Modification No. 14
to
POWER AGREEMENT
Dated October 15, 1952
between
OHIO VALLEY ELECTRIC CORPORATION
AND
UNITED STATES OF AMERICA
Acting By and Through the
SECRETARY OF ENERGY,
the statutory head of the
DEPARTMENT OF ENERGY
Dated as of
January 15, 1992
Contract No. DE-AC05-760R01520
(Modification No. 14)
THIS MODIFICATION NO. 14, dated as of the 15th day of January,
1992, by and between OHIO VALLEY ELECTRIC CORPORATION, a
corporation organized under the laws of the State of Ohio
(hereinafter called the "Corporation") and the UNITED STATES OF
AMERICA (hereinafter sometimes called the "Government"), acting by
and through the SECRETARY OF ENERGY, the statutory head of the
DEPARTMENT OF ENERGY (hereinafter called "DOE");
W I T N E S S E T H T H A T
WHEREAS, Corporation and the Government have heretofore
entered into a contract dated October 15, 1952, providing for the
supply by Corporation of electric utility services to the United
States Atomic Energy Commission (hereinafter called "AEC") at AEC's
project near Portsmouth, Ohio (hereinafter called the "Project"),
which contract has heretofore been modified by Modification No. 1,
dated July 23, 1953, Modification No. 2, dated as of March 15,
1964, Modification No. 3, dated as of May 12, 1966, Modification
No. 4, dated as of January 7, 1967, Modification No. 5, dated as of
August 15, 1967, Modification No. 6, dated as of November 15, 1967,
Modification No. 7, dated as of November 5, 1975, Modification No.
8, dated as of June 23, 1977, Modification No. 9, dated as of July
1, 1979, Modification No. 10, dated as of August 1, 1979,
Modification No. 11, dated as of September 1, 1979, Modification
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No. 12, dated as of August 1, 1981, and Modification No. 13, dated
as of September 1, 1989 (said contract, as so modified, is
hereinafter called the "DOE Power Agreement"); and
WHEREAS, pursuant to the Energy Reorganization Act of 1974,
the AEC was abolished on January 19, 1975 and certain of its
functions, including the procurement of electric utility services
for the Project, were transferred to and vested in the
Administrator of Energy Research and Development; and
WHEREAS, pursuant to the Department of Energy Organization
Act, all of the functions vested by law in the Administrator of
Energy Research and Development or the Energy Research and
Development Administration were transferred to, and vested in, the
Secretary of Energy on October 1, 1977; and
WHEREAS, Corporation and DOE desire to amend the DOE Power
Agreement further for the purpose of extending its term and for
certain other purposes as more particularly hereinafter provided;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. The Equity Participation Ratios of American Gas and
Electric Company (now American Electric Power Company, Inc.) and
Louisville Gas and Electric Company shall be 39.9 Percent and 4.9
Percent, respectively, in lieu of the percentages listed in the
table in the second clause of the preamble to the DOE Power
Agreement. In connection therewith, the third clause of the
preamble to the DOE Power Agreement is hereby modified to read as
follows:
"WHEREAS, Corporation proposes to issue from time to
time to the Participating Companies, as required, shares
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of the capital stock of Corporation for cash at the par
value thereof of $100 per share in amounts presently
estimated not to exceed the aggregate number of shares of
such capital stock indicated in the tabulation below:
Aggregate Number
Name of of Shares of
Participating Company Corporation
American Gas and Electric Company 79,800
The Cincinnati Gas & Electric Company 18,000
Columbus and Southern Ohio Electric Company 8,600
The Dayton Power and Light Company 9,800
Kentucky Utilities Company 5,000
Louisville Gas and Electric Company 9,800
Ohio Edison Company 33,000
Southern Indiana Gas and Electric Company 3,000
The Toledo Edison Company 8,000
The West Penn Electric Company 25,000"
2. Paragraph 1 of Section 2.04 is amended in its entirety to read
as follows:
"1. Whenever, for any clock hour, the aggregate
amount of permanent power and the energy associated
therewith furnished by Corporation to DOE pursuant to
Section 2.03 and the scheduled kwh of occasional energy
for which provision has been made by Corporation pursuant
to Section 2.09 is insufficient to supply the part of the
DOE contract demand which is then being demanded by DOE,
Corporation shall, unless Corporation shall be excused as
a result of conditions contemplated by Section 7.05 of
this Agreement or DOE shall have otherwise excused
Corporation from meeting such demand, furnish additional
generating capacity and the energy associated therewith
to DOE at the point of delivery to make up for such
insufficiency in any amount necessary up to a number of
kilowatts which will equal the Applicable Percentage
(which percentage, for purposes of this Section 2.04,
shall not exceed thirty percent) of the sum of (i) the
DOE contract demand and (ii) the transmission losses
thereon from the 345 kv busses of the project generating
stations. At the request of DOE, during any clock hour
Corporation may, at its option, furnish to DOE
supplemental power which, when added to the permanent
power and occasional energy then being furnished, shall
exceed the DOE contract demand; provided that, in such
event, DOE shall, if requested to do so by Corporation,
forthwith take action to reduce its power and energy
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requirements to an amount not exceeding the aggregate
amount which Corporation would otherwise be obligated to
supply. Notwithstanding the foregoing, the aggregate
amount of supplemental power and energy which Corporation
shall be obligated to furnish to D0E pursuant to this
paragraph l during any calendar year shall not exceed the
product of 900,000,000 kwh multiplied by the average DOE
capacity ratio of such calendar year, weighted with
respect to the periods of time during which DOE capacity
ratios were in effect."
3. Paragraph 1 of Section 2.05 is amended by deleting
subsection (b) of clause (B) of said paragraph 1 and substituting
therefor the following:
"(b) in the event that any of the events specified
in clause (i), clause (ii), clause (iii) or clause (iv)
of Section 6.05 of this Agreement shall occur on the
effective date of Modification No. 14 to this Agreement
or thereafter during the term of this Agreement, then,
and in such event, if Corporation so elects pursuant to
Section 6.05, for the purpose of computing the demand
charges or modified demand charges payable by DOE as
cancellation costs pursuant to Section 6.02 of this
Agreement, and for all other purposes of this Agreement,
the DOE contract demand in effect on the date of the
occurrence of such event and thereafter shall be, and be
deemed to be, the Full Contract Quantity; and provided
further"
4. Section 2.05 is further amended by deleting paragraphs 2,
3 and 4 in their entirety and substituting therefor the following:
"2. DOE shall have the right at any time to sell or
provide permanent or supplemental power and energy to
which it is entitled hereunder to its vendors,
contractors and concessionaires for their consumption at
or in the vicinity of the Project. In addition, DOE
shall have the right at any time to sell or provide
permanent or supplemental power and energy in an amount
up to 2,500 kw to its tenants for their consumption at or
in the vicinity of the Project.
"3. Except as hereinafter provided, DOE shall have
the right, at any time during the term of this Agreement,
to the extent that power and energy shall no longer be
required at the Project, to transfer all or part of the
power and energy to which DOE is entitled hereunder in a
block or blocks not less than 20,000 kw in any one case
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to supply a Governmental requirement at DOE's uranium
enrichment facility near Paducah, Kentucky for
consumption in operations at such installation. In the
event that DOE desires to exercise such right, it shall
give notice of its intention to Corporation. If
arrangements are mutually agreed upon for such transfer
over transmission facilities provided by Corporation,
such power and energy shall be delivered by Corporation
to the point agreed upon at the rates provided in this
Agreement, adjusted to reflect any increase in cost to
Corporation as well as applicable transmission charges.
If, however, within 60 days after receipt of the notice
provided for in this paragraph, Corporation undertakes to
release DOE from liability with respect to charges
payable by DOE with respect to such power and energy as
of (a) one year after such notice, or (b) the day on
which such power and energy could have been used at the
Paducah facility, whichever is later, or (c) as of such
earlier date, if any, when Corporation can absorb such
power and energy in its system or in the systems of
Sponsoring Companies, then Corporation shall, as of the
date when DOE is released from such liability, have the
right to dispose of such power and energy in any manner
it may determine."
5. A new Section 2.10 is to be inserted after Section 2.09
as follows:
"SECTION 2.10 Transmission Revenues. From time to
time Corporation may receive payments from other
utilities or entities for the transmission over
transmission facilities of Corporation of electric power
and energy not associated with the Project. In such
event, no portion of the payments received by Corporation
for the use of Corporation's transmission facilities
shall be included in the computations under Sections 3.03
and 3.04."
6. A new Section 2.11 is to be inserted after Section 2.10
as follows:
"SECTION 2.11 Transmission Payments. In the event
that Corporation is required to make payments to other
utilities and/or entities of transmission or
transmission-related charges for or in connection with
the delivery of electric power and energy to DOE under
this Agreement, which charges would not, pursuant to any
other provision of this Agreement, be billed by
Corporation to, and paid by, DOE, DOE shall pay to
Corporation the full amount paid by Corporation for such
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charges; provided, however, that such amount shall be
reduced, to not less than zero, by any amount which
Corporation receives from other utilities and/or entities
under Section 2.10 during the calendar year when the
obligation to make payments to other utilities and/or
entities arises."
7. Clauses (c) and (d) of paragraph 3 of Section 3.04 are
amended in their entirety to read as follows:
"(c) Component (C) shall consist of the total
expenses for taxes, including all taxes on income (other
than (i) Federal income taxes, (ii) any taxes that are
now or may hereafter be levied based on revenue, energy
generated or sold or on any other basis capable of direct
distribution, the cost of which taxes shall be allocated
directly to DOE and Corporation in amounts reflecting the
proper share of each, and DOE shall pay to Corporation
its share thereof, (iii) taxes arising from payments
received by Corporation for difficult to quantify costs
under Section 2.08 and (iv) taxes arising from payments
received by Corporation for use of Corporation's
transmission facilities under Section 2.10), properly
chargeable to Account 507 of the Uniform System of
Accounts; provided, however, that any taxes for which DOE
reimburses Corporation under Sections 1.05, 3.06, 3.07,
4.02, and 4.08 shall not be included in Component (C)."
"(d) Component (D) shall consist of an amount
equal to the product of $2.089 multiplied by the total
number of shares of capital stock of the par value of
$100 per share of Ohio Valley Electric Corporation which
shall have been issued and which are outstanding on the
last day of such month."
8. The second paragraph of paragraph 8 of Section 3.04 is
amended by deleting the first sentence thereof and substituting
therefor the following:
"Prior to the effectiveness of any assignment of
this Agreement by DOE, the 'Review Board,' for the
purposes of this paragraph 8, shall be the DOE Board of
Contract Appeals."
9. Section 3.06 is amended in its entirety to read as
follows:
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"SECTION 3.06 Additional Facilities. In connection
with the operation of the Paducah or Portsmouth
installations of DOE, as a part of the cost structure of
this Agreement and for the purpose of providing funds in
the amount necessary to cover the entire cost to
Corporation of additional facilities and/or spare parts
associated with the provision of electric utility
services to DOE, including, without limitation, such
facilities as fuel processing plants, flue gas or waste
product processing facilities and additional generating
units or stations at the location of the existing
facilities or elsewhere, as shall be purchased and/or
installed or being installed by Corporation pursuant to
the provisions of this Section 3.06, DOE shall pay to
Corporation amounts sufficient, after provision for any
estimated income taxes that may be applicable thereto, to
enable Corporation to cover the entire cost of such
additional facilities and/or spare parts; provided,
however, that neither any single additional facility
and/or spare part costing more than $100,000 nor any
single additional facility or spare part costing less
than $100,000 ('small additional facility or spare part')
after the total cost of all small additional facilities
or spare parts in one calendar year has reached $5
million shall be purchased or installed by Corporation
pursuant to this Section 3.06 without the prior written
approval of DOE unless the purchase or installation of
such additional facilities and/or spare parts is ordered
or required by any regulatory body having jurisdiction
over the emission of pollutants or the discharge of
wastes by Corporation or is reasonably required to enable
Corporation to limit the emission of pollutants or the
discharge of wastes or is otherwise reasonably necessary
in order to comply with any governmental requirement as
to health, safety or the protection of the environment.
"Corporation agrees, upon the request of DOE, to use
its best efforts to arrange, to the extent that, in
Corporation's judgment, such financing is feasible,
financing for a period not to extend beyond December 31,
2005, from sources of capital funds other than DOE of the
cost of each additional facility and/or spare part which
has a cost in excess of $5,000,000, or such lesser amount
as may be specified by Corporation, and also agrees where
the cost is so financed in whole or in part (1) to
reimburse or credit DOE from any proceeds of such
financing to the extent such proceeds are, under the
financing arrangements, available for such purpose, for
any amount which DOE may have previously paid to
Corporation under this Section 3.06 for the cost of such
additional facility and/or spare part and (2) to apply
the balance of any such proceeds in payment of the
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remaining cost, if any, of such additional facility
and/or spare part; DOE shall be relieved of its
obligation under this Section 3.06 to pay Corporation for
the cost of any additional facility and/or spare part to
the extent that Corporation pays such cost from the
balance of any proceeds as contemplated under clause (2)
of this sentence.
"DOE agrees that, if DOE requests that Corporation
arrange for financing from sources of capital funds other
than DOE the cost of any additional facility and/or spare
part, DOE will provide to Corporation assurance in a form
satisfactory to Corporation that DOE will pay to
Corporation (or, if the right to receive principal
payments, interest payments, and any other financing
expenses under an installment sale, loan, lease or
similar agreement shall have been assigned by the seller,
lender, lessor or other party to any such similar
agreement with the written consent of Corporation and DOE
to a trustee under an indenture pursuant to which bonds
or other debt securities have been issued and sold, will
pay directly to such assignee rather than to Corporation)
the full amount of principal payments, interest payments
and any other expenses of financing the cost of the
additional facility and/or spare part.
"If Corporation requests a ruling to the effect that
amounts paid by DOE under this Section 3.06 do not
constitute taxable income to Corporation, but is unable
to obtain a ruling satisfactory to Corporation, or in
case such ruling once obtained shall be reversed or
rescinded, then DOE shall pay to Corporation such
amounts, in lieu of the amounts to be paid as above
provided, which, after provision for all estimated income
taxes that may be applicable thereto, shall equal the
entire costs of the additional facilities and/or spare
parts payable by DOE to Corporation as above provided.
"If Corporation charges to expense any item of
additional facilities and/or spare parts which is later
determined to be an item which should have been
capitalized for tax purposes, then DOE shall, as part of
the cost structure of this Agreement, pay to Corporation
such amount which, after provision for all estimated
income taxes that may be applicable thereto, when added
to any amount previously paid for the item by DOE, shall
equal the entire cost of the additional facilities and/or
spare parts payable by DOE to Corporation as above
provided.
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"DOE shall not pay to Corporation any amount
pursuant to paragraph 3(a) and paragraph 3(d) of Section
3.04 with respect to all or such portion of the cost of
such additional facilities and/or spare parts as has been
paid by DOE and has not thereafter been financed from
sources other than DOE.
If the purchase, acquisition or installation of any
additional facility and/or spare part is ordered or
required by any regulatory agency having jurisdiction
over the emission of pollutants or the discharge of
wastes by Corporation or by a court in any proceeding
relating to the control of pollutants or the discharge of
wastes by Corporation, or if in the judgment of
Corporation any additional facility and/or spare part is
reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes of is
otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the
protection of the environment, then until such additional
facility and/or spare part shall be purchased, acquired
or installed and operating effectively (A) Corporation
shall be entitled so to operate the project generating
stations as, in the judgment of Corporation, will (i)
limit emissions of pollutants and the discharge of wastes
to permissible amounts, and (ii) otherwise comply with
all governmental requirements as to health, safety and
the protection of the environment, and (B) Corporation
shall not be held responsible or liable for any loss or
damage to DOE on account of non-delivery of energy, and
DOE shall not be relieved from its obligation to pay any
charges payable under this Agreement."
10. Section 3.07 is amended in its entirety to read as
follows:
"SECTION 3.07 Replacements. In connection with the
operation of the Paducah or Portsmouth installations of
DOE, as a part of the cost structure of this Agreement
and for the purpose of providing funds in the amount
necessary to cover the entire cost to Corporation of
replacements chargeable to property and plant pursuant to
the provisions of this Section 3.07 necessary or
desirable to keep the project generating stations and
project transmission facilities in a dependable and
efficient operating condition in order to facilitate the
provision of electric utility services to DOE, DOE shall
pay to Corporation amounts sufficient, after provision
for any estimated income taxes that may be applicable
thereto, to enable Corporation to cover the entire cost
of such replacements made or being made by Corporation
9
during any month or prior thereto (and not previously
reimbursed), which costs are incurred after October 14,
1977, whether or not the purchase and installation of
such replacements occurred in whole or in part prior to
such date; provided, however, that neither any single
replacement costing more than $500,000 nor any single
replacement costing less than $500,000 ('small
replacement') after the total cost of all small
replacements in one calendar year has reached $1,000,000
shall be effected by Corporation pursuant to this Section
3.07 without the written approval of DOE unless such
replacements are ordered or required by any regulatory
body having jurisdiction over the emission of pollutants
or the discharge of wastes by Corporation or are
reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes or are
otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the
protection of the environment.
"Corporation agrees, upon the request of DOE, to use
its best efforts to arrange, to the extent that, in
Corporation's judgment, such financing is feasible,
financing for a period not to extend beyond December 31,
2005, from sources of capital funds other than DOE of the
cost of each replacement which has a cost in excess of
$5,000,000, or such lesser amount as may be specified by
Corporation, and also agrees where the cost of a
replacement is so financed in whole or in part (1) to
reimburse or credit DOE from any proceeds of such
financing to the extent such proceeds are, under the
financing arrangements, available for such purpose, for
any amount which DOE may have previously paid to
Corporation under this Section 3.07 for the cost of such
replacement and (2) to apply the balance of any such
proceeds in payment of the remaining cost, if any, of
such replacement; DOE shall be relieved of its obligation
under this Section 3.07 to pay Corporation for the cost
of any replacement to the extent that Corporation pays
such cost from the balance of any proceeds as
contemplated under clause (2) of this sentence.
"DOE agrees that, if DOE requests that Corporation
arrange financing from source of capital funds other than
DOE or the cost of any replacement, DOE will provide to
Corporation assurance in a form satisfactory to
Corporation that DOE will pay to Corporation (or, if the
right to receive principal payments, interest payments,
and any other financing expenses under an installment
sale, loan, lease or similar agreement shall have been
assigned by the seller, lender, lessor or other party to
any such similar agreement with the written consent of
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Corporation and DOE to a trustee under an indenture
pursuant to which bonds or other debt securities have
been issued and sold, will pay directly to such assignee
rather than to Corporation) the full amount of principal
payments, interest payments and any other expenses of
financing the cost of the replacement.
"If Corporation requests a ruling to the effect that
amounts paid by DOE under this Section 3.07 do not
constitute taxable income to Corporation, but is unable
to obtain a ruling satisfactory to Corporation, or in
case such ruling once obtained shall be reversed or
rescinded, then DOE shall pay to Corporation such
amounts, in lieu of any amounts paid as above provided,
which, after provision for all estimated income taxes
that may be applicable thereto, shall equal the entire
cost of the replacements payable to DOE as above
provided.
"If Corporation charges to expense any replacement
item which is later determined to be an item which should
have been capitalized for tax purposes, then DOE shall,
as part of the cost structure of this Agreement, pay to
Corporation such amount which, after provision for all
estimated income taxes that may be applicable thereto,
when added to any amount previously paid for the item by
DOE, shall equal the entire cost of the replacements
payable by DOE to Corporation as above provided.
"For the purposes of this Section 3.07 the term
'replacement' shall include, in addition to electric
plant constructed or installed in place of property
retired, any facilities or equipment (i) the installation
of which shall require some physical alteration of the
project generating facilities and/or the project
transmission facilities and (ii) which are designed to
limit the emission of pollutants or the discharge of
wastes or are otherwise reasonably necessary to comply
with any governmental requirement as to health, safety or
the protection of the environment, whether or not the
project generating facilities or the project transmission
facilities previously included facilities or equipment
serving the same purpose or function as the replacement.
"No replacement costs paid for out of the proceeds
of insurance, or out of amounts recovered from third
parties, shall be included in the cost of replacements.
The term 'costs of replacements' shall include all
components of cost plus removal expenses, less salvage.
DOE shall not pay to Corporation any amounts pursuant to
paragraph 3 (a) and paragraph 3 (d) of Section 3.04 with
respect to all or such portion of the cost of such
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replacements as has been paid by DOE and not thereafter
been financed from sources other than DOE.
"If the purchase, acquisition or installation of any
replacement is ordered or required by any regulatory
agency having jurisdiction over the emission of
pollutants or the discharge of wastes by Corporation or
by a court in any proceeding relating to the control of
pollutants or the discharge of wastes by Corporation, or
if in the judgment of Corporation any replacement is
reasonably required to enable Corporation to limit the
emission of pollutants or the discharge of wastes or is
otherwise reasonably necessary in order to comply with
any governmental requirement as to health, safety or the
protection of the environment, then until such
replacement shall be installed and operating effectively
(A) Corporation shall be entitled so to operate the
project generating stations as, in the judgment of
Corporation, will (i) limit emissions of pollutants and
the discharge of wastes to permissible amounts, and (ii)
otherwise comply with all governmental requirements as to
health, safety and the protection of the environment, and
(B) Corporation shall not be held responsible or liable
for any loss or damage to DOE on account of non-delivery
of energy, and DOE shall not be relieved from its
obligation to pay any charges payable under this
Agreement."
11. Section 4.05 is amended in its entirety to read as
follows:
"SECTION 4.05 Taxes and Insurance Allocated
Directly to DOE. Corporation shall bill DOE for (i) its
share of the cost of any estimated taxes allocated
directly to DOE pursuant to clause (c) of paragraph 3 of
Section 3.04, (ii) the cost of any estimated taxes or
other charges to be paid by DOE pursuant to Sections 3.06
and 3.07, and (iii) the cost of any Insurance to be paid
by DOE pursuant to clause (b) of paragraph 3 of Section
3.04."
12. A new Section 4.09 is to be inserted after Section 4.08
as follows:
"SECTION 4.09 Transmission Payments. Corporation
shall submit to DOE as early as practicable in each month
a bill or the amount by which costs incurred during the
current calendar year pursuant to Section 2.11 exceed the
total of (i) the amounts paid by DOE during the current
calendar year under this Section 4.09, and (ii) the
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amount of any transmission revenues received by the
Corporation during the current calendar year pursuant to
Section 2.10."
13. Section 6.01 is amended in its entirety to read as
follows:
"SECTION 6.01 Duration. The term of this
Agreement, unless otherwise terminated in accordance with
the provisions hereof, shall terminate at 12:00 Midnight,
Central Standard Time, on December 31, 2005. The parties
recognize that the project generating stations were
constructed to service the United States of America's
load requirements at the Project, and therefore recognize
the principle that power and associated energy produced
by the project generating stations beyond the term of
this Agreement are to be made available, at least to the
extent of DOE's contract demand as in effect on December
31, 2005, to serve such load, provided Corporation's
equipment is then serviceable and mutually agreeable
arrangements can be evolved by the parties hereto.
Accordingly, Corporation and DOE agree to review the
possibility of negotiating power supply arrangements for
the delivery of power and associated energy produced by
the project generating stations to DOE subsequent to
December 31, 2005, at least two years in advance of such
date."
14. The first sentence of Section 6.02 is amended by deleting
the words "not less than five years" and substituting therefor the
words "not less than three years."
15. Section 6.04 is amended in its entirety to read as
follows:
"SECTION 6.04 Payments for Employee Benefits.
"1. As part of the cost structure of this
Agreement, beginning in 1993, and in any event not later
than the effective date of termination of this Agreement,
DOE shall pay to Corporation amounts, after provision for
any estimated taxes that may be applicable thereto,
determined by an actuary or actuaries selected in
accordance with the provisions of paragraph 2 of this
Section 6.04 to be sufficient to pay the premiums due or
expected to become due, as well as administrative fees
and costs, on life insurance medical insurance or other
post-retirement benefits other than pensions attributable
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to the employment and employee service of active
employees, retirees, or other employees prior to such
effective date, such amounts being sufficient to provide
payment with respect to all periods for which Corporation
has committed or is otherwise obligated to make such
payments, including amounts attributable to current
employee service and any unamortized transition
obligation attributable to prior service years ("Post--
Retirement Benefit Obligation"); further provided, that,
not later than the effective dates of termination, DOE
will pay to Corporation additional amounts, after
provision for any estimated taxes that may be applicable
thereto, sufficient to purchase insurance policies, or
DOE will provide other forms of assurance, together with
provisions for estimated taxes, if any, that may be
applicable thereto, satisfactory to DOE and to
Corporation, such insurance policies or other forms of
assurance being adequate to cover any shortfall if the
amount of the Post-Retirement benefit Obligation is
insufficient to permit Corporation to fulfill its
commitments or obligations with respect to post-
retirement benefits other than pensions; further provided
that if, after the decease of the last person entitled
to life and/or medical insurance coverage or other post-
retirement benefits other than pensions, the amounts paid
by DOE to Corporation plus earnings thereon are found to
have exceeded Corporation's commitments or obligations,
such excess shall be refunded to DOE; and further
provided, that should Corporation be required by law or
by regulation of governmental agencies to provide funds
in connection with life and/or medical insurance premiums
for employees whose employment with Corporation
terminates or has terminated before retirement, DOE shall
pay Corporation amounts, after provision for any
estimated taxes that may be applicable thereto, required
to provide funds sufficient to pay life and/or medical
insurance benefits for such employees, such payments to
be made on or before the dates when any accruals in
connection therewith are required by Generally Accepted
Accounting Principles to be recorded or in any event by
the effective date of termination of this Agreement.
2. The actuary selected by Corporation to
determine the amounts sufficient to make payments
referenced in paragraph 1 of this Section 6.04 shall be
a person classified under the Employee Retirement income
Security Act as an 'Enrolled Actuary' unless such actuary
is selected by Corporation with the approval of DOE. An
actuary retained by DOE shall have the right to review
and approve any actuarial or other assumption or
calculation performed with respect to Section 6.04 by or
on behalf of the actuary retained by Corporation and the
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actuary retained by Corporation shall have the right to
review any actuarial or other assumption or calculation
performed with respect to Section 6.04 by or on behalf
of an actuary retained by DOE. If there is a dispute
between Corporation's actuary and DOE's actuary
concerning any actuarial or other assumption or
calculation pursuant to this Section 6.04 and the
respective actuaries are not able to resolve such dispute
within 30 days, they shall within 30 days thereafter
select and appoint a third actuary to resolve the
dispute. If the actuaries retained by Corporation and DOE
are unable to agree within 30 days upon the selection of
a third actuary to resolve the dispute, an Enrolled
Actuary who has no professional relationship with either
party or to the actuaries retained by either party shall
be chosen by the Executive Director of the Society of
Actuaries or its successor. The fees and expenses of the
third actuary shall be divided equally between
Corporation and DOE."
16. Section 6.05 is amended in its entirety to read as
follows:
"SECTION 6.05 Termination as Result of Certain
Conditions. In the event of the occurrence of any of the
events specified in clause (i), clause (ii), clause (iii)
or clause (iv) of this Section 6.05, Corporation may in
its sole discretion elect, by notice in writing delivered
to DOE within 270 days following such occurrence, to
treat such occurrence as the delivery by DOE to
Corporation on the data of such occurrence of a notice
of termination pursuant to Section 6.02 hereof
designating an effective date of termination as the
earlier of (a) the date when this Agreement would
otherwise terminate in accordance with Section 6.01
hereof, or (b) a date three years subsequent to the date
of such occurrence and, in the event of such election by
Corporation, this Agreement shall terminate upon the
earlier of (a) the date when this Agreement would
otherwise terminate in accordance with Section 6.01
hereof, or (b) a date three years subsequent to the date
of such occurrence and, in the event of such election by
Corporation, this Agreement shall terminate upon the
earlier of (a) the date when this Agreement would
otherwise terminate in accordance with Section 6.01
hereof, or (b) a date three years subsequent to the date
of such occurrence:
(i) DOE shall have failed to pay any amount
required to be paid by DOE pursuant to the provisions of
this Agreement within a period of 30 days after the
15
receipt of a written notice from Corporation to DOE of
DOE's failure to pay any such amount; or
(ii) DOE shall have made any payment required to be
made by DOE pursuant to the provisions of this Agreement
without having full authority to make such payment; or
(iii) DOE shall have claimed as a reason for
failing to pay any amount billed to DOE by Corporation
that DOE was prevented from doing so by Section 165(b)
of the Atomic Energy Act, unless Corporation specifically
identifies all or a portion of such billing as requiring
a direct payment or direct reimbursement of Federal
income taxes; or
(iv) DOE shall have assigned this Agreement or
rights under this Agreement and the assignee shall not
have been at the time of the assignment, or shall have
ceased to be at any time after the assignment, wholly
owned by the United States of America."
17. A new Section 6.09 is to be inserted after Section 6.08
as follows:
"SECTION 6.09 Decommissioning, Shutdown, Demolition
and Closing. DOE recognizes that a part of the cost of
supplying power to it under this Agreement is the amount
that may be incurred in connection with the
decommissioning, shutdown, demolition and closing of
Corporation's Ohio Station and its Indiana Station when
production of electric power and energy is discontinued
at each of these facilities. Such cost (net of salvage
credits) shall include, but is not limited to, the costs
of demolishing the plant's building structures, disposal
of non-salvageable materials, removal and disposal of
insulating materials, removal and disposal of storage
tanks and associated piping, disposal or removal of
materials and supplies (including fuel oil and coal),
grading, covering and reclaiming storage and disposal
areas, disposing of ash in ash ponds to the extent
required by regulatory authorities, undertaking
corrective or remedial action required bv regulatory
authorities, and any other costs incurred in putting the
facilities in a condition necessary to protect health or
the environment or which are required by regulatory
authorities, or which are incurred to fund continuing
obligations to monitor or to correct environmental
problems which result, or are later discovered to result,
from the facilities' operation, closure or post-closure
activities.
16
"DOE agrees to pay as incurred or, if not incurred,
not later than the effective date of the termination of
the Agreement its pro rata share of any of the above--
referenced costs incurred or, if not incurred, as
estimated by the Independent Engineer in accordance with
the methodology described below. The pro rata share to
be paid by DOE and the estimated total amount of the
above-referenced costs are to be determined by a
recognized firm of Independent Engineers to be selected
by Corporation with the approval of DOE (hereinafter
called "Independent Engineer"). The Independent Engineer
shall determine DOE's pro rata share on the basis of the
following ratio:
(i) The total number of megawatt-hours produced
and estimated to be produced at the generating
station incurring such costs for sale to DOE
subsequent to the effective date of this
Modification No. 14 to this Agreement, as
compared to
(ii) The total number of megawatt-hours produced
and estimated to be produced at the generating
station incurring such costs subsequent to the
effective date of this Modification No. 14 to
this Agreement."
18. Section 7.04 is amended by deleting paragraph 1 in its
entirety and substituting therefor the following:
"1. Corporation shall keep books of account in
accordance with the Federal Power Commission (FPC)
Uniform System of Accounts of 1937 (Uniform System of
Accounts) and, with the consent of DOE, such other
systems of accounts prescribed by other governmental
regulatory authorities having jurisdiction as may be
applicable. In addition, Corporation shall keep such
records and memorandum accounts as may be required for
the computation of amounts payable by DOE hereunder. The
Uniform System of Accounts shall be used for the
determination of any question relative to costs and
expenses arising under this Agreement except that where
specific methods of computations of amounts are set forth
in this Agreement such methods shall be employed in lieu
of any other method which might be required by the
Uniform System of Accounts."
19. Section 7.07 is amended in its entirety to read as
follows:
17
"SECTION 7.07 - FAR 52.222-3 Convict Labor (APR 1984).
"Corporation agrees not to employ any person
undergoing sentence of imprisonment in performing this
contract except as provided by 18 U.S.C. 4082(c)(2) and
Executive Order 11755, December 29, 1973."
20. Section 7.08 is amended in its entirety to read as
follows:
"SECTION 7.08 - FAR 52.203-1 Officials Not to Benefit (APR
1984).
"No member of or delegate to Congress, or resident
commissioner, shall be admitted to any share or part of
this contract, or to any benefit arising from it.
However, this clause does not apply to this contract to
the extent that this contract is made with a corporation
for the corporation's general benefit."
21. Section 7.12 is amended in its entirety to read as
follows:
"SECTION 7.12 Successors and Assigns.
"1. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and assigns. Neither this Agreement nor any rights
under this Agreement may be assigned by either party without
the written consent of the other, provided, however, that
consent shall not be unreasonably withheld and provided
further that, in the case of an assignment by DOE, reasonable
grounds for refusal of consent shall include, without
limitation, that such assignment may be prejudicial to
Corporation or the holders of any indebtedness of Corporation,
except that (A) DOE may without Corporation's consent assign
this Agreement or any of its rights under this Agreement,
provided that (i) the assignee is a successor to DOE for
purposes of operating the Project, (ii) the assignee is wholly
owned by the United States of America, (iii) the assignee is
authorized by law to assume, and does assume (by written
instrument that is in form satisfactory to Corporation), all
of the obligations and responsibilities of DOE and the United
States of America under this Agreement, and (iv) the
assignment does not have the effect of relieving the United
States of America of any of its obligations or
responsibilities under this Agreement, and (B) Corporation may
without the consent of DOE assign this Agreement or any of its
rights under this Agreement to a successor to all or
substantially all of its property and assets and may pledge
18
this Agreement to secure its indebtedness incurred or to
be incurred for the purpose of constructing facilities,
and this Agreement or rights under this Agreement may be
assigned or transferred without the consent of DOE to one
or more persons who shall assume the obligations of
Corporation hereunder in connection with the enforcement
of any such pledge. Corporation may without the consent
of DOE assign pursuant to the provisions of the
Assignment of Claims Act of 1940, as amended, to any
bank, trust company, or other financing institution,
including any Federal lending agency, any moneys due or
to become due under this Agreement, and any such
assignment may cover all or any part of the amounts
payable by DOE to Corporation under this Agreement and
may be made to more than one such bank, trust company or
financing institution either for the account of such
bank, trust company or financing institution or as agent
or trustee for two or more parties who are holders of
indebtedness of Corporation. Payments to be made to the
assignee of any moneys due or to become due under this
Agreement shall not be subject to reduction or set off.
"2. Notwithstanding any other provision of this
Agreement, any assignment by DOE shall not become effective
if the same would require any shareholder of the Corporation
to dispose of its shares or until the date upon which all
authorizations, consents, approvals, exemptions, franchises,
permissions, permits and licenses of Federal, State or other
governmental authorities, free of conditions deemed burdensome
by the Corporation or any of its shareholders, shall have been
issued and there have been made all recordings and filings
with such authorities which are necessary to enable
Corporation legally to furnish to such successor operator of
the Project the electric service required to be furnished to
DOE under this Agreement and to enable Corporation legally to
carry out is obligations under this Agreement, and all such
authorizations, consents, approvals, exemptions, franchises,
permissions, permits, licenses, recordings and filings are
valid and in full force and effect, are not the subject of
attack on the appeal, by direct proceedings or otherwise, and
(except to the extent that Corporation shall waive such
condition) that either the time within which any appeal
therefrom may be taken or any review thereof may be had has
expired or that no review thereof may be had nor appeal
therefrom taken.
"3. In the event that any assignment of this Agreement
or rights under this Agreement shall become effective as
herein provided, Corporation shall thereafter be entitled to
take such action before, or make such filings with, any
regulatory authority having jurisdiction with respect to any
term or condition of this Agreement as Corporation shall deem
appropriate and in the event of such action by Corporation,
19
the terms and conditions under which service shall be
rendered shall be the terms and conditions as so changed
or as shall result from such action by or before any such
regulatory authority.
"4. Notwithstanding nay other provision of this
Agreement, no assignment contemplated by this Section 7.12 or
transfer, by operation of law or otherwise, of any of the
rights, obligations or responsibilities of DOE and the United
States of America under this Agreement shall relieve the
United States of America of its obligations or
responsibilities to pay interest and principal or amortization
components of purchase price, amortization, rental or other
payments under installment sale, loan, lease or similar
agreements directly to a trustee as provided in subclauses(i)
and (iii) of clause (a) of paragraph 3 of Section 3.04 or as
provided in Sections 3.06 and 3.07 of this Agreement."
22. Section 7.13 is amended in its entirety to read as
follows:
"SECTION 7.13 FAR 52.2222-6 Equal Opportunity (APR
1984).
"(a) If, during any 12-month period (including the 12
months preceding the award of this contract), Corporation has
been or is awarded non-exempt Federal contracts and/or
subcontracts that have an aggregate value in excess of
$10,000, Corporation shall comply with the subparagraph (b)(1)
through (11) below. Upon request, Corporation shall provide
information necessary to determine the applicability of this
clause.
"(b) During performing this contract, Corporation agrees
as follows:
(1) Corporation shall not discriminate against any
employee or applicant for employment because of race,
color, religion, sex or national origin.
(2) Corporation shall take affirmative action to
ensure that applicants are employed, and that employees
are treated during employment, without regard to their
race, color, religion, sex or national origin. This
shall include, but not be limited to, (i) employment,
(ii) upgrading, (iii) demotion, (iv) transfer, (v)
recruitment or recruitment advertising, (vi) layoff or
termination, (vii) rates of pay or other forms of
compensation, and (viii) selection for training,
including apprenticeship.
20
(3) Corporation shall post in conspicuous places
available to employees and applicants for employment the
notices to be provided by the Contracting Officer that
explain this clause.
(4) Corporation shall, in all solicitations or
advertisement for employees placed by or on behalf of the
Corporation, state that all qualified applicants will
receive consideration for employment without regard to
race, color, religion, sex or national origin.
(5) Corporation shall send to each labor union or
representative of workers with which it has a collective
bargaining agreement or other contract or understanding,
the notice to be provided by the Contracting Officer
advising the labor union or workers' representative of
Corporation's commitments under this clause, and post
copies of the notice in conspicuous places available to
employees and applicants for employment.
(6) Corporation shall comply with Executive Order
11246, as amended, and the rules, regulations and orders
of the Secretary of Labor.
(7) Corporation shall furnish to the contracting
agency all information required by Executive Order 11246,
as amended, and by the rules, regulations and orders of
the Secretary of Labor. Standard Form 100 (EEO-1), or
any successor form, is the prescribed form to be filed
within 30 days following the award, unless filed within
12 months preceding the date of award.
(8) Corporation shall permit access to its books,
records and accounts by the contracting agency or the
Office of Federal Contract Compliance Programs (OFCCP)
for the purposes of investigation to ascertain
Corporation's compliance with the applicable rules,
regulations and orders.
(9) In the event of Corporation's non-compliance
with this clause or any rule, regulation or order of the
Secretary of Labor, this contract may be canceled,
terminated or suspended in whole or in part and
Corporation may be declared ineligible for further
Government contracts under the procedures authorized in
Executive Order 11246, as amended. In addition,
sanctions may be imposed and remedies invoked against
Corporation as provided in Executive Order 11246, as
amended, the rules, regulations and orders of the
Secretary of Labor, or as otherwise provided by law.
21
(10) Corporation shall include the terms and
conditions of subparagraph (b)(1) through (11) of this
clause in every subcontract or purchase order that is not
exempted by the rules, regulations or orders of the
Secretary of Labor issued under Executive Order 11246,
as amended, so that these terms and conditions will be
binding upon each subcontractor or vendor.
(11) Corporation shall take such action with
respect to any subcontract or purchase order as the
contracting agency may direct as a means of enforcing
these terms and conditions, including sanctions for non-
compliance; provided, that if Corporation becomes
involved in, or is threatened with, litigation with a
subcontractor or vendor as a result of any direction,
Corporation may request the United States to enter into
the litigation to protect the interests of the United
States.
"(c) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement."
23. Section 7.14 is amended in its entirety to read as
follows:
"SECTION 7.14. Security.
"1. Corporation's Duty to Safeguard Restricted
Data, Formerly Restricted Data, and Other Classified
Information. Corporation shall, in accordance with DOE's
security regulations and requirements, be responsible for
safeguarding all classified information and protecting
against sabotage, espionage, loss and theft the
classified documents and material in the Corporation's
possession in connection with work under this Agreement.
Except as otherwise expressly provided in this Agreement,
Corporation shall, upon completion or termination of this
Agreement, transmit to DOE any classified matter in the
possession of Corporation or any person under
Corporation's control in connection with the performance
of the Agreement. If retention by Corporation of any
classified matter is required after the completion or
termination of the Agreement and such retention is
approved by the Contracting Officer, Corporation will
complete a certificate of possession to be furnished to
22
DOE specifying the classified matter to be retained. The
certification shall identify the items and types of
categories of matter retained, the conditions governing
the retention of the matter and the period of retention,
if known. If the retention is approved by the
Contracting Officer, the security provisions of the
Agreement will continue to be applicable to the matter
retained.
"2. Regulations. Corporation agrees to conform to
all security regulations and requirements of DOE.
"3. Definition of Classified Information. The
term 'Classified Information' means Restricted Data,
Formerly Restricted Data, or National Security
Information.
"4. Definition of Restricted Data. The term
'Restricted Data,' as used in this paragraph, means all
data concerning (a) design, manufacture, or utilization
of atomic weapons; (b) the production of special nuclear
material; or (c) the use of special nuclear material in
the production of energy, but shall not include data
declassified or removed from the Restricted Data category
pursuant to Section 142 of the Atomic Energy Act of 1954,
as amended.
"5. Definition of Formerly Restricted Data. The
term 'Formerly Restricted Data,' as used in this
paragraph, means all data removed from the Restricted
Data category under Section 142(d) of the Atomic Energy
Act of 1954, as amended.
"6. Definition of National Security Information.
The term 'National Security Information' means any
information or material, regardless of its physical form
or characteristics, that is owned by, produced for or by,
or is under the control of the United States Government,
that has been determined pursuant to Executive Order
12356 or prior Orders to require protection against
unauthorized disclosure, and which is so designated.
"7. Security Clearance of Personnel. Corporation
shall not permit any individual to have access to any
classified information, except in accordance with the
Atomic Energy Act of 1954,
"8. Criminal Liability. It is understood that
disclosure of any classified information relating to the
work or services ordered hereunder to any person not
entitled to receive it, or failure to safeguard any
classified matter that may come to Corporation or any
23
person under Corporation's control in connection with
work under this Agreement, may subject Corporation, its
agents, employees, or subcontractors to criminal
liability under the laws of the United States. (See the
Atomic Energy Act of 1954, as amended, 42 U.S.C. 2011 et
seq.; 18 U.S.C. 793 and 794; and Executive Order 12356.)
"9. Subcontracts and Purchase Orders. Except as
otherwise authorized in writing by the Contracting
Officer, Corporation shall insert provisions similar to
the foregoing provisions of this Section 7.14 in all
subcontracts and purchase orders under this Agreement."
24. Section 7.15 is amended in its entirety to read as
follows:
"SECTION 7.15 Contract Work Hours and Safety Standards
Act -- Overtime Compensation.
"Prior to any assignment or transfer by DOE under
Section 7.12, this Agreement, to the extent that it is
of a character specified in the Contract Work Hours and
Safety Standards Act (40 U.S.C. 327-333), is subject to
the following provisions and to all other applicable
provisions and exceptions of such Act and the regulations
of the Secretary of Labor thereunder.
"1. Overtime Requirements. No contractor or
subcontractor contracting for any part of the contract
work which may require or involve the employment of
laborers or mechanics shall require or permit any laborer
or mechanic, in any workweek in which he is employed on
such work, to work in excess of 40 hours in such workweek
on work unless such laborer or mechanic receives
compensation at a rate not less than one and one-half
times the basic rate of pay for all such hours worked in
excess of 40 hours in such workweek.
"2. Violation; liability for unpaid wages;
liquidated damages. In the event of any violation of the
provisions of paragraph 1 of this Section 7.15,
Corporation and any subcontractor responsible therefor
shall be liable to any affected employee for the unpaid
wages. In addition, such Corporation and subcontractor
shall be liable to the United States for liquidated
damages. Such liquidated damages shall be computed with
respect to each individual laborer or mechanic employed
in violation of the provisions of paragraph 1 of this
Section 7.15 in the sum of $10 for each calendar day bon
which such employee was required or permitted to be
24
employee on such work in excess of his standard workweek
of 40 hours without payment of the overtime wages
required by paragraph 1 of this Section 7.15.
"3. Withholding of unpaid wages and liquidated
damages. Except as otherwise provided in Section 7.12
of this Agreement, the Contracting Officer may withhold
from Corporation, from any moneys payable on account of
work performed by Corporation or subcontractor under any
such contract or other Federal contract with Corporation,
or any other Federally Assisted contract subject to the
Contract Work Hours and Safety Standards Act which is
held by Corporation, such sums as may administratively
be determined to be necessary to satisfy any liabilities
of Corporation or subcontractor for unpaid wages and
liquidated damages as provided in the provisions of
paragraph 2 of this Section 7.15.
"4. Payrolls and basic records. Corporation or
subcontractor shall maintain payrolls and basic payroll
records during the course of contract work and shall
preserve them for a period of 3 years from the completion
of this Agreement for all laborers and mechanics working
on this Agreement. Such records shall contain the name
and address of each such employee, social security
number, correct classifications, hourly rates of wages
paid, daily and weekly number of hours worked, deductions
made, and actual wages paid. Nothing in this paragraph
shall require the duplication of records required to be
maintained for construction work by Department of labor
regulations at 29 CFR 5.5(a)(3) implementing the Davis-
Bacon Act.
"5. Subcontracts. Corporation shall insert
paragraphs 1 through 4 of this Section 7.15 in all
subcontracts, and shall require their inclusion in all
subcontracts of any tier."
25. Paragraph (a) of Section 7.18 is amended by adding a
second sentence to read as follows:
"It is further the policy of the United States that
its prime contractors establish procedures to ensure the
timely payment of amounts due pursuant to the terms of
their subcontracts with small business concerns and small
business concerns owned and controlled by socially and
economically disadvantaged individuals."
26. Paragraph (c) of Section 7.18 is amended in its entirety
to read as follows:
25
"(c) As used in this Agreement, the term 'small
business concern' shall mean a small business as defined
pursuant to section 3 of the Small Business Act (15
U.S.C. 632) and relevant regulations promulgated pursuant
thereto. The term 'small business concern owned and
controlled by socially and economically disadvantaged
individuals' shall mean a small business concern:
(1) which is at least 51 percent owned by one or
more socially and economically disadvantaged individuals;
or, in the case of any publicly-owned business, at least
51 percent of the stock of which is owned by one or more
socially and economically disadvantaged individuals; and
(2) whose management and daily business operations
are controlled by one or more of such individuals.
This term also means a small business concern that
is at least 51 percent unconditionally owned by an
economically disadvantaged Indian tribe or Native
Hawaiian organization, or a publicly-owned business
having at least 51 percent of its stock unconditionally
owned by one of these entities which has its management
economically disadvantaged Indian tribe or Native
Hawaiian organization which meet the requirements of 13
CFR 124.
Corporation shall presume that socially and
economically disadvantaged individuals include Black
Americans, Hispanic Americans, Native Americans, Asian-
Pacific Americans, Asian-Indian Americans, and other
specified minorities, or any other individual found to
be disadvantaged by the Small Business Administration
pursuant to section 8(a) of the Small Business Act.
Corporation shall presume that socially and economically
disadvantaged entities also include Indian Tribes and
Native Hawaiian Organizations."
27. Section 7.19 is amended by deleting subparagraph (1) of
paragraph (c) thereof in its entirety and substituting therefor the
following:
"(1) The term 'labor surplus area' means a geographical
area identified by the Department of Labor, in accordance with
20 CFR 654, Subpart A, as an area of concentrated unemployment
and under-employed or an area of labor surplus."
26
28. Paragraph (g) of Section 7.22 is amended in its entirety
to read as follows:
"(g) If, pursuant to this section, DOE elects, in
whole or in part, to cancel, terminate, annul or suspend
this Agreement, to terminate the right of Corporation to
proceed or to suspend contract payments, such action by
DOE may only be taken by delivering to Corporation a
notice in writing of DOE's election to terminate not less
than three years prior to the effective date of
termination pursuant to Section 6.02 of this Agreement."
29. Section 7.23 is amended in its entirety to read as
follows:
"Section 7.23 Clean Air and Water.
"(a) Corporation agrees as follows:
(i) to comply with all applicable requirements of
Section 114 of the Clean Air Act (42 U.S.C. 7414) and
Section 308 of the Clean Water Act (33 U.S.C. 1518),
respectively, relating to inspection, monitoring, entry,
reports and information, as well as other applicable
requirements specified in Section 114 and Section 308 of
the Air Act and the Water Act, respectively, and all
applicable regulations and guidelines issued thereunder
before the execution of Modification No. 14 to this
Agreement;
(ii) that no portion of the work required by this
Agreement will be performed in a facility listed on the
Environmental Protection Agency list of violating
facilities on the date when Modification No. 14 to this
Agreement was executed unless and until the Environmental
Protection Agency eliminates the name of such facility
or facilities from such listing;
(iii) to use its best efforts to comply with
clean air standards and clean water standards at the
facilities in which the Agreement is being performed;
(iv) to insert the substance of the provisions of
this Section 7.23 in any non-exempt subcontract,
including this paragraph (iv).
"(b) The terms used in this Section 7.23 have the
following meanings:
27
(i) the term 'Air Act' means the Clean Air Act, as
amended (42 U.S.C. 7401 et seq.);
(ii) the term 'Water Act' means Clean Water Act, as
amended (33 U.S.C. 1251 et seq.);
(iii) the term 'Clean Air Standards' means any
applicable and enforceable rules, regulations, guidelines,
standards, limitations, orders, controls, prohibitions, or
other requirements which are contained in, issued under, or
otherwise adopted pursuant to the Air Act or Executive Order
11,738, an applicable implementation plan as described in
Section 110(d) of the Air Act (42 U.S.C. 7410(d)), an approved
implementation procedure or plan under Section 111(c) or
Section 111(d), respectively, of the Air Act (42 U.S.C 7411(c)
or (d), or an approved implementation procedure under Section
112 (d) of the Air Act (42 U.S.C. 7412 (d));
(iv) the term 'Clean Water Standards' means any
applicable and enforceable limitation, control, condition,
prohibition, standard, or other requirement which is
promulgated pursuant to the Water Act or contained in a permit
issued to a discharger by the Environmental Protection Agency
or by a state under an approved program, as authorized by
Section 402 of the Water Act (33 U.S.C. 1342), or by a local
government to ensure compliance with pretreatment regulations
as required by Section 307 of the Water Act (33 U.S.C. 1317);
(v) the term 'compliance' means compliance with
applicable clean air or water standards. Compliance shall also
mean compliance with a schedule or plan ordered or approved
by a court of competent jurisdiction, the Environmental
Protection Agency or an air or water pollution control agency
in accordance with the requirements of the Air Act or Water
Act and regulations issue pursuant thereto;
(vi) the term 'facility' means any building, plant,
installation, structure, mine, vessel, or other loading craft,
location, or site of operations, owned, leased or supervised
by a contractor or subcontractor, to be utilized in the
performance of a contract or subcontract. Where a location or
site of operations contains or includes more than one
building, plant, installation, or structure, the entire
location shall be deemed to be a facility except where the
Director, Office of Federal Activities, Environmental
Protection Agency, determines that independent facilities are
located in one geographical area."
28
30. Paragraph (b) of Section 7.24 is amended by deleting the
words "Modification No. 11" and substituting therefor the words
"Modification No. 14."
31. Paragraph (d) of Section 7.24 is amended in its entirety
to read as follows:
"(d)(l) Corporation shall report at least annually, as
required by the Secretary of Labor, on:
(i) The number of special disabled veterans and the
number of veterans of the Vietnam era in the work force of
Corporation by job category and hiring location; and
(ii) The total number of new employees hired during the
period covered by the report, and of that total, the number
of special disabled veterans,and the number of veterans of the
Vietnam era.
(2) The above items shall be reported by completing the
form entitled Federal Contractor Veterans' Employment Report
VETS-100.'
(3) Reports shall be submitted no later than March 31
of each year.
(4) The employment activity report required by paragraph
(d) (1) (ii) of this clause shall reflect total hires during
the most recent 12-month period as of the ending date selected
for the employment profile report required by paragraph (d)
(1) (i) of this clause. Contractors may select an ending date:
(i) As of the end of any pay period during the period January
through March 1st of the year the report is due, or (ii) as
of December 31, if the contractor has previous written
approval from the Equal Opportunity Commission to do so for
purposes of submitting the Employer Information Report EEQ-l
(Standard Form 100).
(5) The count of veterans reported according to
paragraph (d) (1) of this clause shall be based on voluntary
disclosure. Each contractor subject to the reporting
requirements at 38 U.S.C. 2012(d) shall invite all special
disabled veterans and veterans of the Vietnam era who wish to
benefit under the affirmative action program at 38 U.S.C. 2012
to identify themselves to the contractor. The invitation shall
state that the information is voluntarily provided. that the
information will be kept confidential, that disclosure or
refusal to provide the information will not subject the
applicant or employee to any adverse treatment and that the
29
information will be used only in accordance with the
regulations promulgated under 38 U.S.C. 2012."
32. Paragraph (f) of Section 7.24 is amended to read as
follows:
"(f) This clause does not apply to the listing of
employment openings which occur and are filled outside of the
50 states, the District of Columbia, Puerto Rico, Guam, Virgin
Islands, American Samoa, and the Trust Territory of the
Pacific Islands."
33. Subparagraph (2) of paragraph (h) of Section 7.24 is
amended in its entirety to read as follows:
"(2) Appropriate office of the State employment service
system means the local office of the Federal-State national
system of public employment offices with assigned
responsibility for serving the areas where the employment
opening is to be filled, including the District of Columbia,
Guam, Puerto Rico, the Virgin Islands, American Samoa, and the
Trust Territory of the Pacific Islands."
34. Paragraph (i) of Section 7.24 is amended in its entirety
to read as follows:
"(i) Corporation agrees to comply with the rules,
regulations, and relevant orders of the Secretary of Labor
issued pursuant to the Vietnam Era Veterans Readjustment
Assistance Act of 1972 (the 'Act'), as amended."
35. Paragraph (n) of Section 7.24 is amended in its entirety
to read as follows:
"(n) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement."
36. Section 7.25 is amended in its entirety to read as
follows:
"SECTION 7.25 Covenant Against Contingent Fees.
"(a) The Corporation warrants that no person or selling
agency has been employed or retained to solicit or secure this
contract upon an agreement or understanding for a commission,
30
percentage, brokerage, or contingent fee, excepting bona
fide employees or bona fide established commercial or
selling agencies maintained by the Corporation for the
purpose of securing business. For breach or violation of
this warranty the Government shall have the right to
annul this contract without liability or in its
discretion to deduct from the contract price or
consideration, or otherwise recover, the full amount of
such commission, percentage, brokerage, or contingent
fee; provided, however, that if, pursuant to this
section, DOE elects, in whole or in part, to cancel,
terminate, annul or suspend this Agreement, to terminate
the right of Corporation to proceed or to suspend
contract payments, such action by DOE may only be taken
by delivering to Corporation a notice in writing of DOE's
election to terminate not less than three years prior to
the effective date of termination pursuant to Section
6.02 of this Agreement.
"(b) 'Bona fide agency,' as used in this clause, means
an established commercial or selling agency, maintained by a
contractor for the purpose of securing business, that neither
exerts nor proposes to exert improper influence to solicit or
obtain Government contracts nor holds itself out as being able
to obtain any Government contract or contracts through
improper influence.
'Bona fide employee,' as used in this clause, means a
person, employed by a contractor and subject to the
contractor's supervision and control as to time, place, and
manner of performance, who neither exerts nor proposes to
exert improper influence to solicit or obtain Government
contracts nor holds out as being able to obtain any Government
contract or contracts through improper influence.
'Contingent fee,' as used in this clause, means any
commission, percentage, brokerage, or other fee that is
contingent upon the success that a person or concern has in
securing a Government contract.
'Improper influence,' as used in this clause, means any
influence that induces or tends to induce a Government
employee or officer to give consideration or to act regarding
a Government contract on any basis other than the merits of
the matter."
37. Section 7.26 is amended by deleting its third and fourth
sentences.
38. A new Section 7.30 is to be inserted after Section 7.29
as follows:
"SECTION 7.30 - DEAR 952.202-l Definitions (APR 1984).
31
"(a) 'Contracting Officer' means a person with the
authority to enter into, administer, and/or terminate
contracts and make related determinations and findings. The
term includes certain authorized representatives of the
Contracting Officer acting within the limits of their
authority as delegated by the Contracting Officer.
"(b) Except as otherwise provided in this Agreement, the
term 'subcontracts' includes, but is not limited to, purchase
orders and changes and modifications to purchase orders under
this Agreement."
39. A new Section 7.31 is to be inserted after 7.30 as
follows:
"SECTION 7.31 - FAR 52.203-3 Gratuities (APR 1984).
"(a) The right of Corporation to proceed may be
terminated by written notice if, after notice and hearing, the
agency head or a designee determines that Corporation, its
agent, or another representative --
(1) Offered or gave a gratuity (e.g., an
entertainment or gift) to an officer, official, or
employee of the Government; and
(2) Intended, by the gratuity, to obtain a
contract or favorable treatment under a contract.
"(b) The facts supporting this determination may be
reviewed by any court having lawful jurisdiction.
"(c) If this Agreement is terminated under paragraph (a)
above, the Government is entitled --
(1) To pursue the same remedies as in a breach of
this Agreement; and
(2) In addition to any other damages provided by
law, to exemplary damages of not less than 3 nor more
than 10 times the cost incurred by Corporation in giving
gratuities to the person concerned, as determined by the
agency head or a designee. (This subparagraph (c) (2)
is applicable only if this contract uses money
appropriated to the Department of Defense.)
"(d) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement."
32
40. A new Section 7.32 is to be inserted after Section 7.31
as follows:
"SECTION 7.32 - FAR 52.203-6 Restrictions on Subcontractor
Sales to the Government (JUL 1985)
"(a) Except as provided in (b) below, Corporation 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 unreasonably restricting sales by such
subcontractors directly to the Government of any item or
process (including computer software) made or furnished by the
subcontractor under this Agreement or under any follow-on
production contract.
"(b) The prohibition in (a) above does not preclude
Corporation from asserting rights that are otherwise
authorized by law or regulation.
41. A new Section 7.33 is to be inserted after Section 7.32
as follows:
"SECTION 7.33 - FAR 52.203-7 Anti-Kickback Procedures (OCT
1988).
"(a) Definitions.
'Kickback,' as used in this clause, means any
money, fee, commission, credit, gift, gratuity, thing of
value, or compensation of any kind which is provided,
directly or indirectly, to any prime Contractor, prime
Contractor employee, sub-contractor, or subcontractor
employee for the purpose of improperly obtaining or
rewarding favorable treatment in connection with a prime
contract or in connection with a subcontractor relating
to a prime contract.
'Person,' as used in this clause, means a
corporation, partnership, business association of any
kind, trust, joint-stock company, or individual.
'Prime contract,' as used in this clause, means a
contract or contractual action entered into by the United
States for the purpose of obtaining supplies, materials,
equipment, or services of any kind.
'Prime Contractor,' as used in this clause, means
a person who has entered into a prime contract with the
United States.
33
'Prime Contractor employee,' as used in this
clause, means any officer, partner, employee, or agent
of a prime Contractor.
'Subcontract,' as used in this clause, means a
contract or contractual action entered into by a prime
Contractor or subcontractor for the purpose of obtaining
supplies, materials, equipment or services of any kind
under a prime contract.
'Subcontractor,' as used in this clause, (1) means
any person, other than the prime Contractor, who offers
to furnish or furnishes any supplies, materials,
equipment, or services of any kind under a prime
contractor or subcontract entered into in connection with
such prime contract, and (2) includes any person who
offers to furnish or furnishes general supplies to the
prime Contractor or a higher tier subcontractor.
'Subcontractor employee,' as used in this clause,
means any officer, partner, employee, or agent of a
subcontractor.
"(b) The Anti-Kickback Act of 1986 (41 U.S.C. 51-
58) (the Act), prohibits any person from --
(1) Providing or attempting to provide or
offering to provide any kickback;
(2) Soliciting, accepting, or attempting to
accept any kickback; or
(3) Including, directly or indirectly, the
amount of any kickback in the contract price charged by
a prime Contractor to the United States or in the
contract price charged by a subcontractor to a prime
contractor or higher tier subcontractor.
"(c)(1) Corporation shall have in place and follow
reasonable procedures designed to prevent and detect
possible violations described in paragraph (b) of this
clause in its own operations and direct business
relationships.
(2) When Corporation has reasonable grounds to
believe that a violation described in paragraph (b) of
this clause may have occurred, Corporation shall promptly
report in writing the possible violation. Such reports
shall be made to the inspector general of the contracting
agency, the head of the contracting agency if the agency
does not have an inspector general, or the Department of
Justice.
34
(3) Corporation shall cooperate fully with any
Federal Agency investigating a possible violation
described in paragraph (b) of this clause.
(4) The Contracting Officer may (i) offset the
amount of the kickback against any monies owed by the
United States under the prime contract and/or (ii) direct
that the Prime Contractor withhold, from sums owed a
subcontractor under the prime contract, the amount of any
kickback. The Contracting Officer may order that monies
withheld under subdivision (c)(4)(ii) of this clause be
paid over to the Government unless the Government has
already offset those monies under subdivision (c)(4)(i)
of this clause. In either case, the Prime Contractor
shall notify the Contracting Officer when the monies are
withheld.
(5) Corporation agrees to incorporate the
substance of this clause, including this subparagraph (c)
(5) but excepting subparagraph (c) (1), in all
subcontracts under this Agreement."
42. A new Section 7.34 is to be inserted after Section 7.33
as follows:
"SECTION 7.34 - FAR 52.219-9 Small Business And Small
Disadvantaged Business Subcontracting Plan (FEB 1990).
"(a) This clause does not apply to small business
concerns.
"(b) 'Commercial product,' as used in this clause,
means a product in regular production that is sold in
substantial quantities to the general public and/or
industry at established catalog or market prices. It also
means a product which, in the opinion of the Contracting
Officer, differs only insignificantly from Corporation's
commercial product.
'Subcontract,' as used in this clause, means any
agreement (other than one involving an employer-employee
relationship) entered into by a Federal Government prime
Contractor or subcontractor calling for supplies or
services rendered for performance of the contract or
subcontract.
"(c) The offeror, upon request by the Contracting
Officer, shall submit and negotiate a subcontracting
plan, where applicable, which separately addresses
subcontracting with small business concerns and small
disadvantaged business concerns. If the offeror is
submitting an individual contract plan, the plan must
separately address subcontracting with small business
concerns and with small disadvantaged business concerns
35
with a separate part for each option (if any). The plan
shall be included in and made a part of the resultant
contract. The subcontracting plan shall be negotiated
within the time specified by the Contracting Officer.
Failure to submit and negotiate the subcontracting plan
shall make the offeror ineligible for award of a
contract.
"(d) The offeror's subcontracting plan shall
include the following:
(1) Goals, expressed in terms of
percentages of total planned subcontracting
dollars, for use of small business concerns
and small disadvantaged business concerns as
subcontractors. The offeror shall include all
subcontracts that contribute to contract
performance, and may include a proportionate
share of products and services that are
normally allocated as indirect costs.
(2) A statement of --
(i) Total dollars planned to
be subcontracted;
(ii) Total dollars planned to
be subcontracted to small business
concerns; and
(iii) Total dollars
planned to be subcontracted to small
disadvantaged business concerns.
(3) A description of the principal types
of supplies and services to be subcontracted,
and an identification of the types planned for
subcontracting to (i) small business concerns
and (ii) small disadvantaged business
concerns.
(4) A description of the method used to
develop the subcontracting goals in (1) above.
(5) A description of the method used to
identify potential sources for solicitation
purposes (e.g., existing company source lists,
the Procurement Automated Source System (PASS)
of the Small Business Administration, the
National Minority Purchasing Council Vendor
Information Service, the Research and
Information Division of the Minority Business
Development Agency in the Department of
Commerce, or small and small disadvantaged
concerns trade associations).
36
(6) A statement as to whether or not the
offeror included indirect costs in
establishing subcontracting goals, and a
description of the method used to determine
the proportionate share of indirect costs to
be incurred with (in small business concerns
and (ii) small disadvantaged business
concerns.
(7) The name of the individual employed
by the offeror who will administer the
offeror's subcontracting program, and a
description of the duties of the individual.
(8) A description of the efforts the
offeror will make to assure that small
business concerns and small disadvantaged
business concerns have an equitable
opportunity to compete for subcontracts.
(9) Assurances that the offeror will
include the clause in this Agreement entitLed
'Utilization of Small Business Concerns and
Small Disadvantaged Business Concerns in all
subcontracts that offer further subcontracting
opportunities, and that the offeror will
require all subcontractors (except small
business concerns) who receive subcontracts in
excess of $500,000 ($1,000,000 for
construction of any public facility) to adopt
a plan similar to the plan agreed to by the
offeror.
(10) Assurances that the offeror will (i)
cooperate in any studies or surveys as may be
required, (ii) submit periodic reports in
order to allow the Government to determine the
extent of compliance by the offeror with the
subcontracting plan, (iii) submit, not later
than the 25th day of the succeeding month,
Standard Form (SF) 294 only, (DOE contractors
need not submit SF 295) on a quarterly basis
current as the last day of March, June,
September, and December, and upon contract
completion, in accordance with the
instructions on the form except the report
shall be submitted quarterly rather than
semiannually and additionally shall indicate
at the remarks block the number and dollar
amount of award made to labor surplus area
concerns to the extent such reporting is
required by the terms of their contract, and
(iv) ensure that its subcontractors agree to
submit Standard Form 294 in accordance with
the instructions of (iii) above.
37
(11) A recitation of the types of records
the offeror will maintain to demonstrate
procedures that have been adopted to comply
with the requirements and goals in the plan,
including establishing source lists; and a
description of its efforts to locate small and
small disadvantaged business concerns and
award subcontracts to them. The records shall
include at least the following (on a plant--
wide or company-wide basis, unless otherwise
indicated):
(i) Source lists, guides, and
other data that identify small and
small disadvantaged business
concerns.
(ii) Organizations contacted
in an attempt to locate sources that
are small or small disadvantaged
business concerns.
(iii) Records on each
subcontract solicitation resulting
in an award of more than $100,000,
indicating (A) whether small
business concerns were solicited and
if not, why not, (B) whether small
disadvantaged business concerns were
solicited and if not, why not, and
(C) if applicable, the reason award
was not made to a small business
concern.
(iv) Records of any outreach
efforts to contact (A) trade
Associations, (B) business development
organizations, and (C) conferences
and trade fairs to locate small and
small disadvantaged business
sources.
(v) Records of internal
guidance and encouragement provided
to buyers through (A) workshops,
seminars, training etc., and (B)
monitoring performance to evaluate
compliance with the program's
requirements.
(vi) On a contract-by-contract
basis, records to support award data
submitted by the offeror to the
Government, including the name,
address, and business size of each
38
subcontractor. Contractors having
company or division-wide annual
plans need not comply with this
requirements.
"(e) In order to effectively implement this plan to
the extent consistent with efficient contract
performance, Corporation shall perform the following
functions:
(1) Assist small business and small
disadvantaged business concerns by arranging
solicitations, time for the preparation of
bids, quantities, specifications, and delivery
schedules so as to facilitate the
participation by such concerns.
Where Corporation's lists of potential small
business and small disadvantaged subcontractors are
excessively long, reasonable effort shall be made
to give all small business concerns an opportunity
to compete over a period of time.
(2) Provide adequate and timely
consideration of the potentialities of small
business and small disadvantaged business
concerns in all 'make-or-buy' decisions.
(3) Counsel and discuss subcontracting
opportunities with representatives of small
and small disadvantaged business firms.
(4) Provide notice to subcontractors,
similar to that in the solicitation provision
at 52.219-l, concerning penalties from its
representations of business status as small
business or small disadvantaged business for
the purpose of obtaining a subcontract that is
to be included as part or all of a goal
contained in Corporation's subcontracting
plan.
"(f) A master subcontracting plan on a plant or
division-wide basis which contains all the elements
required by (d) above, except goals, may be incorporated
by reference as a part of the subcontracting plan
required of the offeror by this clause; provided, (1) the
master plan has been approved, (2) the offeror provides
copies of the approved master plan and evidence of its
approval to the Contracting Officer, and (3) goals and
any deviations from the master plan deemed necessary by
the Contracting Officer to satisfy the requirements of
this contract are set forth in the individual
subcontracting plan.
39
"(g)(1) If a commercial product is offered, the
subcontracting plan required by this clause may relate
to the offeror's production generally, for both
commercial and non-commercial products, rather than
solely to the Government contract. In these cases, the
offeror shall, with the concurrence of the Contracting
Officer, submit one company-wide or division-wide annual
plan.
(2) The annual plan shall be reviewed for approval
by the agency awarding the offeror its first prime
contract requiring a subcontracting plan during the
fiscal year, or by an agency satisfactory to the
Contracting Officer.
(3) The approved plan shall remain in effect during the
offeror's fiscal year for all of the offeror's commercial
products.
"(h) Prior compliance of the offeror with other such
subcontracting plans under previous contracts will be
considered by the Contracting Officer in determining the
responsibility of the Offeror for award of the contract.
"(i) The failure of the Corporation to comply in good
faith with (1) the clause of this Agreement entitled
Utilization of Small Business Concerns and Small Disadvantaged
Business Concerns,' or (2) an approved plan required by this
clause, shall be a material breach of this Agreement.
"(j) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
or to suspend contract payments, such action by DOE may only
be taken by delivering to Corporation a notice in writing of
DOE's election to terminate not less than three years prior
to the effective date of termination pursuant to Section 6.02
of this Agreement. "
43. A new Section 7.35 is to be inserted after Section 7.34
as follows:
"SECTION 7.35 - FAR 52.291-13 Utilization of Women-Owned Small
Businesses (AUG 1986).
"(a) 'Women-owned small businesses,' as used in this
clause, means small business concerns that are at least 51
percent owned by women who are United States citizens and who
also control and operate the business.
'Control,' as used in this clause, means exercising the
power to make policy decisions.
40
'Operate,' as used in this clause, means being actively
involved in the day-to-day management of the business.
'Small business concern,' as used in this clause, means
a concern including its affiliates, that is independently
owned and operated, not dominant in the field of operation in
which it is bidding on government contracts, and qualified as
a small business under the criteria and size standards in 13
CFR 121.
"(b) It is the policy of the United States that women-
owned small businesses shall have the maximum practicable
opportunity to participate in performing contracts awarded by
any Federal agency.
"(c) Corporation agrees to use its best efforts to give
women-owned small businesses the maximum practicable
opportunity to participate in the subcontracts it awards to
the fullest extent consistent with the efficient performance
of this Agreement.
"(d) Corporation may rely on written representations by
its subcontractors regarding their status as women-owned small
businesses."
44. A new Section 7.36 is to be inserted after Section 7.35
as follows:
"SECTION 7.36 - FAR 52.223-6 Drug-Free Work place (JUL 1990).
"(a) Definitions. As used in this clause,
'Controlled substance' means a controlled substance in
schedules I through V of section 202 of the Controlled
Substances Act (21 U.S.C. 812) and as further defined in
regulation at 21 CFR 1308.11 - 1308.15.
'Conviction' means a finding of guilt (including a plea
of nolo contendere) or imposition of sentence, or both, by any
judicial body charged with the responsibility to determine
violations of the Federal or State criminal drug statutes.
'Criminal drug statute' means a Federal or non-Federal
criminal statute involving the manufacture, distribution,
dispensing, possession or use of any controlled substance.
'Drug-free work place' means the site(s) for the
performance of work done by the Contractor in connection with
a specific contract at which employees of the Contractor are
prohibited from engaging in the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled
substance.
41
'Employee' means an employee of a Contractor directly
engaged in the performance of work under a Government
contract.
'Directly engaged' is defined to include all direct cost
employees and any other Contractor employee who has other than
a minimal impact or involvement in contract performance.
"(b) Corporation, if other than an individual, shall --
within 30 calendar days after award (unless a longer period
is agreed to in writing for contracts of 30 calendar days or
more performance duration); or as soon as possible for
contracts of less than 30 days performance duration -
(1) Publish a statement notifying its
employees that the unlawful manufacture,
distribution, dispensing, possession, or use
of a controlled substance is prohibited in
Corporation's work place and specifying the
actions that will be taken against employees
for violations of such prohibition;
(2) Establish an ongoing drug-free
awareness program to inform such employees
about --
(i) The dangers o f drug
abuse in the work place;
(ii) Corporation's policy of
maintaining a drug-free work place;
(iii) Any available drug
counseling, rehabilitation, and
employee assistance program; and
(iv) The penalties that may be
imposed upon employees for drug
abuse violations occurring in the
work place.
(3) Provide all employees engaged in
performance of the Agreement with a copy of
the statement required by subparagraph (b)(1)
of this clause;
(4) Notify such employees in writing in
the statement required by subparagraph (b)(1)
of this clause that, as a condition of
continued employment of this Agreement, the
employee will --
(i) Abide by the terms of the
statement;
42
(ii) Notify the employer in
writing of the employee's conviction
under a criminal drug statute for a
violation occurring in the work
place no later than five (5)
calendar days after such conviction.
(5) Notify the Contracting Officer
within 10 calendar days after receiving notice
under subdivision (b)(4)(ii) of this clause,
from an employee or otherwise receiving actual
notice of such conviction. The notice shall
include the position title of the employee;
(6) Within 30 calendar days after
receiving notice under subdivision (b)(4)(ii)
of this clause of a conviction, take one of
the following actions with respect to any
employee who is convicted of a drug abuse
violation occurring in the work place:
(i) Taking appropriate
personnel action against such
employee up to and including
termination; or
(ii) Require such employee to
satisfactorily participate in a drug
abuse assistance or rehabilitation
program approved for such purposes
by a Federal, State, or local
health, law enforcement, or other
appropriate agency.
(7) Make a good faith effort to maintain
a drug-free work place through implementation
of subparagraphs (b)(l) through (b)(6) of this
clause.
"(c) Corporation, if an individual, agrees by award of
this Agreement or acceptance of a purchase order, not to
engage in the unlawful manufacture, distribution, dispensing,
possession, or use of a controlled substance in the
performance of this Agreement.
"(d) In addition to other remedies available to the
Government, Corporation's failure to comply with the
requirements of paragraphs (b) and (c) of this clause may,
pursuant to FAR 23.506, render Corporation subject to
suspension of contract payments, termination of the Agreement
for default, and suspension or debarment.
"(e) If, pursuant to this section, DOE elects, in whole
or in part, to cancel, terminate, annul or suspend this
Agreement, to terminate the right of Corporation to proceed
43
or to suspend contract payments, such action by DOE may
only be taken by delivering to Corporation a notice in
writing of DOE's election to terminate not less than
three years prior to the effective date of termination
pursuant to Section 6.02 of this Agreement."
45. A new Section 7.37 is to be inserted after Section 7.36
follows:
"SECTION 7.37 - FAR 52.232-28 Electronic Funds Transfer
Payment Methods
(APR 1989).
"Payments under this Agreement will be made by the
Government either by check or electronic funds transfer
(through the Treasury Fedline Payment System (FEDLINE) or the
Automated Clearing House (ACH)), at the option of the
Government. After award, but no later than 14 days before an
invoice or contract financing request is submitted,
Corporation shall designate a financial institution for
receipt of electronic funds transfer payments, and shall
submit this designation to the Contracting Officer or other
Government official, as directed.
"(a) For payments through FEDLINE, Corporation shall
provide the following information:
(1) Name, address, and telegraphic
abbreviation of the financial institution
receiving payment.
(2) The American Bankers Association 9-
digit identifying number for wire transfers of
the financing institution receiving payment if
the institution has access to the Federal
Reserve Communications System.
(3) Payee's account number at the
financial institution where funds are to be
transferred.
(4) If the financial institution does
not have access to the Federal Reserve
Communications System, name, address, and
telegraphic abbreviation of the correspondent
financial institution through which the
financial institution receiving payment
obtains wire transfer activity. Provide the
telegraphic abbreviation and American Bankers
Association identifying number for the
correspondent institution.
"(b) For payment through ACH, Corporation shall provide
the following information:
44
(1) Routing transit number of the
financial institution receiving payment (same
as American Bankers Association identifying
number used for FEDLINE).
(2) Number of account to which funds are
to be deposited.
(3) Type of depositor account ('C' for
checking, 'S' for savings).
(4) If Corporation is a new enrollee to
the ACH system, a 'Payment Information Form,'
SF 3881, must be completed before payment can
be processed.
"(c) In the event Corporation, during the performance of
this Agreement, elects to designate a different financial
institution for the receipt of any payment made using
electronic funds transfer procedures, notification of such
change and the required information specified above must be
received by the appropriate Government official 30 days prior
to the date of such change is to become effective.
"(d) The documents furnishing the information required
in this clause must be dated and contain the signature, title,
and telephone number of the Corporation official authorized
to provide it, as well as Corporation's name and contract
number.
"(e) Corporation's failure to properly designate a
financial institution or to provide appropriate payee bank
account information may delay payments of amounts otherwise
properly due."
46. A new Section 7.38 is to be inserted after Section 7.37
as follows:
"SECTION 7.38 - Payment of Interest.
"(a) Notwithstanding any other clause of this Agreement,
all amounts that become payable by Corporation to the
Government under this Agreement (net of any applicable tax
credit under the Internal Revenue Code (26 U.S.C. 1481)) shall
bear simple interest from the date due until paid unless paid
within 30 days of becoming due. The interest rate shall be the
interest rate established by the Secretary of the Treasury as
provided in Section 12 of the Contract Disputes Act of 1978
(Public Law 95-563), which is applicable to the period in
which the amount becomes due, as provided in paragraph (b) of
this clause, and then at the rate applicable for each six-
month period as fixed by the Secretary until the amount is
paid.
45
"(b) Amounts shall be due at the earliest of the
following dates:
(1) The date fixed under this Agreement.
(2) The date of the first written demand
for payment consistent with this Agreement.
"(c) The interest charge made under this clause may be
reduced under the procedures prescribed in 32.614-2 of the
Federal Acquisition Regulation in effect on the date of this
Agreement."
47. A new Section 7.39 is to be inserted after Section 7.38
as follows:
"SECTION 7.39 - FAR 52.203-10 Price or Fee Adjustment for
Illegal or Improper Activity (SEP 1990).
"(a) The Government, at its election, may reduce
the price of a fixed-price type contract or contract
modification and the total cost and fee under a cost-type
contract or contract modification by the amount of profit
or fee determined as set forth in paragraph (b) of this
clause if the head of the contracting activity or his or
her designee determines that there was a violation of
subsection 27(a) of the Office of Federal Procurement
Policy Act, as amended (41 U.S.C. 423), as implemented
in the FAR. In the case of a contract modification, the
fee subject to reduction is the fee specified in the
particular contract modification at the time of
execution, except as provided in subparagraph (b)(5) of
this clause.
"(b) The price or fee reduction referred to in
paragraph (a) of this clause shall be --
(1) For cost-plus-fixed-fee contracts,
the amount of the fee specified in the
contract at the time of award;
(2) For cost-plus-incentive-fee
contracts, the target fee specified in the
contract at the time of award, notwithstanding
any minimum fee or 'fee floor' specified in
the contract;
(3) For cost-plus-award-fee contracts --
(i) The base fee established
in the contract at the time of
contract award;
46
(ii) If no base fee is
specified in the contract, 30
percent of the amount of each award
fee otherwise payable to the
Contractor for each award fee
evaluation period or at each award
fee determination point.
(4) For fixed price incentive contracts,
the Government may --
(i) Reduce the contract
target price and contract target
profit both by an amount equal to
the initial target profit specified
in the contract at the time of
contract award; or
(ii) If an immediate
adjustment to the contract target
price and contract target profit
would have a significant adverse
impact on the incentive price
revision relationship under the
contract, or adversely affect the
contract financing provisions, the
Contracting Officer may defer such
adjustment until establishment of
the total final price of the
contract. The total final price
established in accordance with the
incentive price revision provisions
of the contract shall be reduced by
an amount equal to the initial
target profit specified in the
contract at the time of contract
award and such reduced price shall
be the total final contract price.
(5) For firm-fixed-price contracts or
contract modifications, by 10 percent of the
initial contract price; 10 percent of the
contract modification price; or a profit
amount determined by the Contracting Officer
from records or documents in existence prior
to the date of the contract award or
modification.
"(c) The Government may, at its election,
reduce a prime contractor's price or fee in
accordance with the procedures of paragraph
(b) of this clause for violations of the Act
by its subcontractors by an amount not to
exceed the amount of profit or fee reflected
47
in the subcontract at the time the subcontract
was first definitively priced.
"(d) In addition to the remedies in
paragraphs (a) and (c) of this clause, the
Government may terminate this contract for
default. The rights and remedies of the
Government specified herein are not exclusive
and are in addition to any other rights and
remedies provided by law or under this
contract.
"(e) Notwithstanding the provisions of
paragraphs (a),(b),(c) and (d) of this Section
7.39 :
(1) The cumulative total of
all reductions, made pursuant to
this Section 7.39, in price, profit,
fee or other compensation shall not
exceed $140,000; and
(2) If, pursuant to this
section, DOE elects, in whole or in
part, to cancel, terminate, annul or
suspend this Agreement, to terminate
the right of Corporation to proceed
or to suspend contract payments,
such action by DOE may only be taken
by delivering to Corporation a
notice in writing of DOE's election
to terminate not less than three
years prior to the effective date of
termination pursuant to Section 6.02
of this Agreement."
48. The term "indebtedness" referred to in the DOE Power
Agreement shall include any indebtedness of Corporation for
borrowed money incurred in connection with the acquisition,
financing, construction and completion of the project generating
stations, or the project transmission facilities, and shall include
any indebtedness (including, without limitation any indebtedness
relating to the interest component, the principal or amortization
component and any other component of any purchase price,
amortization, rental or other payment under an installment sale,
loan, lease or similar agreement) relating to the purchase, lease
or acquisition by Corporation of additional facilities under
Section 3.06 and replacements under Section 3.07.
49. Appendix II is amended in its entirety to read as
follows:
48
APPENDIX II
"DEFINITION OF OUT-OF-POCKET COSTS
OF SUPPLEMENTAL ENERGY
"Out-of-pocket costs associated with the furnishing
of supplemental energy mean such operating and tax
expenses incurred that would not have been otherwise
incurred if such supplemental energy had not been
furnished.
"Such operating expenses, under usual
circumstances, include the incremental production
expenses incurred in the production of the energy so
furnished. Incremental production expenses associated
with the production of such energy will be influenced by
the type or class of generating station used for such
purpose. If the station used is normally operating and
carrying load, the incremental production expenses will
include, without limitation, the fuel expense normally
charged at the time in question by the producer of the
power plus an appropriate allowance for maintenance,
plus, in the case of supplemental energy scheduled to be
delivered to Corporation from the Sponsoring Companies
for redelivery to DOE, 0.5 mills per kwh for incremental
operating labor. The appropriate unit allowance for
maintenance shall be one-half of the weighted average
unit cost (expressed in mills per kwh of net generation)
normally charged at the time in question by the producer
of the power. If the station or part thereof used is
normally held in reserve as standby, all expenses
incurred that are in excess of the expenses that would
have been incurred for standby operation of such station
or part thereof will be considered incremental production
expenses. Incremental production expenses associated with
fuel for each kwh of supplemental energy not scheduled
for redelivery to DOE from the Sponsoring Companies shall
be an amount determined by dividing (i) the total amount
determined under Section 3.03 of this Agreement, by (ii)
the billing kwh of permanent power for such month, plus
the transmission losses thereon from the 345 kv busses
of the project generating stations to the point of
delivery.
"To the operating expenses as hereinabove
determined, there will be added a charge of 0.7 mills per
kwh to cover accounting, administration and billing
expenses. Tax expenses will be the expenses that are
payable as taxes either in connection with the sale or
production of such energy.
"The above-described charges for operating labor
and for accounting, administration and billing shall be
adjusted in the following manner:
49
(i) Operating Labor. Effective January 1 of each
year, commencing January 1, 1989, the value for average
hourly earnings of production or non-supervisory workers
in electric services (1972 SIC Code 491) published by the
U.S. Department of Labor, Bureau of Labor Statistics for
the month of August in the preceding calendar year shall
be compared to the March 1988 base value of such average
hourly earnings of $14.28 per hour. The percentage change
thereof (carried out four decimal places, e.g., 6.124%
shall be .0612) in such average hourly earnings shall be
multiplied by the initial charge for operating labor of
0.5 mills per kwh. The amount of increase or decrease
shall be added to or subtracted from, as the case may be,
the initial charge for operating labor; and the amount
obtained in this manner (carried out four decimal places)
shall become the then effective charge for operating
labor.
(ii) Accounting, Administration and Billing.
Effective January 1 of each year, commencing January 1,
1989, the value for average hourly earnings of production
or non-supervisory workers in accounting, auditing and
bookkeeping services (1972 SIC Code 893) published by the
U.S. Department of Labor, Bureau of Labor Statistics for
the month of August in the preceding calendar year shall
be compared to the March 1988 base value of such average
hourly earnings of $10.26 per hour. The percentage change
thereof (carried out four decimal places, e.g., 6.124%
shall be .0612) in such average hourly earnings shall be
multiplied by the initial charge for accounting,
administration and billing of 0.7 mills per kwh. The
amount of increase or decrease shall be added to or
subtracted from, as the case may be, the initial charge
for accounting, administration and billing; and the
amount obtained in this manner (carried out four decimal
places) shall become the then effective charge for
accounting, administration and billing.
"Should publication of average hourly earnings be
discontinued for either or both of the above-referenced
statistical codes, a statistical code or codes which is
or are, as nearly as practicable, equivalent shall be
substituted by mutual agreement of the parties hereto.:
50. This Modification No. 14 to the DOE Power Agreement shall
become effective at 12:00 Midnight on the date on which Corporation
shall deliver to DOE a written notice to the effect that:
(a) All applicable requirements as to approval by
or filings with regulatory agencies having jurisdiction
in respect of the transactions constituting the subject
matter of this Modification No. 14 (including expiration
of any specified period after the date of any filing)
50
have been complied with and all requisite approvals of
such regulatory agencies are in full force and effect and
none is the subject of attack on appeal by direct
proceeding or otherwise, and (except to the extent that
Corporation shall waive such condition) any requisite
approvals of regulatory agencies having such jurisdiction
have become final and not subject to judicial review in
any court; and
(b) All applicable requirements as to approval by
or filings with regulatory agencies having jurisdiction
in respect of a modification, if any of the Inter-Company
Power Agreement dated July 10, 1953, as amended
(including expiration of any specified period after the
date of any filing) have been complied with and all
requisite approvals of such regulatory agencies are in
full force and effect and none is the subject of attack
on appeal by direct proceeding or otherwise, and (except
to the extent that Corporation shall waive such
condition) any requisite approvals of regulatory agencies
having such jurisdiction have become final and not
subject to judicial review in any court; and
(c) The General Counsel of DOE shall have
delivered to Corporation an opinion satisfactory to
Corporation that the Agreement as modified herein
constitutes a valid and legally binding obligation of the
United States of America enforceable in accordance with
its terms.
51. The DOE Power Agreement, as modified by Modifications No.
1 through No. 13, both inclusive, and by this Modification No. 14,
is hereby in all respects confirmed.
IN WITNESS WHEREOF, the parties hereto have executed this
Modification No. 14 as of the date and year first above written.
OHIO VALLEY ELECTRIC CORPORATION
By
51
UNITED STATES OF AMERICA
By: SECRETARY OF ENERGY
By WILLIS DAVIS
Authorized Contracting Officer
52