ify for this Plan and the estimated annual premiums are substantial, a commercial retrospective rating plan may be appropriate. If the estimated annual premiums are small, joint insurance with the contractor's commercial operations or special guaranteed cost policies may be advisable.

as

(2) Where special insurance arrange-ments are made, the exact coverages and limits required by § 10.501 of this title and § 600.501 shall be provided. The purpose of such an insurance proIgram is not primarily to protect the Government or the contractor against E financial loss but is to obtain the experienced services of the insurance industry in such technical areas claims settlement and safety engineering; therefore, the higher limits of liability insurance normally carried by contractors in their commercial operations are not acceptable. The risk of excessive losses is normally assumed by the Government by the use of the Insurance-Liability to Third Persons clause (§ 7.203-22 of this title) or a similar clause.

(3) It is the policy of the Department of the Army not to interfere with the contractor's established commercial insurance program. However, where cost-reimbursement type contract operations are commingled with the contractor's commercial operations, all operations should normally be insured together. In such a case, the proportionate share of Department of Defense contracts and the amount of premium involved shall be the governing factors in determining the extent of Government participation in the contractor's program. Unless both of these factors are substantial, review of the contractor's insurance program should be limited to assuring that the contractor complies with the requirements contained in the sections of the 10.501 series of this title and the sections of the 600.501 series of this chapter. Higher limits than those prescribed may be approved where joint insurance coverage exists. Particular attention should be given to the time period and any geographical limits of the policies as well as to provisions excluding any phase of contract operations from coverage. Policy endorsements set forth in

§ 10.302 of this title should be attached to the policies.

(b) The submission by a Head of Procuring Activity to higher authority of a question involving a contractor's insurance program shall include (1) a copy of the related contract, (2) a copy of the contractor's proposed insurance policies, and (3) the recommendations of the procuring activity.

(c) Where contract operations are separately insured under a policy which incorporates a retrospective plan (National Defense Projects Rating Plan, War Department Comprehensive Insurance Rating Plan, or commercial plans, A, B, C, or D), incurred losses and final premium costs will be reviewed at the home office of the insurer prior to payment of the final additional premium or receipt of final return premium. This review will include (1) an examination of closed claims to assure that losses have been properly charged and expenses correctly allocated; (2) an inspection of open claims to negotiate the allowable reserves; and (3) such other matters as the reviewing officer may deem appropriate.

(d) Where more than one Department of the Army procuring activity is involved in approval, negotiation, or review of a contractor's insurance program or policies, to the extent possible coordination shall be effected among the procuring activities involved. When feasible, the procuring activity whose contracts bear the predominant amount of premiums should be responsible for the negotiation review. However, other arrangements may be made if concurred in by all procuring activities involved.

or

[30 FR 12208, Sept. 24, 1965, as amended at 31 FR 2370, Feb. 4, 1966]

§ 600.554 Action on termination or completion of contract.

(a) Generally, settlements of cost-reimbursement type contracts will have been completed prior to the required lapse of time for final settlement under any form of retrospective rating plan of insurance. Therefore, where a retrospective plan of insurance is involved, the contracting officer shall take action, at the time of contract

settlement, to ensure that any appropriate remaining credits due the contractor in connection with the insurance will be paid to the Government and any appropriate outstanding obligations of the contractor with respect to insurance will be assumed by the Government. This action shall be accomplished through execution of one of the two types of assignment form set forth in paragraph (c) of this section, or in § 10.604 of this title, as appropriate.

(b) In the event the Government has less than a 100 percent interest in premium refunds or dividends, the assignment shall be appropriately modified to reflect the percentage of the Government's interest in premium refunds or dividends and the extent of the Government's assumption of additional premium obligation. Assignments to the Government shall be executed in sufficient copies to serve the purposes of the cognizant procuring activity. After the original and all copies have been executed by the contractor and the Government, the contracting officer shall dispatch them by registered mail, return receipt requested, to the home office of the insurance company involved for signature by an officer of the company. The letter accompanying the forms shall specify that all checks to cover return premiums and dividends are to be made payable to the Treasurer of the United States and forwarded to the contracting officer with advice as to the contract to which it applies.

(c) The format set forth below shall be used in connection with insurance policies not issued under the National Defense Projects Rating Plan or War Department Insurance Rating Plan when the Government has assumed the contractor's obligations for further premium payments under the policies.

ASSIGNMENT TO GOVERNMENT

It is agreed that the return premium and dividend1 due or to become due the insured

1Omit "and dividend," if nondividend paying company.

under Policy No. are hereby assigned to and shall be paid to the United States of America, and the Contractor directs the company to make such payments to the Treasurer of the United States acting for and on account of the United States of America.

The United States of America hereby assumes and agrees to fulfill all present and future obligations of the Contractor with respect to the payment of the premiums due under said policy.

This agreement, upon acceptance by the Contractor, the United States of America and the company, shall be effective:0 from-Accepted

§ 600.650 Application of National Defense Projects Rating Plan.

(a) The procedures applicable to the operation of this Plan are set forth in detail in Bulletins issued by the Conference Committee on the National Defense Projects Rating Plan, 10th Floor, 200 East 42d Street, New York 17, N.Y. The documents required and procedures normally followed are outlined below.

(b) It is often advantageous to the Government to combine the insurance for several cost-reimbursement type contracts under one National Defense Projects Rating Plan project for premium settlement purposes. The contracts involved may have been negotiated by different procuring activities or by the Departments of the Navy and the Air Force, in which case

§§ 600.352 and 600.553(d) apply. Situations where combinations of contracts may be advisable are where work under several contracts is performed:

(1) At the same location at the same time by different contractors, such as an architect-engineer and a construction contractor;

(2) At the same location at different times by the same or different contractors, such as construction and operation contracts at a GovernmentOwned Contractor-Operated plant or aircraft maintenance contracts which are replaced periodically by new contracts; or

(3) At different locations by the same contractor, such as one division of a contractor performing mostly cost-reimbursement type contracts.

§ 600.651 Insurance advisors.

(a) Contractor's right to select an insurance advisor. When the insurance program is administered under the National Defense Projects Rating Plan for contracts within the United States, the contractor may select a licensed insurance agent or broker as insurance advisor to represent him in connection with the insurance coverages under the Plan. If a contractor selects an insurance advisor, the advisor shall submit a statement of his qualifications through the contractor to the contracting officer for approval. The statement should include a description of the experience of the firm or individual, location of the office from which the risk will be serviced, and a list of other Government contracts which the advisor has serviced or is presently servicing. After the individual or firm has been approved by the contracting officer, the contractor may enter into the service agreement in paragraph (b) of this section with his insurance advisor.

(b) Insurance advisor's quarterly statement of earned fee. The insurance advisor shall bill the contractor each quarter for his fee in accordance with the schedule of percentages outlined in the insurance service agreement. The following format shall be used in the preparation of the fee statement:

§ 601.000 Resolution of tax problems.

(a) Actual or anticipated tax problems which cannot readily be solved by reference to Part 11 of this title shall be forwarded to The Judge Advocate General, address: HQDA (DAJAPL), through procurement channels (see 591.150(d)). Direct communication with The Judge Advocate General is authorized if the time by which a solution to a tax problem is required is so short that communication through channels would be inadequate.

(b) Tax problems forwarded shall be accompanied by—

(1) A comprehensive statement of pertinent facts, including documents and correspondence pertinent thereto;

(2) A copy of the contract or pertinent portions thereof;

(3) A review of the legal and factual issues involved;

(4) A statement of the effect of the tax problem on procurement policies and procedures, if appropriate; and

(5) The comments and recommendations of the contracting officer and of each successive echelon of command through which the correspondence passes.

[35 FR 4131, Mar. 5, 1970, as amended at 37 FR 7088, Apr. 8, 1972]

§ 601.050 Implementation of part.

No directive, regulation, instruction, or procedure concerning Federal, State, or local taxes in relation to Army procurement functions shall be published by any agency, command, or office of the Department of the Army without prior approval of the Assistant Secretary of the Army (Installations and Logistics) obtained through the addressee in § 591.150(b)(6) of this chapter. If approval is obtained for publishing such instructions, the requirements in § 591.108 of this chapter shall apply.

pected to involve purchases of materials of $2,500 or more shall contain

(1) A notification concerning the availability of this exemption;

(2) A requirement that Colorado sales and use taxes be excluded from prices; and

(3) The method by which contractors or subcontractors may obtain tax exemption certificates.

§ 601.351 Indiana gross income tax.

(a) The Indiana gross income tax is applicable to gross receipts received by a Government contractor under a contract

(1) For services performed in Indiana; or

(2) For supplies produced in Indiana and delivered to the Government in Indiana (including contracts requiring delivery f.o.b. carrier's equipment, wharf, or freight station in Indiana for shipment on a Government bill of lading to destinations outside Indiana).

(b) The tax does not apply to gross receipts received by a Government contractor under a contract for supplies produced in Indiana and delivered to the Government at a destination outside Indiana if—

(1) The contract provides that title to the supplies shall vest in the Government at destination; and

(2) Shipment is made on a commercial bill of lading or a commercial bill of lading convertible to a Government bill of lading at destination.

§ 601.352 Iowa sales and use tax-construction contracts.

(a) Government agencies may obtain from the Iowa State Tax Commission refunds of sales and use tax paid by their construction contractors with respect to goods, wares, or merchandise which becomes an integral part of a construction project.

(b) The contracting officer shall obtain from the contractor the statement required by section 422.45(7a), Iowa Code Annotated, and shall file an application for refund with the Iowa State Tax Commission within 60 days after final settlement as required by section 422.45(7b), Iowa Code Annotated.

(c) Solicitations for construction projects to be performed in Iowa shall contain a provision that the Contractor will be required to furnish the Contracting Officer with the statements required by section 422.45(7a), Iowa Code Annotated.

§ 601.353 Indiana sales and use tax-construction contracts.

(a) A construction contractor or subcontractor may purchase materials free of the Indiana Sales and Use Tax if the contract or subcontract provides separate amounts applicable to the performance of services and the furnishing of materials. Tangible personal property purchased for use in fulfilling contract for the improvement of real estate for the United States is not subject to these taxes.

(b) Solicitations for fixed price construction contracts to be performed in Indiana shall contain the following statements

(1) The contract to be awarded will be a construction contract which separately states amounts applicable to the performance of services and the furnishing of materials as contemplated in State of Indiana, Department of Revenue Circular ST-21 (Revised) dated July 1, 1969. Exemption from the Indiana Sales and Use Tax on material to be incorporated by the contractor and his subcontractors into the structure or improvement to real estate may be secured under the terms of the cited circular. The successful bidder to whom this contract is awarded should provide his supplier with a State of Indiana General Exemption Certificate (Form ST-105) with respect to such property.

(2) Prior to award of a contract, the successful bidder shall furnish a breakdown to be incorporated into the contract separately pricing: (i) Materials to be incorporated into the structure or improvement to real estate, (ii) services and other obligations of the construction contract, and (iii) total contract price.

(c) The following clause shall be included in solicitations for fixed-price construction contracts to be performed in Indiana

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