RIX Industries Flow Downs

11

Description:

17-27 PROGRESS PAYMENTS, INCURRED COSTS

Clause:

Progress payments shall be made to the seller when requested as work progresses, but not more frequently than monthly in amounts approved by the buyer upon the following terms and conditions:Seller shall provide buyer with a completed request for progress of payment (Form 84-00-4632) and a certified copy of the progress report (Form 84-00-5194). Upon request by the buyer, seller will also furnish an appropriate chart of physical progress in a format acceptable to the buyer. For the purpose of permitting verification of information furnished as required under this clause, seller will permit buyer to inspect the order work in process at seller?s plants and at plans of the seller?s subcontractors and vendors. Note: Where an asterisk (*) appears in this clause, it is intended that the customary progress payment rate applicable to the seller?s business size be used, as defined in FAR 32.501 as of date of this order. (A) Computation of Amounts(1) Unless a smaller amount is requested, each progress payment shall be (I) * % of the amount of the seller?s total costs which, except as provided herein with respect to costs of pension at the time of the request, from payment made by cash, check, or other form of actual payment for items or services purchased directly for the order, together with (When the seller is not delinquent in payment of costs incurred, but not necessarily paid, for materials which have been issued from the seller?s stores inventory and placed in the production process for use on the order, for direct labor, for direct travel, for other direct in-house costs, and for properly allocable and allowable indirect costs, all recorded on records maintained by the seller for purposes of obtaining a payment under government contract plus (II) the amount of progress payments which have been paid to seller?s subcontractors and other divisions as provided in (J) below; all les the sum of previous progress payments. With respect to costs of pension contributions, when pension contributions are paid by the seller to the retirement fund less frequently than quarterly. Accruals of the costs of these pension contributions shall be excluded from seller`s total costs for progress payment purposes until such costs are paid. If pension contributions are paid on a quarterly or more frequent basis, accruals of the costs of these pension contributions may be included in the seller?s total costs for progress payment purposes provided that the pension contributions are paid to the retirement fund within such 30 day period, pension contribution costs shall be excluded from seller?s total costs for progress payment purposes until payment therefor has been made. Note: If the purchase order in which this clause is included is awarded to a small business concern, then the following paragraph shall be substituted, for paragraph(A) (1) above. (1) Unless smaller amount is requested, each progress payment shall be (I) * % of the amount of the seller?s total costs incurred under this order, except as provided herein with respect to costs of pension contributions, plus (II) the amount of progress payments to subcontractors as provided in (J) below; all less the sum of previous progress payments. With respect to costs of pension contributions, when pension contributions are paid by the seller to the retirement fund less frequently than quarterly, accruals of the cost of these pension contributions shall be excluded from seller?s total costs for progress payment purposes provided that the pension contributions are paid to the retirement fund within 30 days after the close of the period covered by the payment. IF payments are not made to the fund within such 30-day period, pension contribution costs shall be excluded from seller?s total cost for progress payment purposes until payment therefore has been made. (2) The seller?s total costs ( (A) (1) (I) ) shall be reasonable, allocable to this order, and consistent with sound and generally accepted accounting principles and practices. However, such costs shall not include (1) any costs incurred by subcontractors or suppliers, or (II) any payments or amounts payable to subcontractors or suppliers except for completed work (Including partial deliveries) to which the seller has acquired title and except for amounts paid or payable under cost-reimbursement or time and material subcontracts for work to which the seller has acquired title, or (III) costs ordinarily capitalized and subject to depreciated or amortization except for the properly depreciated or amortized portion of such costs. (3) The amount of unliquidated progress payment shall not exceed the lesser of * % of the costs mentioned in (A) (1) (I) above, plus any unliquidated progress payments mentioned in Item (A) (1) (I) above, both of which are applicable only to the suppliers and services not yet delivered and invoiced to and accepted by the buyer, or (II) * % of the total order price of supplies and services not yet delivered and invoiced to and accepted by the buyer, less unliquidated advance payments. (4) The aggregate amount of progress payments shall not exceed * % of the total order price. (5) If at any time a progress payment or unliquidated progress payment exceed the amount permitted by this paragraph (A), the seller shall pay the amount of such excess to the buyer upon demand. (B) Liquidation. Except in the event of termination all progress payments shall be liquidated by deducting from any payment under this order, other than advance or progress, the amount of unliquidated progress payments, or * % of the gross amount invoiced, whichever is less. Repayment to the buyer required by a retroactive, price reduction will be made after calculating liquidations and payments on past invoices at the reduced prices and adjusting the unliquidated progress payments accordingly. (C) Reduction or suspension. The buyer may reduce or suspend progress payments or liquidate them at a higher rate than the percentage stated in (B) above or both, whenever he finds substantial evidence that the seller (I) failed to comply with any material requirement of this order, (II) has failed to make progress, or is in such unsatisfactory financial condition, as to endanger performance of this order, (III) has allocated inventory to this order substantially exceeding reasonable requirements, (V) is delinquent in payment of the costs of performance of this order in the ordinary course of business, (V) has failed to make progress that the unliquidated progress payments exceed the fair value of the work accomplished on the undelivered portion of this order, or (VI) is realizing less profit than the estimated profit used for establishing a liquidation percentage in paragraph (B), if that liquidation percentage is less than the percentage stated in paragraph (A) (1). (VII) If it is determined that the total costs incurred plus the estimated additional costs to complete the contract will exceed the contract price, the buyer will be promptly advised, and all further progress payments will be adjusted using a loss ration factor. (D) Security interest. By acknowledgment of this purchase order, seller agrees to execute a financing statement (Uniform Commercial Code Form 1) giving the buyer a security interest in the material covered by this order and authorizes the buyer to file said statement in any public office. Payment of progress payments will be withheld until this document is received by the buyer. At the buyer?s request, seller shall segregate and mark in accordance with buyer?s instructions the material and any and all of the personal property and good, including without limitation raw materials, inventory work-in-progress, finished goods, drawings, designs, models, tools, dies, molds, and contract rights with respect to which seller hereby gives a security interest. At buyer?s request, seller shall perfect a security interest covering any and all items which seller may order from third parties used in connection with buyer?s purchase orders for which said third parties require advance payments or progress payments. Seller shall have seller?s subcontractors give buyer such further assurances, execute such further documents (Including financing statements under the uniform and perform such further acts as buyer may require. At buyer?s request, seller shall direct any third party suppliers of goods to be used in connection with buyer?s purchase orders to deliver said goods to the order of buyer. In the event of seller?s default or in the event of sellers insolvency or in the event buyer deems itself insecure, buyer may enter seller?s premises and take immediate possession of any collateral hereinabove described, whether payment has been made therefor or not, subject only to the obligations of the buyer and seller under this order. The seller will not create or permit to be created any lien or encumbrance upon the material or any part thereof except as provided herein. (E) Risk of loss. Except to the extent that the buyer shall have otherwise expressly assumed the risk of loss of property in the event of the loss, theft or destruction of or damage to any such property before its delivery to and acceptance by the buyer, the seller shall bear the risk of loss and shall repay the buyer an amount equal to the unliquidated progress payments based on costs allocable to such lost, stolen, destroyed, or damaged property. (F) Control of costs and property. The seller shall maintain an accounting system and controls adequate for the proper administration of this clause.(G) Reports ? access to records. Insofar as pertinent to the administration of this clause, the seller will (I) furnish promptly such relevant reports, certificates, financial statements, and other information as may be reasonably requested by the buyer, and (II) give the buyer reasonable opportunity to examine and verify his books, records and accounts. (H) Special provisions regarding default. If this order is terminated pursuant to the clause entitled ?Default?, (I) the seller shall, upon demand, pay the buyer the amount of unliquidated progress payments and require deliver under the clause entitled ?Default?, title shall vest in the seller upon full liquidation of progress payments and the buyer shall be liable for no payment except as provided by the ?Default? clause. (I) Reservations of rights. The rights and remedies of the buyer provided in this clause shall not be exclusive and are in addition to any other rights and remedies provide by law or under this order. No payment or vesting of title pursuant to this clause shall excuse the seller from performance of his obligations under this order, nor constitute a waiver of any of the rights and remedies of the parties under this order. No delay or failure of the buyer in exercising any right, power, privilege under this clause shall affect any such right, power, or privilege nor shall any signel or partial exercise thereof preclude or impair any further exercise thereof or the exercise of any other right, power, or privilege of the buyer. (J) Progress payments to subcontractors.(1) The amount mentioned in item (A) (1) (II) above shall be the sum of (I) of all the progress payments made by the seller to his subcontractors or other division and meeting the following conditions and which conform to (2) below: (I) The amounts included are limited to the unliquidated remainder of progress payments made, plus(II) For small business concerns any unpaid subcontractor requests for progress payments that the seller has approved for current payment in the ordinary course of business. (2) Subcontracts or interdivisional orders on which progress payments to subcontractors may be included in the base for progress payments pursuant to paragraph (A) of this clause are limited to those subcontracts in which there is a long ?lead time?, between the beginning of work and the first delivery, approximating four months or more for small business concerns, and six months or more for firms which are not small business concerns, and in which the provisions regarding progress payments (I) are substantially similar to and favorable to the buyer as this ?progress payments? clause nor more favorable to the subcontractor than this clause is to the seller and on a basis of not more than * % of total costs (except that for those subcontractors which are small business concerns a ?progress payments? clause substantially similar to FAR 52.236-16 alternate I may be used) and (II) make all rights of the subcontractor with respect to all property to which the buyer require delivery of such property to him in the event of default by the seller under this order or in the event of bankruptcy or insolvency of this subcontractor. (3) The buyer agrees that any proceeds received by him from property to which the government has acquired title by virtue of such provisions in any subcontract shall be applied to reduce the amount of unliquidated progress payments made by the buyer to seller under this order. In the event the seller fully liquidates such progress payments to any subcontractors which are unliquidated, the seller shall be subrogated to all the buyer?s rights by virtue of such provisions in the subcontract or subcontracts involved as if all such rights has been assigned and transferred to the seller. (4) The billing described in (J) (1) (I) above shall be paid promptly by the seller in the ordinary course of business, not later than a reasonable time after payment of equivalent amounts by the buyer to the seller.(5) To facilitate the small business participation in subcontracting under this order, the seller agrees to offer and provide progress payments to those subcontractors which are small business concerns, in conformity with the standards for customary progress payments stated in Section 32.501 if the Federal Acquisition Regulation, as in effect on the date of this order. The seller further agrees that the need for such progress payments will not be considered as a handicap or adverse factor in the award of subcontracts.