Research Administration Office

University of California

Memo Operating Requirement

No. 85-6

April 7, 1985

Subject: Army Advance Payment Pool Agreement No. DACA-FAP-B-84-0009

Enclosure I is a copy of the new Advance Payment Pool Agreement Without Special Bank Account (Agreement No. DACA-FAP-B-84-0009) between the University and the Department of the Army. This Agreement provides for advance payments, to the University through the pool arrangement not to exceed $1,280,000 for all Department of the Army pool contracts executed on or before November 1, 1986. The Agreement specifically excludes University contracts with the Departments of the Air Force and Navy.

This Advance Payment Pool will be administered by the Office of Corporate Accounting, Office of the President. All Army contracts must be financed under this Agreement.

CURRENT ARMY CONTRACTS--ADVANCE PAYMENT PROVISIONS

The Contracts and Grants Office, Office of the President, is currently working with the Office of the Comptroller of the Army and the Army Research Office to initiate the appropriate modifications to existing Army contracts in order to include them under the terms of the Army Advance Payment Pool Agreement. At the same time, Army contracts currently containing Navy Advance Payment Pool Agreement provisions will be amended to delete such Navy provisions.

The Office of the Comptroller of the Army, working from a list of active University contracts with the Army (Enclosure 2) will identify and notify those Army commands with which we have active contracts of the need to modify all University of California contracts.

The Army Research Office (ARO) with which the University holds the majority of its active Army contracts has provided this Office with sample language it intends to use to incorporate the terms of the Army Advance Payment Pool Agreement (Enclosure 3). In addition, ARO sample language to delete references to the Navy Advance Payment Pool Agreement currently in some Army contracts has been developed (also Enclosure 3).

Contracts and Grants Officers should, themselves, initiate comparable contract modifications with any Army commands with which they have active contracts, but which fail to modify the contracts.

NEW ARMY CONTRACTS--ADVANCE PAYMENT PROVISIONS

The Department of the Army issues most contracts using the DOD Short Form Research Contract contracting method and format. Contracts and Grants Officers, therefore, shall incorporate into all Army SFRC proposals the provisions set forth in Enclosure 4.

Army contracts issued in formats other than SFRC formats must include the contract provision set forth in Enclosure 5.

REQUIREMENTS UNDER LIEN ON PROPERTY PROVISION

The Army Advance Payment Pool Agreement contains as paragraph 5, the same Lien on Property under Contracts clause as has been included in the Navy and Air Force Advance Payment Pool Agreements.

Although the lien provision applies to all non-Government property acquired for or allocated to performance of the contract, implementation is not necessary for non-inventorial equipment and supplies since these are assumed to be immediately expended. Enclosure 6 is a copy of Coordinator Ove's March 25, 1983, memo to Materiel Managers on this subject. Coordinator Ove has indicated that this same guidance is now applicable to Army contracts subject to the Army Advance Payment Pool Agreement.

To meet the requirements of paragraph 5, Contracts and Grants Officers are responsible for the following actions when Army contracts fund inventorial equipment with title vesting in the University:

(1) Contracts and Grants Officers should provide to campus Materiel Managers the full contract number for each award financed under the Army Advance Payment Pool Agreement in order that Materiel Managers may track all inventorial equipment subject to the lien provision; and

(2) When such contracts are completed and all advances thereunder liquidated, the Materiel Manager should be notified so that the removal of liens may be noted on inventory records.

Refer: Joe Acanfora

ATSS 8-582-1638

(415) 642-1638

Subject Index: 06, 15

Organization Index: F-210, F-225

Billy Sheets

ATSS 8-582-2604

(415) 642-2604

Donald L. Alter, Director

Corporate Accounting

Enclosures

cc:

Campus Accounting Officers

Campus Materiel Managers

David F. Mears

University Contracts and Grants Coordinator


DEPARTMENT OF THE ARMY

OFFICE OF THE COMPTROLLER OF THE ARMY

INDIANAPOLIS. IN 46Z49

Enclosure 1 to C& G MEMO No. 85-6

THE UNIVERSITY OF CALIFORNIA ADVANCE PAYMENT POOL AGREEMENT WITHOUT- SPECIAL BANK ACCOUNT

(AGREEMENT NO. DACA-FAP-B-84-0009)

between the United States of America (hereinafter called the "Government") represented by the Office of Assistant Comptroller of the Army for Finance and Accounting (hereinafter called the "Administering Office") executing this Agreement, and the Regents of the University of California (hereinafter called the "Contractor"), a research and educational institution having a principal office at Berkeley, California.

WITNESSES THAT

WHEREAS, the Contractor is now and may hereafter become a party to cost-type contracts, or amendments issued thereunder, with the Department of the Army; and

WHEREAS, it is contemplated that said contracts will be financed by means of advance payments made, or to be made, by the Department of the Army; and

WHEREAS, the Defense and Federal Acquisition Regulations provide for advance payment financing of the Contractor's unfinished cost-type contracts; and

WHEREAS, it is deemed desirable by the Contractor and the Administering Office to consolidate the provisions governing such financing by entering into this Agreement

NOW THEREFORE, the parties hereto mutually agree as follows:

(1) Maximum amount of Advance Payments.

(a) The Government shall make advance payments under this Agreement for the purpose of providing funds to assist in the performance of all pool contracts. Pool contracts under this agreement are limited to all contracts awarded to the Contractor by the Department of the Army. Department of the Air Force and Department of the Navy contracts are hereby excluded.

(b) No payment shall be made if either such payment (i) together with all advance payments heretofore made results in unliquidated advances exceeding $1,280,000.00, or (ii) exceeds the total amount remaining to be paid under the pool contracts.

(c) The amount contained in paragraph l(b) shall not be increased or decreased unless the contractor's annual average cash requirement fluctuates more than $60,000.00.

(2) Submission of Requests for Advance Payments

(a) The Contractor shall submit to the Approving Officer (see paragraph (10) hereof) thirty days after the date of this Agreement, an Advance Payment Request (in the amount of $1,280,000.00 in accordance with the form provided in Annex A hereto.

(b) The Approving Officer shall review the request and forward it to the Disbursing Office (see paragraph (10) hereof) with the Approving Officer's endorsement.

(c) The Disbursing Officer shall draw a Treasury check payable to the Contractor for the amount authorized by the Approving Officer on the endorsed request and mail such check to the Contractor.

(d) Any additional requests for an advance shall be a matter of negotiation between the Contractor and the Approving Officer. Notwithstanding, an additional advance shall not be granted unless the Contractor's annual average cash requirements exceeds the initial pool advance by $60,000.00 as specified in paragraph l(c).

(3) Use of Funds. The funds provided by this advance payment arrangement are to be used solely for the purpose of making payments for items of allowable costs as defined in pool contracts subject to this Agreement. In addition, advance payments may be used to reimburse the Contractor for (i) items of allowable costs which have been paid by the Contractor, (ii) payment of contract fees, and (iii) such other purposes as the Administrative Contracting Officer (see paragraph (10) hereof) may approve in writing- Any interpretation required as to the proper use of funds shall be made in writing by the Administrative Contracting-Officer.

(4) Liquidation of Advances and Return of Funds.

(a) Upon termination of this Agreement, the total amount of advance outstanding shall be liquidated either by (i) a check drawn by the Contractor payable to the Department of the Army or (ii) an offset of invoice payments due. the Contractor.

(b) Upon a decrease in the ceiling amount contained in paragraph l(b), the total amount of advance determined to be outstanding over the decrease ceiling will be liquidated by (i) a check drawn by the Contractor payable to the Department of the Army or, (ii) an offset of invoice payments due the Contractor.

(c) If the payment due the Contractor exceeds the amount of the outstanding advance, the funds shall first be applied to reduce the unliquidated advance payments to a zero balance and the funds remaining shall be paid by a check drawn payable to the Contractor. If, upon completion of the pool contracts, there remains any outstanding and unliquidated advance payment or payments, the Contractor shall immediately pay the Government, upon demand, the amount remaining unliquidated. In the event the Contractor fails to make payment within 30 days of the date of demand for such payment, interest at the rate established by the Secretary of Treasury under the Debt Collection Act of 1982 (Public Law 97-365), which prevails on the date of the demand for payment, shall become due and payable from the date of demand. The Disbursing Office shall apply all funds payable to the Contractor first in reduction of interest due, if any, then to the outstanding and unliquidated advance payments. The Contractor may at any time repay all or any part of the outstanding and unliquidated advance payments made hereunder.

(5) Lien on Property under contracts. Any and all advance payments made hereunder shall be secured, when made, by a lien in favor of the Government, paramount to all other liens, upon all supplies, materials, property, or other items acquired for or allocated to the performance of all pool contracts, except to the extent that the Government, by virtue of any other provisions of said contracts, or otherwise, shall have valid title to such supplies, materials, or other property as against other creditors of the Contractor. The Contractor shall identify by marking or segregating all property which is subject to a lien in favor of the Government by virtue of any provisions of this Agreement in such a way as to indicate that it is subject to such lien and that it has been acquired for or allocated to the performance of pool contracts. If for any reason such supplies, materials, or other property are not so identified, the Government shall be deemed to have a lien to the extent of the Government's interest upon the property with which such supplies, materials, or other property is commingled. The Contractor shall maintain adequate accounting control over such property on its books and records. at any time during the progress of the work on the pool contracts, it becomes necessary to deliver any item or items and materials upon which the Government has a lien as aforesaid to a third person, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third person a receipt, in duplicate, acknowledging, the existence of such lien. A copy of each receipt shall be delivered by the Contractor to the Administrative Contracting Officer. If any pool contract is terminated in whole or in part and the Contractor is authorized to sell or retain termination inventory acquired for or allocated to the performance of such pool contract, such sale or retention shall be made only if approved by the Contracting Officers and this approval shall constitute a release of the Government's lien hereunder to the extent that such termination inventory is sold or retained and to the extent that the proceeds of the sale, or the credit allowed for such retention on the Contractor's termination claim, is applied in reduction of advance payments then outstanding hereunder.

(6) Insurance. The Contractor represents and warrants that it is now maintaining with responsible insurance carriers, or under a program of self-insurance (i) insurance upon its own plant and equipment against fire and other hazards up to $5 million for each loss; (ii) adequate insurance against liability on account of damage to persons or property; and (iii) adequate insurance under all applicable workmen's compensation laws. The Contractor agrees that, until work under the contracts subject to the terms of this Agreement has been completed and all advance payments made hereunder have been liquidated, it shall (i) maintain such insurance; (11) maintain adequate insurance upon any materials, parts, assemblies, sub-assemblies, supplies, equipment, and other property acquired for or allocable to such contracts and subject to the Government lien hereunder; and (iii) furnish such certificates with respect to its insurance as the Administering Office may from time to time require.

(7) Default Provisions. Upon the happening of any of the following events of default: (i) termination of any pool contract by reason of fault of the Contractor; (ii) a finding by the Approving Office that the Contractor (a) has failed to observe any of the covenants, conditions or warranties of these provisions or has failed to comply with any material provision of any pool contract, or (b) has so failed to make progress, or is in such unsatisfactory financial condition, as to endanger performance of any pool contract, or (c) has allocated inventory to any pool contract substantially exceeding reasonable requirements, or (d) is delinquent in payment of taxes or of the costs of performance of any pool contract in the ordinary course of business; (iii) appointment of a trustee, receiver or liquidator for all or a substantial part of the Contractor's property, or institution of bankruptcy, reorganization, arrangement or liquidation proceedings by or against the Contractor, or (iv) commission of any act of bankruptcy; the Government, without limiting any rights which it may otherwise have, may, at its discretion and upon written notice to the Contractor, immediately cease to make further advance payments and withhold further payments on any pool contract. Upon the continuance of any such events of default for a period of 30 days after such written notice to the Contractor, the Government may, at its discretion and without limiting any other rights the Government may have, take the following additional actions as it may determine appropriate in the circumstances: (a) demand immediate repayment of the unliquidated advance payments made hereunder; (b) charge interest on unliquidated advance payments made hereunder at the per annum rate established by the Secretary of the Treasury under the Debt Collection Act of 1982 (Public Law 97-365) which prevails on the date of demand for repayment, during the period of any such default; and (c) take possession of and, with or without advertisement, sell at public sale at which the Government may be the purchaser or at a private sale, all or any part of the property on which the Government has a lien, as provided for herein, and, after deducting any expenses incident to such sale, apply the net proceeds of such sale in reduction of the unliquidated balance of advance payments made hereunder and in reduction of any other claim of the Government against the Contractor.

(8) Prohibition Against Assignment. Notwithstanding any other provisions of the pool contracts, the Contractor shall not transfer, pledge, or otherwise assign any pool contract subject to this Agreement, or any interest therein, or any claim arising thereunder, to any party or parties, bank, trust company or other financing institution until all advance payments made hereunder have been fully liquidated.

(9) Information. The Contractor shall, within 30 days after the end of each calendar quarter, furnish to the Approving Office, an Incurred Cost Report in the format set forth in Annex B hereto plus other information as may be requested from time to time concerning the Contractor's operations affecting the advance payments made, or to be made, hereunder. These reports shall be routed through the Office of Naval Research Representative serving the Contractor.

(10) Designations/Definitions.

(a) Approving Officer. The Approving Officer shall be the Chief, Banking, Disbursing and Contract Financing Policy Division, Office Comptroller of the Army, Indianapolis, IN 46249-1016.

(b) Disbursing Office. The Finance and Accounting Office DSSN 5479, US Army Research Office, ATTN: AMXRO-PR, P.O. Box 12211, Research Triangle Park, NC 27709-2211 will be the Disbursing Office for all pool contracts included in this Agreement.

(c) The term "Contracting Officer" means any person who, either by virtue of his or her position or by appointment, is currently a Contracting Officer with authority to enter into and/or administer contracts and make determinations and findings with respect thereto. It includes the Contracting Officer at the purchasing office as the Procuring Contracting Officer (PCO) and the Contracting Officer at the contract administration office as the Administrative Contracting Officer (ACO). This term also includes the authorized representative of the Contracting Officer acting within the limits of his or her authority,

(d) The term "Contractor" means the Regents of the University of California.

(11) Interest. No interest shall be charged for advance payments made hereunder except as provided for in paragraphs (4) and (7). The Contractor shall charge interest on subadvances or down payments to subcontractors and such interest shall be payable to the Government. The effective interest rate to be charged shall be the per annum rate established by the Secretary of the Treasury under the Debt Collection Act of 1982 (Public Law 91-365) which prevails at the time such subadvances or down payments are made to subcontractors. However, interest need not be charged on subadvances to nonprofit subcontractors with nonprofit education or research institutions for research or development work.

(12) Disputes.

(a) Except as otherwise provided in this Agreement, any dispute concerning a question of face arising hereunder which is not disposed of by agreement shall be decided by the Administering Officer, who shall reduce its decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Administering Office shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Contractor appeals by mailing or otherwise furnishing to the Administering Office a written appeal addressed to the Secretary of the Army. The decision of the Secretary, or his duly authorized representative for the determination of such appeals, shall be final and conclusive unless determined by a court of competent Jurisdiction to have been fraudulent, arbitrary, capricious, so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contracts financed under the terms of this Agreement and in accordance with the decision of the Administering Officer.

(b) This "Disputes" clause does not preclude consideration of questions of law in connection with decisions provided for in paragraph (a) above, provided that nothing in this Agreement shall be construed as making final the decision of any administrative official, representative, or board on a question of law.

(13) Officials not to Benefit. No member of or delegate to Congress, or resident commissioner, shall be admitted to any share or part of this Agreement or to any benefit that may arise therefrom; if made with a corporation for its general benefit.

(14) Covenant against Contingent Fees- The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this Agreement upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty, the Government shall have the right to annul this Agreement without liability, or, at its discretion, to deduct from any pool contract price or consideration in full the amount of such commission, percentage, brokerage, or contingent fee.

(15) Examination of Records. The Contractor agrees that authorized representatives of the Government shall, until the expiration of three years after final payment of any pool contract, have access to and the right to examine any pertinent books, documents, papers, and records of the Contractor Involving transactions related to this Agreement and -all pool contracts as defined herein. In addition, the Contractor shall afford to authorized representatives of the Government proper facilities for the inspection of the Contractor's books, records and accounts.

(16) Other Security. The terms of this Agreement shall be considered adequate security for advance payments hereunder, except that, if at any time the Administering Office deems the security furnished by the Contractor to be inadequate, the Contractor shall furnish such additional security as may be satisfactory to the Administering Office up to the value of the pool limit as specified in Paragraphs (1)(b) and (2)(a).

(17) Representations and Warranties. To induce the making of advance payments, the Contractor represents and warrants that:

(a) The Contractor has the power to enter into this Agreement and accept advance payments hereunder and has taken all necessary action to authorize such acceptance under the terms and conditions of this Agreement.

(b) None of the contracts under this Agreement are subject to any lien or encumbrance other than set forth in this Agreement.

(c) All information furnished by the Contractor to the Administering Office in connection with each request for advance payments is true and correct,

(d) None of the provisions herein contravenes or is in conflict with the authority under which the Contractor is doing business or with the provision of any existing indenture or agreement of the Contractor.

(e) There has been no assignment of claims under any contract affected by these advance payment provisions, or if there has been any assignment, such assignment has been terminated.

(f) These representations and warranties shall be continuing, and shall be deemed to have been repeated by the submission of each request for advance payments.

(18) Authority. Advance payments under this Agreement are made pursuant to the authority under 10 U.S.C. 2307.

(19) Limiting Date. Advance payments made hereunder are to finance all pool contracts subject to this Agreement, including amendments issued thereunder which result in increasing the contract price, that are executed on or before 1 November 1986.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

THE UNITED STATES OF AMERICA

By

DAVID D. MORRIS

Ch, Banking, Disb & Con Fin Div

Office, Assistant Comptroller of the Army for Finance and Accounting

Attest:

Regents of the University of California

Name

Willie C. Archie

Acting University Contracts

and Grants Coordinator


Enclosure 4 to C& G MEMO No. 85-6

(The following provision must be physically incorporated into each Short Form Research Contract proposal to the Department of the Army.)

ADVANCE PAYMENT PROVISION

Advance payments will be made for performance of this SFRC pursuant to the terms and conditions of the Advance Payment Pool Agreement effective I January 1985 between the Department of the Army and The Regents of the University of California. The provisions of that Agreement are hereby incorporated by reference in this SFRC with the same force and effect as though fully set forth herein. If this SFRC is awarded by the Department of the Army it will be deemed a "designated pool contract" for the purpose of said Agreement and be paid by the Finance and Accounting Office DSSN 5479, US Army Research Office, ATTN: AMXRO-PR, P.O. Box 12211, Research Triangle Park, NC 27709-2211.


Enclosure 5 to C& G MEMO 85-6

(The following provision must be physically incorporated into all contracts with the Department of the Army except Short Form Research Contracts (SFRC).

ADVANCE PAYMENT POOL (APR 1984)

Notwithstanding other provisions of this contract, advance payments will be made for the work called for hereunder in accordance with the Determinations, Findings, and Authorization for advance payments dated 20 December 1984. Payments made pursuant to this clause shall be governed by the terms and conditions of the Advance Payment Pool Agreement dated I January 1985 as it may be amended from time to time between, the United States of America and The Regents of the University of California, which agreement is hereby incorporated by reference with the same force and effect as though fully set forth herein.

The paying office for all Army contracts which incorporate the Agreement Pool is Finance and Accounting Office DSSN 5479, US Army Research Office, ATTN: AMXRO-PR, P.O. Box 12211, Research Triangle Park, NC 27709-2211.