extent necessary to make such invention disclosures in accordance with Article XII, Clause 1,"Patent Rights," of this contract.

(8) Laboratory employee personnel costs and related expenses incurred in accordance with the personnel appendix which is hereby incorporated by reference and made a part of this contract. It is specifically understood and agreed that said personnel appendix sets forth in detail personnel costs and related expenses to be allowable under this contract and is intended to document those personnel policies, practices and plans which have been found acceptable by the Contracting Officer. It is further understood and agreed that the University will advise DOE of any proposed changes in any matters covered by said policies, practices or plans which relate to this item of cost, and that the personnel appendix may be modified from time to time in writing by mutual agreement of the University and DOE without execution of an amendment to this contract for the purpose of effectuating any such changes in, or additions to, said personnel appendix as may be agreed upon by the parties. Such modifications shall be evidenced by execution of written numbered approval letters from the Contracting Officer or his representative. Types of Laboratory employee personnel costs and related expenses to be incorporated into the personnel appendix, or amendments thereto, are as follows:

(i) Salaries and wages; bonuses and incentive compensation; overtime, shift differential, holiday, and other premium pay for time worked; nonwork time, including vacations, holidays, sick, funeral, military, jury, witness, and voting leave; salaries and wages to employees in their capacity as union stewards and committeemen for time spent in handling grievances, or serving on labor management (University) committees;

(ii) Legally required contributions to old-age and survivors' insurance, unemployment compensation plans, and workers compensation plans, (whether or not covered by insurance); voluntary or agree-upon plans providing benefits for retirement, separation, life insurance, hospitalization, medical-surgical and unemployment (whether or not such plans are covered by insurance);

(iii) Travel (except foreign travel, which requires specific approval in accordance with the Article VII, Clause 13, "Foreign Travel," of this contract); incidental subsistence and other allowances of Laboratory employees, in connection with performance of work under this contract (including new employees reporting for work and transfer of employees, the transfer of their household goods and effects and the travel and subsistence of their dependents);

(iv) Employee relations, welfare, morale, etc.; programs including incentive or suggestion awards;

(v) Personnel training; including apprenticeship training programs designed to improved efficiency and productivity of contract operations, to develop needed skills, and to develop scientific and technical personnel in specialized fields required in the contract work; and

(vi) Recruitment of personnel (including help-wanted advertisement), including service of employment agencies at rates not in excess of standards commercial rates, employment office, travel of prospective employees at the request of the University for employment interviews.

(9) Repairs, maintenance, inspection, replacement, and disposal of Government-owned property and the restoration or clean-up of site and facilities.

(10) Subcontracts and purchase orders, including procurements from University-controlled sources, subject to approvals required by other provisions of this contract.

(11) Subscriptions to trade, business, technical, and professional periodicals, as authorized through the University's annual budget process.

(12) Taxes, fees, and charges levied by public agencies which the University is required by law to pay, except those which are expressly made unallowable under other provisions of this contract.

(13) Utility services, including electricity, gas, water, and sewerage.

(14) Indemnification of the Pension Benefit Guaranty Corporation, pursuant to the Employee Retirement Income Security Act of 1974, in accordance with FAR 31.205-6(j)(3)(iv).

(15) Establishment and maintenance of bank accounts in connection with the work hereunder, including, but not limited to: service charges, the cost of disbursing cash, necessary guards, cashiers, and paymasters.

(16) Camp operations, to the extent approved by the Contracting Officer.

(17) Maintenance, inspection, repair, replacement, and transportation of construction plant and equipment to the extent not covered by rentals or insurance and as provided in rental agreements approved by the Contracting Officer.

(18) Rental for construction plant and equipment rented by the University from others at rates and under written agreements approved by the Contracting Officer.

(19) Costs and compensation associated with University management and operation of the Laboratory as described in Article V, Clauses 3, 4, 5, and 6, of this contract.

(20) Costs for University conducted research and support as described in Article VIII, Clause 2, of this contract.

(21) Fines and penalties, except those expressly made unallowable under paragraph (e)(12) of this clause.

(22) Employee assistance programs; health or first-aid clinics; house or employee publications.

(23) Net cost of operating plant-site cafeteria, dining rooms, and canteens attributable to the performance of the contract.

(e) Items of unallowable costs. The following items of costs are unallowable under this contract to the extent indicated, except as may be otherwise approved in writing by the Contracting Officer or as provided elsewhere in this contract:

(1) Advertising and public relations costs designed to promote the University or the Laboratory or its products, including the costs of promotional items and memorabilia such as models, gifts and souvenirs, and the cost of memberships in civic and community organizations; except those advertising and public relations costs:
(i) Specifically required by the contract,

(ii) Approved in advance by the Contracting Officer as clearly in furtherance of work performed under the contract,

(iii) That arise from requirements of the contract and that are exclusively for recruiting personnel, acquiring scarce items for contract performance, disposing of scrap or surplus materials, the transfer of federally owned or originated technology to State and local governments and to the private sector, or acquisition of contract-required supplies and services, or

(iv) Where the primary purpose of the activity is to facilitate contract performance in support of the DOE mission.

The term "designed to promote" does not include: the use of University or Laboratory name or logos in conjunction with correspondence and press releases or imprinted on materials to be used by Laboratory employees in the course of work performance, including, but not limited to stationery, binders, writing implements, displays, presentations, buttons identifying employees and/or their programs; the creation and display or performance of models, films, videotapes, audio presentations and the like, describing the technical, scientific, science education, technology transfer, and business affirmative action efforts or achievements of the Laboratory; the operation of museums and public access centers.

(2) Bad debts (including expenses of collection) and provisions for bad debts arising out of other business of the University.

(3) Proposal expenses and costs of proposals except in the conduct of the Work for Others program.

(4) Bonuses and similar compensation under any other name, which (i) are not pursuant to an agreement between the University and employee prior to the rendering of the services or an established plan consistently followed by the University, (ii) are in excess of those costs which are allowable by the Internal Revenue Code and regulations thereunder, or (iii) provide total compensation to an employee in excess of reasonable compensation for the services rendered.

(5) Central and branch office expenses of the University, except as specifically set forth in the contract.

(6) Commissions, bonuses, and fees (under whatever name) in connection with obtaining or negotiating for a Government contract or a modification thereto, except when paid to bona fide employees or bona fide established selling organizations maintained by the contractor for the purpose of obtaining Government business.

(7) Contingency reserves, provisions for.

(8) Contributions and donations, including cash, University-owned property and services, regardless of the recipient.

(9) Depreciation in excess of that calculated by application of methods approved for use by the Internal Revenue Code of 1954, as amended, including the straight-line, declining balance (using a rate not exceeding twice the rate which would have been used had the depreciation been computed under the straight line method), or sum-of-the-years digits method, on the basis of expected useful life, to the cost of acquisition of the related fixed assets less estimated salvage or residual value at the end of the expected useful life.

(10) Dividend provisions or payments and, in the case of sole proprietors and partners, distributions of profit.

(11) Entertainment, including costs of amusement, diversion, social activities; and directly associated costs such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities; costs of membership in any social, dining or country club or organization, except the costs of such recreational activities for on-site employees as may be approved by the Contracting Officer or provided for elsewhere in this contract.

(12)(i) Fines or penalties caused directly by bad faith or willful misconduct on the part of some officer or officers of the Regents of the University of California or any person acting as Laboratory Director; or

(ii) Criminal penalties assessed pursuant to 223(c) of the Atomic Energy Act of 1954, as amended (42 U.S.C. [[section]] 2273(c)) and as provided for in Article XVII, Clause 2(j), "Nuclear Indemnity Agreement," of this contract.

(13) Government-furnished property, except to the extent that cash payment therefor is required pursuant to procedures of DOE applicable to transfers of such property to the University from others.

(14) Insurance (including any provisions of a self-insurance reserve) on any person where the University under the insurance policy is the beneficiary, directly or indirectly, and insurance against loss of or damage to Government property as defined in Article IX, Clause 1, "Property," of this contract.

(15) Interest, however represented (except (i) interest incurred in compliance with Article VII, Clause 14, "State and Local Taxes," of this contract, or, (ii) imputed interest costs relating to leases classified and accounted for as capital leases under generally accepted accounting principles (GAAP), provided that the decision to enter into a capital leasing arrangement has been specifically authorized and approved by the DOE in accordance with applicable procedures and such interest costs are recorded in an appropriately specified DOE account established for such purpose), bond discounts and expenses, and costs of financing and refinancing operations.

(16) Legal, accounting, and consulting services costs incurred in connection with: the preparation and issuance of stock, rights, organization or reorganization; the prosecution of judicial or administrative proceedings against the United States or the defense of judicial or administrative proceedings and investigations under the Major Fraud Act into alleged violations of statutes or regulation (as those terms are used in the Major Fraud Act) by the United States against the University, except as permitted by the Equal Access to Justice Act (28 U.S.C. [[section]] 2412 and 5 U.S.C. [[section]] 504) and the Major Fraud Act (41 U.S.C. [[section]] 256) and except as otherwise approved by the Contracting Officer; and the prosecution of patent infringement litigation, except where incurred pursuant to the Litigation and Claims clause of this contract. This provision shall not be applicable to costs incurred by the University in fulfillment of its responsibilities under this contract in normal, routine or informal interactions such as routine inspections, audits, and reviews of work by sponsors, with a state or the federal government.

(17) Losses (including litigation expenses, Counsel fees, and settlements) on, or arising from the sale, exchange, or abandonment of capital assets, including investments; losses on other contracts, including the University's contributed portion under cost-sharing contracts; losses in connection with price reductions to and discount purchases by employees (excluding losses arising from the cost of operating cafeteria and food service operations) and other from any source; and losses where such losses or expenses:

(i) Are compensated for by insurance or otherwise or which would have been compensated by insurance required by law or by written direction of the Contracting Officer but which the University failed to procure or maintain through the fault of some officer or officers of The Regents of the University of California or any person acting as Laboratory Director;

(ii) Result from willful misconduct or lack of good faith on the part of some officer or officers of The Regents of the University of California or any person acting as Laboratory Director;

(iii) Represent liabilities to third persons from which the contractor has expressly accepted responsibility under other terms of this contract.

(18) Maintenance, depreciation, and other costs incidental to the contractor's idle or excess facilities (including machinery and equipment), other than reasonable standby facilities.

(19) Membership in trade, business, and professional organizations, except as approved by the Contracting Officer.

(20) Precontract costs, except as expressly made allowable under the provisions in this contract.

(21) (Not applicable)

(22) (Not applicable)

(23) (Not applicable)

(24) Taxes, fees, and charges in connection with financing, refinancing, or refunding operations, including listing of securities on exchanges, taxes which are paid contrary to Article VII, Clause 14, "State and Local Taxes" (provided that the Government's recovery of state and local taxes inadvertently paid shall be limited to any refund action pursued at the direction of the Contracting Officer), federal taxes on net income and excess profits, special assessments on land which represent capital improvement and taxes on accumulated funding deficiencies of, or prohibited transactions involving, employee deferred compensation plans pursuant to Section 4971 or Section 4975 of the Internal Revenue Code of 1954, as amended, respectively.'

(25) Travel expenses of the officers, proprietors, executives, administrative heads and other employees of the University's central office or branch office organizations concerned with the general management, supervision, and conduct of the University's business as a whole, except to the extent that particular travel is in connection with the contract or approved by the Contracting Officer.

(26) Salary or other compensation (and expenses related thereto) of any individual employed under this contract as a consultant or in another comparable employment capacity who is an employee of another organization and concurrently performing work on a full-time annual basis for that organization under a cost-type contract with DOE, except to the extent that cash payment therefor is required pursuant to the provisions of this contract or procedure of DOE applicable to the borrowing of such an individual from another cost-type contractor.

(27) (Not applicable)

(28) Special construction industry "funds" financed by employer contributions for such purposes as methods and materials research, public and industry relations, market development, and disaster relief, except as specifically provided elsewhere in this contract.

(29) Late premium payment charges related to employee deferred compensation plan insurance.

(30) Facilities capital cost of money. (CAS 414 and CAS 417).

(31) Cost incurred to influence (directly or indirectly) legislative action on any matter pending before Congress or a State legislature as delineated in Article VII, Clause 16, "Legislative Lobbying Cost Prohibition," of this contract.

(32) Commercial automobile rental expenses (exclusive of employee automobile rental while on travel, or short term use not to exceed 60 days) unless approved by the Contracting Officer.

(33) Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of any false certification) brought by the Government where the University, its agents or employees, has pleaded nolo contendere to a charge of fraud or similar proceeding or where such charge results in a judgment or a conviction; provided, however, that such costs incurred in defense of a civil fraud or similar proceeding brought against an employee or agent shall be allowable in accordance with Article XVII, Clause 1, "Litigation and Claims."

(34) Costs of alcoholic beverages.

(35) (Not applicable)

(36) Cost of attendance at any meeting or conference which the Contracting Officer may determine to be unallocable or unreasonable for application to this contract.

(f) Reasonable costs. A cost shall be considered reasonable if the nature of the goods or services acquired or applied, and the amount involved therefor, reflect the action that a prudent person would have taken under the circumstances prevailing at the time the decision to incur the cost was made. Major considerations involved in the determination of the reasonableness of a cost are: (i) whether or not the cost is of a type generally recognized as necessary for the operation of the Laboratory or the performance of the contract; (ii) the restraints or requirements imposed by such factors as arm's-length bargaining, Federal and State laws and regulations, and contract terms and conditions; (iii) whether or not the individuals concerned acted with due prudence in the circumstances, considering their responsibilities to the Laboratory, its employees, the Government, and the public at large; and (iv) the extent to which the actions taken with respect to the incurrence of the cost are consistent with established University policies and practices applicable to the work of the University generally, including federally-sponsored agreements.

(g) In the event the University fails to obtain a prior approval required of any action by the terms of this contract, the Contracting Officer may give after the fact approval to the extent that the Contracting Officer can determine that the Government sustained no loss as the result of the failure to obtain the prior approval or that such failure did not adversely affect the interests of the Government.

ARTICLE VII, CL. 2 - OBLIGATION OF FUNDS (SEP 1991) * - DEAR 970.5204-15

(b) Limitation on payment by the Government. Except as otherwise provided in this contract and except for costs which may be incurred by the University pursuant to Article XIX, Clause 1, "Term, Termination and Expiration," of this contract, or costs of claims allowable under the contract occurring after completion or termination and not released by the University at the time of financial settlement of the contract in accordance with Article VII, Clause 3, "Payments and Advances," of this contract, payment by the Government under this contract on account of allowable costs shall not, in the aggregate, exceed the amount obligated with respect to this contract. Unless expressly negated in this contract, payment on account of those costs excepted in the preceding sentence which are in excess of the amount obligated with respect to this contract shall be subject to the availability of (1) collections accruing to the University in connection with the work under this contract and processed and accounted for in accordance with the requirements specified in DOE Accounting directives as provided in Article VII, Clause 3, "Payments and Advances," of this contract, and (2) other funds which DOE may legally use for such purpose, provided DOE will use its best efforts to obtain the appropriation of funds for this purpose if not otherwise available.

(c) Notices s University excused from further performance. The University shall notify DOE in writing whenever the unexpended balance of funds (including collections) available under paragraph (a) above, plus the University's best estimate of collections to be received during the 90 day period hereinafter specified, is in the University's best judgment sufficient to continue contract operations at the programmed rate for only 90 days and to cover the University's costs and compensation provided for in Article V, Clauses 3, 4, 5 and 6, and outstanding commitments and liabilities on account of costs allowable under the contract at the end of such period. Whenever the unexpended balance of funds (including collections) available under paragraph (a) above, less the amount of the University's costs and compensation provided for in Article V, Clauses 3, 4, 5 and 6 then earned but not paid, is in the University's best judgment either sufficient only to liquidate outstanding commitments and liabilities on account of costs allowable under this contract or is equal to zero, the University shall immediately notify DOE and shall make no further commitments or expenditures (except to liquidate existing commitments and liabilities), and, unless the parties otherwise agree, the University shall be excused from further performance (except such performance as may become necessary in connection with termination by the Government) and the performance of all work hereunder will be deemed to have been terminated for the convenience of the Government in accordance with the provisions of Article XIX, Clause 1, "Term, Termination and Expiration," of this contract.

(d) Approved Funding Programs; cost and commitment limitations. In addition to the limitations provided for elsewhere in this contract, DOE may, through financial plans, such as Approved Funding Programs or other directives issued to the University, establish controls on the costs to be incurred and commitments to be made in the performance of the contract work. Such plans and instruction may be amended or supplemented from time to time by DOE. The University hereby agrees to comply with the specific limitations (ceilings) on costs and commitments set forth in such plans and directives, to use its best efforts to comply with other requirements of such plans and directives, and to promptly notify DOE in writing, whenever it has reason to believe the authorized financial levels of costs and commitments will be exceeded or substantially underrun. When such costs and commitments exceed or fall below authorized financial levels, the parties may agree upon appropriate adjustments designed to assure compliance with overall funding limitations.

(e) Government's right to terminate not affected. The giving of any notice under this article shall not be construed to waive or impair any right of the Government to terminate the contract under the provisions of Article XIX, Clause 1, "Term, Termination and Expiration," of this contract.

ARTICLE VII, CL. 3 - PAYMENTS AND ADVANCES (JAN 1991) * - DEAR 970.5204-16

(b) Special bank account s use. All advances of Government funds shall be withdrawn pursuant to a letter of credit in favor of the financial institution or, in the option of the Government, shall be made by direct payment to the University, and shall be deposited only in the Special Bank Account referred to in the Agreement for Special Bank Account, which is attached hereto and incorporated into this contract as an appendix. No part of the funds in the Special Bank Account shall be (1) mingled with any funds of the University or (2) used for a purpose other than that of making payments for costs allowable under this contract. If the Contracting Officer shall at any time determine that the cash balance in such bank account exceeds current needs, the University shall promptly make such disposition of the excess as the Contracting Officer may direct.

(c) Title to funds advanced. Title to the unexpended balance of any funds advanced and of any bank account established pursuant to this clause shall remain in the Government and be superior to any claim or lien of the financial institution of deposit or others. It is understood that an advance to the University hereunder is not a loan to the University, and will not require the payment of interest by the University, and that the University acquires no right, title or interest in or to such advance other than the right to make expenditures therefrom, as provided in this clause.

(d) Review and approval of costs incurred. The University shall prepare and submit annually as of September 30, a voucher for the total of net expenditures accrued (i.e., net cost incurred) for the period covered by the voucher, and DOE, after audit and appropriate adjustment, will approve such voucher. This approval by DOE will constitute an acknowledgment by DOE that the net costs incurred are allowable under the contract and that they have been recorded in the accounts maintained by the University in accordance with DOE accounting policies, but will not relieve the University of responsibility for DOE's assets in its care, for appropriate subsequent adjustments, or for errors later becoming known to DOE; provided, however, that DOE asserts a claim in this regard against the University under the procedures set forth in Article V, Clause 9, "Procedure to Disallow Costs," of this contract, prior to October 1, 2002.

(e) Financial settlement. The Government shall promptly pay to the University any unpaid balance of allowable costs upon termination of the work, expiration of the term of the contract, or completion of the work and its acceptance by the Government after (1) compliance by the University with DOE's patent clearance requirements, and (2) the furnishing by the University of:

(i) An assignment of the University's rights to any refunds, rebates, allowances, accounts receivable, collections accruing to the University in connection with the work under this contract, or other credits applicable to allowable costs under the contract;

(ii) A closing financial statement;

(iii) The accounting for Government-owned property required by Article IX, Clause 1, "Property," of this contract; and

(iv) A release discharging the Government, its officers, agents and employees from all liabilities, obligations, and claims arising out of or under this contract subject only to the following exceptions:

(A) Specified claims in stated amounts or in estimated amounts where the amounts are not susceptible to exact statement by the University;

(B) Claims, together with reasonable expenses incidental thereto, based upon liabilities of the University to third parties arising out of the performance of this contract; provided that such claims were not brought against the University prior to the date of execution of the release;

(C) Claims for reimbursement of costs (other than expenses of the University by reason of any indemnification of the Government against patents, copyrights, or technology transfer liability), including reasonable expenses incidental thereto, incurred by the University under the provisions of this contract relating to patents; and

(D) Claims, and all related expenses, based upon liability or obligation for environment matters arising out of performance of this contract.

(g) Collections. All collections other than reimbursement of cost for University research and supporting efforts for the Laboratory in accordance with Article VII, Clause 1(d)(20), of this contract, the University's costs and compensation authorized in accordance with Article VII, Clause 1(d)(19), of this contract, and royalties or other income received from technology transfer activities in accordance with this contract, accruing to the University in connection with the work under this contract, shall be Government property and shall be processed and accounted for in accordance with applicable directives treated under this contract pursuant to Article XV, Clause 3, "Procedure for Treatment of Prospective DOE Directives and Extant DOE Orders," of this contract and, to the extent consistent with applicable provisions contained in DOE Order 2200.6, shall be deposited in the Special Bank Account to be available for payment of allowable costs under this contract.

(h) Direct payment of charges. The Government reserves the right, upon ten days written notice from the Contracting Officer to the University, to pay directly to the persons concerned, all amounts due which otherwise would be allowable under this contract. DOE may use any such funds as an offset to any payment owed the University under this contract for the University's indebtedness to the payee, provided that the University has not already paid the obligation.

ARTICLE VII, CL. 4 - ACCOUNTS, RECORDS AND INSPECTION (APR 1984) - DEAR 970.5204-9

(b) Inspection and audit of accounts and records. All books of account and records relating to this contract shall be subject to inspection and audit by DOE at all reasonable times, before and during the period of retention provided for in (d) below, and the University shall afford DOE proper facilities for such inspection and audit.

(c) Audit of subcontractors' records. The University also agrees, with respect to any subcontracts (including fixed-price or unit-price subcontracts or purchase orders) where, under the terms of the subcontract, costs incurred are a factor in determining the amount payable to the subcontractor of any tier, to either conduct an audit of the subcontractor's cost or arrange for such an audit to be performed by the cognizant government audit agency through the Contracting Officer.

(d) Disposition of records. Except as agreed upon by the Government and the University, all financial and cost reports, books of account and supporting documents, and other data evidencing costs allowable, collections accruing to the University in connection with the work under this contract, and other applicable credits under this contract, shall be the property of the Government and shall be delivered to the Government or otherwise disposed of by the University either as the Contracting Officer may from time to time direct during the progress of the work or, in any event, as the Contracting Officer shall direct upon completion or termination of this contract and final audit of accounts hereunder. Except as provided in this contract, all other records in the possession of the University relating to this contract shall be preserved by the University for a period of three years after final payment under this contract or otherwise disposed of in such manner as may be agreed upon by the Government and the University.

(e) Reports. The University shall furnish such progress reports and schedules, financial and cost reports, and other reports concerning the work under this contract as the Contracting Officer may from time to time require.

(f) Inspections. The DOE shall have the right to inspect the work and activities of the University under this contract at such time in such manner as it shall deem appropriate.

(g) Subcontracts. The University further agrees to require the inclusion of provisions similar to those in paragraphs (a) through this paragraph (g) of this clause in all subcontracts (including fixed-price of unit-piece subcontracts or purchase orders) of any tier entered into hereunder where, under the terms of the subcontract, costs incurred are a factor in determining the amount payable to the subcontractor. The University further agrees to include an audit clause, the substance of which is the "Audit" Clause set forth at FAR 52.215-2, in each subcontract which does not include provisions similar to those in paragraph (a) through this paragraph (g) of this clause, but which contains a "defective cost or pricing data" clause.

(h) Internal audit. The University agrees to conduct an internal audit and examination satisfactory to DOE of the records, operations, expenses, and the transactions with respect to costs claimed to be allowable under this contract annually and at such other times as may be mutually agreed upon. The results of such audit, including the working papers, shall be submitted or made available to the Contracting Officer.

ARTICLE VII, CL. 5 - EXAMINATION OF RECORDS BY COMPTROLLER GENERAL (APR 1984) - FAR 52.215-1

(b) The Comptroller General of the United States or a duly authorized representative from the General Accounting Office shall, until 3 years after final payment under this contract or for any shorter period specified in Federal Acquisition Regulation (FAR) Subpart 4.7, "Contractor Records Retention," have access to and the right to examine any of the University's directly pertinent books, documents, papers, or other records involving transactions related to this contract.

(c) The University agrees to include in first-tier subcontracts under this contract a clause to the effect that the Comptroller General or a duly authorized representative from the General Accounting Office shall, until 3 years after final payment under the subcontract or for any shorter period specified in FAR Subpart 4.7, have access to and the right to examine any of the subcontractor's directly pertinent books, documents, papers, or other records involving transactions related to the subcontract. "Subcontract," as used in this clause, excludes (1) purchase orders not exceeding $10,000 and (2) subcontracts or purchase orders for public utility services at rates established to apply uniformly to the public, plus any applicable reasonable connection charge.

(d) The periods of access and examination in paragraphs (b) and (c) above for records relating to (1) appeals under the Disputes clause, (2) litigation or settlement of claims arising from the performance of this contract, or (3) costs and expenses of this contract to which the Comptroller General or a duly authorized representative from the General Accounting Office has taken exception shall continue until such appeals, litigation, claims, or exceptions are disposed of.

(e) Nothing in this contract shall be deemed to preclude an audit by the General Accounting Office of any transaction under this contract.

ARTICLE VII, CL. 6 - INTEGRATED ACCOUNTING (SPECIAL)

ARTICLE VII, CL. 7 - FINANCIAL MANAGEMENT SYSTEM (SPECIAL)

ARTICLE VII, CL. 8 - COST ACCOUNTING STANDARDS (APR 1992) - FAR 52.230-2

(1) (CAS-covered Contracts Only) By submission of a Disclosure Statement, disclose in writing the University's cost accounting practices as required by FAR 30.202-1 through 30.202-5 including methods of distinguishing direct costs from indirect costs and the basis for allocating indirect costs. The practices disclosed for this contract shall be the same as the practices currently disclosed and applied on all other contracts and subcontracts being performed by the University and which contain a Cost Accounting Standards (CAS) clause. If the University has notified the Contracting Officer that the Disclosure Statement contains trade secrets and commercial or financial information which is privileged and confidential, the Disclosure Statement shall be protected and shall not be released outside of the Government.

(2) Follow consistently the University's cost accounting practices in accumulating and reporting contract performance cost data concerning this contract. If any change in cost accounting practices is made for the purposes of any contract or subcontract subject to CAS requirements, the change must be applied prospectively to this contract and the Disclosure Statement must be amended accordingly. If the contract price or cost allowance of this contract is affected by such changes, adjustment shall be made in accordance with subparagraph (a)(4) or (a)(5) of this clause, as appropriate.

(3) Comply with all CAS, including any modifications and interpretations indicated thereto contained in FAR Subpart 30.4, in effect on the date of award of this contract or, if the University has submitted cost or pricing data, on the date of final agreement on price as shown on the University's signed certificate of current cost or pricing data. The University shall also comply with any CAS (or modifications to CAS) which here after become applicable to a contract or subcontract of the University. Such compliance shall be required prospectively from the date of applicability to such contract or subcontract.

(4)(i) Agree to an equitable adjustment as provided in the Changes clause of this contract if the contract cost is affected by a change which, pursuant to subparagraph (a)(3) of this clause, the University is required to make to the University's established cost accounting practices.

(ii) Negotiate with the Contracting Officer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of subparagraph (a)(4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the United States.

(iii) When the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(i) of this clause, negotiate an equitable adjustment as provided in the Changes clause of this contract.

(5) Agree to an adjustment of the contract price or cost allowance, as appropriate, if the University or a subcontractor fails to comply with an applicable Cost Accounting Standard, or to follow any cost accounting practice consistently and such failure results in any increased costs paid by the United States. Such adjustment shall provide for recovery of the increased costs to the United States, together with interest thereon computed at the annual rate established under section 6621 of the Internal Revenue Code of 1986 (26 U.S.C. [[section]] 6621) for such period, from the time the payment by the United States was made to the time the adjustment is effected. In no case shall the Government recover costs greater than the increased cost to the Government, in the aggregate, on the relevant contracts subject to the price adjustment, unless the University made a change in its cost accounting practices of which it was aware or should have been aware at the time of price negotiations and which it failed to disclose to the Government.

(c) The University shall permit any authorized representatives of the Government to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause.

(d) The University shall include in all negotiated subcontracts which the University enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all CAS in effect on the subcontract's award date or if the subcontractor has submitted cost or pricing data, on the date of final agreement on price as shown on the subcontractor's signed Certificate of Current Cost or Pricing Data. This requirement shall apply only to negotiated subcontracts in excess of $500,000 where the price negotiated is not based on--

(1) Established catalog or market prices of commercial items sold in substantial quantities to the general public; or

(2) Prices set by law or regulation, and except that the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in FAR 30.201-1.

Note (1): New or modified CAS shall be applicable to both national defense and nondefense CAS-covered contracts upon award of a new national defense CAS-covered contract containing the new or modified Standard. The award of a new nondefense CAS-covered contract shall not trigger application of new CAS or modification to CAS.

Note (2): Subcontractors shall be required to submit their Disclosure Statements to the University. However, if a subcontractor has previously submitted its Disclosure Statement to a Government Administrative Contracting Officer (ACO), it may satisfy that requirement by certifying to the University the date of the Statement and the address of the ACO.

Note (3): In any case where a subcontractor determines that the Disclosure Statement information is privileged and confidential and declines to provide it to the University or higher tier subcontractor, the University may authorize direct submission of that subcontractor's Disclosure Statement to the same Government offices to which the University was required to make submission of its Disclosure Statement Such authorization shall in no way relieve the University of liability as provided in subparagraph (a)(5) of this clause. In view of the foregoing and since the contract may be subject to adjustment under this clause by reason of any failure to comply with rules, regulations, and Standards as specified in FAR Subparts 30.3 and 30.4 in connection with covered subcontracts, it is expected that the University may wish to include a clause in each such subcontract requiring the subcontractor to appropriately indemnify the University. However, the inclusion of such a clause and the terms thereof are matters for negotiation and agreement between the University and the subcontractor, provided that they do not conflict with the duties of the University under its contract with the Government. It is also expected that any subcontractor subject to such indemnification will generally require substantially similar indemnification to be submitted by its subcontractors.

Note (4): If the subcontractor is a business unit which, pursuant to FAR 30.201-2(b) is entitled to elect modified contract coverage and to follow 30.401 and 30.402, the clause at 52.230-5, "Disclosure Consistency of Cost Accounting Practices," of the Federal Acquisition Regulation shall be inserted in lieu of this clause.

Note (5): The terms defined in FAR 30.301 and 31.001 shall have the same meanings herein. As there defined, "negotiated subcontract" means any subcontract except a firm-fixed-price subcontract made by the University or subcontractor after receiving offers from at least two persons not associated with each other or with the University or subcontractor, providing (1) the solicitation to all competitors is identical, (2) price is the only consideration in selecting the subcontractor from among the competitors solicited, and (3) the lowest offer received in compliance with the solicitation from among those solicited is accepted.

ARTICLE VII, CL. 9 - NON-LIABILITY WITH RESPECT TO COST ACCOUNTING STANDARDS (SPECIAL)

ARTICLE VII, CL. 10 - ADMINISTRATION OF COST ACCOUNTING STANDARDS (SEP 1987) * - FAR 52.230-4

(a) Submit to the cognizant Contracting Officer a description of any accounting change, the potential impact of the change on contracts containing a CAS clause, and if not obviously immaterial, a general dollar magnitude cost impact analysis of the change which displays the potential shift of costs between CAS-covered contracts by contract type (i.e., firm-fixed-price, incentive, cost-plus-fixed fee, etc.) and other University business activity. As related to CAS-covered contracts, the analysis should display the potential impact of funds of the various Agencies/Departments (i.e., Department of Energy, National Aeronautics and Space Administration, Army, Navy, Air Force, other Department of Defense, other Government) as follows:

(1) For any change in cost accounting practices required to comply with a new CAS in accordance with subparagraph (a)(3) and subdivision (a)(4)(i) of the CAS clause, within 60 days (or such other date as may be mutually agreed to) after award of a contract requiring this change.

(2) For any change in cost accounting practices proposed in accordance with subdivision (a)(4)(ii) or (a)(4)(iii) of the CAS clause or with subparagraph (a)(3) of the Disclosure and Consistency of Cost Accounting Practices clause, not less than 60 days (or such other date as may be mutually agreed to) before the effective date of the proposed change.

(3) For any failure to comply with an applicable CAS or to follow a disclosed practice as contemplated by subparagraph (a)(5) of the CAS clause or by subparagraph (a)(4) of the Disclosure and Consistency of Cost Accounting Practices clause, within 60 days (or such other date as may be mutually agreed to) after the date of agreement of noncompliance by the University .

(c) Agree to appropriate contract and subcontract amendments to reflect adjustments established in accordance with subparagraphs (a)(4) and (a)(5) of the CAS clause or with subparagraphs (a)(3) or (a)(4) of the CAS Disclosure and Consistency of Cost Accounting Practices clause.

(d) For all subcontracts subject either to the CAS clause or to the Disclosure and Consistency of Cost Accounting Practices clause--

(1) So state in the body of the subcontract, in the letter of award, or in both (self-deleting clauses shall not be used); and (2) include the substance of this clause in all negotiated subcontracts. In addition, within 30 days after award of the subcontract, submit the following information to the University's cognizant contract administration office for transmittal to the contract administration office cognizant of the subcontractor's facility:
(i) Subcontractor's name and subcontract number.

(ii) Dollar amount and date of award.

(iii) Name of Contractor making the award.

(iv) Any changes the subcontractor has made or proposes to make to accounting practices that affect prime contracts or subcontracts containing the CAS clause or Disclosure and Consistency of Cost Accounting Practices clause, unless these changes have already been reported. If award of the subcontract results in making one or more CAS effective for the first time, this fact shall also be reported.

(e) Notify the Contracting Officer in writing of any adjustments required to subcontracts under this contract and agree to an adjustment, based on them, to this contractor's price or estimated cost and fee. This notice is due within 30 days after proposed subcontract adjustments are received and shall include a proposal for adjusting the higher tier subcontract or the prime contract appropriately.

(f) For subcontracts containing the CAS clause, require the subcontractor to comply with all Standards in effect on the date of award or of final agreement on price, as shown on the subcontractor's signed Certificate of Current Cost or Pricing Data, whichever is earlier.

ARTICLE VII, CL. 11 - PRINCIPLES AND PROCEDURES FOR ACCOUNTING AND RECONCILIATION OF UNIVERSITY OF CALIFORNIA RETIREMENT PLAN (UCRP) FUNDING OBLIGATIONS FOR DEPARTMENT OF ENERGY CONTRACT NOS. W-7405-ENG-36, W-7405-ENG-48 AND DE-AC03-76SF00098 (SPECIAL)

The adoption of these principles and procedures shall not be deemed nor are they intended to create rights of third parties, i.e. the DOE, nor abrogate existing rights of UCRP Members employed under Contract Nos. W-7405-ENG-36, W-7405-ENG-48 and DE-AC03-76SF00098. These principles and procedures shall have no effect upon the vested rights and entitlement of individual Members or their beneficiaries of the UCRP Defined Benefit Retirement Plan of the University of California Retirement System (UCRP) nor upon the exercise of those rights and entitlement nor shall they be in contradiction of Internal Revenue Service Code applicable to Section 401 (a) qualified plans.

(b) Scope. These principles and procedures shall apply with respect to the cost accounting of the UCRP Defined Benefit Retirement Plan of the University of California Retirement System (UCRP). Procedures and reports for the accounting of DOE-funded employer contributions to UCRS, as specified in paragraph (d) below, shall apply as of June 30, 1991 and annually thereafter. The principles for any financial settlement of pension funding obligations as specified in paragraphs (f) and (g) below, shall apply only to and upon disaffiliation of one or more of the Lawrence Berkeley Laboratory, the Lawrence Livermore National Laboratory, or the Los Alamos National Laboratory from the management of the University of California. References to disaffiliation of a laboratory in these principles are intended to cover the circumstances created when the term of either Contract Nos. W-7405-ENG-36, W-7405-ENG-48 and DE-AC03-76SF00098 expires or performance of work by the University at one or more laboratories is terminated in accordance with the clauses of the contracts entitled "Term, Termination and Expiration." The term "effective date of disaffiliation" means the date of expiration of the contract term as extended, and/or the effective date or dates of termination as provided in said clauses.

All assets and liabilities associated with employee contributions to the Supplemental Defined Contribution Plan and Tax-Deferred Retirement Programs of UCRS shall be excluded from these principles and procedures.

(c) Agreements.

(1) DOE agrees to continue to fund for the contract term(s), as extended, the employer cost of UCRP for contract employees at the contribution rates established from time to time by the Regents, subject to the following restriction: The DOE funded contribution shall not exceed the full funding limit as defined in the Internal Revenue Code, Section 412.

(2) DOE agrees to require that, in the event of termination of work under the contract, a successor contractor shall permanently maintain the benefit accrual terms and conditions of UCRP for the University employees transferred to the successor contractor insofar as UCRP is consistent with the provisions of applicable law.

(3) The University agrees to provide DOE with the annual financial report of UCRP as well as actuarial valuation reports of the UCRP whenever actuarial valuations are conducted. The valuation reports shall be provided to DOE one month following their presentation to The Regents.

(4) The University will provide DOE with annual separate actuarial valuations for each of the laboratories. Such actuarial reports shall follow the format of the UCRP interim actuarial report. Specifically, the actuarial reports shall include the cash flow data referred to in paragraph (d), the total compensation as defined in the plan, demographic data of active participants arranged in age, service and salary cells, demographic data of retirees and terminated vested participants arranged in age and benefit amount cells, a schedule of amortization basis and corresponding charges and credits, an itemization of the changes in the number of actives, retirees and terminated vested participants during the previous plan year, and the current rate of interest being credited to employee contributions. When DOE establishes a final actuarial report format, additional information may be required. The University agrees to negotiate in good faith to include additional information in the annual separate actuarial valuations which DOE may reasonably request. DOE shall pay the cost of such valuation.

(5) Unless otherwise agreed, the University will conduct an actuarial valuation of UCRP as of the effective date of disaffiliation of one or more laboratories. DOE agrees to pay one-half the cost of such valuation.

(1) Market value of assets at the beginning of a plan year;

(2) (i) Employer contributions made during a plan year, less the employer contributions transferred to the Social Security Administration on behalf of contract employee members of UCRP who elected Social Security coverage in 1976 or 1977;

(ii) Employee contributions made during a plan year, less the employee contributions transferred to the Social Security Administration on behalf of contract employee members of UCRP who elected Social Security coverage in 1976 or 1977;

(3) The dollar amount of investment income from applying the rate of return on the accrual-basis market value of UCRP assets to items (1), (2), (4), and (5) of this Section;

(4) Benefits disbursed on account of contract employees during a plan year, including return of accumulated employee contributions;

(5) Administrative expenses paid from the trust. Such expenses shall be allocated to the laboratories in the same proportion that the market value of assets assigned to the laboratory segment bears to the market value of the total fund assets as of the beginning of the plan year;

(6) The DOE and University agree that prior to June 30, 1991, no adjustment of liabilities for contract and non-contract service is required. After June 30, 1991, if more than 10 University employees change employment to the Laboratory from another University entity, the net amount of the annual accounting of assets and liabilities will be adjusted to reflect the assignment of individuals moving to and from University entities and DOE contract work.

(7) Market value of assets at the end of the plan year = [(1) + (2) + (3) - (4) - (5) + (6)]

The annual accounting shall include the market value of such assets as of June 30, 1991, and as of the end of each plan year thereafter.

The first accounting, as of June 30, 1991, shall be a retroactive accounting that will not use the formula specified above. Instead, only the end-of-year asset value [item (7)] shall be determined. It will be determined by the formula [a x b/c = 7], where "a", "b" and "c" are determined as follows:

a = Market value of assets of UCRP, determined as of the end of the plan year.

b = Liabilities for Present and Future Benefits of all Contract Members, calculated as of the end of the plan year using all UCRP actuarial assumptions and UCRP calculation method, both then in effect.

c = Liabilities for Present and Future Benefits of all UCRP Members, including Contract Employees, calculated as of the end of the plan year using all UCRP actuarial assumptions and the UCRP calculation method, both then in effect.

The liabilities for (b) and (c) shall be equal to the present value of benefits for pensioners, survivors, and terminated vested members whose last service was with the laboratory plans, plus the actuarial liability for active laboratory employees at the end of the plan year.

(e) The term "contract service assets" shall mean the accrual basis market value given by the accounting to which referred in paragraph (d).

(f) Procedures for Determination of Contract Service pension Assets and Liabilities Upon Disaffiliation.

(1) Liabilities for Present and Future Benefits of Contract Employees. Liabilities in the Event There is a Successor Pension Plan. The liabilities as of the effective date of disaffiliation for members to be covered by a successor pension plan shall be calculated by using the UCRP plan provisions, actuarial assumptions, and actuarial cost methods as then in effect. Active members are the only members to be covered by a successor pension plan.

(2) Contract Service Assets in the Event There is Successor pension Plan. In the event there is a successor pension plan, contract service assets shall be determined by a formula to be negotiated between the parties, subject to an IRS ruling and in compliance with the laws of the State of California as to permitted agreements that may be contained in the aforementioned formula.

If permitted, contract service assets for a successor contractor shall be determined generally in accordance with the following formula:

A - B, where

A = Market value of assets assigned to the DOE laboratories as determined from paragraph (d) as of the last business day of the full calendar quarter which ends coincident with, or next preceding, the effective date of disaffiliation.

B = Liabilities associated with pensioners, survivors, terminated vested members and active members (contract employees) who are retained by the University as determined in paragraph (f) (1). In determining these liabilities, the present value of future ad hoc benefit improvements may be included.

Otherwise, contract service assets shall be determined generally in accordance with the following formula:

A x (B/C), where

A = Market value of assets of the University of California Retirement Fund, determined as of the last business day of the full calendar quarter which ends coincident with, or next preceding, the effective date of disaffiliation.

B = Liabilities for present and future benefits of contract members to be covered by a Successor Pension Plan, as determined by (f) (1) above.

C = Liabilities for present and future benefits of all UCRP members calculated as of the effective date of disaffiliation using all UCRP actuarial assumptions and the UCRP calculation method, both then in effect.

Notwithstanding the provisions of paragraph (g)(1) below, the parties further agree to consider the desirability of covering pensions, survivors, and terminated vested members under a successor plan.

(g) Disposition of Contract Service Assets and Liabilities. The parties agree that any disposition of contract service assets or transfer of liabilities upon disaffiliation shall be consistent with the then applicable federal and state laws relating to qualified defined benefit pension plans and shall be subject to obtaining such rulings and/or approvals from cognizant Federal and State agencies as may be required by law or deemed prudent by The Regents or the DOE.

(1) Retention of Assets and Liabilities. When a successor pension plan has been established by a successor contractor, UCRP shall retain the liabilities associated with pensioners, survivors, terminated vested members, and active members (contract employees) who are retained by the university as determined in paragraphs (f) (1). In the event that there is no successor plan, UCRP shall retain the liabilities associated with all members (contract employees).

(2) Transfer of Assets and Liabilities to Successor Pension Plan. Under a successor pension plan acceptable to the DOE and which fulfills all of the Regents' fiduciary responsibilities under UCRP, and which further assumes UCRP liabilities for transferred contract employees, the Regents agree to transfer to the trustees of such successor plan an amount equal to the contract service assets as determined in Paragraph (f) (2). Such amount shall be transferred as investment holdings of the UCRP, plus any necessary U.S. Currency, or, by mutual agreement of the parties, the total amount may be transferred as U.S. Currency. Agreement by the DOE and The Regents will not be unreasonably withheld.

(i) If the asset transfer to the successor contractor's trust is made in the form of investment holdings, such holdings shall include cash, equity securities, and fixed income securities, but shall exclude investment holding (and earnings thereon) acquired after the effective date of disaffiliation. Such assets shall be allocated on a pro-rated basis, with proration for fixed income assets based on rating and classification. The pro-rata allocation shall be the ratio of (A) and (B) where
(A) is the contract service assets referred to in paragraph (f) (2) and

(B) is the total assets of the Retirement Fund of UCRP at market value as of the effective date of disaffiliation.

Such assets shall be transferred within 36 months of the effective date of disaffiliation, and shall include actual investment earnings of such assets from the effective date of disaffiliation to the date of transfer.

(ii) The University will transfer assets at a rate at least sufficient to meet the cash flow requirement of transferred employees who go into benefit status under the successor plan.

(iii) If the transfer is made as U.S. Currency, the transfer shall be increased to include interest on the amount at the actuarially assumed rate(s) of investment return in effect, from the first day following the effective date of disaffiliation through the day of payment.

In the event that there is no successor plan, a reconciliation of funding obligations shall be done. A separate accounting of assets and liabilities for contract employees retained by the University pursuant to (g) (1) above shall be maintained. The University shall assure that obligations to contract employees are met and that the fund is being prudently managed. When all UCRP obligations to contract employees have been fulfilled, the University shall return any excess assets attributable to contract employees to DOE. If a funding short fall arises as a result of economic conditions beyound the University's direct control, the DOE agrees, subject to availability of appropriated funds, to contribute a proportionate share of funds necessary to fully fund liabilities to cover obligations to contract employees, not including active employees who continue to be permanently employed by the University.

(h) Plan Termination. In the unlikely event of a plan termination or partial termination affecting the laboratory segment, DOE's liability shall be based on the lowest annuity purchase rate obtained from five insurance companies with an A.M. Best rating of at least A+. In the event that annuities cannot be provided for some individuals, lump-sum distribution should be considered. The DOE shall reimburse the UCRP the excess of that liability over the corresponding market value of assets, plus simple interest at the three month Treasury Bill rate in effect on the date of event on such excess. Likewise, the University shall reimburse the DOE the excess of market value of assets attributed to the laboratory over the corresponding liability, plus simple interest at the three month Treasury Bill rate in effect on the date of event.

ARTICLE VII, CL. 12 - AGREEMENT PERTAINING TO PUBLIC EMPLOYEES RETIREMENTĘSYSTEM (PERS) (SPECIAL)

(b) The University agrees to provide DOE with the annual financial report of PERS as well as actuarial valuation reports of PERS, when provided to the University.

(c) The University agrees to provide DOE an annual accounting of DOE participation in PERS based on records the University currently maintains.

(d) The University shall ensure that a pro rata share of any refunds or credits it receives from PERS should be provided to DOE.

ARTICLE VII, CL. 13 - FOREIGN TRAVEL (APR 1984) * - DEAR 952.247-70

(a) Foreign travel, when charged directly, shall be subject to the prior approval of the Contracting Officer. Foreign travel is defined as any travel outside of Canada and the United States and its territories and possessions.

(b) A process for approving foreign travel will be implemented that ensures that foreign trips are directly relevant and beneficial to performing the mission of the Laboratory, are cost effective, and are consistent with DOE guidelines and directives.

ARTICLE VII, CL. 14 - STATE AND LOCAL TAXES (APR 1984) * - DEAR 970.5204-23

(b) The University may take such action as may be requested or approved by the Contracting Officer to cause any State or local tax, fee, or charge which would be an allowable cost to be paid under protest and to take such action as may be required or approved by the Contracting Officer to seek recovery of any payments made, including assignment to the Government or its designee of all rights to an abatement or refund thereof, and granting permission for the Government to join with the University in any University initiated proceedings for the recovery thereof or to sue for recovery in the name of the Government. If the Contracting Officer requests and the University agrees to institute litigation to enjoin the collection of or to recover payment of any such tax, fee, or charge referred to above, or if a claim or suit is filed against the University for a tax, fee, or charge it has refrained from paying in accordance with this clause, the procedures and requirements of Article XVII, Clause 1, "Litigation and Claims," of this contract, shall apply and the costs and expenses incurred by the University shall be allowable items of costs, as provided in this contract, together with the amount of any judgment rendered against the University. The actions taken by the University in response to directions of the Contracting Officer pursuant to this clause are not subject to the Major Fraud Act (41 U.S.C. [[section]] 256).

(c) The Government shall hold the University harmless from penalties and interest incurred through compliance with this clause. All recoveries or credits in respect of the foregoing taxes, fees, and charges (including interest) shall inure to and be for the sole benefit of the Government.

ARTICLE VII, CL. 15 - RESERVED

ARTICLE VII, CL. 16 - LEGISLATIVE LOBBYING COST PROHIBITION (JUN 1988) - DEAR 970.5204-17

(1) Attempts to influence the outcome of any Federal, State, or local election, referendum, initiative, or similar procedure, through in-kind or cash contributions, endorsements, publicity, or similar activities;

(2) Establishing, administering, contributing to, or paying the expenses of a political party, campaign, political action committee, or other organization established for the purpose of influencing the outcomes of elections;

(3) Any attempt to influence (i) the introduction of Federal or State legislation, or (ii) the enactment or modification of any pending Federal or State legislation through communication with any member or employee of the Congress or State legislature (including efforts to influence state or local officials to engage in similar lobbying activity), or with any government official or employee in connection with a decision to sign or veto enrolled legislation;

(4) Any attempt to influence (i) the introduction of Federal or State legislation, or (ii) the enactment or modification of any pending Federal or State legislation by preparing, distributing or using publicity or propaganda, or by urging members of the general public or any segment thereof to contribute to or participate in any mass demonstration, march, rally, fund raising drive, lobbying campaign or letter writing or telephone campaign; or

(5) Legislative liaison activities, including attendance at legislative sessions or committee hearings, gathering information regarding legislation, and analyzing the effect of legislation, when such activities are carried on in support of or in knowing preparation for an effort to engage in unallowable activities.

(b) Costs of the following activities are excepted from the coverage of paragraph (a) of this clause; provided that the resultant contract costs are reasonable and otherwise comply with the allowable cost provisions of the contract:

(1) Providing Members of Congress, State legislatures or subdivisions thereof, or their staff members or staff of cognizant legislative committees, in response to a request (written or oral, prior or contemporaneous, including a Congressional Record notice requesting testimony or statements for the record at a regularly scheduled hearing) from Members of Congress, State legislatures or subdivisions thereof, or their staff members or staff of cognizant legislative committees, information or expert advice of a factual, technical, or scientific nature, with respect to topics directly related to the performance of the contract or proposed legislation. Reasonable costs for transportation, lodging, or meals incurred by University employees for the purpose of providing such information or advice shall also be reimbursable; provided such costs also comply with the allowable cost provisions of the contract.

(2) Any lobbying made unallowable under subparagraph (a)(3) of this clause to influence State legislation in order to directly reduce contract cost, or to avoid material impairment of the University's authority to perform the contract if authorized by the Contracting Officer.

(3) Any activity specifically authorized by statute to be undertaken with funds from the contract.

(c) Unallowable lobbying costs incurred, if any, shall not be charged to DOE, paid for with DOE funds or recorded as allowable cost in DOE's system of accounts.

(d) The University's annual certification, submitted as part of its annual claim (i.e., Voucher Accounting for Net Expenditures Accrued required under Article VII, Clause 3, "Payments and Advances" of this contract) or cost incurred statement, that the costs claimed are allowable under the contract, shall also serve as the University's certification that the requirements and standards of this clause have been complied with.

(e) The University shall maintain adequate records to demonstrate that the annual certifications of claimed costs as being allowable comply with the requirements of this clause.

(f) Time logs, calendars, or similar records shall not be created for purposes of complying with this clause during any particular calendar month when: (1) An employee engages in legislative liaison activities (as delineated in paragraphs (a) and (b) of this clause) 25 percent or less of the employee's compensated hours of employment during that calendar month, and (2) within the preceding five-year period, the University has not materially misstated allowable or unallowable costs of any nature, including legislative liaison costs. When conditions (f)(1) and (2) of this clause are met, the University is not required to establish records to support the allowability of claimed costs in addition to records already required or maintained. Also, when conditions (f)(1) and (2) of this clause are met, the absence of time logs, calendars, or similar records will not serve as a basis for disallowing costs by contesting estimates of legislative liaison activity time spent by employees during any calendar month.

(g) During contract performance, the University should resolve, in advance, any significant questions or disagreements between the University and DOE concerning compliance with this clause.

ARTICLE VII, CL. 17 - ORGANIZATIONAL CONFLICTS OF INTEREST (APR 1984) * - DEAR 952.209-72

(b) Scope. Subject to paragraph (h) of this clause, the restrictions described herein shall apply to performance or participation by the University and any of its affiliates or their successors in interest (hereinafter collectively referred to as "University") in the activities covered by this clause as a prime contractor, subcontractor, cosponsor, joint venturer, consultant, or in any similar capacity.

(1) Technical consulting and management support services.
(i) The University shall be ineligible to participate in any capacity in Department contracts, subcontracts, or proposals therefor (solicited or unsolicited) which stem directly from the University's performance of work under this contract. Furthermore, unless so directed in writing by the Contracting Officer, the University shall not perform any technical consulting or management support services work under this contract on any of its products or services or the products or services of another firm if the University is or has been substantially involved in their development or marketing. Nothing in this subparagraph shall preclude the University from competing for follow-on contracts for technical consulting and management support services.

(ii) If the University under this contract prepares a complete or essentially complete statement of work or specifications to be used in competitive acquisitions, the University shall be ineligible to perform or participate in any capacity in any contractual effort which is based on such statement of work or specifications. The University shall not incorporate its products or services in such statement of work or specifications unless so directed in writing by Contracting Officer, in which case the restriction in this subparagraph shall not apply.

(iii) Nothing in this paragraph shall preclude the University from offering or selling its standard commercial items to the Government.

(2) Access to and use of information.
(i) If the University, in the performance of this contract, obtains access to information, such as Department plans, policies, reports, studies, financial plans, internal data protected by the Privacy Act of 1974 (Pub. L. 93-579), or data which has not been released or otherwise made available to the public, the University agrees that without prior written approval of the Contracting Officer it shall not: (a) use such information for any private purpose unless the information has been released or otherwise made available to the public; (b) compete for work for the Department based on such information for a period of six (6) months after the completion of this contract or until such information is released or otherwise made available to the public, whichever is first; (c) submit an unsolicited proposal to the Government which is based on such information until after such information is released or otherwise made available to the public; and (d) release such information unless such information has previously been released or otherwise made available to the public by the Department.

(ii) In addition, the University agrees that to the extent it receives or is given access to proprietary data, data protected by the Privacy Act of 1974 (Pub. L. 93-579), or other confidential or privileged technical, business, or financial information under this contract, it shall treat such information in accordance with any restrictions imposed on such information.

(iii) The University shall have, subject to patent, data, and security provisions of this contract, the right to use technical data it first produces under this contract for its private purpose consistent with the Rights in Data provisions of this contract.

(c) Disclosure after award.

(1) The University agrees that if after award it discovers an organizational conflict of interest with respect to this contract, an immediate and full disclosure shall be made in writing to the Contracting Officer which shall include a description of the action which the University has taken or proposes to take to avoid or mitigate such conflicts. The Department may, however, terminate the contract for convenience if it deems such termination to be in the best interest of the Government.

(2) In the event that the University was aware of an organizational conflict of interest prior to the award of this contract and did not disclose the conflict to the Contracting Officer, the Department may terminate the contract in accordance with Article XIX, Clause 1, "Term, Termination and Expiration," of this contract.

(d) Subcontracts.

(1) The University shall include this clause, including this paragraph, in contracts of any tier which involve performance or work of the type specified in (b)(1) above or access to information of the type covered in (b)(2) above. The terms "contract," "University," and "Contracting Officer" shall be appropriately modified to preserve the Government's rights.

(2) If a subcontract is to be issued for evaluation services or activities, technical consulting or management support services work as defined at DEAR 909.570, the University shall obtain for the Department a disclosure statement or representation, in accordance with DOE regulations in effect at the time, from each intended subcontractor or consultant. The University shall not enter into any subcontract nor engage any consultant unless the Contracting Officer shall have first notified the University that there is little or no likelihood that an organizational conflict of interest exists or that despite the existence of a conflict of interest the award is in the best interest of the Government.

(e) Remedies. For breach of any of the above restrictions or for nondisclosure or misrepresentation of any relevant facts required to be disclosed concerning this contract, the Government may terminate the contract in accordance with the Article XIX, Clause 1, "Term, Termination and Expiration," of this contract, disqualify the University for subsequent related contractual efforts and pursue such other remedies as may be permitted by law or this contract.

(f) Waiver. Requests for waiver under this clause shall be directed in writing to the Contracting Officer and shall include a full description of the requested waiver and the reasons in support thereof. If it is determined to be in the best interests of the Government, the Contracting Officer shall grant such a waiver in writing.

(g) Modifications. Prior to a contract modification when the statement of work is modified to add new work, the period of performance is significantly increased, or the parties to the contract are changed, the Department will request and the University is required to submit either an organizational conflict of interest disclosure or representation or an update of the previously submitted disclosure or representation.

(h) The University and DOE agree that nothing in this clause is intended to prohibit the following activities as authorized under this contract:

(1) The activities of the University under this contract in performance of work under work for others agreements in accordance with Article III, Clause 4, and technology transfer arrangements and CRADAs in accordance with Article XII, Clause 11;

(2) The University's (as opposed to the Laboratory's) right to compete for work for DOE or the Government unrelated to this contract and performed by units of the University other than the Laboratory;

(3) Submitting unsolicited proposals to DOE or the Government, if the University independently obtains the information referred to in paragraph (c) above from sources other than those engaged in, or derived from, the performance of this contract;

(4) University research and supporting efforts conducted for the Laboratory in accordance with the Article VIII, Clause 2;

(5) The use of Laboratory employees to provide technical expertise to the DOE or the Congress pursuant to an invitation by the DOE or the Congress;

(6) The proposal of new lines of scientific and technical inquiry related to the general scope of this contract; or

(7) The use of University employees by the DOE to conduct "peer reviews" of research activities by other University employees or employees of other DOE contractors.

(i) The parties agree that activities identified in paragraph (h) above, to the extent that they may involve discussions between University employees and federal agency or Congressional employees that may result in modifications to this contract, are not intended to be prohibited by Article VII, Clause 20, "Limitation on Payments to Influence Certain Federal Transactions," of this contract.

ARTICLE VII, CL. 18 - MANAGEMENT CONTROLS (JAN 1992) * DEAR 970.5204-20

(b) The University shall, as part of the Performance Based Management Process required in Article VI, Clause 6, maintain, as part of its self-assessment process, a baseline quality assurance program that reflects documented performance, quality standards, and control and assessment techniques.

ARTICLE VII, CL. 19 - LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS (JAN 1990) - FAR 52.203-12

"Agency," as used in this clause, means executive agency as defined in 2.101.

"Covered Federal action," as used in this clause, means any of the following Federal actions:

(1) The awarding of any Federal contract.

(2) The making of any Federal grant.

(3) The making of any Federal loan.

(4) The entering into of any cooperative agreement.

(5) The extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative Agreement.

"Influencing or attempting to influence," as used in this clause, means making, with the intent to influence, any communication to or appearance before an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any covered Federal action.

"Local government," as used in this clause, means a unit of government in a State and, if chartered, established, or otherwise recognized by a State for the performance of a governmental duty, including a local public authority, a special district, an intrastate district, a council of governments, a sponsor group representative organization, and any other instrumentality of a local government.

"Officer or employee of an agency," as used in this clause, includes the following individuals who are employed by an agency:

(1) An individual who is appointed to a position in the Government under title 5, United States Code, including a position under a temporary appointment.

(2) A member of the uniformed services, as defined in subsection 101(3), title 37, United States Code.

(3) A special Government employee, as defined in section 202, title 18, United States Code.

(4) An individual who is a member of a Federal advisory committee, as defined by the Federal Advisory Committee Act, title 5, United States Code, appendix 2.

"Reasonable compensation," as used in this clause, means, with respect to a regularly employed officer or employee of any person, compensation that is consistent with the normal compensation for such officer or employee for work that is not furnished to, not funded by, or not furnished in cooperation with the Federal Government.

"Reasonable payment," as used in this clause, means, with respect to professional and other technical services, a payment in an amount that is consistent with the amount normally paid for such services in the private sector.

"Recipient," as used in this clause, includes the Contractor and all subcontractors. This term excludes an Indian tribe, tribal organization, or any other Indian organization with respect to expenditures specifically permitted by other Federal law.

"Regularly employed," as used in this clause, means, with respect to an officer or employee of a person requesting or receiving a Federal contract, an officer or employee who is employed by such person for at least 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person for receipt of such contract An officer or employee who is employed by such person for less than 130 working days within 1 year immediately preceding the date of the submission that initiates agency consideration of such person shall be considered to be regularly employed as soon as he or she is employed by such person for 130 working days.

"State," as used in this clause, means a State of the United States, the District of Columbia, the Commonwealth of Puerto Rico, a territory or possession of the United States, an agency or instrumentality of a State, and multi-State, regional, or interstate entity having governmental duties and powers.

(b) Prohibitions.

(1) Section 1352 of title 31, United States Code, among other things, prohibits a recipient of a Federal contract, grant, loan, or cooperative agreement from using appropriated funds to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any of the following covered Federal actions: the awarding of any Federal contract; the making of any Federal grant; the making of any Federal loan; the entering into of any cooperative agreement; or the modification of any Federal contract, grant, loan, or cooperative agreement.

(2) The Act also requires Contractors to furnish a disclosure if any funds other than Federal appropriated funds (including profit or fee received under a covered Federal transaction) have been paid, or will be paid, to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with a Federal contract, grant, loan, or cooperative agreement.

(3) The prohibitions of the Act do not apply under the following conditions:

(i) Agency and legislative liaison by own employees.
(A) The prohibition on the use of appropriated funds, in subparagraph (b)(1) of this clause, does not apply in the case of a payment of reasonable compensation made to an officer or employee of a person requesting or receiving a covered Federal action if the payment is for agency and legislative liaison activities not directly related to a covered Federal action.

(B) For purposes of subdivision (b)(3)(i)(A) of this clause, providing any information specifically requested by an agency or Congress is permitted at any time.

(C) The following agency and legislative liaison activities are permitted at any time where they are not related to a specific solicitation for any covered Federal action:

1. Discussing with an agency the qualities and characteristics (including individual demonstrations) of the person's products or services, conditions or terms of sale, and service capabilities.

2. Technical discussions and other activities regarding the application or adaptation of the person's products or services for an agency's use.

(D) The following agency and legislative liaison activities are permitted where they are prior to formal solicitation of any covered Federal actions
1. Providing any information not specifically requested but necessary for an agency to make an informed decision about initiation of a covered Federal action;

2. Technical discussions regarding the preparation of an unsolicited proposal prior to its official submission; and

3. Capability presentations by persons seeking awards from an agency pursuant to the provisions of the Small Business Act, as amended by Pub. L. 95-507, and subsequent amendments.

(E) Only those services expressly authorized by subdivision (b)(3)(i)(A) of this clause are permitted under this clause.

(ii) Professional and technical services.

(A) The prohibition on the use of appropriated funds, in subparagraph (b)(1) of this clause, does not apply in the case ofs

1. A payment of reasonable compensation made to an officer or employee of a person requesting or receiving a covered Federal action or an extension, continuation, renewal, amendment, or modification of a covered Federal action, if payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal action.

2. Any reasonable payment to a person, other than an officer or employee of a person requesting or receiving a covered Federal action or an extension, continuation, renewal, amendment, or modification of a covered federal action if the payment is for professional or technical services rendered directly in the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for meeting requirements imposed by or pursuant to law as a condition for receiving that Federal action. Persons other than officers or employees of a person requesting or receiving a covered Federal action include consultants and trade associations.

(B) For purposes of subdivision (b)(3)(ii)(A) of this clause, "professional and technical services" shall be limited to advice and analysis directly applying any professional or technical discipline. For example, drafting of a legal document accompanying a bid or proposal by a lawyer is allowable. Similarly, technical advice provided by an engineer on the performance or operational capability of a piece of equipment rendered directly in the negotiation of a contract is allowable. However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a technical person (such as a licensed accountant) are not allowable under this section unless they provide advice and analysis directly applying their professional or technical expertise and unless the advice or analysis is rendered directly and solely in the preparation, submission or negotiation of a covered Federal action. Thus, for example, communications with the intent to influence made by a lawyer that do not provide legal advice or analysis directly and solely related to the legal aspects of his or her client's proposal, but generally advocate one proposal over another are not allowable under this section because the lawyer is not providing professional legal services. Similarly, communications with the intent to influence made by an engineer providing an engineering analysis prior to the preparation or submission of a bid or proposal are not allowable under this section since the engineer is providing technical services but not directly in the preparation, submission or negotiation of a covered Federal action.

(C) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include those required by law or regulation and any other requirements in the actual award documents.

(D) Only those services expressly authorized by subdivisions (b)(3)(ii)(A)(1) and (2) of this clause are permitted under this clause.

(E) The reporting requirements of FAR 3.803(a) shall not apply with respect to payments of reasonable compensation made to regularly employed officers or employees of a person.

(iii) Disclosure.

(A) The Contractor who requests or receives from an agency a Federal contract shall file with that agency a disclosure form, OMB standard form LLL, Disclosure of Lobbying Activities, if such person has made or has agreed to make any payment using nonappropriated funds (to include profits from any covered Federal action), which would be prohibited under subparagraph (b)(1) of this clause, if paid for with appropriated funds.

(B) The Contractor shall file a disclosure form at the end of each calendar quarter in which there occurs any event that materially affects the accuracy of the information contained in any disclosure form previously filed by such person under subparagraph (c)(1) of this clause. An event that materially affects the accuracy of the information reported includess

1. A cumulative increase of $25,000 or more in the amount paid or expected to be paid for influencing or attempting to influence a covered Federal action; or

2. A change in the person(s) or individual(s) influencing or attempting to influence a covered Federal action; or

3. A change in the officer(s), employee(s), or Member(s) contacted to influence or attempt to influence a covered Federal action.

(C) The Contractor shall require the submittal of a certification, and if required, a disclosure form by any person who requests or receives any subcontract exceeding $100,000 under the Federal contract.

(D) All subcontractor disclosure forms (but not certifications) shall be forwarded from tier to tier until received by the prime Contractor. The prime Contractor shall submit all disclosures to the Contracting Officer at the end of the calendar quarter in which the disclosure form is submitted by the subcontractor. Each subcontractor certification shall be retained in the subcontract file of the awarding Contractor.

(iv) Agreement. The Contractor agrees not to make any payment prohibited by this clause.

(v) Penalties.

(A) Any person who makes an expenditure prohibited under paragraph (a) of this clause or who fails to file or amend the disclosure form to be filed or amended by paragraph (b) of this clause shall be subject to civil penalties as provided for by 31 U.S.C. [[section]] 1352. An imposition of a civil penalty does not prevent the Government from seeking any other remedy that may be applicable.

(B) Contractors may rely without liability on the representation made by their subcontractors in the certification and disclosure form.

(vi) Cost allowability. Nothing in this clause makes allowable or reasonable any costs which would otherwise be unallowable or unreasonable. Conversely, costs made specifically unallowable by the requirements in this clause will not be made allowable under any other provision.



Go to Article VIII
Return to Contract 98 Table of Contents