ARCHIVED Shipbuilding - Cost Reimbursement

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Legal text for SACC item

1033   00     (2004-12-10)  Shipbuilding - Cost Reimbursement


Public Works and Government Services Canada

01     Interpretation
02     Sources of Labour
03     Supervision and Conduct of Work
04     Inspector Final Judge of Work, Materials, etc.
05     Re-execution of Inferior Work
06     Economical Execution and Spoilage
07     Provision of Facilities 
08     Discounts, etc.
09     Suspension of Work and Changes in Specifications
10     Certificates Required
11     Warranty
12     Title to Vest in Canada
13     Risk of Loss or Damage and Provisions as to Insurance
14     Amendment to General Conditions 1026B
15     Accommodation for Inspector
16     Launching
17     Public Ceremonies
18     Berthing of Vessel
19     Dry-docking of Vessel
20     Commissioning of Vessel
21     Storage of Materials, Parts, etc.
22     Drawings
23     Trials of Vessel


1033   01     (2004-12-10)  Interpretation

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

       "Canada", "Crown", "Her Majesty", "the Government" means Her Majesty 
       the Queen in right of Canada;

       "General Conditions" means general conditions 1026B forming part of 
       the Contract;

       "supplemental general conditions" means these supplemental general 
       conditions;

       "Inspector" means the representative designated for the inspection 
       function by the client department;

       "vessels" means the ships or vessels to be constructed by the 
       Contractor under the Contract and includes the whole of their 
       respective hulls, engines, boilers, machinery, components, 
       auxiliaries, equipment, fittings and appurtenances; and "vessel" 
       shall have a corresponding meaning.  Where the context permits, the 
       term "Work" as used in the Contract includes the vessels or vessel 
       as herein defined. 
2.     These supplemental general conditions shall be read with the General 
       Conditions, provided that, in the event of any inconsistencies 
       between the provisions of the General Conditions and of these 
       supplemental general conditions, the latter shall prevail; and in 
       the event of any inconsistencies between these supplemental general 
       conditions and the Agreement, the latter shall prevail.

1033   02     (2004-12-10)  Sources of Labour

The Contractor shall make a special study of and exert special efforts for 
the training of its own workers and employees for the purpose of carrying 
out the Contract and shall not engage or employ any skilled or other 
workers or employees engaged or employed in any other shipyards under 
similar contract with Canada to build vessels. 

1033   03     (2004-12-10)  Supervision and Conduct of Work

1.     The Contractor shall to such extent, if any, as may from time to 
       time be requested by the Minister or the Inspector:

       (a)    consult the Minister and the Inspector on matters pertaining 
              to the performance of the Contract;

       (b)    permit the examination by the Minister and the Inspector of 
              all contracts entered into or to be entered into by the 
              Contractor and of all Specifications and drawings prepared or 
              under preparation by or for the Contractor in connection with 
              the performance of the Contract; and

       (c)    furnish to the Minister and to the Inspector

              (i)    copies of all contracts, Specifications and drawings 
                     as may be necessary to complete their records of the 
                     performance of the Contract; and  

              (ii)   such information and data (including duplicates of 
                     orders, progress reports and flow sheets) with respect 
                     to the Work and the progress thereof as the Minister 
                     or the Inspector may from time to time require.  

2.     All directions and instructions which may from time to time be given 
       by the Minister or the Inspector with respect to the Work or the 
       conduct or progress thereof and the recording and reporting of the 
       cost thereof, and/or with respect to the placing of contracts or the 
       making of commitments for the purposes of the Work, shall be 
       promptly and fully complied with by the Contractor. 

1033   04     (2004-12-10)  Inspector Final Judge of Work, Materials, etc. 
If any part of the Specifications or drawings provide for a method of 
construction or for the supply and/or use of materials, equipment or parts 
which are not specified with particularity, the Contractor shall, subject 
to the approval of the Inspector, have the right of selection provided that 
the construction so performed and the materials, equipment and parts so 
supplied and/or used are in accordance with good marine building practice 
for the type and class of vessels covered by the Contract, and provided 
that the Specifications and drawings and all other contract requirements 
are fully complied with.  The Inspector shall be the final judge of the 
quality, quantity and suitability of the workmanship, parts, materials, 
plant, machinery, apparatus, tools and equipment used in or for the 
purposes of the Work and as to the meaning or interpretation of the 
Specifications and drawings and his decision with regard to the foregoing 
matters, or any of them, shall be final and binding upon the Contractor.  
All orders, directions or instructions at any time given by the Inspector 
with respect to the Work or the conduct or progress thereof or with respect 
to the parts, materials, plant, apparatus, machinery, tools or equipment 
used in or for the purposes of the Work, shall be promptly and fully 
complied with by the Contractor. 

1033   05     (2004-12-10)  Re-execution of Inferior Work

The Inspector may reject or refuse to accept or approve any part of the 
materials or Work if, in his opinion, the same or any workmanship, parts or 
materials used in the manufacture or production thereof are not in 
accordance with the provisions of the Contract.  Canada shall not be under 
any liability hereunder for any work done, materials or parts delivered or 
assembly made by the Contractor hereunder, unless and until the same shall 
have been approved by the Inspector as evidence by its  certificate in 
writing.  The Contractor shall forthwith replace or otherwise make good to 
the satisfaction of the Inspector any part of the materials or work which 
may have been rejected by the Inspector. 

1033   06     (2004-12-10)  Economical Execution and Spoilage

1.     The Contractor shall use its best efforts to launch, complete and 
       equip the vessels as economically as possible and to avoid waste and 
       shall, at all times, apply to the Work under the Contract, including 
       the purchase and maintenance of inventories of materials and 
       supplies therefor, and shall exercise in respect to the operations 
       under the Contract, the same care, skill and supervision as it would 
       if it were constructing the vessels for its own account.

2.     The Contractor shall avoid spoilage of materials but, up to the time 
       of final acceptance by Canada of the respective vessels, the cost of 
       correction or replacement of rejected material and workmanship, the 
       cost of rectifications required of component parts or completed 
       vessels, and the cost of any repairs thereto occasioned by or in 
       connection with the demonstration or test or trials thereof shall be 
       part of the cost of the Work under the Contract and the Contractor 
       shall be reimbursed therefor under and in accordance with the 
       provisions hereof, unless the character and total value thereof 
       shall, in the opinion of the Minister, clearly indicate gross 
       mismanagement, wilful misconduct or lack of good faith on the part 
       of the Contractor. 

1033   07     (2004-12-10)  Provision of Facilities

Canada reserves the right to furnish any material or components, or 
supplementary tools, machinery and equipment necessary for the performance 
of the Contract, and the right to pay private or common carriers any and 
all freight charges on equipment, materials and component parts.

1033   08     (2004-12-10)  Discounts, etc.

The Contractor shall, as far as practicable, take all cash and trade 
discounts, rebates, credits, salvage, custom duty drawbacks, commissions 
and other allowances.  In determining the actual net cost of articles and 
materials of every kind required for the performance of the Contract, there 
shall be deducted from the gross cost thereof all cash and trade discounts, 
rebates, credits, salvage, custom duty drawbacks, commissions and other 
allowances as aforesaid.  Such benefits lost through no fault or neglect on 
the part of the Contractor or lost through the fault of Canada shall not be 
deducted from gross costs. 

1033   09     (2004-12-10)  Suspension of Work and Changes in 
                                   Specifications

The Minister may, at any time and from time to time, order a suspension of 
the Work, in whole or in part, and may, from time to time, make 
modifications of, changes in or additions to the Specifications, and all 
orders and directions given by the Minister with respect to the foregoing 
shall be complied with by the Contractor.  The Contractor may, with the 
written approval of the Minister, make any such modifications, changes or 
additions to the Specifications.  Should any such suspension, modification, 
change or addition result in a material increase or decrease in the scope 
of the Work, the Minister may make an adjustment in the Contractor's fee, 
and the Minister's decision as to the adjustment to be made shall be final.

1033   10     (1991-06-01)  Certificates Required

It shall be the duty of the Contractor, if so required by the Minister, to 
have the vessels classed and to obtain and deliver to the Inspector all 
necessary certificates to show the same to be in accordance with approved 
classification society's survey and/or any governmental requirements, and 
to provide any necessary documents for obtaining registration under the 
Canada Shipping Act and/or any other relevant statute.  Certificates called 
for under the Contract shall be handed over to the Inspector prior to final 
payment to the Contractor in respect of each vessel. 

1033   11     (2004-12-10)  Warranty

Notwithstanding anything in the Contract contained, the Contractor warrants 
and guarantees that the vessels as herein defined will be of first-class 
quality, materials and workmanship and fully in accordance with the 
Specifications, said warranty and guarantee to continue for a period of 
twelve (12) months from and after delivery to and acceptance by the 
Minister of the respective vessels or such longer period as may be provided 
in the agreement.  Such warranty shall apply against all defects of 
materials or workmanship and includes an undertaking that any part or parts 
of the vessels (excluding government issue) which may be found defective or 
with signs of weakness of undue wear within such period (owing to faulty 
materials or workmanship) shall be repaired or, at the Contractor's option, 
a new part or parts shall be furnished by the Contractor at the Contractor'
s shipyard without cost to Canada or Canada may repair or replace such 
defective part or parts and the Contractor will pay to Canada the cost of 
such repair or new part or parts not exceeding; however, the cost of a new 
part or parts, FOB the Contractor's shipyard, provided, however, that 
notice of such defective part or parts and of the whereabouts of the vessel 
shall be given by Canada to the Contractor within sixty (60) days following 
discovery of such defect.

1033   12     (2004-12-10)  Title to Vest in Canada

The vessels and all materials and things acquired or intended for the 
purpose of the Work around or about the premises where any part of the Work 
is being carried on shall at all times be the property of Canada (and, to 
such extent as may be required by the Inspector, shall be marked with or 
identified by a statement to that effect) and shall not be removed from the 
said premises without the written consent of the Minister or the Inspector 
provided, however, that all materials and things which are normally kept by 
the Contractor in its common stores for use in its general business shall 
be at the risk of the Contractor until withdrawn by the Contractor for use 
in the performance of the Work under the Contract.

1033   13     (2004-12-10)  Risk of Loss or Damage

1.     Notwithstanding anything contained in section 12 of these 
       supplemental general conditions and/or any other provision of the 
       Contract, the Contractor shall bear and be subject to all risk of 
       loss or damage of any nature whatsoever (except loss or damage the 
       risk of which is assumed by Canada as provided in subsection 13.3 
       and except as provided in section 6 of these supplemental general 
       conditions) of or to the Work or any part thereof until delivery of 
       the vessels and final acceptance of same pursuant to the provisions 
       hereof.  If any such loss or damage should occur prior to such 
       delivery and final acceptance, the Contractor shall forthwith 
       (unless otherwise directed by the Minister or the Inspector and 
       subject to such conditions as the Minister or the Inspector may 
       impose) at its own expense and without making any claim for 
       reimbursement therefor, repair, restore and/or replace the Work or 
       the part thereof so lost or damaged.

2.     The Contractor shall indemnify and save harmless Canada and the 
       Minister against and from any and all claims, damages, loss, costs 
       and expenses (except claims, damages, loss, costs and expenses and 
       risk of which is assumed by Canada as provided in subsection 13.3 
       which Canada and/or the Minister may, at any time or times, suffer 
       or incur as a result of or arising out of any actual or alleged 
       injury to persons (including injuries resulting in death) or damage 
       to property which may be or be alleged to be caused by or suffered 
       as a result of the carrying out of this Contract or any part thereof, 
       whether by the Contractor or by any subcontractor or assignee of the 
       Contractor.

3.     The Contractor shall not (except as and to the extent, if any, 
       specifically required or permitted by the agreement), unless 
       otherwise directed by the Minister, carry, or incur the expense of, 
       any insurance on or in respect of the Work.  Canada hereby assumes 
       the same risk of loss of, damage to and liability in respect of the 
       Work (except to the extent, if any, to which the Contractor is for 
       the time being directed or permitted hereunder to carry insurance) 
       as would have been assumed by the underwriters if the Work had been 
       insured throughout the term of the Contract for full value under the 
       form of builders' risk policy set forth in standard form of Marine 
       Builders' Risk Policy, forming part of the Contract, but excluding 
       therefrom the "Collision" and the "Protection and Indemnity" clauses.

4.     The Contractor will promptly notify the Minister of any action, 
       claim or demand instituted or made in respect of which the 
       Contractor may be entitled to be indemnified by Canada under the 
       provisions of subsection 13.3, and shall furnish to the Minister the 
       originals or true copies of all proceedings and papers received by 
       the Contractor in respect of each such action, claim or demand, and 
       shall, if hereunto requested by the Minister, authorize 
       representatives of the Minister to settle or to direct or to take 
       conduct of the defence of such action, claim or demand, and, in the 
       absence of such request, the Contractor shall diligently proceed 
       with such defence.
 
5.     Canada shall be entitled or subrogated to all rights and remedies of 
       the Contractor and/or any subcontractor against third parties in 
       respect of any loss or damage, the risk of which is assumed by 
       Canada hereunder, and the Contractor and/or the said subcontractors 
       shall, at the expense of Canada , do, concur in doing and permit to 
       be done all such acts and things as may be necessary or as the 
       Minister may direct or require for the purpose of enforcing such 
       rights and remedies.

6.     If the Work or any part thereof shall be lost or damaged by reason 
       of anything the risk whereof is assumed by Canada hereunder, then 
       the Contractor shall, if the Minister so directs, with all possible 
       speed and with equivalent materials and workmanship, repair, rebuild 
       or replace the same in the like state and condition in every respect 
       as before the happening of the said loss or damage, and the 
       reasonable and proper net cost of such repair, rebuilding or 
       replacement (calculated and determined in accordance with the 
       Contract Cost Principles 1031-2 forming part of the Contract) shall 
       be paid or reimbursed to the Contractor as herein provided in 
       respect of the cost of the Work, and, in case such loss or damage 
       shall have happened without the actual fault or privity of the 
       Contractor, Canada will pay to the Contractor, in addition to such 
       cost, a profit or fee in such amount as the Minister shall consider 
       reasonable, having regard to all the circumstances.

7.     The term "Work" and other words relative thereto, or of like "import
       ", wherever used in this section, shall be deemed to include 
       Government Issue and any other property owned by Canada which for 
       the purposes of the Contract is in the Contractor's possession or 
       subject to the Contractor's control. 

1033   14     (2004-12-10)  Amendment to General Conditions 1026B

For the purposes of the Contract, the words "for a period of thirty (30) 
days" are hereby added after the word "default" in the first line of 
subsection 24.1 of general conditions 1026B.

1033   15     (2004-12-10)  Accommodation for Inspector

The Contractor shall provide for the Inspector and any supervisory or other 
staff employed by Canada, such office space, office facilities, telephone 
service and suitable sanitary and washing facilities as the Inspector or 
the Minister may reasonably require from time to time at the Contractor's 
shipyard.  Such staff may, if required by the Inspector, include the ship's 
company standing by the vessels during the last stages of completion.

1033   16     (2004-12-10)  Launching
 
1.     The Contractor shall launch the vessels safely.  Launching 
       calculations shall be made available for inspection by the Inspector 
       and, in the following circumstances, shall also be submitted by the 
       Contractor through the Inspector to the client department:

       (a)    if the Contractor shall not have previously built and 
              launched a vessel of the same class at its shipyard; or

       (b)    if the Contractor is directed by the client department to 
              submit such calculations.

2.     Neither the submission of launching calculations to the Inspector or 
       to the client department nor concurrence therein by the Inspector or 
       the client department shall be deemed to be concurrence by Canada in 
       the adequacy of such calculations.

1033   17     (1991-06-01)  Public Ceremonies

The Contractor shall not allow any public ceremony in connection with the 
Work without having previously obtained the written approval of the 
Minister.  Any ceremony approved by the Minister shall be conducted by the 
Contractor in accordance with the instructions of the Minister and/or the 
Inspector.

1033   18     (1991-06-01)  Berthing of Vessel

After the launching or floating out of dock of the vessel, the vessel, 
while receiving her machinery or being completed, shall be placed by the 
Contractor in a suitable berth where the vessel cannot touch the ground at 
any time, unless prior approval shall have been obtained by the Contractor 
from the Inspector for the use of a particular berth where the vessel may 
touch bottom.  No berth shall be considered a suitable berth unless prior 
approval thereof, having regard to the size of the vessel, shall have been 
received from the Inspector. 

1033   19     (1991-06-01)  Dry Docking of Vessel

In addition to any dry-docking by the Contractor for the completion of the 
vessel and for tests and trials, the vessel shall be dry-docked for survey 
at any time if required by the Minister or the Inspector.

1033   20     (2004-12-10)  Commissioning of Vessel

Canada may commission the vessel before or during trials and shall not, by 
reason thereof, be deemed to have accepted the vessel.

1033   21     (1991-06-01)  Storage of Materials, Parts, etc.
 
1.     The Contractor shall supply suitable warehouse accommodation for the 
       storage of all materials, parts and equipment regardless of the 
       source of supply thereof, for such length of time as the Minister 
       may direct.

2.     Without limiting the Contractor's responsibility, as provided in the 
       Contract, for the care of materials, parts and equipment in its 
       custody or control, the Contractor shall carry out such maintenance, 
       care, minor repairs, calibration, adjustment, handling, embarking, 
       loading, care after loading and similar duties in respect of 
       materials, parts and equipment in the custody or control of the 
       Contractor or of the Inspector, as the Minister or the Inspector may 
       from time to time direct.

1033   22     (2004-12-10)  Drawings

All drawings and copies of drawings which have been prepared by the 
Contractor pursuant to the Contract or furnished to the Contractor by 
Canada, shall be sole property of Canada and may be used as Canada sees fit.

1033   23     (2004-12-10)  Trials of Vessel

1.     Each vessel shall, before delivery, be subjected to such trials as 
       are required by the specifications.  Delivery of a vessel shall not 
       be complete until after such trials shall have been made to the 
       satisfaction of the Inspector and in accordance with such 
       instructions as may be given to the Contractor in writing by the 
       Minister or the Inspector.

2.     The Contractor shall be in charge of the vessel, including the 
       machinery and the electrical installations thereof, and shall 
       provide the staff for navigating the vessel and for the operation of 
       the machinery and the electrical installation at all times during 
       trials and until the vessel is accepted by Canada.

3.     During sea trials, the vessel shall be commanded by a Master 
       employed by the Contractor after such Master shall have been 
       approved by the client department.

4.     The vessel shall not move to open water for trials without the 
       written consent of the Inspector.

5.     The client department may place a reasonable number of its naval 
       officers and men, including civilian personnel, on board the vessel 
       during the period of trials and, regardless of their duties, they 
       shall have access to any part of the vessel.  The client department 
       shall designate one of such personnel (who may or may not be the 
       Inspector) to be the client department representative, and the 
       Contractor shall appoint one of its personnel to be its senior 
       representative.  All client department personnel will observe the 
       manner in which the Contractor conducts the trials and in the event 
       of danger to the ship or its machinery or equipment or to life and 
       property, they will report to the Contractor's senior representative 
       and to the client department representative.  The Contractor shall 
       comply with any instructions which may be given by the client 
       department representative to the Contractor's senior representative 
       in respect of safety measures to counteract such danger.