This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
The Government will pay the following items within ten days of their determination, unless otherwise herein provided, as follows:
(1) For all direct materials, supplies and equipment accessories, purchased by the Contractor and necessary for the purpose of this contract, and which have been delivered to and accepted by the Government (which shall be deemed to have been accepted by the Government unless rejected within five days after tender of delivery to the Accounting Officer), an amount not exceeding the cost thereof, provided that the Government shall have the right to pay such amounts direct to the vendor, provided further that to the extent that the Contractor shall purchase any such materials and equipment accessories which he shall not deliver to the Government, he shall in due time be paid as in Section (2) hereof provided.
(2) The cost of all direct materials and supplies definitely ascertainable as having actually entered into or been expended in or fabricated for use in connection with the production of the articles hereby contracted for, which shall be determined weekly or at any longer regular interval, at the option of the Contractor; provided that the Government has not previously paid for such costs, or any portion thereof, either under the terms of this section or under other provisions of the contract.
(3) An amount equal to the payroll of the preceding week for direct labor definitely ascertainable as having been used in the production of the articles herein contracted for, complete and in process, and properly chargeable thereto; but, at the option of the Contractor, any regular interval longer than a week may be substituted for the weekly periods.
(4) Amounts included in the Actual Cost, for depreciation and other items of overhead, not previously paid for by the Government, which shall be determined monthly or at longer regular intervals at the option of the Contractor, provided that those items of indirect labor which are ascertainable shall be paid weekly and the balance of indirect labor shall be paid monthly.
(5) All amounts included in the Actual Cost of the articles herein contracted for and not previously paid for, which shall be determined upon the completion or termination of this contract.
(6) The sum of nine hundred and thirteen dollars and five cents ($913.05) for each unit delivered and accepted, as a fixed profit, all of which shall be paid in each week upon units delivered and accepted in the previous week, not previously paid for under this Section, and the remainder upon the completion of the contract.
(7) As an inducement to economy in the production of the articles, and in consideration of any saving to the Government which the Contractor may effect below the estimated cost of the articles as set forth in Article V hereof, there shall be paid to the Contractor a sum for saving effected by the Contractor determined as follows:
The Estimated Cost of each Article upon which savings are based is --------- ($---------). Such Estimated Cost is composed of and includes all elements of Actual Cost, as in Article V hereof defined, excluding, however, royalties paid by the Contractor, and the cost of special tools provided by the Contractor for the purpose of this contract exclusively. At the completion or termination of the contract for reasons other than the default of the Contractor, the total Actual Cost of all articles, completed and accepted, shall be determined; provided that in case the Government shall furnish to the Contractor, in accordance with the privilege reserved to it under Article IT hereof, any raw materials relating to the performance of this contract, which', if furnished by the Contractor, would have constituted a part of cost of production as defined in Article V, such raw material shall, for the purpose of computing the amount to be paid to the Contractor, under this Section (7) be charged as a part of the Actual Cost at cost to the Government of such raw material, plus cost of delivery thereof at the Contractor's plant; and there shall be deducted therefrom the amount of royalties therein included, and the cost of special tools provided by the Contractor for the purpose of this contract exclusively. In case the Actual Cost shall be increased by reason of changes in the specifications as in Article X hereof provided, or increases in the rate of wages under any act, determination, decision or award of any board, commission, body or authority which the Contractor is required by the Government to comply with, the total amount of increase due to either or both of these causes shall be deducted from the total Actual Cost; and the total amount of decreases in the total Actual Cost due to changes in the specifications shall be added to Actual Cost. If the amount so arrived at shall be less than the total Estimated Cost of all the units, completed and accepted, the Government shall pay the Contractor, on account of such saving, twenty-five per cent. (25%) of such difference. But if the amount of the average actual cost so arrived at of all articles delivered and accepted shall, except on account of causes beyond the
Contractor's control, exceed by --------- ($--------) the estimated cost of each article as modified above, then the Contractor shall pay to the Government fifty per cent. (50%) of such excess above the sum of such estimated cost and said
--------- ($---------), multiplied by the number of articles accepted and delivered hereunder, provided, however, that the Contractor need pay no part of such excess unless it is permitted to complete one-half of the Articles contracted for.
The Accounting Officer may, from time to time, estimate the amount due on account of savings and payable hereunder.
(6) In case, but only in case, the Government shall have by separate agreement undertaken to pay for the same, the cost of increased facilities as defined and determined in accordance with Articles V and VII hereof shall be paid from time to time against the delivery of any part thereof to the Contractor.
(9) The amounts advanced by the Contractor to cover the cost of shipping the articles, as provided in Article III hereof, shall be paid upon the proper certificate of the officer in charge of the Accounting Section of the Division of Finance of the Signal Corps, that the Contractor has paid the same for and on behalf of the Government.
(10) The amounts due as rental by the Government to the Contractor under Articles III, XI and XIII hereof shall be paid monthly, final payment to be made as soon as possible after the Government shall have ceased to use the property for which such rentals are payable. For the purpose of determining the amounts due hereunder the rente shall be deemed to accrue from day to day.
(11) All other amounts due under any of the provisions of this contract, not otherwise provided for, shall be paid upon the. completion or termination of this contract, provided that amounts due for storage under Articles III and X11I hereof shall be paid at least once every two months during the period when such storage costs are being incurred.
Expenditures made by the Contractor prior to the date of this contract shall be paid if. had such expenditures been made subsequent to the date hereof the same would have been payable hereunder.
Every determination of Actual Cost, and the other factors under this Article VI necessary to the determination of the amount due or payable under any part thereof, shall be subject to correction and adjustment at each successive computation, provided that this shall not be deemed to compel the Government to make such corrections and readjustments before the final adjustment hereunder, and a final adjustment shall be made upon the completion or termination of the contract, and any and all amounts due by either of the parties hereto to the other, shall be immediately paid, provided that if an amount shall be found due to the Contractor, the same shall be paid only upon presentation of a proper voucher as hereinafter provided.
No payment shall be made except upon a voucher wherein the officer in charge of the Accounting Section of the Division of Finance of the Signal Corps of the United States Army, or his duly authorized representative, hereinafter sometimes called the "Accounting Officer," shall certify the amounts that he has determined and that the Contractor is entitled to be paid the same in accordance with the provisions of this Article VI.
It shall be the duty of the Contractor to submit satisfactory proof of the amounts due under any or all of the above Sections (1) to (11) to the said Accounting Officer, which shall be submitted to him a reasonable time before any of the above payments are required to be made; and until such time as the proofs have been submitted, none of the amounts referred to in this Article shall be due or payable. In case of disagreement between the Contractor and the Accounting Officer as to any amounts due or payable, payment of only such portion as may be in dispute shall be withheld.
The amounts due under Sections (1), (2) and (3) hereof shall be determined as near as may be at the end of each week.
In the discretion of the Accounting Officer estimated figures may be used as the basis for payments made under this Article, subject to later adjustment.
The provisions of this Article VI are in all respects subject to the provisions of Articles XI and XII of this contract relating to the termination thereof.