DOCUMENT NO. THAAD013 1/20/10
Subcontract MIDD040003, MEADS Design & Development
Full Text Clauses
Article 5 Subcontracts (Applicable to all purchase orders/subcontracts, except for commercial items or commercial services. Communication with the “Contracting Authority” shall be through Lockheed Martin.)
5.1 Unless otherwise specified in the Subcontract, the Contractor shall impose on Subcontractors listed in Annex J the same conditions and requirements as are included in this Subcontract, unless the object of the subcontracts is a commercial item or service. Should the Contractor in any instance deem it necessary to waive the imposition of same conditions and requirements, he shall report it to the Contracting Authority at least 35 calendar days prior to award of the subcontract, provide rationale and obtain approval prior to award. This approval shall not relieve the Contractor of any assigned responsibility. Contractor and subcontractors shall comply with national rules and regulations of the Participating Governments with regard to the work performed under this Subcontract.
5.2 To the maximum extent possible all Subcontracts shall be subjected to competitive tendering except in cases where the Contracting Authority agrees otherwise.
The Contractor shall notify the Contracting Authority prior to award of the following Subcontracts and amendments thereto other than those for raw material and components for:
a) those to be placed in Non-Participating Countries;
b) those to be placed in another Participating Country
5.3 The Contractor shall provide to the Contracting Authority on a regular six month basis a report showing details of the Subcontracts down to the third level of subcontractors placed which:
a) are not placed as a result of genuine competitive tender;
b) are placed in Non-Participating Countries; or
c) have been placed in another Participating Nation.
This report shall include the following details:
a) Level of Contractor
b) Company performing the subcontract
c) Company placing the subcontract
d) Work identification
e) Subcontract price
f) Date and duration of the subcontract
g) Country where the work is to be performed
The Contractor/Subcontractors shall establish a database system on the CITIS network which will hold the Contractor/Subcontractor details down to the third level of subcontracting which will be available to the Contracting Authority and through him to NAMEADSMA and the Nations.
Before any non-competitive Subcontract is awarded the potential Supplier or Subcontractor shall be required to confirm in writing that the prices quoted are calculated on the same basis as would be used in the case of the prices quoted to their own government for domestic requirements.
5.4 The Contracting Authority has the right to request copies of any subcontracts at any time. The Contractor shall provide copies of subcontracts as requested by the Contracting Authority.
In addition, on a regular six month basis, the Contractor shall provide the Contracting Authority a copy of those subcontracts and supporting documentation that the Contracting Authority has chosen for review.
5.5 The Contractor shall remain responsible for performance of the requirements of the Subcontract notwithstanding any failure to perform by subcontractors except as may be excused by other provisions of this Subcontract.
5.6 The Contractor shall not enter into any agreement with an actual or prospective subcontractor, nor otherwise act in any manner, which has or may have the effect of restricting sales by such subcontractors directly to the Contracting Authority or NAMEADSMA of any items or processes, including computer Software, made or furnished by the Contractor under this Subcontract.
5.7 If the Contractor/subcontractors intend to award a Fixed Price Subcontract, they shall immediately notify the Contracting Authority of their intention to allow for price investigation. This notification is required for Subcontracts above 500,000.00 equivalent USD.
5.8 If the Contractor awards a subcontract to a United States (US) company, and said subcontract has a value of $50,000 USD or more, the statement below must be included in the subcontract in accordance with the US Defense Priorities and Allocation System (DPAS). If the Contractor awards a subcontract to a non-US company which may in turn place a sub-tier subcontract with a value of $50,000 USD or more with a US company, this full article 5.8 must be included in the subcontract. Through the DPAS, the US Government directs US industry to give priority to certain Government programs and contracts. “DX” is the highest rating. Additional information on the DPAS may be found at http://www.doc-bxa.bmpcoe.org/dpas.html.
“This is a rated Contract certified for National Defense. The CONTRACTOR is required to follow all provisions of the Defense Priorities and Allocations System Regulation (15 CFR 700). The rating on this Contract is DX”.
Article 6 Quality Assurance (Applicable to all purchase orders/subcontracts)
6.1 The Contractor shall define and maintain an effective Quality Assurance System that will provide an adequate and uniform level of quality management for all products and services under the Subcontract. The quality system implemented shall be compliant to the current ISO 9001 standard and meet all the requirements for certification.
6.2 The Contractor shall implement an appropriate quality management approach requiring all first level Subcontractors identified in Annex Q (excluding LMOC and EUROMEADS) to be certified to the current ISO 9001 and to provide quality assurance for all the products and services IAW their relevant Quality Standards (such as ISO, AQAP, MIL-STD, Commercial, etc.).
6.3 The Contractor shall be responsible for assuring compliant Quality Assurance standards and requirements are flowed down the supply chain to lower tier subcontractors.
6.4 At the request of the Contracting Authority and NAMEADSMA, the Participating Governments will furnish the Government Quality Assurance Service for the work carried on/out under this Subcontract, in accordance with the provisions of the official mutual technical inspection agreement (STANAG 4107) including the confirmation of intermediate technical objective achievement. The Contractor shall allow action of government representatives in accordance with the aforementioned STANAGs. Additional reference for STANAGs documentation; http://www.nato.int/docu/standard.htm
Article 8 Prices in Subcontracts (Applicable to all purchase orders/subcontracts)
8.1 The subcontracts will be drawn up in the currencies of the Participants.
8.2 The subcontract price will be established in accordance with national price regulations and practices relating to government contracts of this kind in those countries where the respective Subcontractor is located.
8.3 To the extent that national price regulations and practices leave pricing to free arrangements between the contracting parties, the Contractor undertakes to include in subcontracts terms which are not less favorable to the Contracting Authority than those contained in this Contract.
Article 9 Taxes, Customs, Duties and Similar Dues (Applicable to all purchase orders/subcontracts)
9.1 The Contractor undertakes to make as far as it is cost-effective full use of any legal provisions contained in the national laws concerning the waiving, reduction or reimbursement of taxes, customs and duties to the benefit of the MEADS Program.
9.2 In the event the Contractor cannot be relieved and a waiver cannot be obtained for taxes, customs and duties, set forth below and charged to the Contractor/Subcontractors in accordance with the applicable national laws and regulations, the Contractor may request those costs to become allowable under this Contract in accordance with Article 7.8.c. The Contractor shall keep appropriate records of the taxes, customs and duties set out below:
a. Sales Taxes/Value Added Taxes;
b. Customs, Duties, and Similar Dues.
9.3 Cost of appeal against any decision of the Tax or Custom Authorities will be reimbursed only if previously agreed upon by amendment to the Contract in accordance with Article 7.8.c. If the appeal has been agreed by amendment to the Contract, the Contracting Authority shall be bound to the outcome of such an appeal. The time to give notice of such an appeal shall be observed.
9.4 Where the Contractor fails by intentional act or gross negligence to meet his obligations under Article 9.1, or where an appeal in accordance with Article 9.3 has become necessary for reasons for which the Contractor is responsible, any financial liability resulting there from will be borne solely by the Contractor.
9.5 The Contractor shall permit the examination by representatives of the national audit agencies/pricing authorities on behalf of the Contracting Authority of any records or documents in relation to taxes, customs and duties to establish whether the obligations imposed in this Article have been complied with.
Article 12 Capital Investments (Applicable if you will be making any capital investments under this contract. Communication with the “Contracting Authority” under this clause shall be made through Lockheed Martin.)
12.1 Capital Investments are facilities such as machines, equipment and buildings provided by the Contractor and/or his Subcontractors at their own expense, for the purpose of creating additional facilities which are not Special To Type, and which are not replacement of consumed Assets needed to meet the Contracting Authority’s requirements. It is not the intent of the Contracting Authority to approve the construction of buildings and/or manufacturing of plants.
12.2 Capital investments which are approved under this Article are listed in Annex L.
12.3 In case the Contractor requires Capital investments necessary for performance of work under the Contract other than the ones listed in Annex L, he shall initiate a request for Amendment to the Contract to update Annex L. No Capital Investment to be covered under Annex L shall be initiated by the Contractor and/or his Subcontractors before the Contracting Authority has given his approval. If the Contractor wishes to create fixed capital assets (e.g. buildings) he shall advise in his request for approval whether these or similar assets exist in any of the participating countries.
12.4 The costs of capital investments shall be charged proportionately to this Contract in the Contractor’s and/or his Subcontractor’s overhead accounts, in accordance with the depreciation rates generally recognized in accordance with national accounting conventions for government contracts, according to the service life of use.
12.5 In case of termination of the Contract (Article28), the unrecovered depreciation allowances with respect to capital investments included in Annex L shall be reimbursed without profit and interest as a charge to the residual claim, but excluding any allowances/deductions claimable under national tax laws.
12.6 The Contractor shall not be entitled to reimbursement of unrecovered depreciation allowances according to the Article 12.5 above, if:
a. The Contractor can use the capital investment to fulfill orders already placed at the date of termination of contract by another customer; or
b. The Contractor sells, after prior consent by the Contracting Authority, the capital investment at a price which covers the unrecovered depreciation amount. In the event that the net recovery from such sale is less than the amount of unrecovered depreciation, than he shall be reimbursed by the Contracting Authority the difference between such amounts without profit and interest;
12.7 In the event that the Contractor sells, or makes use of such capital investment for any order other than MEADS, after payment of the unrecovered depreciation he shall reimburse the Contracting Authority proportionately the depreciation proceeds recovered under such sales or orders.
12.8 Ownership to the capital investment, the value of which has been fully reimbursed by the Contracting Authority, shall be transferred by the Contractor to the Contracting Authority at the latter’s request free of any Third Party rights.
Article 14 Audits (Applicable for all purchase orders/subcontracts. “Contracting Authority” shall mean “Contracting Authority and Lockheed Martin.”)
14.1 With the exception of subcontract prices which are determined as the result of genuine competitive tendering and contain the same conditions of this Subcontract, all other subcontract prices are subject to price investigation.
14.2 The Contractor shall grant the Contracting Authority and NAMEADSMA the right to ascertain costs and investigate prices through the relevant National Audit Services/National Pricing Authorities. The Contractor shall ensure that proper accounts and records are kept of the cost of the work and of all expenditures or commitments made by the Contractor or authorized representatives in connection therewith and of invoices, receipts and vouchers relating thereto. Such accounts, records, invoices, receipts and vouchers shall at all reasonable times be open to audit and inspection as required by the Contracting Authority utilizing the relevant national organizations in the Contractor’s or Contractor’s country. The Contractor shall furnish the national organizations and its authorized representatives with all such information as it may, from time to time, require with reference to such accounts, records, invoices, receipts and vouchers. The Contractor shall not, without the consent of the Contracting Authority, dispose of any such accounts, records, invoices, receipts and vouchers but shall preserve and keep the same available for audit and inspection in accordance with applicable national laws, but at least until Subcontract close-out. The Contracting Authority's rights set out in this Article shall be included in any subcontract the value of which exceeds EUSD 500,000.00 , unless the Contracting Authority determines on a case by case basis that an audit is required on a subcontract valued at 500,000.00 EUSD or below. Said rights shall also be included in any subcontract below the stated values. However, such rights will only normally be exercised if a subcontract forms or becomes part of a series of subcontracts, the cumulative value of which exceeds the values stated above.
14.3 The Contractor shall comply with the national accounting and pricing laws and regulations of the country where the Contractor/respective subcontractor is located. Ascertainment of costs, price investigation and pricing shall be carried out in accordance with the National Price Regulations and Practices applicable in the nations of the Participating Governments. In the case of work performed by GE and IT industries the following regulations, inter alia, shall apply as appropriate:
GERMAN INDUSTRIES
Ordinance on Prices for Public Subcontracts (VOPR 30/53)-Guidelines for the Establishment of price on the basis of Prime Cost (LSP).
ITALIAN INDUSTRIES
Segredifesa Directive “Metodologia per la determinazione dei costi orari aziendali per prestazioni e/o forniture militari”-“Capitolato d'Oneri per i Contratti Stipulati dall’Amministrazione Difesa”
Ascertainment of costs and price investigation may be undertaken:
a. with respect to work performed by GE Industry by Bundesamt fuer Wehrtechnik und Beschaffung, Koblenz;
b. with respect to work performed by IT Industry by Ministero della Difesa - DGAT, Roma;