ARCHIVED General Conditions - Research & Development

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Legal text for SACC item

Public Works and Government Services Canada

01     Interpretation
02     Standard Clauses and Conditions
03     Powers of Canada
04     Status of the Contractor
05     Conduct of the Work
06     Subcontracts
07     Specifications
08     Condition of Material
09     Replacement of Specific Individuals
10     Time of the Essence
11     Excusable Delay
12     Inspection and Acceptance of the Work
13     Invoice Submission
14     Taxes
15     Transportation Costs
16     Shipment Documentation
17     Payment Period
18     Interest on Overdue Accounts
19     Compliance with Applicable Laws
20     Ownership
21     Warranty
22     Confidentiality
23     Use and Translation of Written Material
24     Government Property
25     Liability
26     Intellectual Property Infringement and Royalties
27     Records and Disclosure of Foreground Information
28     Ownership of Intellectual Property Rights in Foreground Information
29     Licenses to Intellectual Property Rights in Foreground and 
Background Information
30     Contractor's Right to Grant Licenses
31     Waiver of Moral Rights
32     License to Intellectual Property Rights to Canada's Information
33     Transfer or License of Contractor's Rights
34     Transfer of Intellectual Property Rights Upon Termination of the 
Contract for Default
35     Products Created Using the Foreground Information
36     Amendment and Waivers
37     Suspension of the Work
38     Default by the Contractor
39     Termination for Convenience
40     Accounts and Audit
41     Right of Set-off
42     Notice
43     Conflict of Interest and Values and Ethics Code for the Public 
Service
44     No Bribe
45     Survival
46     Severability
47     Successors and Assigns
48     Contingency Fees
49     International Sanctions
50     Code of Conduct for Procurement
51     Entire Agreement
52     Transportation Carriers' Liability
53     Assignment


2040   01     (2008-05-12)  Interpretation

1.     In the Contract, unless the context otherwise requires:

       "Articles of Agreement" means the clauses and conditions 
       incorporated in full text or incorporated by reference from the 
       Standard Acquisition Clauses and Conditions Manual to form the body 
       of the Contract; it does not include these general conditions, any 
       supplemental general conditions, annexes, the Contractor's bid or 
       any other document;

       "Background Information" means all Intellectual Property that is not 
       Foreground Information that is incorporated into the Work or 
       necessary for the performance of the Work and that is proprietary to 
       or the confidential information of the Contractor, its 
       subcontractors or any other third party;

       "Canada", "Crown", "Her Majesty" or "the Government" means Her 
       Majesty the Queen in right of Canada as represented by the Minister 
       of Public Works and Government Services and any other person duly 
       authorized to act on behalf of that minister or, if applicable, an 
       appropriate minister to whom the Minister of Public Works and 
       Government Services has delegated his or her powers, duties or 
       functions and any other person duly authorized to act on behalf of 
       that minister;

       "Contract" means the Articles of Agreement, these general conditions, 
       any supplemental general conditions, annexes and any other document 
       specified or referred to as forming part of the Contract, all as 
       amended by agreement of the Parties from time to time;

       "Contracting Authority" means the person designated by that title in 
       the Contract, or by notice to the Contractor, to act as Canada's 
       representative to manage the Contract;

       "Contractor" means the person, entity or entities named in the 
       Contract to supply goods, services or both to Canada;

       "Contract Price" means the amount stated in the Contract to be 
       payable to the Contractor for the Work, exclusive of Goods and 
       Services Tax and Harmonized Sales Tax;

       "Cost" means cost determined according to Contract Cost Principles 
       1031-2 as revised to the date of the bid solicitation or, if there 
       was no bid solicitation, the date of the Contract;

       "Deliverables" means any technical information, equipment, prototype, 
       or any other thing developed under the Contract that are expressly 
       required to be delivered by the Contractor in order to carry out its 
       obligations under the Contract;

       "Firmware" means computer programs that are stored in integrated 
       circuits, read-only memory or other similar devices within the 
       hardware or other equipment;

       "Foreground Information" means all Intellectual Property first 
       conceived, developed, produced or reduced to practice as part of the 
       Work under the Contract;

       "Government Property" means anything supplied to the Contractor by 
       or on behalf of Canada for the purposes of performing the Contract 
       and anything acquired by the Contractor in any manner in connection 
       with the Work, the cost of which is paid by Canada under the 
       Contract;

       "Intellectual Property" means any information or knowledge of an 
       industrial, scientific, technical, commercial, literary, dramatic, 
       artistic or otherwise creative nature relating to the Work, whether 
       oral or recorded in any form or medium and whether or not subject to 
       copyright; this includes but is not limited to any inventions, 
       designs, methods, processes, techniques, know-how, show-how, models, 
       prototypes, patterns, samples, schematics, experimental or test data, 
       reports, drawings, plans, specifications, photographs, manuals and 
       any other documents, Software, and Firmware;

       "Intellectual Property Right" means any intellectual property right 
       recognized by law, including any intellectual property right 
       protected by legislation such as patents, copyright, industrial 
       design, integrated circuit topography, and plant breeders' rights, 
       or subject to protection under the law as trade secrets and 
       confidential information;

       "Party" means Canada, the Contractor, or any other signatory to the 
       Contract and "Parties" means all of them;

       "Software" means any computer program whether in source or object 
       code (including Firmware), any computer program documentation 
       recorded in any form or upon any medium, and any computer database, 
       including any modification;

       "Specifications" means the description of the essential, functional 
       or technical requirements of the Work in the Contract, including the 
       procedures for determining whether the requirements have been met;

       "Work" means all the activities, services, goods, equipment, matters 
       and things required to be done, delivered or performed by the 
       Contractor under the Contract.

2.     References in these general conditions to the Contractor owning the 
       Foreground Information or any rights in it refer to the Contractor, 
       its subcontractors, its suppliers, its agents, its representatives 
       or any of their employees owning such information or rights, as the 
       case may be.

2040   02     (2008-05-12)  Standard Clauses and Conditions

Pursuant to the Department of Public Works and Government Services Act, S.C., 
1996, c. 16, the clauses and conditions identified by number, date and 
title in the Contract are incorporated by reference and form part of the 
Contract as though expressly set out in the Contract.

2040   03     (2008-05-12)  Powers of Canada

All rights, remedies, powers and discretions granted or acquired by Canada 
under the Contract or by law are cumulative, not exclusive.

2040   04     (2008-05-12)  Status of the Contractor

The Contractor is an independent contractor engaged by Canada to perform 
the Work.  Nothing in the Contract is intended to create a partnership, a 
joint venture or an agency between Canada and the other Party or Parties.  
The Contractor must not represent itself as an agent or representative of 
Canada to anyone.  Neither the Contractor nor any of its personnel is 
engaged as an employee or agent of Canada. The Contractor is responsible 
for all deductions and remittances required by law in relation to its 
employees.

2040   05     (2008-12-12)  Conduct of the Work

1.     The Contractor represents and warrants that:

       (a)    it is competent to perform the Work;

       (b)    it has everything necessary to perform the Work, including 
              the resources, facilities, labour, technology, equipment, and 
              materials; and

       (c)    it has the necessary qualifications, including knowledge, 
              skill, know-how and experience, and the ability to use them 
              effectively to perform the Work.

2.     The Contractor must:

       (a)    perform the Work diligently and efficiently;

       (b)    except for Government Property, supply everything necessary 
              to perform the Work;

       (c)    use, as a minimum, quality assurance procedures, inspections 
              and controls generally used and recognized by the industry to 
              ensure the degree of quality required by the Contract;

       (d)    select and employ a sufficient number of qualified people;

       (e)    perform the Work in accordance with standards of quality 
              acceptable to Canada and in full conformity with the 
              Specifications and all the requirements of the Contract;

       (f)    provide effective and efficient supervision to ensure that 
              the quality of workmanship meets the requirements of the 
              Contract.

3.     The Work must not be performed by any person who, in the opinion of 
       Canada, is incompetent, unsuitable or has been conducting himself/
       herself improperly.

4.     All services rendered under the Contract must, at the time of 
       acceptance, be free from defects in workmanship and conform to the 
       requirements of the Contract.  If the Contractor must correct or 
       replace the Work or any part of the Work, it will be at no cost to 
       Canada.

5.     Canada's facilities, equipment and personnel are not available to 
       the Contractor to perform the Work unless the Contract specifically 
       provides for it.  The Contractor is responsible for advising the 
       Contracting Authority in advance if it requires access to Canada's 
       facilities, equipment or personnel to perform the Work.  The 
       Contractor must comply and ensure that its employees and 
       subcontractors comply with all security measures, standing orders, 
       policies or other rules in force at the site where the Work is 
       performed.

6.     Unless the Contracting Authority orders the Contractor to suspend 
       the Work or part of the Work pursuant to section 37, the Contractor 
       must not stop or suspend the Work or part of the Work pending the 
       settlement of any dispute between the Parties about the Contract.

7.     The Contractor must provide all reports that are required by the 
       Contract and any other information that Canada may reasonably 
       require from time to time.

8.     The Contractor is fully responsible for performing the Work.  Canada 
       will not be responsible for any negative consequences or extra costs 
       if the Contractor follows any advice given by Canada, unless the 
       Contracting Authority provides the advice to the Contractor in 
       writing and includes a statement specifically relieving the 
       Contractor of any responsibility for negative consequences or extra 
       costs that might result from following the advice.

2040   06     (2008-05-12)  Subcontracts

1.     Except as provided in subsection 2, the Contractor must obtain the 
       Contracting Authority's written consent before subcontracting or 
       permitting the subcontracting of any part of the Work.  A 
       subcontract includes a contract entered into by any subcontractor at 
       any tier to perform any part of the Work.

2.     The Contractor is not required to obtain consent for subcontracts 
       specifically authorized in the Contract.  The Contractor may also 
       without the consent of the Contracting Authority:

       (a)    purchase "off-the-shelf" items and any standard articles and 
              materials that are ordinarily produced by manufacturers in 
              the normal course of business;

       (b)    subcontract any incidental services that would ordinarily be 
              subcontracted in performing the Work;

       (c)     in addition to purchases and services referred to in 
              paragraphs (a) and (b), subcontract any part or parts of the 
              Work to one or more subcontractors up to a total value of 40 
              percent of the Contract Price; and

       (d)    permit its subcontractors at any tier to make purchases or 
              subcontract as permitted in paragraphs (a), (b) and (c).

3.     In any subcontract other than a subcontract referred to in paragraph 
       2.(a), the Contractor must, unless the Contracting Authority agrees 
       in writing, ensure that the subcontractor is bound by conditions 
       compatible with and, in the opinion of the Contracting Authority, 
       not less favourable to Canada than the conditions of the Contract.

4.     Even if Canada consents to a subcontract, the Contractor is 
       responsible for performing the Contract and Canada is not 
       responsible to any subcontractor.  The Contractor is responsible for 
       any matters or things done or provided by any subcontractor under 
       the Contract and for paying any subcontractors for any part of the 
       Work they perform.

2040   07     (2008-05-12)  Specifications

1.     All Specifications provided by Canada or on behalf of Canada to the 
       Contractor in connection with the Contract belong to Canada and must 
       be used by the Contractor only for the purpose of performing the 
       Work.

2.     If the Contract provides that Specifications furnished by the 
       Contractor must be approved by Canada, that approval will not 
       relieve the Contractor of its responsibility to meet all 
       requirements of the Contract.

2040   08     (2008-05-12)  Condition of Material

Unless provided otherwise in the Contract, material supplied must be new 
and conform to the latest issue of the applicable drawing, specifications 
and part number that is in effect on the bid closing date or, if there was 
no bid solicitation, the date of the Contract.

2040   09     (2008-05-12)  Replacement of Specific Individuals
 
1.     If specific individuals are identified in the Contract to perform 
       the Work, the Contractor must provide the services of those 
       individuals unless the Contractor is unable to do so for reasons 
       beyond its control.

2.     If the Contractor is unable to provide the services of any specific 
       individual identified in the Contract, it must provide a replacement 
       with similar qualifications and experience.  The replacement must 
       meet the criteria used in the selection of the Contractor and be 
       acceptable to Canada.  The Contractor must, as soon as possible, 
       give notice to the Contracting Authority of the reason for replacing 
       the individual and provide:

       (a)    the name, qualifications and experience of the proposed 
              replacement; and

       (b)    proof that the proposed replacement has the required security 
              clearance granted by Canada, if applicable.

3.     The Contractor must not, in any event, allow performance of the Work 
       by unauthorized replacement persons.  The Contracting Authority may 
       order that a replacement stop performing the Work.  In such a case, 
       the Contractor must immediately comply with the order and secure a 
       further replacement in accordance with subsection 2.  The fact that 
       the Contracting Authority does not order that a replacement stop 
       performing the Work does not relieve the Contractor from its 
       responsibility to meet the requirements of the Contract.

2040   10     (2008-05-12)  Time of the Essence

It is essential that the Work be performed within or at the time stated in 
the Contract.

2040   11     (2008-05-12)  Excusable Delay

1.     A delay in the performance by the Contractor of any obligation under 
       the Contract that is caused by an event that

       (a)    is beyond the reasonable control of the Contractor,

       (b)    could not reasonably have been foreseen,

       (c)    could not reasonably have been prevented by means reasonably 
              available to the Contractor, and

       (d)    occurred without the fault or neglect of the Contractor,

       will be considered an "Excusable Delay" if the Contractor advises 
       the Contracting Authority of the occurrence of the delay or of the 
       likelihood of the delay as soon as the Contractor becomes aware of 
       it.  The Contractor must also advise the Contracting Authority, 
       within fifteen (15) working days, of all the circumstances relating 
       to the delay and provide to the Contracting Authority for approval a 
       clear work around plan explaining in detail the steps that the 
       Contractor proposes to take in order to minimize the impact of the 
       event causing the delay.

2.     Any delivery date or other date that is directly affected by an 
       Excusable Delay will be postponed for a reasonable time that will 
       not exceed the duration of the Excusable Delay.

3.     However, if an Excusable Delay has continued for thirty (30) days or 
       more, the Contracting Authority may, by giving notice in writing to 
       the Contractor, terminate the Contract.  In such a case, the Parties 
       agree that neither will make any claim against the other for damages, 
       costs, expected profits or any other loss arising out of the 
       termination or the event that contributed to the Excusable Delay.  
       The Contractor agrees to repay immediately to Canada the portion of 
       any advance payment that is unliquidated at the date of the 
       termination.

4.     Unless Canada has caused the delay by failing to meet an obligation 
       under the Contract, Canada will not be responsible for any costs 
       incurred by the Contractor or any of its subcontractors or agents as 
       a result of an Excusable Delay.

5.     If the Contract is terminated under this section, the Contracting 
       Authority may require the Contractor to deliver to Canada, in the 
       manner and to the extent directed by the Contracting Authority, any 
       completed parts of the Work not delivered and accepted before the 
       termination and anything that the Contractor has acquired or 
       produced specifically to perform the Contract.   Canada will pay the 
       Contractor:

       (a)    the value, of all completed parts of the Work delivered to 
              and accepted by Canada, based on the Contract Price, 
              including the proportionate part of the Contractor's profit 
              or fee included in the Contract Price; and

       (b)    the Cost to the Contractor that Canada considers reasonable 
              in respect of anything else delivered to and accepted by 
              Canada.

       The total amount paid by Canada under the Contract to the date of 
       termination and any amounts payable under this subsection must not 
       exceed the Contract Price.

2040   12     (2008-05-12)  Inspection and Acceptance of the Work

1.     All the Work is subject to inspection and acceptance by Canada.  
       Inspection and acceptance of the Work by Canada do not relieve the 
       Contractor of its responsibility for defects or other failures to 
       meet the requirements of the Contract.  Canada will have the right 
       to reject any Work that is not in accordance with the requirements 
       of the Contract and require its correction or replacement at the 
       Contractor's expense.

2.     The Contractor must provide representatives of Canada access to all 
       locations where any part of the Work is being performed at any time 
       during working hours.  Representatives of Canada may make 
       examinations and such tests of the Work as they may think fit.  The 
       Contractor must provide all assistance and facilities, test pieces, 
       samples and documentation that the representatives of Canada may 
       reasonably require for the carrying out of the inspection.  The 
       Contractor must forward such test pieces and samples to such person 
       or location as Canada specifies.

3.     The Contractor must inspect and approve any part of the Work before 
       submitting it for acceptance or delivering it to Canada.  The 
       Contractor must keep accurate and complete inspection records that 
       must be made available to Canada on request.  Representatives of 
       Canada may make copies and take extracts of the records during the 
       performance of the Contract and for up to three (3) years after the 
       end of the Contract.

2040   13     (2008-05-12)  Invoice Submission

1.     Invoices must be submitted in the Contractor's name.  The Contractor 
       must submit invoices for each delivery or shipment; invoices must 
       only apply to the Contract.  Each invoice must indicate whether it 
       covers partial or final delivery.

2.     Invoices must show:

       (a)    the date, the name and address of the client department, item 
              or reference numbers, deliverable and/or description of the 
              Work, contract number, Client Reference Number (CRN), 
              Procurement Business Number (PBN), and financial code(s);

       (b)    details of expenditures in accordance with the Basis of 
              Payment, exclusive of Goods and Services Tax (GST) or 
              Harmonized Sales Tax (HST) (such as item, quantity, unit of 
              issue, unit price, fixed time labour rates and level of 
              effort, subcontracts, as applicable);

       (c)    deduction for holdback, if applicable;

       (d)    the extension of the totals, if applicable; and

       (e)    if applicable, the method of shipment together with date, 
              case numbers and part or reference numbers, shipment charges 
              and any other additional charges.

3.     If applicable, the GST or HST must be specified on all invoices as a 
       separate item.  All items that are zero-rated, exempt or to which 
       the GST or HST does not apply, must be identified as such on all 
       invoices.

4.     By submitting an invoice, the Contractor certifies that the invoice 
       is consistent with the Work delivered and is in accordance with the 
       Contract.

2040   14     (2010-08-16)  Taxes

1.     Municipal Taxes
       Municipal Taxes do not apply.

2.     Provincial Taxes

       (a)    Excluding legislated exceptions, federal government 
              departments and agencies are not required to pay any sales 
              tax payable to the province in which the taxable goods or 
              services are delivered.  This exemption has been provided to 
              federal government departments and agencies under the 
              authority of one of the following:

              (i)    Provincial Sales Tax (PST) Exemption Licence Numbers, 
              for the provinces of:

                     Prince Edward Island OP-10000-250
                     Manitoba             390-516-0


              (ii)   for Quebec, Saskatchewan, the Yukon Territory, the 
                     Northwest Territories and Nunavut, an Exemption 
                     Certification, which certifies that the goods or 
                     services purchased are not subject to the provincial/
                     territorial sales and consumption taxes because they 
                     are purchased by the federal government with Canada 
                     funds for the use of the federal government.

       (b)    Currently, in Alberta, the Yukon Territory, the Northwest 
              Territories and Nunavut, there is no general PST.  However, 
              if a PST is introduced in Alberta, the Yukon Territory, the 
              Northwest Territories or Nunavut, the sales tax exemption 
              certificate would be required on the purchasing document.

       (c)    Federal departments must pay the HST in the participating 
              provinces of Newfoundland and Labrador, Nova Scotia, New 
              Brunswick, Ontario and British Columbia.

       (d)    The Contractor is not exempt from paying PST under the above 
              Exemption Licence Numbers or Exemption Certification.  The 
              Contractor must pay the PST on taxable goods or services used 
              or consumed in the performance of the Contract (in accordance 
              with applicable provincial legislation), including material 
              incorporated into real property.

3.     Changes to Taxes and Duties

       If there is any change to any tax or duty payable to any level of 
       government in Canada after the bid submission date that affects the 
       costs of the Work to the Contractor, the Contract Price will be 
       adjusted to reflect the increase or decrease in the cost to the 
       Contractor.  However, there will be no adjustment for any change 
       that increases the cost of the Work to the Contractor if public 
       notice of the change was given before bid submission date in 
       sufficient detail to have permitted the Contractor to calculate the 
       effect of the change on its cost.  There will be no adjustment if 
       the change takes effect after the date required by the Contract for 
       delivery of the Work.

4.      GST or HST

       The estimated GST or HST, if applicable, is included in the total 
       estimated cost on page 1 of the Contract. The GST or HST is not 
       included in the Contract Price but will be paid by Canada as 
       provided in the Invoice Submission section above.  The Contractor 
       agrees to remit to Canada Revenue Agency any amounts of GST and HST 
       paid or due.

5.     Tax Withholding of 15 Percent

       Pursuant to the Income Tax Act, 1985, c. 1 (5th Supp.) and the 
       Income Tax Regulations, Canada must withhold 15 percent of the 
       amount to be paid to the Contractor in respect of services provided 
       in Canada if the Contractor is a non-resident, unless the Contractor 
       obtains a valid waiver.  The amount withheld will be held on account 
       for the Contractor in respect to any tax liability which may be owed 
       to Canada.

2040   15     (2010-01-11)  Transportation Costs

If transportation costs are payable by Canada under the Contract and the 
Contractor makes the transportation arrangements, shipments must be made by 
the most direct and economical means consistent with normal shipping 
practice.  The costs must be shown as a separate item on the invoice.

2040   16     (2008-05-12)  Shipment Documentation

For the shipment of goods, the transportation bill of lading must accompany 
the original invoice, except for "collect" shipments (if and when 
stipulated), in which event it must accompany the shipment.  In addition, a 
packing slip must accompany each shipment, showing item, quantity, part or 
reference numbers, description of the goods and contract number, including 
the CRN and PBN.  If the goods have been inspected at the Contractor's 
plant, the signed inspection voucher must be attached to the packing slip 
normally enclosed in the packing note envelope.

2040   17     (2008-05-12)  Payment Period

1.     Canada's standard payment period is thirty (30) days.  The payment 
       period is measured from the date an invoice in acceptable form and 
       content is received in accordance with the Contract or the date the 
       Work is delivered in acceptable condition as required in the 
       Contract, whichever is later. A payment is considered overdue on the 
       31st day following that date and interest will be paid automatically 
       in accordance with section 18.

2.     If the content of the invoice and its substantiating documentation 
       are not in accordance with the Contract or the Work is not in 
       acceptable condition, Canada will notify the Contractor within 
       fifteen (15) days of receipt.  The 30-day payment period begins upon 
       receipt of the revised invoice or the replacement or corrected Work.  
       Failure by Canada to notify the Contractor within fifteen (15) days 
       will only result in the date specified in subsection 1 to apply for 
       the sole purpose of calculating interest on overdue accounts.

2040   18     (2008-12-12)  Interest on Overdue Accounts

1.     For the purpose of this section:

       "Average Rate" means the simple arithmetic mean of the Bank Rates in 
       effect at 4:00 p.m. (Eastern Time) each day during the calendar 
       month immediately before the calendar month in which payment is made;

       "Bank Rate" means the rate of interest established from time to time 
       by the Bank of Canada as the minimum rate at which the Bank of 
       Canada makes short term advances to members of the Canadian Payments 
       Association;

       "date of payment" means the date of the negotiable instrument drawn 
       by the Receiver General for Canada to pay any amount under the 
       Contract;

       an amount becomes "overdue" when it is unpaid on the first day 
       following the day on which it is due and payable according to the 
       Contract.

2.     Canada will pay to the Contractor simple interest at the Average 
       Rate plus 3 percent per year on any amount that is overdue, from the 
       date that amount becomes overdue until the day before the date of 
       payment, inclusive.  The Contractor is not required to provide 
       notice to Canada for interest to be payable.

3.     Canada will pay interest in accordance with this section only if 
       Canada is responsible for the delay in paying the Contractor.  
       Canada will not pay interest on overdue advance payments.

2040   19     (2008-05-12)  Compliance with Applicable Laws

1.     The Contractor must comply with all laws applicable to the 
       performance of the Contract.  The Contractor must provide evidence 
       of compliance with such laws to Canada at such times as Canada may 
       reasonably request.

2.     The Contractor must obtain and maintain at its own cost all permits, 
       licenses, regulatory approvals and certificates required to perform 
       the Work.  If requested by the Contracting Authority, the Contractor 
       must provide a copy of any required permit, license, regulatory 
       approvals or certificate to Canada.

2040   20     (2008-05-12)  Ownership

1.     Unless provided otherwise in the Contract, the Work or any part of 
       the Work belongs to Canada after delivery and acceptance by or on 
       behalf of Canada.

2.     However if any payment is made to the Contractor for or on account 
       of any Work, either by way of progress or milestone payments, that 
       work paid for by Canada belongs to Canada upon such payment being 
       made.  This transfer of ownership does not constitute acceptance by 
       Canada of the Work or any part of the Work and does not relieve the 
       Contractor of its obligation to perform the Work in accordance with 
       the Contract.

3.     Despite any transfer of ownership, the Contractor is responsible for 
       any loss or damage to the Work or any part of the Work until it is 
       delivered to Canada in accordance with the Contract.  Even after 
       delivery, the Contractor remains responsible for any loss or damage 
       to any part of the Work caused by the Contractor or any 
       subcontractor.

4.     Upon transfer of ownership to the Work or any part of the Work to 
       Canada, the Contractor must, if requested by Canada, establish to 
       Canada's satisfaction that the title is free and clear of all claims, 
       liens, attachments, charges or encumbrances.  The Contractor must 
       execute any conveyances and other instruments necessary to perfect 
       the title that Canada may require.

2040   21     (2008-05-12)  Warranty

1.     Despite inspection and acceptance of the Work by or on behalf of 
       Canada and without restricting any other provision of the Contract 
       or any condition, warranty or provision imposed by law, the 
       Contractor warrants that, for twelve (12) months (or any other 
       period stated in the Contract), the Work will be free from all 
       defects in design, material or workmanship, and will conform to the 
       requirements of the Contract.  The warranty period begins on the 
       date of delivery, or if acceptance takes place at a later date, the 
       date of acceptance.  With respect to Government Property not 
       supplied by the Contractor, the Contractor's warranty will extend 
       only to its proper incorporation into the Work.

2.     In the event of a defect or non-conformance in any part of the Work 
       during the warranty period, the Contractor, at the request of Canada 
       to do so, must as soon as possible repair, replace or otherwise make 
       good at its own option and expense the part of the Work found to be 
       defective or not in conformance with the requirements of the 
       Contract.

3.     The Work or any part of the Work found to be defective or 
       non-conforming will be returned to the Contractor's plant for 
       replacement, repair or making good.  However, when in the opinion of 
       Canada it is not expedient to remove the Work from its location, the 
       Contractor must carry out any necessary repair or making good of the 
       Work at that location.  In such cases, the Contractor will be paid 
       the fair and reasonable Cost (including reasonable travel and living 
       expenses) incurred in so doing, with no allowance for profit, less 
       an amount equal to the Cost of rectifying the defect or 
       non-conformance at the Contractor's plant.

4.     Canada must pay the transportation cost associated with returning 
       the Work or any part of the Work to the Contractor's plant pursuant 
       to subsection 3.  The Contractor must pay the transportation cost 
       associated with forwarding the replacement or returning the Work or 
       part of the Work when rectified to the delivery point specified in 
       the Contract or to another location directed by Canada.

5.     The Contractor must remedy all data and reports pertaining to any 
       correction or replacement under this section, including revisions 
       and updating of all affected data, manuals, publications, software 
       and drawings called for under the Contract, at no cost to Canada.

6.     If the Contractor fails to fulfill any obligation described in this 
       section within a reasonable time of receiving a notice, Canada will 
       have the right to remedy or to have remedied the defective or 
       non-conforming work at the Contractor's expense.  If Canada does not 
       wish to correct or replace the defective or non-conforming work, an 
       equitable reduction will be made in the Contract Price.

7.     The warranty period is automatically extended by the duration of any 
       period or periods where the Work is unavailable for use or cannot be 
       used because of a defect or non-conformance during the original 
       warranty period.  The warranty applies to any part of the Work 
       repaired, replaced or otherwise made good pursuant to subsection 2, 
       for the greater of:

       (a)    the warranty period remaining, including the extension; or

       (b)    ninety (90) days or such other period as may be specified for 
              that purpose by agreement between the Parties.

2040   22     (2008-05-12)  Confidentiality

1.     The Contractor must keep confidential all information provided to 
       the Contractor by or on behalf of Canada in connection with the Work, 
       including any information that is confidential or proprietary to 
       third parties, and all information conceived, developed or produced 
       by the Contractor as part of the Work when copyright or any other 
       intellectual property rights in such information belongs to Canada 
       under the Contract.  The Contractor must not disclose any such 
       information without the written permission of Canada.  The 
       Contractor may disclose to a subcontractor any information necessary 
       to perform the subcontract, as long as the subcontractor agrees to 
       keep the information confidential and that it will be used only to 
       perform the subcontract.

2.     The Contractor agrees to use any information provided to the 
       Contractor by or on behalf of Canada only for the purpose of the 
       Contract.  The Contractor acknowledges that all this information 
       remains the property of Canada or the third party, as the case may 
       be.  Unless provided otherwise in the Contract, the Contractor must 
       deliver to Canada all such information, together with every copy, 
       draft, working paper and note that contains such information, upon 
       completion or termination of the Contract or at such earlier time as 
       Canada may require.

3.     Subject to the Access to Information Act, R.S., 1985, c. A-1, and to 
       any right of Canada under the Contract to release or disclose, 
       Canada must not release or disclose outside the Government of Canada 
       any information delivered to Canada under the Contract that is 
       proprietary to the Contractor or a subcontractor.

4.     The obligations of the Parties set out in this section do not apply 
       to any information if the information:

       (a)    is publicly available from a source other than the other 
              Party; or

       (b)    is or becomes known to a Party from a source other than the 
              other Party, except any source that is known to be under an 
              obligation to the other Party not to disclose the information; 
              or

       (c)    is developed by a Party without use of the information of the 
              other Party.

5.     Wherever possible, the Contractor must mark or identify any 
       proprietary information delivered to Canada under the Contract as "
       Property of (Contractor's name), permitted Government uses defined 
       under Public Works and Government Services Canada (PWGSC) Contract 
       No. (fill in Contract Number)".  Canada will not be liable for any 
       unauthorized use or disclosure of information that could have been 
       so marked or identified and was not.

6.     If the Contract, the Work, or any information referred to in 
       subsection 1 is identified as TOP SECRET, SECRET, CONFIDENTIAL, or 
       PROTECTED by Canada, the Contractor must at all times take all 
       measures reasonably necessary for the safeguarding of the material 
       so identified, including those set out in the PWGSC Industrial 
       Security Manual and its supplements and any other instructions 
       issued by Canada.

7.     If the Contract, the Work, or any information referred to in 
       subsection 1 is identified as TOP SECRET, SECRET, CONFIDENTIAL, or 
       PROTECTED, by Canada, representatives of Canada are entitled to 
       inspect the Contractor's premises and the premises of a 
       subcontractor at any tier for security purposes at any time during 
       the term of the Contract.  The Contractor must comply with, and 
       ensure that any subcontractor complies with, all written 
       instructions issued by Canada dealing with the material so 
       identified, including any requirement that employees of the 
       Contractor or of any subcontractor execute and deliver declarations 
       relating to reliability screenings, security clearances and other 
       procedures.

2040   23     (2008-05-12)  Use and Translation of Written Material

1.     Unless provided otherwise in the Contract, copyright in any written 
       material used, produced or delivered under the Contract belongs to 
       its author or rightful owner.  Canada has the right to use, copy and 
       disclose, for government purposes, the written material related to 
       the Work that is delivered to Canada.

2.     If the Contract does not require the delivery of any written 
       material in both of Canada's official languages, Canada may 
       translate the written material into the other official language.  
       The Contractor acknowledges that Canada owns the rights on the 
       translation and that Canada is under no obligation to provide the 
       translation to the Contractor.  Canada agrees that any translation 
       must include any copyright and any proprietary right notice that was 
       part of the original. Canada acknowledges that the Contractor is not 
       responsible for any technical errors or other problems that may 
       arise as a result of the translation.
 
2040   24     (2008-05-12)  Government Property

1.     All Government Property must be used by the Contractor solely for 
       the purpose of the Contract and remains the property of Canada.  The 
       Contractor must maintain adequate accounting records of all 
       Government Property and, whenever feasible, mark it as being the 
       property of Canada.

2.     The Contractor must take reasonable and proper care of all 
       Government Property while it is in its possession or subject to its 
       control.  The Contractor is responsible for any loss or damage 
       resulting from its failure to do so other than loss or damage caused 
       by ordinary wear and tear.

3.     All Government Property, unless it is installed or incorporated in 
       the Work, must be returned to Canada on demand.  All scrap and all 
       waste materials, articles or things that are Government Property 
       must, unless provided otherwise in the Contract, remain the property 
       of Canada and must be disposed of only as directed by Canada.

4.     At the time of completion of the Contract, and if requested by the 
       Contracting Authority, the Contractor must provide to Canada an 
       inventory of all Government Property relating to the Contract.

2040   25     (2008-05-12)  Liability

The Contractor is liable for any damage caused by the Contractor, its 
employees, subcontractors, or agents to Canada or any third party. Canada 
is liable for any damage caused by Canada, its employees or agents to the 
Contractor or any third party.  The Parties agree that no limitation of 
liability or indemnity provision applies to the Contract unless it is 
specifically incorporated in full text in the Articles of Agreement.  
Damage includes any injury to persons (including injury resulting in death) 
or loss of or damage to property (including real property) caused as a 
result of or during the performance of the Contract.

2040   26     (2008-05-12)  Intellectual Property Infringement and 
Royalties

1.     The Contractor represents and warrants that, to the best of its 
       knowledge, neither it nor Canada will infringe any third party's 
       intellectual property rights in performing or using the Work, and 
       that Canada will have no obligation to pay royalties of any kind to 
       anyone in connection with the Work.

2.     If anyone makes a claim against Canada or the Contractor concerning 
       intellectual property infringement or royalties related to the Work, 
       that Party agrees to notify the other Party in writing immediately.  
       If anyone brings a claim against Canada, according to Department of 
       Justice Act, R.S., 1985, c. J-2, the Attorney General of Canada must 
       have the regulation and conduct of all litigation for or against 
       Canada, but the Attorney General may request that the Contractor 
       defend Canada against the claim.  In either case, the Contractor 
       agrees to participate fully in the defence and any settlement 
       negotiations and to pay all costs, damages and legal costs incurred 
       or payable as a result of the claim, including the amount of any 
       settlement.  Both Parties agree not to settle any claim unless the 
       other Party first approves the settlement in writing.

3.     The Contractor has no obligation regarding claims that were only 
made because:

       (a)    Canada modified the Work or part of the Work without the 
              Contractor's consent or used the Work or part of the Work 
              without following a requirement of the Contract; or

       (b)    Canada used the Work or part of the Work with a product that 
              the Contractor did not supply under the Contract (unless that 
              use is described in the Contract or the manufacturer's 
              specifications); or

       (c)    the Contractor used equipment, drawings, specifications or 
              other information supplied to the Contractor by Canada (or by 
              someone authorized by Canada); or

       (d)    the Contractor used a specific item of equipment or software 
              that it obtained because of specific instructions from the 
              Contracting Authority; however, this exception only applies 
              if the Contractor has included the following language in its 
              own contract with the supplier of that equipment or software: 
              "[Supplier name] acknowledges that the purchased items will 
              be used by the Government of Canada.  If a third party claims 
              that equipment or software supplied under this contract 
              infringes any intellectual property right, [supplier name], 
              if requested to do so by either [Contractor name] or Canada, 
              will defend both [Contractor name] and Canada against that 
              claim at its own expense and will pay all costs, damages and 
              legal fees payable as a result of that infringement."  
              Obtaining this protection from the supplier is the 
              Contractor's responsibility and, if the Contractor does not 
              do so, it will be responsible to Canada for the claim.

4.     If anyone claims that, as a result of the Work, the Contractor or 
       Canada is infringing its intellectual property rights, the 
       Contractor must immediately do one of the following:

       (a)    take whatever steps are necessary to allow Canada to continue 
              to use the allegedly infringing part of the Work; or

       (b)    modify or replace the Work to avoid intellectual property 
              infringement, while ensuring that the Work continues to meet 
              all the requirements of the Contract; or

       (c)    take back the Work and refund any part of the Contract Price 
              that Canada has already paid.

       If the Contractor determines that none of these alternatives can 
       reasonably be achieved, or if the Contractor fails to take any of 
       these steps within a reasonable amount of time, Canada may choose 
       either to require the Contractor to do (c), or to take whatever 
       steps are necessary to acquire the rights to use the allegedly 
       infringing part(s) of the Work itself, in which case the Contractor 
       must reimburse Canada for all the costs it incurs to do so.

2040   27     (2008-05-12)  Records and Disclosure of Foreground 
Information

1.     During and after the performance of the Contract, the Contractor 
       must keep detailed records of the Foreground Information, including 
       details of its creation, ownership and about any sale or transfer of 
       any right in the Foreground Information.  The Contractor must report 
       and fully disclose to Canada all Foreground Information as required 
       by the Contract.  If the Contract does not specifically state when 
       and how the Contractor must do so, the Contractor must provide this 
       information when requested by the Contracting Authority or a 
       representative of the department or agency for which the Contract is 
       performed, whether before or after the completion of the Contract.

2.     Before and after final payment to the Contractor, the Contractor 
       must provide Canada with access to all records and supporting data 
       that Canada considers pertinent to the identification of Foreground 
       Information.

3.     For any Intellectual Property that was developed or created in 
       relation to the Work, Canada will be entitled to assume that it was 
       developed or created by Canada, if the Contractor's records do not 
       list that Intellectual Property or do not indicate that it was 
       created by the Contractor, or by someone on behalf of the Contractor, 
       other than Canada.

2040   28     (2008-05-12)  Ownership of Intellectual Property Rights in 
                            Foreground Information

1.     All Intellectual Property Rights in the Foreground Information 
       belong to the Contractor as soon as they come into existence.

2.     Despite the Contractor's ownership of all the Intellectual Property 
       Rights in the Foreground Information, Canada has unrestricted 
       ownership rights in any prototype, model, custom or customized 
       system or equipment that is a deliverable under the Contract, 
       including manuals and other operating and maintenance documents.  
       This includes the right to make them available for public use, 
       whether for a fee or otherwise, sell them or otherwise transfer 
       ownership in them.

3.     Any personal information, as defined in the Privacy Act, R.S., 1985, 
       c. P-21, collected by the Contractor in the execution of the Work 
       under the Contract becomes the property of Canada immediately upon 
       collection and must be used only for the performance of the Work.  
       The Contractor has no right in any such personal information.

4.     If the Work under the Contract involves the preparation of a 
       database or other compilation using information or data supplied by 
       Canada and any personal information referred to above, the 
       Intellectual Property Rights in the database or compilation 
       containing such information will belong to Canada.  The Contractor's 
       Intellectual Property Rights in the Foreground Information are 
       restricted to those capable of being exploited without the use of 
       the information or data supplied by Canada and the personal 
       information.

5.     The Contractor must maintain the confidentiality of the information 
       or data supplied by Canada and the personal information as required 
       in the General Conditions.  The Contractor must return all the 
       information belonging to Canada on request or on completion or 
       termination of the Contract.  This includes returning all hard 
       copies and electronic copies as well as any paper or electronic 
       record that contains any part of the information or information 
       derived from it.

2040   29     (2008-05-12)  Licenses to Intellectual Property Rights in 
                            Foreground and Background Information

1.     As Canada has contributed to the cost of developing the Foreground 
       Information, the Contractor grants to Canada a license to exercise 
       all Intellectual Property Rights in the Foreground Information for 
       Canada's activities.  Subject to any exception described in the 
       Contract, this license allows Canada to do anything that it would be 
       able to do if it were the owner of the Foreground Information, other 
       than exploit it commercially and transfer or assign ownership of it.  
       The Contractor also grants to Canada a license to use the Background 
       Information to the extent that it is reasonably necessary for Canada 
       to exercise fully all its rights in the deliverables and in the 
       Foreground Information.

2.     These licenses are non-exclusive, perpetual, irrevocable, worldwide, 
       fully-paid and royalty-free. Neither license can be restricted in 
       any way by the Contractor providing any form of notice to the 
       contrary, including the wording on any shrink-wrap or click-wrap 
       license or any other kind of packaging, attached to any deliverable.

3.     For greater certainty, Canada's licenses include, but are not 
limited to:

       (a)    the right to disclose the Foreground and Background 
              Information to third parties bidding on or negotiating 
              contracts with Canada and to sublicense or otherwise 
              authorize the use of that information by any contractor 
              engaged by Canada solely for the purpose of carrying out such 
              contracts.  Canada will require these third parties and 
              contractors not to use or disclose that information except as 
              may be necessary to bid on, negotiate or carry out those 
              contracts;

       (b)    the right to disclose the Foreground and Background 
              Information to other governments for information purposes;

       (c)    the right to reproduce, modify, improve, develop or translate 
              the Foreground and Background Information or have it done by 
              a person hired by Canada.  Canada, or a person designated by 
              Canada, will own the Intellectual Property Rights associated 
              with the reproduction, modification, improvement, development 
              or translation.

       (d)    without restricting the scope of any license or other right 
              in the Background Information that Canada may otherwise hold, 
              the right, in relation to any custom-designed or 
              custom-manufactured part of the Work, to exercise such of the 
              Intellectual Property Rights in the Background Information as 
              may be required for the following purposes:

              (i)    for the use, operation, maintenance, repair or 
                     overhaul of the custom-designed or custom-manufactured 
                     parts of the Work;

              (ii)   in the manufacturing of spare parts for maintenance, 
                     repair or overhaul of any custom-designed or 
                     custom-manufactured part of the Work by Canada if 
                     those parts are not available on reasonable commercial 
                     terms to enable timely maintenance, repair or overhaul;

       (e)    for Software that is custom designed for Canada, the right to 
              use any source code the Contractor must deliver to Canada 
              under the Contract.

4.     The Contractor agrees to make the Background Information, including 
       in the case of Software, the source code promptly available to 
       Canada for any purpose mentioned above.  The license does not apply 
       to any Software that is subject to detailed license conditions that 
       are set out elsewhere in the Contract.  Furthermore, in the case of 
       commercial off-the-shelf software, the Contractor's obligation to 
       make the source code promptly available to Canada applies only to 
       source code that is within the control of or can be obtained by the 
       Contractor or any subcontractor.

2040   30     (2008-05-12)  Contractor's Right to Grant Licenses

The Contractor represents and warrants that it has the right to grant to 
Canada the licenses and any other rights to use the Foreground and 
Background Information.  If the Intellectual Property Rights in any 
Foreground or Background Information are or will be owned by a 
subcontractor or any other third party, the Contractor must have or obtain 
promptly a license from that subcontractor or third party that permits 
compliance with section 29 or arrange, without delay, for the subcontractor 
or third party to grant promptly any required license directly to Canada.

2040   31     (2008-05-12)  Waiver of Moral Rights

If requested by Canada, during and after the Contract, the Contractor must 
provide a written permanent waiver of moral rights, as defined in the 
Copyright Act, R.S., 1985, c. C-42, from every author that contributes to 
any Foreground Information subject to copyright protection that is a 
deliverable to Canada under the Contract.  If the Contractor is an author 
of the Foreground Information, the Contractor permanently waives the 
Contractor's moral rights in that Foreground Information.

2040   32     (2008-05-12)   License to Intellectual Property Rights to 
Canada's Information

1.     Any information supplied by Canada to the Contractor for the 
       performance of the Work remains the property of Canada.  The 
       Contractor must use Canada's Information only to perform the 
       Contract.

2.     If the Contractor wants to use any information owned by Canada for 
       the commercial exploitation or further development of the Foreground 
       Information, the Contractor must obtain a license from the 
       department or agency for which the Contract is performed.  In its 
       request for a license to that department or agency, the Contractor 
       must explain why the license is required and how the Contractor 
       intends to use the information.  If the department or agency agrees 
       to grant a license, its terms will be negotiated between the 
       Contractor and that department or agency and may include the payment 
       of a compensation to Canada.

2040   33     (2008-05-12)   Transfer or License of Contractor's Rights

1.     During the Contract, the Contractor must not sell, transfer, assign 
       or license the Foreground Information without first obtaining the 
       Contracting Authority's written permission.

2.     After the Contract, if the Contractor transfer ownership in the 
       Foreground Information, the Contractor is not required to obtain 
       Canada's permission, but must notify the department or agency for 
       whom the Contract is performed in writing of the transfer by 
       referring to the serial number of the Contract and its date and by 
       providing details about the transferee, including the conditions of 
       the transfer.  The Contractor must ensure that the transfer requires 
       the transferee to notify the Canada of any future transfer.  Any 
       transfer must be subject to all Canada's rights to use the 
       Foreground Information.

3.     After the Contract, if the Contractor grants a license or any other 
       right (other than a transfer of ownership) to a third party to use 
       the Foreground Information, the Contractor is not required to notify 
       Canada, but the license or right granted must not affect Canada's 
       rights in any way.

4.     If the Contractor at any time transfers ownership of or grants 
       rights in the Foreground Information that interfere in any way with 
       Canada's rights to use the Foreground Information, the Contractor 
       must, if requested by Canada, immediately take all steps necessary 
       to restore Canada's rights.  If the Contractor is not successful in 
       doing so, within the time reasonably required by Canada, the 
       Contractor must immediately reimburse Canada for all costs Canada 
       incurs to do so itself.

2040   34     (2008-05-12)  Transfer of Intellectual Property Rights upon 
                            Termination of the Contract for Default

1.     If Canada terminates the Contract in whole or in part for default, 
       Canada may, by giving notice to the Contractor, require the 
       Contractor to transfer to Canada all the Intellectual Property 
       Rights in the Foreground Information, including the rights owned by 
       subcontractors.  In the case of Intellectual Property Rights in the 
       Foreground Information that have been sold or assigned to a third 
       party, the Contractor must pay to Canada on demand, at Canada's 
       discretion, the fair market value of the Intellectual Property 
       Rights in the Foreground Information or an amount equal to the 
       payment received by the Contractor from the sale or assignment of 
       the Intellectual Property Rights in the Foreground Information.

2.     In the event of the issuance of a notice under subsection 1, the 
       Contractor must, at its own expense and without delay, execute such 
       documents relating to ownership of the Intellectual Property Rights 
       as Canada may require.  The Contractor must, at Canada's expense, 
       provide all reasonable assistance in the preparation of applications 
       and in the prosecution of any applications for registration of any 
       Intellectual Property Rights in any jurisdiction, including the 
       assistance of the inventor in the case of an invention.

2040   35     (2008-05-12)  Products created using the Foreground 
Information

If the Contractor uses the Foreground Information to develop any new 
product or any improvement in any existing product, the Contractor agrees 
that, if Canada wishes to purchase such new or improved product, the 
Contractor must sell them to Canada at a discount off the lowest price for 
which it has sold those products to other customers, to recognize Canada's 
financial contribution to the development of those products.

2040   36     (2008-05-12)  Amendment and Waivers

1.     To be effective, any amendment to the Contract must be done in 
       writing by the Contracting Authority and the authorized 
       representative of the Contractor.

2.     While the Contractor may discuss any proposed modifications to the 
       Work with other representatives of Canada, Canada will not be 
       responsible for the cost of any modification unless it has been 
       incorporated into the Contract in accordance with subsection 1.

3.     A waiver will only be valid, binding or affect the rights of the 
       Parties if it is made in writing by, in the case of a waiver by 
       Canada, the Contracting Authority and, in the case of a waiver by 
       the Contractor, the authorized representative of the Contractor.

4.     The waiver by a Party of a breach of any condition of the Contract 
       will not be treated or interpreted as a waiver of any subsequent 
       breach and therefore will not prevent that Party from enforcing of 
       that term or condition in the case of a subsequent breach.

2040   37     (2008-05-12)  Suspension of the Work

1.     The Contracting Authority may at any time, by written notice, order 
       the Contractor to suspend or stop the Work or part of the Work under 
       the Contract for a period of up to one hundred eighty (180) days.  
       The Contractor must immediately comply with any such order in a way 
       that minimizes the cost of doing so.  While such an order is in 
       effect, the Contractor must not remove any part of the Work from any 
       premises without first obtaining the written consent of the 
       Contracting Authority.  Within these one hundred eighty (180) days, 
       the Contracting Authority must either cancel the order or terminate 
       the Contract, in whole or in part, under section 38 or section 39.

2.     When an order is made under subsection 1, unless the Contracting 
       Authority terminates the Contract by reason of default by the 
       Contractor or the Contractor abandons the Contract, the Contractor 
       will be entitled to be paid its additional costs incurred as a 
       result of the suspension plus a fair and reasonable profit.

3.     When an order made under subsection 1 is cancelled, the Contractor 
       must resume work in accordance with the Contract as soon as 
       practicable.  If the suspension has affected the Contractor's 
       ability to meet any delivery date under the Contract, the date for 
       performing the part of the Work affected by the suspension will be 
       extended for a period equal to the period of suspension plus a 
       period, if any, that in the opinion of the Contracting Authority, 
       following consultation with the Contractor, is necessary for the 
       Contractor to resume the Work.  Any equitable adjustments will be 
       made as necessary to any affected conditions of the Contract.

2040   38     (2008-05-12)  Default by the Contractor

1.     If the Contractor is in default in carrying out any of its 
       obligations under the Contract, the Contracting Authority may, by 
       giving written notice to the Contractor, terminate for default the 
       Contract or part of the Contract.  The termination will take effect 
       immediately or at the expiration of a cure period specified in the 
       notice, if the Contractor has not cured the default to the 
       satisfaction of the Contracting Authority within that cure period.

2.     If the Contractor becomes bankrupt or insolvent, makes an assignment 
       for the benefit of creditors, or takes the benefit of any statute 
       relating to bankrupt or insolvent debtors, or if a receiver is 
       appointed under a debt instrument or a receiving order is made 
       against the Contractor, or an order is made or a resolution passed 
       for the winding down of the Contractor, the Contracting Authority 
       may, to the extent permitted by the laws of Canada, by giving 
       written notice to the Contractor, immediately terminate for default 
       the Contract or part of the Contract.

3.     If Canada gives notice under subsection 1 or 2, the Contractor will 
       have no claim for further payment except as provided in this section.  
       The Contractor will be liable to Canada for all losses and damages 
       suffered by Canada because of the default or occurrence upon which 
       the notice was based, including any increase in the cost incurred by 
       Canada in procuring the Work from another source.  The Contractor 
       agrees to repay immediately to Canada the portion of any advance 
       payment that is unliquidated at the date of the termination.

4.     Upon termination of the Contract under this section, the Contracting 
       Authority may require the Contractor to deliver to Canada, in the 
       manner and to the extent directed by the Contracting Authority, any 
       completed parts of the Work, not delivered and accepted before the 
       termination and anything the Contractor has acquired or produced 
       specifically to perform the Contract.  In such a case, subject to 
       the deduction of any claim that Canada may have against the 
       Contractor arising under the Contract or out of the termination, 
       Canada will pay or credit to the Contractor:

       (a)    the value, of all completed parts of the Work delivered to 
              and accepted by Canada, based on the Contract Price, 
              including the proportionate part of the Contractor's profit 
              or fee included in the Contract Price; and

       (b)    the cost to the Contractor that Canada considers reasonable 
              in respect of anything else delivered to and accepted by 
              Canada.

       The total amount paid by Canada under the Contract to the date of 
       the termination and any amount payable under this subsection must 
       not exceed the Contract Price.

5.     Title to everything for which payment is made to the Contractor will, 
       once payment is made, pass to Canada unless it already belongs to 
       Canada under any other provision of the Contract.

6.     If the Contract is terminated for default under subsection 1, but it 
       is later determined that grounds did not exist for a termination for 
       default, the notice will be considered a notice of termination for 
       convenience issued under subsection 1 of section 39.

2040   39     (2008-05-12)  Termination for Convenience

1.     At any time before the completion of the Work, the Contracting 
       Authority may, by giving notice in writing to the Contractor, 
       terminate for convenience the Contract or part of the Contract.  
       Once such a notice of termination for convenience is given, the 
       Contractor must comply with the requirements of the termination 
       notice.  If the Contract is terminated in part only, the Contractor 
       must proceed to complete any part of the Work that is not affected 
       by the termination notice.  The termination will take effect 
       immediately or, as the case may be, at the time specified in the 
       termination notice.

2.     If a termination notice is given pursuant to subsection 1, the 
       Contractor will be entitled to be paid, for costs that have been 
       reasonably and properly incurred to perform the Contract to the 
       extent that the Contractor has not already been paid or reimbursed 
       by Canada.  The Contractor will be paid:

       (a)    on the basis of the Contract Price, for all completed work 
              that is inspected and accepted in accordance with the 
              Contract, whether completed before, or after the termination 
              in accordance with the instructions contained in the 
              termination notice;

       (b)    the Cost to the Contractor plus a fair and reasonable profit 
              for all work terminated by the termination notice before 
              completion; and

       (c)    all costs incidental to the termination of the Work incurred 
              by the Contractor but not including the cost of severance 
              payments or damages to employees whose services are no longer 
              required, except wages that the Contractor is obligated by 
              statute to pay.

3.     Canada may reduce the payment in respect of any part of the Work, if 
       upon inspection, it does not meet the requirements of the Contract.

4.     The total of the amounts, to which the Contractor is entitled to be 
       paid under this section, together with any amounts paid, due or 
       becoming due to the Contractor must not exceed the Contract Price.  
       The Contractor will have no claim for damages, compensation, loss of 
       profit, allowance arising out of any termination notice given by 
       Canada under this section except to the extent that this section 
       expressly provides.  The Contractor agrees to repay immediately to 
       Canada the portion of any advance payment that is unliquidated at 
       the date of the termination.

2040   40     (2008-05-12)  Accounts and Audit

1.     The Contractor must keep proper accounts and records of the cost of 
       performing the Work and of all expenditures or commitments made by 
       the Contractor in connection with the Work, including all invoices, 
       receipts and vouchers.  The Contractor must retain records, 
       including bills of lading and other evidence of transportation or 
       delivery, for all deliveries made under the Contract.

2.     If the Contract includes payment for time spent by the Contractor, 
       its employees, representatives, agents or subcontractors performing 
       the Work, the Contractor must keep a record of the actual time spent 
       each day by each individual performing any part of the Work.

3.     Unless Canada has consented in writing to its disposal, the 
       Contractor must retain all the information described in this section 
       for six (6) years after it receives the final payment under the 
       Contract, or until the settlement of all outstanding claims and 
       disputes, whichever is later.  During this time, the Contractor must 
       make this information available for audit, inspection and 
       examination by the representatives of Canada, who may make copies 
       and take extracts.  The Contractor must provide all reasonably 
       required facilities for any audit and inspection and must furnish 
       all the information as the representatives of Canada may from time 
       to time require to perform a complete audit of the Contract.

4.     The amount claimed under the contract, calculated in accordance with 
       the Basis of Payment provision in the Articles of Agreement, is 
       subject to government audit both before and after payment is made.  
       If an audit is performed after payment, the Contractor agrees to 
       repay any overpayment immediately on demand by Canada.  Canada may 
       hold back, deduct and set off any credits owing and unpaid under 
       this section from any money that Canada owes to the Contractor at 
       any time (including under other contracts).  If Canada does not 
       choose to exercise this right at any given time, Canada does not 
       lose this right.

2040   41     (2008-05-12)  Right of Set-off

Without restricting any right of set-off given by law, Canada may set-off 
against any amount payable to the Contractor under the Contract, any amount 
payable to Canada by the Contractor under the Contract or under any other 
current contract.  Canada may, when making a payment pursuant to the 
Contract, deduct from the amount payable to the Contractor any such amount 
payable to Canada by the Contractor which, by virtue of the right of 
set-off, may be retained by Canada.

2040   42     (2008-05-12)  Notice

Any notice under the Contract must be in writing and may be delivered by 
hand, courier, mail, facsimile or other electronic method that provides a 
paper record of the text of the notice.  It must be sent to the Party for 
whom it is intended at the address stated in the Contract.  Any notice will 
be effective on the day it is received at that address.  Any notice to 
Canada must be delivered to the Contracting Authority.

2040   43     (2008-05-12)  Conflict of Interest and Values and Ethics 
                            Codes for the Public Service

The Contractor acknowledges that individuals who are subject to the 
provisions of the Conflict of Interest Act, 2006, c. 9, s. 2, the Conflict 
of Interest Code for Members of the House of Commons, the Values and Ethics 
Code for the Public Service or all other codes of values and ethics 
applicable within specific organizations cannot derive any direct benefit 
resulting from the Contract.

2040   44     (2008-05-12)  No Bribe

The Contractor declares that no bribe, gift, benefit, or other inducement 
has been or will be paid, given, promised or offered directly or indirectly 
to any official or employee of Canada or to a member of the family of such 
a person, with a view to influencing the entry into the Contract or the 
administration of the Contract.

2040   45     (2008-05-12)  Survival

All the Parties' obligations of confidentiality, representations and 
warranties set out in the Contract as well as the provisions, which by the 
nature of the rights or obligations might reasonably be expected to survive, 
will survive the expiry or termination of the Contract.

2040   46     (2008-05-12)  Severability

If any provision of the Contract is declared by a court of competent 
jurisdiction to be invalid, illegal or unenforceable, that provision will 
be removed from the Contract without affecting any other provision of the 
Contract.

2040   47     (2008-05-12)  Successors and Assigns

The Contract is to the benefit of and binds the successors and permitted 
assignees of Canada and of the Contractor.

2040   48     (2008-12-12)  Contingency Fees

The Contractor certifies that it has not, directly or indirectly, paid or 
agreed to pay and agrees that it will not, directly or indirectly, pay a 
contingency fee for the solicitation, negotiation or obtaining of the 
Contract to any person, other than an employee of the Contractor acting in 
the normal course of the employee's duties.  In this section, "contingency 
fee" means any payment or other compensation that depends or is calculated 
based on a degree of success in soliciting, negotiating or obtaining the 
Contract and "person" includes any individual who is required to file a 
return with the registrar pursuant to section 5 of the Lobbying Act, 1985, 
c. 44 (4th Supplement).

2040   49     (2010-01-11)  International Sanctions

1.     Persons in Canada, and Canadians outside of Canada, are bound by 
       economic sanctions imposed by Canada.  As a result, the Government 
       of Canada cannot accept delivery of goods or services that originate, 
       either directly or indirectly, from the countries or persons subject 
       to economic sanctions.

2.     The Contractor must not supply to the Government of Canada any goods 
       or services which are subject to economic sanctions.

3.     The Contractor must comply with changes to the regulations imposed 
       during the period of the Contract.  The Contractor must immediately 
       advise Canada if it is unable to perform the Work as a result of the 
       imposition of economic sanctions against a country or person or the 
       addition of a good or service to the list of sanctioned goods or 
       services.  If the Parties cannot agree on a work around plan, the 
       Contract will be terminated for the convenience of Canada in 
       accordance with section 39.

2040   50     (2010-01-11)  Code of Conduct for Procurement

The Contractor certifies that it has read the Code of Conduct for 
Procurement  and agrees to be bound by its terms.

2040   51     (2008-05-12)  Entire Agreement

The Contract constitutes the entire and only agreement between the Parties 
and supersedes all previous negotiations, communications and other 
agreements, whether written or oral, unless they are incorporated by 
reference in the Contract.  There are no terms, covenants, representations, 
statements or conditions binding on the Parties other than those contained 
in the Contract.

2040   52     (2010-01-11)  Transportation Carriers' Liability

The federal government's policy of underwriting its own risks precludes 
payment of insurance or valuation charges for transportation beyond the 
point at which ownership of goods passes to the federal government 
(determined by the FOB point or Incoterms).  Where increased carrier 
liability is available without charge, the Contractor must obtain the 
increased liability for shipment.

2040   53     (2010-08-16)  Assignment

1.     The Contractor must not assign the Contract without first obtaining 
       the written consent of the Contracting Authority.  Any assignment 
       made without that consent is void and will have no effect. The 
       assignment will be effective upon execution of an assignment 
       agreement signed by the Parties and the assignee.

2.     Assignment of the Contract does not relieve the Contractor from any 
       obligation under the Contract and it does not impose any liability 
       upon Canada.