Supplying Principles and Practices > Contract Clauses > Clause B-1 Definitions (March 2006) > Clause 1-1 Privacy Protection (July 2007) > Clause 7-1 Patent Infringement Bond Requirements (March 2006)

Clause 7-1 Patent Infringement Bond Requirements (March 2006)

The supplier may be required to submit a patent infringement bond in a penal amount set by the contracting officer and in a form acceptable to the Postal Service. Failure to submit an acceptable bond may be cause for termination of the contract for default.

Clause 7-2 Additional Bond Security (March 2006)

If any surety furnishing a bond in connection with this contract becomes unacceptable to the Postal Service or fails to furnish reports on its financial condition as requested by the contracting officer, or if the contract price increases to the point where the security furnished becomes inadequate in the contracting officer's opinion, the supplier must promptly furnish additional security as required to protect the interests of the Postal Service and of persons supplying labor or materials in performance of this contract.

Clause 7-3 Deposit of Assets Instead of Surety Bonds (March 2006)

a. If the supplier has deposited assets instead of furnishing sureties for any bond required under this contract and the assets are in the form of checks, currency, or drafts, the contracting officer will hold the assets in an account for the supplier's benefit.

b. Upon contract completion, the supplier's funds will be returned as soon as possible, unless the contracting officer determines that part or all of the account is required to compensate the Postal Service for costs it incurs as a result of the supplier's delay, default, or failure to perform. In such a case, the entire account will be available to compensate the Postal Service.

Clause 7-4 Insurance (March 2006)

a. During the term of this contract and any extension, the supplier must maintain at its own expense the insurance required by this clause. Insurance companies must be acceptable to the Postal Service. Policies must include all terms and provisions required by the Postal Service.

b. The supplier must maintain and furnish evidence of workers' compensation, employers' liability insurance, and the following general public liability and automobile liability insurance:

c. Each policy must include substantially the following provision: "It is a condition of this policy that the company furnish written notice to the U.S. Postal Service 30 days in advance of the effective date of any reduction in or cancellation of this policy."

d. The supplier must furnish a certificate of insurance or, if required by the contracting officer, true copies of liability policies and manually countersigned endorsements of any changes. Insurance must be effective, and evidence of acceptable insurance furnished, before beginning performance under this contract. Evidence of renewal must be furnished not later than 5 days before a policy expires.

e. The maintenance of insurance coverage as required by this clause is a continuing obligation, and the lapse or termination of insurance coverage without replacement coverage being obtained will be ground for termination for default.

Clause 7-5 Errors and Omissions (March 2006)

a. The supplier warrants that it is insured for $200,000 (unless a greater amount is set forth in the Schedule) for errors and omissions per claim in the performance of this contract.

b. Unless the supplier's policy is prepaid, noncancelable, and issued for a period at least equal to the term of this contract on an occurrence basis, the supplier must have the policy amended to include substantially the following provision:
"It is a condition of this policy that the company furnish written notice to the U.S. Postal Service 30 days in advance of the effective date of any reduction in or cancellation of this policy."

c. The supplier must furnish a certificate of insurance or, if required by the contracting officer, true copies of liability policies and manually countersigned endorsements of any changes. Insurance must be effective, and evidence of acceptable insurance furnished, before beginning performance under this contract. Evidence of renewal must be furnished not later than 5 days before a policy expires.

Clause 7-6 Federal, State, and Local Taxes (March 2006)

a. Definitions

(1) Contract Date. The effective date of this contract or modification.

(2) All Applicable Federal, State, and Local Taxes and Duties. All taxes and duties, in effect on the contract date, that the taxing authority is imposing and collecting on the transactions or property covered by this contract.

(3) After-imposed Federal Tax. Any new or increased federal excise tax or duty, or tax that was exempted or excluded on the contract date but whose exemption is revoked or reduced during the contract period, on the transactions or property covered by this contract that the supplier is required to pay or bear as the result of legislative, judicial, or administrative action taking effect after the contract date. It does not include social security tax or other employment taxes.

(4) After-relieved Federal Tax. Any amount of federal excise tax or duty, except social security or other employment taxes, that would otherwise have been payable on the transactions or property covered by this contract, but which the supplier is not required to pay or bear, or for which the supplier obtains a refund or drawback, as the result of legislative, judicial, or administrative action taking effect after the contract date.

(5) Local Taxes. Includes taxes imposed by a possession of the United States or by Puerto Rico.

b. The contract price includes all applicable federal, state, and local taxes and duties.

c. The contract price will be increased by the amount of any after-imposed federal tax, provided the supplier warrants in writing that no amount for a newly imposed federal excise tax or duty or rate increase was included in the contract price as contingency reserve or otherwise.

d. The contract price will be decreased by the amount of any after-relieved federal tax.

e. The contract price will be decreased by the amount of any federal excise tax or duty, except social security or other employment taxes, that the supplier is required to pay or bear, or does not obtain a refund of, through the supplier's fault, negligence, or failure to follow instructions of the contracting officer.

f. No adjustment will be made in the contract price under this clause unless the amount of the adjustment exceeds $100.

g. The supplier must promptly notify the contracting officer of all matters relating to any federal excise tax or duty that reasonably may be expected to result in either an increase or decrease in the contract price and must take appropriate action as the contracting officer directs.

h. The Postal Service will, without liability, furnish evidence appropriate to establish exemption from any federal, state, or local tax when the supplier requests such evidence and a reasonable basis exists to sustain the exemption.

Clause 7-7 Federal, State, and Local Taxes (Short Form) (March 2006)

Except as this contract may otherwise provide, the contract price includes all applicable federal, state, and local taxes and duties in effect on the contract date but does not include any taxes from which the Postal Service, the supplier, or this transaction is exempt. Upon request of the supplier, the Postal Service must furnish a tax exemption certificate or similar evidence of exemption from any tax not included in the contract price. Contract date means the date of the supplier's proposal or quotation, or, if no proposal or quotation, the date of this purchase order.

Clause 7-8 Federal, State, and Local Taxes (Noncompetitive Contract) (March 2006)

a. Definitions

(1) Contract Date. The effective date of this contract or modification.

(2) All Applicable Federal, State, and Local Taxes and Duties. All taxes and duties, in effect on the contract date, that the taxing authority is imposing and collecting on the transactions or property covered by this contract.

(3) After-imposed Tax. Any new or increased federal, state or local tax or duty, or tax that was excluded on the contract date but whose exclusion was later revoked or amount of exemption reduced during the contract period, other than an excepted tax, on the transactions or property covered by this contract that the supplier is required to pay or bear as the result of legislative, judicial, or administrative action taking effect after the contract date.

(4) After-relieved Tax. Any amount of federal, state, or local tax or duty, other than excepted tax, that would otherwise have been payable on the transactions or property covered by this contract, but which the supplier is not required to pay or bear, or for which the supplier obtains a refund or drawback, as the result of legislative, judicial, or administrative action taking effect after the contract date.

(5) Excepted Tax. Social security or other employment taxes, net income and franchise taxes, excess profits taxes, capital stock taxes, transportation taxes, unemployment compensation taxes, and property taxes. Excepted tax does not include gross income taxes levied on or measured by sales or receipts from sales, property taxes assessed on completed supplies covered by this contract, or any tax assessed on the supplier's possession of, interest in, or use of property to which the Postal Service has title.

(6) Local Taxes. Includes taxes imposed by a possession of the United States or by Puerto Rico.

b. Unless otherwise provided in this contract, the contract price includes all applicable federal, state, and local taxes and duties.

c. The contract price will be increased by the amount of any after-imposed tax, or of any tax or duty specifically excluded from the contract price by a term or condition of this contract, that the supplier is required to pay or bear, including any interest or penalty, if the supplier states in writing that the contract price does not include any contingency for such tax and if liability for such tax, interest, or penalty was not incurred through the supplier's fault, negligence, or failure to follow instructions of the contracting officer.

d. The contract price will be decreased by the amount of any after-relieved tax. The Postal Service will be entitled to interest received by the supplier incident to a refund of taxes, to the extent that such interest was earned after the supplier was paid by the Postal Service for such taxes. The Postal Service will be entitled to repayment of any penalty refunded to the supplier, to the extent that the penalty was paid by the Postal Service.

e. The contract price will be decreased by the amount of any federal, state, or local tax, other than exempted tax, that was included in the contract price and that the supplier is required to pay or bear, or does not obtain a refund of, through the supplier's fault, negligence, or failure to follow instructions of the contracting officer.

f. No adjustment will be made in the contract price under this clause unless the amount of the adjustment exceeds $100.

g. The supplier must promptly notify the contracting officer of all matters relating to any federal, state, and local taxes and duties that reasonably may be expected to result in either an increase or decrease in the contract price, and the supplier must take appropriate action as the contracting officer directs. The contract price will be equitably adjusted to cover the costs of action taken by the supplier at the direction of the contracting officer, including any interest, penalty, and reasonable attorney's fees.

h. The Postal Service will furnish evidence appropriate to establish exemption from any federal, state, or local tax when the supplier requests an exemption and states in writing that it applies to a tax excluded from the contract price, and a reasonable basis for the exemption exists.

Clause 7-9 State and Local Taxes (Indefinite Delivery Equipment Rental) (March 2006)

Notwithstanding the terms of the Federal, State, and Local Taxes clause of this contract, the contract price excludes all state and local taxes levied on or measured by the supplier or rental price of leased equipment furnished under this contract. The supplier will state separately on its invoices any such taxes levied and paid, and the Postal Service agrees either to reimburse the supplier for the amounts of taxes paid or provide evidence necessary to sustain an exemption.