part 1 – conditions of tender tender details schedule rft … · 1.1 interpretation of request...

SEA 1180 Phase 1 Offshore Patrol Vessel Part 1/Conditions of Tender CASG/SHIP/RFT0226/16

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PART 1 – CONDITIONS OF TENDER

TENDER DETAILS SCHEDULE

RFT Number: CASG/SHIP/RFT0226/16

RFT Name: SEA1180-1 Offshore Patrol Vessel

Division 2 of CPRs:

Division 2 of the CPRs do not apply to this procurement.

Contact Officer:

(clause 2.3)

Name: Project Director SEA 1180 Phase 1

Address: Department of Defence Specialist Ships Acquisition Branch Capability, Acquisition and Sustainment Group R2-3-A012 Russell Drive Russell ACT 2601

Email: [email protected]

Tenderer briefing:

(clause 2.6)

Unless otherwise specified by the Commonwealth, any tenderer briefings will be conducted at Russell Offices, Canberra, ACT, Australia. If the Commonwealth elects to conduct a tenderer briefing, tenderers will be advised of the time and location of the briefing in due course and in advance of the proposed date for the briefing.

Representatives of prospective tenderers at the briefing will be limited to eight (8) personnel.

Closing Time:

(clause 2.7.3)

1pm local time in the Australian Capital Territory (ACT) on Thursday, 30 March 2017.

Format:

(clause 2.7.4)

Microsoft Word 2003 (or above), Microsoft Excel 2003 (or above), or PDF format (specifically those documents requiring signatures).

Tender Validity Period:

(clause 2.8)

18 months after the Closing Time.

Tender Presentation Location

(clause 3.1)

Russell Offices, Canberra, ACT, Australia or at a location agreed between the parties.

Minimum Content and Format Requirements:

(clause 3.3)

Tenders (including all attachments, annexes and supporting documentation) are to be written in English.

All measurements in tenders are to be expressed in Australian legal units of measurement unless otherwise specified.

Tenders are to include a PDF copy of the Tenderer’s Deed of Undertaking and, if applicable, the Shareholder Deed of Undertaking in the form of Annex B to the TDRL at Attachment A duly signed by the tenderer or shareholder as applicable.

Offer Definition and Improvement Activities (ODIA) timing and duration:

(clause 3.10.2)

If required, anticipated to commence in mid August 2017 for a period of one to three months approximately.

mailto:[email protected]


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TABLE OF CONTENTS

1 GENERAL CONDITIONS ................................................................................................................ 4 1.1 Interpretation of Request For Tenders ................................................................................. 4 1.2 Amendment of RFT .............................................................................................................. 4 1.3 Termination, Suspension or Deferral of RFT ....................................................................... 4 1.4 Other Commonwealth Rights ............................................................................................... 5 1.5 Australian Government Requirements ................................................................................. 5 1.6 Workplace Gender Equality ................................................................................................. 5 1.7 Risk Reduction and Design Study ....................................................................................... 6

2 TENDER PREPARATION AND LODGEMENT .............................................................................. 6 2.1 Tenderers to Inform Themselves ......................................................................................... 6 2.2 Tender Preparation .............................................................................................................. 6 2.3 Contact Officer for RFT Inquiries ......................................................................................... 6 2.4 Preparation and Transmission of Classified Tenders .......................................................... 7 2.5 Defence Security Clearance Requirements ......................................................................... 7 2.6 Tenderer Briefing ................................................................................................................. 7 2.7 Lodgement of Tenders ......................................................................................................... 8 2.8 Tender Validity Period .......................................................................................................... 8 2.9 Alterations, Erasures and Illegibility ..................................................................................... 8 2.10 Unintentional Errors of Form ................................................................................................ 8 2.11 Confidentiality ....................................................................................................................... 8 2.12 Probity Assurance ................................................................................................................ 9 2.13 Use of Tender Documents ................................................................................................... 9 2.14 Part and Joint Tenders .......................................................................................................10 2.15 Alternative Proposals .........................................................................................................11 2.16 Options for the Ship Design ...............................................................................................11 2.17 Substitution of Tenderer .....................................................................................................12

3 EVALUATION OF TENDERS ........................................................................................................12 3.1 Tender Presentations .........................................................................................................12 3.2 Tender Evaluation ..............................................................................................................12 3.3 Minimum Content and Format Requirements ....................................................................13 3.4 Conditions for Participation ................................................................................................13 3.5 Essential Requirements .....................................................................................................13 3.6 Short listing ........................................................................................................................13 3.7 Negotiation .........................................................................................................................13 3.8 Preferred Tenderer Status .................................................................................................13 3.9 Cost Investigation of Tenders ............................................................................................14 3.10 Offer Definition and Improvement Activities .......................................................................14 3.11 Debriefing of Tenderers .....................................................................................................15 3.12 Tender Evaluation Criteria .................................................................................................15


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ATTACHMENTS

A. TENDER DATA REQUIREMENTS LIST A-1

Annexes to Attachment A

A. Overview A-A1

B. Tenderer’s Deed of Undertaking A-B1

C. Commercial A-C1

D. Financial A-D1

E. Project Management A-E1

F. Materiel Solution A-F1

G. Technical Program Management A-G1

H. NOT USED A-H1

I. Integrated Logistic Support A-I1


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1 GENERAL CONDITIONS

1.1 Interpretation of Request For Tenders

1.1.1 The RFT comprises:

a. Part 1 - COT (including the Tender Details Schedule) and attachments (including any annexes to the TDRL at Attachment A);

b. Part 2 - draft COC (including the Details Schedule) and attachments; and

c. Part 3 - draft SOW and annexes.

1.1.2 This RFT is an invitation to treat and, to the extent permitted by law, no binding contract (including process contract) or other understanding (including any form of contractual, quasi-contractual or restitutionary rights, or rights based upon similar legal or equitable grounds) will exist between the Commonwealth and a tenderer unless and until a contract is signed by the Commonwealth for SEA1180-1.

1.1.3 Clause 1.1.2 does not apply to:

a. the Tenderer's Deed of Undertaking and if applicable, the Shareholder Deed of Undertaking executed in accordance with RFT;

b. the Deed Poll of Confidentiality required to be submitted in accordance with clause 2.11; or

c. any other deed or contractual arrangement as required by the Commonwealth from time to time in relation to this RFT.

1.1.4 The Commonwealth will not be responsible for any costs or expenses incurred by any tenderer in preparation or lodgement of a tender or taking part in any stage of this RFT process.

1.1.5 Unless the contrary intention appears, words, abbreviations and acronyms used throughout the RFT (including the COT and draft Contract) have the same meaning given to them in the Tenders Details Schedule or the draft Contract.

1.1.6 If there is any inconsistency between any part of this RFT, a descending order of precedence is to be accorded to:

a. the COT (including the Tender Details Schedule);

b. the TDRL and the annexes to the TDRL; and

c. the draft Contract in accordance with clause 1.5 of the draft COC,

so that the provision in the higher ranked document, to the extent of the inconsistency, prevails.

1.2 Amendment of RFT

Note to tenderers: When an amendment to the RFT is issued by the Commonwealth it will be through AusTender. Refer to clause 2.7 for further information on AusTender.

1.2.1 The Commonwealth may amend this RFT upon giving tenderers timely written notice of an amendment. If the Commonwealth amends this RFT under this clause 1.2.1 after tenders have been submitted, it may seek amended tenders.

1.2.2 Tenderers will have no claim against the Commonwealth or any Commonwealth Personnel for any failure to inform a tenderer of an amendment to the RFT, or any failure to seek amended tenders, or any other matter arising in connection with an amendment to the RFT.

1.3 Termination, Suspension or Deferral of RFT

1.3.1 Without limiting its other rights under this RFT, at law or otherwise, the Commonwealth may suspend, defer or terminate the RFT process at any time. The Commonwealth will notify tenderers to this effect.


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1.4 Other Commonwealth Rights

1.4.1 Without limiting its other rights under this RFT, at law or otherwise, the Commonwealth may at any stage of the RFT process, exclude a tenderer from further participation in the RFT process:

a. if the tenderer is, or was, the contractor or an approved subcontractor under a contract that is, or becomes at any stage during the RFT process, a Project of Concern. For the purposes of this clause 1.4.1a, ‘tenderer’ also encompasses, any Related Body Corporate, proposed Subcontractor or their Related Body Corporate, or special purpose vehicle in which any of these entities have been involved;

b. if the tenderer fails to comply with clause 2.11;

c. if an Insolvency Event occurs in relation to the tenderer, the tenderer’s proposed Australian ship builder, or any of their Related Bodies Corporate;

d. if the tender is incomplete or clearly non-competitive; or

e. a representation or warranty given by the tenderer (in its tender is, in the Commonwealth’s reasonable opinion, false or misleading.

1.4.2 Any time or date in this RFT is for the convenience of the Commonwealth. The establishment of a time or date in this RFT does not create an obligation on the part of the Commonwealth to take any action or exercise any right established in the RFT or otherwise.

1.5 Australian Government Requirements

Note to tenderers: Electronic copies of relevant Defence documents are available on the internet. Any other documents required can be provided by the Contact Officer. An electronic version of the DPPM can be accessed via the ‘Procurement in Defence’ webpage on the ‘Doing Business with Defence’ internet site at: http://www.defence.gov.au/dmo/DoingBusiness/ProcurementDefence/.

1.5.1 The Commonwealth will not enter into a Contract with a tenderer which has, or which proposes an Australian ship builder that has, a judicial decision against it (including overseas jurisdictions but excluding decisions under appeal or instances where the period for appeal or payment/settlement has not expired) relating to unpaid employee entitlements where the entitlements remain unpaid.

1.5.2 Tenderers should familiarise themselves with the following Commonwealth policies:

a. Conflicts of interest; Gifts, hospitality and sponsorship; Notification of post separation employment; Management and reporting of unacceptable behaviour; The reporting and management of notifiable incidents; Incident recording; and ethical relationship policies as detailed in the Defence Procurement Policy Manual (DPPM), DI(G) PERS 25-6, DI(G) PERS 25-7, DI(G) PERS 25-4, DI(G) PERS 35-3, DI(G) ADMIN 45-2, and Defence and the Private Sector – An Ethical Relationship;

b. Australian Defence Force alcohol policy as detailed in DI(G) PERS 15-1;

c. Work Health and Safety, Hazardous Substances, Defence Environmental, Ozone Depleting Substances and Synthetic Greenhouse Gases, Public Interest Disclosure and Workplace Gender Equality policies as detailed in the DPPM;

d. Company ScoreCard policy as detailed in the DPPM;

e. Defence and Industry policy as detailed in the Defence and Industry Policy Statement and Australian Industry Capability policy as detailed in the DPPM;

f. Indigenous Procurement Policy as detailed in the DPPM; and

g. Defence Stocktaking and Assets Assurance Checking policy as detailed in DEFLOGMAN Part 2 Volume 5.

1.6 Workplace Gender Equality

Note to tenderers: The Workplace Gender Equality Procurement Principles prevent the Commonwealth from entering into contracts with suppliers who are non-compliant under the Workplace Gender Equality Act 2012 (Cth) (WGE Act). In performing any resultant Contract, the tenderer is to comply with its obligations under the WGE Act. Information about the

http://www.defence.gov.au/dmo/DoingBusiness/ProcurementDefence/


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coverage of the Workplace Gender Equality Procurement Principles is available from the Workplace Gender Equality Agency at: https://www.wgea.gov.au/about-wgea/workplace-gender-equality-procurement-principles

1.6.1 In accordance with the Workplace Gender Equality Procurement Principles, the Commonwealth will not enter into any resultant Contract with any entity who is non-compliant under the Workplace Gender Equality Act 2012 (Cth).

1.7 Risk Reduction and Design Study

1.7.1 The tenderer acknowledges that prior to the release of this RFT, the Commonwealth has been engaged in Risk Reduction and Design Study (RRDS) activities with the tenderer in connection with the SEA1180-1 OPV Project in accordance with the terms of an RRDS Contract. Nothing in this RFT limits or affects the Commonwealth's rights, and the tenderer’s obligations, under the RRDS Contract.

1.7.2 The tenderer acknowledges that the Commonwealth’s intent in engaging with the tenderer to perform RRDS activities is to ensure that the tenderer will, in responding to this RFT, be in a position to submit a tender that fully complies with the Commonwealth’s Essential Requirements as set out in clause 3.5.

1.7.3 The tenderer acknowledges that the activities, information, documents and outputs produced by it in connection with its RRDS Contract with the Commonwealth (RRDS Outputs) may be considered by the Commonwealth to be relevant to this RFT process. The Commonwealth may in its absolute discretion take any or all RRDS Outputs of the tenderer into account when evaluating its tender in accordance with this RFT.

2 TENDER PREPARATION AND LODGEMENT

2.1 Tenderers to Inform Themselves

2.1.1 The Commonwealth makes no representations or warranties that the information in this RFT or any information communicated or provided to tenderers during the RFT process (including during any tenderer briefings conducted in accordance with clause 2.6) is, or will be, accurate, current or complete.

2.1.2 Tenderers are responsible for:

a. examining and understanding the RFT, any documents referenced in or attached to this RFT and any other information made available by the Commonwealth to tenderers in connection with the RFT process;

b. obtaining and examining all further information which is obtainable by the making of reasonable inquiries relevant to the risks, contingencies, and other circumstances having an effect on their tenders; and

c. satisfying themselves that their tender (including tendered prices) is accurate, complete and not misleading.

2.1.3 Tenderers are to prepare and lodge their tenders based on the acknowledgements and agreements specified in the Tenderer’s Deed of Undertaking.

2.2 Tender Preparation

2.2.1 Tenderers are to complete and provide the information requested in the annexes to the TDRL at Attachment A and are to do so in the manner requested in these COT and the TDRL annexes.

2.2.2 Tenderers may provide supporting documentation to enhance the tender. Supporting documentation relevant to a particular volume of a tender is to be indicated in that volume.

2.3 Contact Officer for RFT Inquiries

2.3.1 Tenderers are to direct any questions regarding this RFT in writing to the Contact Officer specified in the Tender Details Schedule. Tenderers should note that the Contact Officer identified in the Tender Details Schedule is different from the Austender help desk referred to in clause 2.7.2. Tenderers should contact the Austender help desk only for technical or operational support relating to the Austender system. All other questions and enquiries should be directed to the Contact Officer.

https://www.wgea.gov.au/about-wgea/workplace-gender-equality-procurement-principles

https://www.wgea.gov.au/about-wgea/workplace-gender-equality-procurement-principles


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2.3.2 Tenderers may submit questions to the Contact Officer up until ten Working Days prior to the Closing Time specified in the Tender Details Schedule.

2.3.3 Any question submitted by tenderers is submitted on the basis that the Commonwealth may circulate tenderer’s questions and Commonwealth answers to all other tenderers without disclosing the source of the questions or revealing Confidential Information or the substance of the proposed tender.

2.3.4 Defence observes a Christmas stand down period commencing on Saturday, 24 December 2016 and concluding on Tuesday, 03 January 2017. Subject to clause 2.3.2, any questions submitted by tenderers during this time will be responded to after this period.

2.4 Preparation and Transmission of Classified Tenders

Note to tenderers: For information on preparation and transmission of classified tenders and for access to the DSM, tenderers should contact the Contact Officer.

2.4.1 Classified information in tenders is to be avoided where possible. If this cannot be achieved, tenders containing classified information is to be prepared and transmitted as follows:

a. for Australian tenders, in accordance with Part 2:33 of the DSM; and

b. for overseas tenders, in accordance with the applicable industry security information system regulations issued by the appropriate government security authority in their country. If transmission involves transmission by diplomatic bag, the overseas tenderer is to use the diplomatic bag of its own government.

2.4.2 Tenderers are to classify information in their tenders in accordance with the Security Classification and Categorisation Guide at Attachment I to the draft Contract.

2.4.3 If only part of a tender contains classified information, that part may be segregated from the remainder of the tender for separate transmission. However, both parts of the tender are subject to the Closing Time specified in the Tender Details Schedule. Care should therefore be taken to ensure that sufficient time is allowed for tenders to be received by the Closing Time when secure means of transmission are used.

2.5 Defence Security Clearance Requirements

2.5.1 On request by the Commonwealth, tenderers are to comply with the Commonwealth security clearance and accreditation process as detailed in Part 2.4, 2.20 and 2.60 of the DSM, including obtaining the level of security clearance and accreditations required by the Commonwealth.

2.6 Tenderer Briefing

2.6.1 The Commonwealth may conduct tenderer briefings with prospective tenderers prior to, or after, release of this RFT. The Commonwealth may, in its absolute discretion, elect to hold briefings with tenderers individually or as a group (or both). If the Commonwealth elects to conduct tenderer briefings, tenderers will be notified in writing by the Contact Officer.

2.6.2 The Commonwealth's intention is to only conduct tenderer briefings with:

a. in the case of a tender proposing a Joint Venture to perform any resultant Contract, the primary shareholders in the Joint Venture; and

b. otherwise, representatives of the tenderer and at the tenderer’s option, its proposed Australian ship builder.

2.6.3 Unless otherwise notified by the Contact Officer, tenderer briefings will be conducted in accordance with the details specified in the Tender Details Schedule and the information set out in the Contact Officer’s relevant notice to tenderers.

2.6.4 Nominations to participate in a tenderer briefing must be submitted before the date and time specified in the Contact Officer’s relevant notice to tenderers, and must include all additional information (if any) requested in that notice.

2.6.5 Any tenderer briefings are conducted for the purpose of providing background information only. Tenderers should note the effect of clauses 1.1.2 and 2.1. Tenderers should not rely on a statement made at any tenderer briefing as amending or adding to this RFT, unless that amendment or addition is confirmed by the Commonwealth in writing in accordance with clause 1.2.


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2.7 Lodgement of Tenders

Note to tenderers: The Closing Time will also be displayed in the relevant AusTender webpage together with a countdown clock that displays in real time the amount of time left until Tender Closing Time (for more information please see AusTender Terms of Use). For the purposes of determining whether a tender has been lodged before the Closing Time, the countdown clock will be conclusive.

2.7.1 AusTender is the Australian Government’s procurement information system. Access to and use of AusTender is subject to terms and conditions. In participating in this RFT, tenderers are to comply with those terms and conditions and any applicable instructions, processes, procedures and recommendations as advised on AusTender at https://www.tenders.gov.au/?event=public.termsOfUse.

2.7.2 All queries and requests for AusTender technical or operational support are to be directed to:

AusTender Help Desk Telephone: 1300 651 698 International: +61 2 6215 1558 Email: [email protected]

The AusTender Helpdesk is available between 9am and 5pm Australian Capital Territory (ACT) local time, Monday to Friday (excluding ACT and national public holidays).

2.7.3 Tenders are to be lodged electronically via AusTender (https://www.tenders.gov.au/) before the Closing Time specified in the Tender Details Schedule in accordance with the tender lodgement procedures set out in this RFT and on AusTender.

2.7.4 Tenders are to be lodged in the Format specified in the Tender Details Schedule. All file names should:

a. sufficiently identify the tenderer by including their name; and

b. reflect the parts of the response they represent, where the response comprises multiple files.

2.7.5 Tender files should not exceed a combined file size of 500 megabytes per upload. Each upload may consist of a maximum of 5 files.

2.7.6 Tenderers may upload multiple times, but need to be aware of the time to upload large quantities of data and also that AusTender will not accept partial upload. Thus, if there are issues, the upload will need to be repeated and this may impact on the ability to meet the tender Closing time.

2.7.7 Tenderers are to advise the Contract Officer specified in clause 2.3 of the RFT Part 1 Conditions of Tender of the estimated total size of their tender at least 24 hours prior to the Closing time, where their response is expected to be greater than 2.5 giga bytes (GB)

2.8 Tender Validity Period

2.8.1 The Commonwealth requires that tenders submitted in response to this RFT remain open for acceptance during the Tender Validity Period specified in the Tender Details Schedule.

2.8.2 The Commonwealth may request an extension of the Tender Validity Period.

2.9 Alterations, Erasures and Illegibility

2.9.1 Any alterations or erasures made to a tender by a tenderer are to be initialled by that tenderer. Tenders containing alterations or erasures that are not initialled or pricing or other information that is not stated clearly and legibly may be excluded from consideration.

2.10 Unintentional Errors of Form

2.10.1 If the Commonwealth considers that there are unintentional errors of form in a tender, the Commonwealth may request the tenderer to correct or clarify the error but will not permit any material alteration or addition to the tender.

2.11 Confidentiality

2.11.1 Tenderers are required to execute a Deed Poll of Confidentiality in the form required by the Commonwealth before being provided with Confidential Information in relation to the RFT. This information includes the Preliminary Operating and Support Intent at Annex A to the

https://www.tenders.gov.au/?event=public.termsOfUse

mailto:[email protected]

https://www.tenders.gov.au/


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draft SOW, the Security Classification and Categorisation Guide at Attachment I to the draft COC, a range of manual’s and project specific documents, and any other document notified to the tenderer in accordance with clause 16.1 of the Deed Poll of Confidentiality.

2.11.2 Tenderers wishing to receive the additional information identified in clause 2.11.1 should execute the Deed Poll of Confidentiality and return it to the Contact Officer within 21 days of receiving the RFT, or such later date as agreed by the Commonwealth in writing, where this has not occurred prior to RFT release. A tenderer will have no claim against the Commonwealth or any Commonwealth Personnel if a tenderer fails to submit a Deed Poll of Confidentiality as required by the Commonwealth and is therefore precluded from accessing Confidential Information in relation to the RFT.

2.11.3 Without limiting a tenderer’s obligations under the Deed Poll of Confidentiality, tenderers must ensure that each recipient of the RFT executes a Deed Poll of Confidentiality in the form required by the Commonwealth and ensures that any information provided by or on behalf of the Commonwealth in connection with the RFT process is treated as confidential and is not disclosed or used except as strictly required for the purpose of developing a tender in accordance with the RFT.

2.11.4 In accordance with paragraph 7.21 of the CPRs, the Commonwealth will treat tenders as confidential before and after the award of any resultant Contract.

2.11.5 Despite clause 2.11.4 the Commonwealth may disclose information:

a. if required by law or statutory or portfolio duties, or required for public accountability reasons, including following a request by parliament or a parliamentary committee;

b. for the purpose of defending any claim or proceeding in relation to the RFT process or any resultant Contract;

c. in the public domain otherwise than due to a breach of confidence; or

d. as contemplated under clause 2.13.

2.12 Probity Assurance

Note to tenderers: The Tenderer’s Deed of Undertaking sets out a number of acknowledgements and undertakings to be given by tenderers, including in relation to probity, conflict of interest and bribery.

2.12.1 The Commonwealth may exclude a tender from further consideration if in the opinion of the Commonwealth, the tenderer fails to comply with clause 4 of the Tenderer’s Deed of Undertaking or a shareholder fails to comply with clause 4 of the Shareholder’s Deed of Undertaking. The Commonwealth may exclude a tender from further consideration if any of the following has been convicted of bribery of Commonwealth, State, Territory or foreign government officials at any time during the last seven years:

a. the tenderer;

b. the tenderer’s nominated Australian ship builder;

c. any Related Bodies Corporate of the entities set out in (a) or (b); or

d. any officer of any of any of the above.

2.13 Use of Tender Documents

2.13.1 All tender documents submitted in response to this RFT become the property of the Commonwealth and the Commonwealth may use, retain and copy the information contained in those documents for the purposes of;

a. evaluation and selection of any tender;

b. preparation and negotiation of any resultant Contract with respect to the RFT; and

c. verifying the currency, consistency and adequacy of information provided under any other RFT process conducted by the Commonwealth.

2.13.2 The Commonwealth may disclose tender documents to a third party for the purposes of assisting the Commonwealth in the conduct of the RFT process and for the purposes contained in clause 2.13.1. The Commonwealth may obtain appropriate confidentiality undertakings from the third party prior to disclosure.


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2.13.3 Nothing in this clause 2.13 changes or affects the ownership of IP in the information contained in the tender documents.

2.14 Part and Joint Tenders

Note to tenderers: The Commonwealth will permit the tenderer (ie the ship designer) to propose a Joint Venture as the contracting party for the purpose of its tender provided that both the ship designer and an Australian ship builder (which satisfies the requirements set out at clause 4.1 of the draft COC) are the primary, if not exclusive shareholders.

The tenderer is to ensure that any Joint Venture arrangements must contain an appropriate degree of management and control over decision-making and contract delivery by the tenderer.

Any tender proposing a Joint Venture is to clearly detail the technical, management and commercial arrangements/controls that will apply to the Joint Venture to enable the Commonwealth to understand the implications (including risks) associated with contracting with a Joint Venture.

Tenderers should refer to clause 6.1 of TDR-A which details the information required to be submitted in relation to any proposed Joint Venture.

2.14.1 The Commonwealth will not consider a tender for part of the Supplies. Tenderers must offer to deliver all Supplies required by the Commonwealth as described in the draft Contract.

2.14.2 The Commonwealth will:

a. consider a tender that proposes a single legal entity to deliver all Supplies required by the Commonwealth as described in the draft Contract where that entity is:

(i) a Joint Venture provided that:

1) both the tenderer and an Australian ship builder (which satisfies the requirements set out at clause 4.1 of the draft COC) are the primary, if not exclusive shareholders; and

2) the tenderer is able to demonstrate to the Commonwealth’s satisfaction that it will have an appropriate degree of management and control over the Joint Venture’s decision-making and contract delivery; or

(ii) the tenderer; and

b. not consider a consortium tender, including an unincorporated joint venture, alliance or other structure, that involves more than one entity teaming to provide a tender for the Supplies where no single entity will be responsible for delivering all Supplies required by the Commonwealth as described in the draft Contract.

2.14.3 Without limiting the Commonwealth’s rights, the Commonwealth intends to enter into a contract with a single legal entity that will be the party responsible for the performance of any resultant Contract. If tenderers submit a tender proposing to establish a Joint Venture to contract for the delivery of the Supplies, whether as the tenderer’s primary tender or as part of an alternative proposal under clause 2.15, the tenderer is to:

a. where indicated in the RFT provide the information sought in relation to each shareholder, or proposed shareholder, in the proposed Joint Venture; and

b. provide all information requested in clause 6.1 of Annex A to the TDRL.

Note to tenderers: The Commonwealth may undertake a risk assessment in order to:

- identify all relevant risks and the probability of those risks occurring; and

- assess the impact the events could have on the procurement and how they might be treated/ managed.

The Commonwealth will only request such other information at clause 2.14.4 that will assist with undertaking the above.

2.14.4 Tenderers proposing a Joint Venture to Contract for the delivery of the Supplies must promptly provide such other information that the Commonwealth requests from the tenderer in relation to the proposed Joint Venture to enable the Commonwealth to undertake a risk assessment of the proposed Joint Venture.


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2.14.5 The Commonwealth may, in its absolute discretion, request further information on a tenderer, or a tenderer’s proposed contracting entity or contracting structure, and may request that a tenderer:

a. vary its proposed contracting entity or structure;

b. substitute a different entity, or entities, for the tenderer;

c. agree to further commercial terms in connection with any resultant Contract; or

d. make such other variations to its tendered offer as the Commonwealth, in its absolute discretion, considers necessary,

to address any risk identified by the Commonwealth.

2.15 Alternative Proposals

2.15.1 The Commonwealth may (but is under no obligation to) consider an alternative proposal submitted by a tenderer that does not comply with the requirements of the RFT. Any alternative proposal is to be submitted in accordance with this clause 2.15.

2.15.2 The Commonwealth will not consider an alternative proposal unless the alternative proposal:

a. is submitted together with a tender that addresses the requirements of the RFT;

b. is clearly identified as an alternative proposal submitted under this clause 2.15;

c. is fully described by the tenderer, including:

(i) the advantages, disadvantages, limitations and capability of the alternative proposal; and

(ii) the extent to which the adoption of the alternative proposal would impact upon the tender that addresses the requirements of the RFT including any financial impact, impact on the provision of the Supplies and any other consequences of the alternative proposal; and

d. contains sufficient and verifiable supporting information and data to enable a comparison of the alternative proposal against other tenders.

2.15.3 An alternative proposal should be a complete tender capable of being evaluated by the Commonwealth. An alternative proposal may, however, include only information and/or documents which differ from those submitted in the tenderer’s primary tender and cross reference those sections in the primary tenderer which remain identical in the alternative proposal.

2.15.4 Tenderers will have no claim against the Commonwealth or any Commonwealth Personnel where the Commonwealth elects not to evaluate an alternative proposal.

2.16 Options for the Ship Design

Note to tenderer: As part of their tender, tenderers may propose one or more options for their tendered ship design (including MEL and general arrangement drawings) which may depart from the System Specification (SS). Any option proposed must be limited to those parts of the tenderer’s Reference Ship Design which were modified under the RRDS Contract.

For example:

- tenderers may offer the Commonwealth an option to provide a gun which departs from that stipulated in the SS.

2.16.1 As part of their tender and subject to clause 2.16.4, tenderers may offer the Commonwealth one or more options for parts of the tendered ship design which may depart from the System Specification.

2.16.2 The Commonwealth may, in its absolute discretion, elect to consider and evaluate any option for the tendered ship design. Tenderers will have no claim against the Commonwealth or any Commonwealth Personnel where the Commonwealth elects not to evaluate an option.

2.16.3 Subject to clause 2.16.2, unless the Commonwealth determines otherwise, options will not be considered as part of the initial evaluation of tenders but may be considered and evaluated after the selection of the preferred tenderer.


AB28026506 12 Version 3.0

2.16.4 In order for an option to be considered for evaluation under clause 2.16.3, the option must:

a. be limited to those systems or subsystems of the Reference Ship Design that were modified under the RRDS Contract; and

b. provide the information required in TDR F-4.

2.17 Substitution of Tenderer

2.17.1 If during the period following the submission of the tender and prior to execution of any resultant Contract, there occurs:

a. an Insolvency Event in respect of the tenderer; or

b. any other event that has the effect of substantially altering the composition or control of the tenderer or the business of the tenderer; or

c. one of the events set out in (a) and (b) above in relation to any shareholder, or proposed shareholder, in a Joint Venture proposed by the tenderer,

the Commonwealth may allow, on such terms as the Commonwealth considers appropriate, the substitution of that tenderer with another legal entity upon receipt of a joint written request from or on behalf of the tenderer and the other legal entity.

2.17.2 If no request for substitution is made, or the Commonwealth chooses not to allow the substitution under clause 2.17.1, the Commonwealth may decide not to consider the tender any further or, in considering it, may take into account the impact of the event on the information provided in the tender.

2.17.3 If the Commonwealth allows the substitution under clause 2.17.1, the Commonwealth will evaluate the tender in its original form prior to the event, except that the impact of the event on the information provided in the tender may be taken into account.

2.17.4 This clause 2.17 does not limit or affect the Commonwealth’s rights under clause 2.14.4.

3 EVALUATION OF TENDERS

3.1 Tender Presentations

3.1.1 The Commonwealth may, after the Closing Time specified in the Tender Details Schedule and having provided tenderers with reasonable notice require any or all tenderers to provide a presentation on their respective tenders at the Tender Presentation Location specified in the Tender Details Schedule.

3.2 Tender Evaluation

3.2.1 The SEA1180-1 OPV Project is of significant importance to Australia’s continuous naval surface ship building policy. Accordingly, the Australian Government will select the preferred tenderer based on the evaluation of tenders against the tender evaluation criteria at clause 3.12 and having regard to Australia’s continuous naval surface ship building requirements, Australian industry requirements and other strategic considerations, to determine best value for money.

Note to Tender: Tenderer’s should note that prior to release of this RFT the Commonwealth, through the Royal Australian Navy, has engaged with the Navies of other nations to conduct ‘Navy to Navy engagement’ in connection with the SEA1180-1 OPV Project.

The Commonwealth’s intent in conducting the ‘Navy to Navy engagement’ was to ensure that the Commonwealth has a complete understanding of the Reference Ship Designs including from an operational perspective.

3.2.2 Without limiting or affecting the Commonwealth’s other rights under or in connection with this RFT, the Commonwealth may:

a. seek additional information from alternate sources in respect of any aspect of a tender at any time (whether that information is obtained through the RFT process or by any other means including information obtained from Navy);

b. use material tendered in response to one evaluation criterion in the evaluation of other criteria;


AB28026506 13 Version 3.0

c. seek clarification or additional information from, and enter into discussions with, any or all of the tenderers in relation to their tender;

d. visit the tenderers’ or proposed Subcontractors’ facilities; or

e. consider any analysis undertaken by or on behalf of the Commonwealth of RRDS Outputs and any report or finding from the Royal Australian Navy engagement with any other Navy,

to interpret the tender and evaluate the cost and risk to the Commonwealth in accepting the tender.

3.2.3 In assessing tenders, the Commonwealth may, but is not under any obligation to take into account any supporting documentation provided under clause 2.2.2 and any additional information obtained by the Commonwealth pursuant to clause 3.2.2a to 3.2.2e.

3.3 Minimum Content and Format Requirements

3.3.1 Subject to clause 2.10, the Commonwealth may exclude a tender from further consideration if the Commonwealth considers that the tender does not comply with any of the Minimum Content and Format Requirements specified in the Tender Details Schedule.

3.4 Conditions for Participation

3.4.1 The Commonwealth may exclude a tender from further consideration if the Commonwealth considers that the tender does not propose an Australian ship builder to participate in the performance of any resultant Contract that is currently registered as an Australian registered company and has continuously maintained that registration for at least 15 years.

3.4.2 For the avoidance of doubt, a tenderer may propose that a Joint Venture acts as the Australian ship builder for the purposes of any resultant Contract so long as at least one participant in the Joint Venture is currently registered as an Australian registered company and has continuously maintained that registration for at least 15 years.

3.5 Essential Requirements

3.5.1 The Commonwealth may exclude a tender from further consideration if the Commonwealth considers that the tender (other than any alternative proposal submitted in accordance with clause 2.15 or any option(s) proposed in accordance with clause 2.16) does not comply with the System Specification at Part B to Annex A of the draft SOW.

3.6 Short listing

3.6.1 The Commonwealth may shortlist one or more tenderers with whom to conduct Offer Definition and Improvement Activities or negotiations.

3.7 Negotiation

3.7.1 The Commonwealth may engage one or more tenderers in negotiations which may involve tenderers being asked to:

a. clarify, improve or consolidate any of the technical, commercial, legal, financial and operational aspects of their tenders; or

b. enter into an agreement with the Commonwealth relating to the terms of the detailed engagement with that tenderer.

3.8 Preferred Tenderer Status

3.8.1 The Commonwealth may select a tenderer as preferred tenderer, but such selection:

a. does not affect or limit the Commonwealth’s rights or the tenderer’s obligations under the RFT; and

b. is not a representation that a contract will be entered into between the Commonwealth and that tenderer,


AB28026506 14 Version 3.0

and the Commonwealth may recommence or commence negotiations under the RFT with any other tenderer whether or not a tenderer has been selected as preferred tenderer.

3.9 Cost Investigation of Tenders

Note to tenderers: The Commonwealth will refer to the CASG Cost Principles in considering whether the costs that the Contractor seeks to recover under the Contract are reasonable. The CASG Cost Principles can be accessed via the ‘Contracting in CASG’ webpage on the ‘Doing Business with Defence’ internet site at http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/DefenceCostPrinciples/.

3.9.1 For the purposes of evaluating a tender, Commonwealth Personnel may conduct a cost investigation(s) of the tendered price and any other financial aspects of the tender. On request by the Commonwealth the tenderer is to facilitate any such cost investigation(s).

3.9.2 A cost investigation under clause 3.9.1 may be conducted at any time prior to selection of any preferred tenderer(s) or prior to signature of any resultant Contract, as the Commonwealth elects.

3.9.3 The Commonwealth may, without limitation, in any cost investigation conducted under clause 3.9.1, evaluate how tendered prices reflect actual costs to the tenderer of the proposed contract, and:

a. how those costs relate to costs included in other contracts between the Commonwealth and the tenderer, and/or a Related Body Corporate or a special purpose vehicle in which the tenderer is or has been involved;

b. how costs will be allocated between any resultant Contract and other contracts between the tenderer and/or a Related Body Corporate or a special purpose vehicle in which the tenderer is or has been involved and the Commonwealth, including where the same facilities, assets (including tangible or intangible) or personnel are used for more than one contract involving the Commonwealth and the tenderer and/or a Related Body Corporate or a special purpose vehicle in which the tenderer is or has been involved;

c. whether the tendered prices are sufficient to adequately cover actual costs of performance of the tenderer’s obligations under the proposed Contract and to provide a rate of return to the tenderer; and

d. whether the tenderer and/or Related Body Corporate or a special purpose vehicle in which the tenderer is or has been involved, in the proposed Contract or any other contract with the Commonwealth, proposes to or has engaged in any cross-subsidisation or transfer-pricing with Related Bodies Corporate or a special purpose vehicle in which the tenderer is or has been involved.

3.9.4 The tenderer must, for the purpose of clause 3.9 and on request by the Commonwealth:

a. allow access for Commonwealth Personnel to tenderer and Related Body Corporate (including parent company and subsidiary) or a special purpose vehicle records, officers, employees, agents and advisers; and

b. provide detailed information in response to any requests from the Commonwealth in connection with the financial aspects of its tender (including tendered prices), including information on an Open Book Basis.

3.10 Offer Definition and Improvement Activities

3.10.1 The Commonwealth may, at its discretion, conduct offer definition and improvement activities (ODIA) with one or more tenderers in order to clarify, improve, and maximise value for money of, tenders for the Commonwealth.

3.10.2 Where the Commonwealth elects to conduct ODIA, it is anticipated that ODIA will take place for the timing and duration specified in the Tender Details Schedule. Tenderers should note that the timing and duration of ODIA specified in the Tender Details Schedule may change as required by the Commonwealth.

3.10.3 Where the Commonwealth elects to conduct ODIA, the Commonwealth may first require relevant tenderers to enter into a process document that provides further details of ODIA and specific terms and conditions that will apply to the tenderer’s participation in ODIA. The

http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/DefenceCostPrinciples/



AB28026506 15 Version 3.0

Commonwealth may elect not to proceed with ODIA with any tenderer that does not execute a process document as required by the Commonwealth.

3.10.4 ODIA may include the following activities:

a. clarification, improvement and refinement of tendered offers;

b. submission of additional information by tenderers during ODIA;

c. site visits;

d. workshops;

e. submission of revised tenders upon completion of ODIA;

f. provision of additional information by the Commonwealth to tenderers; and

g. provision of scope and costs for additional optional quantities or requirements or build requirements for consideration by the Commonwealth for potential inclusion in any resultant Contract.

3.10.5 As part of ODIA, the Commonwealth may make changes to the draft Contract (including the Commonwealth’s requirements) and require tenderers to amend their tenders to reflect the changes.

3.10.6 The Commonwealth may, at its discretion, make a contribution to the cost of tenderers participating in ODIA. Tenderers will be advised of any such contribution and the conditions associated with such contribution prior to the commencement of ODIA.

3.11 Debriefing of Tenderers

3.11.1 Tenderers will be notified whether they have been successful or unsuccessful and may request a tender debriefing. Tenderers requiring a debriefing should contact the Contact Officer specified in the Tender Details Schedule.

3.11.2 Tenderers will be debriefed against the evaluation criteria contained in clause 3.12. In accordance with Commonwealth policy, a tenderer will not be provided with information concerning other tenders, except for publicly available information such as the name of the successful tenderer and the total price of the winning tender. No comparisons with other tenders will be made.

3.12 Tender Evaluation Criteria

3.12.1 The criteria to be applied for the purposes of evaluation are as follows, not in any order of importance:

a. the tenderers proposed commitment and approach to the development of an Australian continuous naval surface ship building capability, including the extent of Australian Industry Capability, and development of an Australian shipbuilding workforce capability and an Australian supply chain;

b. the extent to which the tendered solution for the Mission System and the Support System is assessed as meeting the requirements of the draft Contract including the draft Preliminary Operating and Support Intent (POSI) at Part A of Annex A and the Function and Performance Specification (FPS) at Part D of Annex A to the draft SOW;

c. the tenderer’s demonstrated ability to deliver the other requirements in the draft SOW and the assessed level of risk to commence construction in 2018;

d. the extent to which the tender is compliant with the draft conditions of contract including the extent to which the tender proposes IP rights to the Commonwealth and the assessed level of risk relating to the negotiation of a contract acceptable to the Commonwealth;

e. the extent to which the Australian ship builder meets the requirements in clause 4.1 of the draft Contract;

f. the proposed corporate structure and contracting structure of, or proposed by, the tenderer including any proposed Joint Venture and Approved Subcontractors, and the assessed level of associated risk to the Commonwealth;


AB28026506 16 Version 3.0

g. the financial and corporate viability of the tenderer and any proposed Joint Venture and Approved Subcontractors including the level of risk relating to the delivery of Contract obligations;

h. the tendered prices, pricing structure and life cycle cost; and

i. past performance of contractual obligations by the tenderer, any proposed Approved Subcontractors and any Related Bodies Corporate, or a special purpose vehicle in which any of these entities is or has been involved.

.

SEA1180 Phase 1 Offshore Patrol Vessel CASG/SHIP/RFT0226/16

Part 2/Conditions of Contract

AB28026346 Version 2.0

i

OFFSHORE PATROL VESSELS ACQUISITION CONTRACT

CONTRACT NO: [INSERT NUMBER]

DETAILS SCHEDULE

PARTIES

COMMONWEALTH OF AUSTRALIA represented by the Department of Defence ABN 68 706 814 312 (Commonwealth)

Commonwealth Representative:

Project Director SEA 1180-1

Notice Details: Address: Department of Defence Specialist Ships Acquisition Branch Capability, Acquisition and Sustainment Group R2-3-A012 Russell Drive Russell ACT 2601

Email: (INSERT EMAIL ADDRESS)

(INSERT FULL NAME OF CONTRACTOR) ABN (INSERT CONTRACTOR'S ABN) (Contractor) Contractor Representative:

(INSERT DETAILS)

Notice Details: Address: (INSERT ADDRESS)

Fax: (INSERT FAX NUMBER)


Item Information

Item 1 (clause 1.3)

Effective Date (INSERT DATE)

Item 2 (clause3.3.1)

Base Date 28 February 2017

Item 3

Not Used

Item 4

(clause 7.4)

Mobilisation Payment

Mobilisation Payment: (INSERT AMOUNT)

Bank Guarantee Amount:

(INSERT AMOUNT BEING 50% OF THE MOBILISATION PAYMENT)

Date for provision of Bank Guarantee:

(INSERT DATE)




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Item Information

Item 5

(clause 7.5)

Bank Guarantee

Bank Guarantee Amount:

$100M

Date for provision of Bank Guarantee:

The Effective Date.

Release Event: 90% of Bank Guarantee Amount will be released on Final Acceptance.

The remainder to be released on the later of:

a. 12 months after Final Acceptance; or

b. the date on which the Contractor has completed all rectification work required under clause 9.3.6 to the Commonwealth Representative’s satisfaction.

Deed of Guarantee and Indemnity

Yes / No

Guarantor: (INSERT NAME)

Item 6

Not used

Item 7

(clause 7.12)

GST Agent

Name: (INSERT NAME) ABN: (INSERT ABN)

Address: (INSERT ADDRESS)

Fax: (INSERT FAX NUMBER)


Item 8 (clause 8.9)

Limitation Amount:

Item 1: Loss of or damage to Defence Property (other than Supplies)

(clause 8.9.1a)

$300 million

Item 2: Liquidated damages

(clause 8.9.1b)

$40 million

Item 3: Loss of use of Supplies after Acceptance

(clause 8.9.1c)

$170 million

Item 4: Loss of or damage to Supplies (other than loss of use of Supplies), and Losses suffered by the Commonwealth other than those referred to in clauses 8.9.1a to 8.9.1c.

(clause 8.9.1d)

$450 million

Item 9 Renegotiation Threshold:

Note to Tenderer: The Renegotiation Threshold is to be agreed with the successful tenderer during negotiation.




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Item Information

(clause 8.10) [INSERT $ AMOUNT OR % OF THE CONTRACT PRICE]

Item 10 (clause 8.12)

Approved Contractor Insurance Program Status

Yes / No

Limits of indemnity for required insurances:

Public liability:

(clause 8.12.4a)

$100 million

Products liability:

(clause 8.12.4b)

$100 million

Public and products liability tangible property sublimit: (clause 8.12.4e)

$100 million

Professional indemnity: (clause 8.12.5)

$30 million

Industrial special risks business interruption period: (clause 8.12.6b)

16 weeks

Motor vehicle insurance:

(clause 8.12.8b)

$20 million

Marine liability:

(clause 8.12.13)

$250 million

Marine liability tangible property sublimit:

(clause 8.12.13c)

$250 million

Ship builders:

(clause 8.12.14)

$250 million


Defect Notification Period

The period from the Effective Date until 12 months after expiry or earlier termination of the Contract.

Item 12 (clause 9.3.1)

Defect Rectification Period:

If the Defect is a Latent Defect, the period of 10 years after Acceptance of the relevant Supplies, or if the Contract does not provide for Acceptance of the relevant Supplies, a period of 10 years after Final Acceptance.

If the Defect is not a Latent Defect, the period of 12 months after Acceptance of the relevant Supplies, or if the Contract does not provide for Acceptance of the relevant Supplies, 12 months after Final Acceptance or such other period determined in accordance with clause 9.3.6.

Item 13 (clause 10.9.3a)

Approved Subcontractor Threshold

AUD $50,000,000


Defence Security:

Security classification:

(clause 10.10.3)

SECRET




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DISP membership required:

(clause 10.10.3a)

Yes

Personnel security clearance:

(clause 10.10.3c)

Negative Vetting 1

Facility / ICT accreditation:

(clause 10.10.3d)

Facility accreditation required

ICT system accreditation required

Document storage / equipment / ICT system up to and including Business Impact Level (BIL) 3.

Classified assets

Business Impact Level (BIL) 5

Security Classification and Categorisation Guide included:

(clause 10.10.6)

Attachment I to the COC

COMSEC material:

(clause 10.10.8 and 10.10.9)

transmitted in Australia

transmitted overseas


Governing law: Australian Capital Territory (ACT)

Item 16 (clause 12.1.3)

Management Representatives (position):

Commonwealth: (INSERT DETAILS)

Contractor: (INSERT DETAILS)

Senior Representatives (position):

Commonwealth: (INSERT DETAILS)

Contractor: (INSERT DETAILS)




v

TABLE OF CONTENTS

Page

1 CONTRACT FRAMEWORK .................................................................................................................... 1 1.1 Definitions ....................................................................................................................................... 1 1.2 Interpretation .................................................................................................................................. 1 1.3 Effective Date ................................................................................................................................. 2 1.4 Entire Agreement ........................................................................................................................... 2 1.5 Precedence of Documents ............................................................................................................. 2 1.6 Contracted Requirement ................................................................................................................ 2 1.7 Option for Further Quantities and Optional Extras ......................................................................... 3 1.8 Design Refresh Review .................................................................................................................. 3 1.9 RRDS Contract ............................................................................................................................... 4

2 ROLES AND RESPONSIBILITIES .......................................................................................................... 5 2.1 Commonwealth Representative ..................................................................................................... 5 2.2 Contractor Representative ............................................................................................................. 5 2.3 Notices............................................................................................................................................ 5 2.4 Cooperation and coordination ........................................................................................................ 5

3 PRODUCTION OF THE SUPPLIES ........................................................................................................ 7 3.1 Standards of Work and Conformity ................................................................................................ 7 3.2 Authorisations ................................................................................................................................. 7 3.3 Imports and Customs Entry ............................................................................................................ 7 3.4 Provision and Management of Government Furnished Material .................................................... 8 3.5 Government Furnished Facilities (GFF) ......................................................................................... 9 3.6 Key Persons ................................................................................................................................... 9 3.7 Commonwealth Property .............................................................................................................. 10

4 AUSTRALIAN SHIPBUILDING INDUSTRY .......................................................................................... 11 4.1 Australian Ship Builder ................................................................................................................. 11 4.2 Australian Industry Capability ....................................................................................................... 12

5 INTELLECTUAL PROPERTY ................................................................................................................ 13 5.1 General Intellectual Property Obligations ..................................................................................... 13 5.2 Ownership of Intellectual Property ................................................................................................ 13 5.3 Intellectual Property Licences ....................................................................................................... 14 5.4 Provision of Technical Data (TD) ................................................................................................. 15 5.5 Release to Third Parties ............................................................................................................... 16 5.6 Additional IP ................................................................................................................................. 16 5.7 Moral Rights ................................................................................................................................. 16 5.8 Software Design Data................................................................................................................... 16 5.9 Survival ......................................................................................................................................... 17

6 DELIVERY, ACCEPTANCE AND OWNERSHIP ................................................................................... 18 6.1 Delivery ......................................................................................................................................... 18 6.2 Delay 18 6.3 Postponement .............................................................................................................................. 18 6.4 Postponement Costs .................................................................................................................... 20 6.5 Acceptance ................................................................................................................................... 20 6.6 Final Acceptance .......................................................................................................................... 22 6.6A Acceptance and Final Acceptance Not to Affect Commonwealth’s Other Rights ........................ 23




vi

6.7 Ownership .................................................................................................................................... 23 6.8 Progress Certification ................................................................................................................... 23

7 PRICE AND PAYMENT ......................................................................................................................... 25 7.1 Price and Price Basis ................................................................................................................... 25 7.2 Payment ....................................................................................................................................... 25 7.3 Adjustments .................................................................................................................................. 25 7.4 Mobilisation Payment and Security............................................................................................... 26 7.5 Bank Guarantee ........................................................................................................................... 27 7.6 Exercise of Securities ................................................................................................................... 28 7.7 Stop Payment ............................................................................................................................... 28 7.8 Early and Late Payment ............................................................................................................... 28 7.9 Incentive Payments ...................................................................................................................... 29 7.10 Liquidated Damages and Other Compensation ........................................................................... 29 7.11 Taxes and Duties ......................................................................................................................... 30 7.12 GST Agent .................................................................................................................................... 31 7.13 Cost Principles.............................................................................................................................. 31

8 INDEMNITIES, DAMAGES, RISK, INSURANCE AND LIABILITY ....................................................... 31 8.1 Contractor’s Officers and Employees ........................................................................................... 31 8.2 Other Third Party Claims .............................................................................................................. 31 8.3 Proceedings relating to Indemnities ............................................................................................. 32 8.4 Other Provisions Relating to Indemnities ..................................................................................... 32 8.5 Loss of or Damage to the Supplies .............................................................................................. 32 8.6 Loss of or Damage to Commonwealth Property .......................................................................... 33 8.7 Exclusions of Certain Losses ....................................................................................................... 33 8.8 Intellectual Property and Confidentiality ....................................................................................... 34 8.9 Liability Caps ................................................................................................................................ 34 8.10 Renegotiation of liquidated damages and Limitation Amounts .................................................... 35 8.11 Proportionate Liability Laws .......................................................................................................... 35 8.12 Insurance ...................................................................................................................................... 36

9 WARRANTIES AND SUPPORT OF THE SUPPLIES ........................................................................... 44 9.1 Fitness for Purpose ...................................................................................................................... 44 9.2 Notification of Defects .................................................................................................................. 44 9.3 Defect Rectification Obligations ................................................................................................... 44 9.4 Manufacturer's and Other Warranties .......................................................................................... 45 9.5 Spare Parts and Support Equipment ............................................................................................ 46 9.6 Draft Data Items ........................................................................................................................... 46

10 CONTRACT MANAGEMENT ................................................................................................................ 46 10.1 Change to the Contract ................................................................................................................ 46 10.2 Condition as to Disclosure by the Contractor ............................................................................... 47 10.3 Waiver .......................................................................................................................................... 48 10.4 Confidential Information ............................................................................................................... 48 10.5 Assignment and Novation ............................................................................................................ 49 10.6 Negation of Employment and Agency .......................................................................................... 49 10.7 Commonwealth Access and Records .......................................................................................... 49 10.8 Contractor Access ........................................................................................................................ 51 10.9 Subcontracts ................................................................................................................................ 51 10.10 Defence Security .......................................................................................................................... 52




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10.11 Post Defence Separation Employment ........................................................................................ 54 10.12 Change Of Control ....................................................................................................................... 54 10.13 Joint Venture Requirements ......................................................................................................... 55

11 POLICY AND LAW................................................................................................................................. 56 11.1 Governing Law ............................................................................................................................. 56 11.2 Compliance with Laws .................................................................................................................. 56 11.3 Policy Requirements ..................................................................................................................... 56 11.4 Work Health and Safety ............................................................................................................... 57 11.5 Environmental Obligations............................................................................................................ 60 11.6 Severability ................................................................................................................................... 60 11.7 Privacy .......................................................................................................................................... 61

12 DISPUTES AND TERMINATION ........................................................................................................... 61 12.1 Resolution of Disputes ................................................................................................................. 61 12.2 Termination Without Prior Notice for Contractor Default .............................................................. 61 12.3 Default Notices ............................................................................................................................. 62 12.4 Termination or reduction for Convenience ................................................................................... 62 12.5 General Termination Provisions ................................................................................................... 62 12.6 Right of Commonwealth to Recover Debts .................................................................................. 64 12.7 Survivorship .................................................................................................................................. 64

ATTACHMENTS

A. Statement of Work A-1

B. Price and Payments B-1

C. Liquidated Damages C-1

D. Government Furnished Material and Government Furnished Facilities D-1

E. Australian Industry Capability Plan E-1

F. Intellectual Property Plan F-1

G. Schedule of Approved Subcontractors G-1

H. Agreed Forms and Deeds H-1

I. Security Classification and Categorisation Guide I-1

J. Resident Personnel J-1

K. Confidential Information and Reporting K-1

L. Key Staff Positions L-1

M. Glossary M-1

N. Draft Data Items N-1




1

1 CONTRACT FRAMEWORK

1.1 Definitions

1.1.1 In the Contract, unless the contrary intention appears, words, abbreviations and acronyms have the meaning given to them in the Details Schedule, or by the Glossary at Attachment M. The Glossary also contains definitions of WBS elements, a list of documents referred to in the Contract and details of the version that is applicable to the Contract.

1.2 Interpretation

1.2.1 In the Contract, unless the contrary intention appears:

a. headings are for the purpose of convenient reference only and do not form part of the Contract;

b. the singular includes the plural and vice-versa;

c. a reference to one gender includes the other;

d. a reference to a person includes a body politic, body corporate or a partnership;

e. if the last day of any period prescribed for the doing of an action falls on a day which is not a Working Day, the action shall be done no later than the end of the next Working Day;

f. a reference to an Act is a reference to an Act of the Commonwealth, State or Territory of Australia, as amended from time to time, and includes a reference to any subordinate legislation made under the Act;

g. a reference to a clause includes a reference to a subclause of that clause;

h. a reference to a ‘dollar’, ‘$’, ’$A’ or ‘AUD’ means the Australian dollar unless otherwise stated;

i. a reference to a specification, publication, Commonwealth policy or other document is a reference to that specification, publication, Commonwealth policy or document, in effect on the Effective Date specified in the Details Schedule, or alternatively, a reference to another version of the document if agreed in writing between the parties;

j. the word ‘includes’ in any form is not a word of limitation; and

k. a reference to a party includes that party’s administrators, successors, and permitted assigns, including any person to whom that party novates any part of the Contract.

1.2.2 The objectives of the parties in entering into this Contract are:

a. to ensure that, for the payments provided for under the Contract, the Contractor delivers the Supplies on time, on budget, to the required safety, quality and capability, in accordance with the Contract;

b. to provide an effective capability to the ADF that:

i supports the ADF’s mission to ‘fight and win’;

ii supports the Commonwealth’s policy of Defence self-reliance; and

iii minimises the Commonwealth’s costs of maintaining and supporting the capability;

c. to develop, maintain and enhance appropriate skill sets and capabilities within both the Commonwealth and the Contractor;

d. to obtain value for money for the Commonwealth on an ongoing basis in relation to the delivery of capability;

e. to obtain for the Contractor as a commercial entity a reasonable return on its investment when it performs the Contract efficiently and successfully, and a return that appropriately reflects properly managed risks involved in the performance of the Contract;




2

f. for the Commonwealth to have appropriate IP rights arising out of or in connection with the provision of the Supplies for acquisition, whole of life support and disposal of the capability;

g. to facilitate the retention and enhancement of industry capabilities within Australia and New Zealand and to maximise Australian Industry participation in the Project;

h. to ensure availability of necessary facilities (including any plant and systems) to develop and maintain (as appropriate) the capability;

i. to encourage the most efficient possible use of resources for the achievement of the capability;

j. to work within a framework that ensures the safety of persons, Materiel Safety, and complies with all laws and other regulatory requirements;

k. to achieve these joint objectives through a culture of mutual respect and co-operation, and in an environment that fosters innovation, continuous improvement, cost efficiency, transparency and open, honest and timely communication;

l. to deliver the Project in a manner which meets the Commonwealth’s ship building requirements set out in this Contract; and

m. contribute to the Australian Government’s program for continuous naval surface ship building in Australia.

1.2.3 Without in any way affecting or overriding the other terms of this Contract, each party agrees to perform its obligations and enforce its rights under the Contract having regard to, and with the aim of, achieving the objectives described in clause 1.2.2.

1.2.4 All information provided as part of the Supplies under the Contract shall be written in English. Measurements of physical quantity shall be in Australian legal units as prescribed under the National Measurement Act 1960 (Cth), or, if Supplies are imported, units of measurement as agreed by the Commonwealth Representative.

1.3 Effective Date

1.3.1 The Contract commences on the Effective Date specified in the Details Schedule.

1.4 Entire Agreement

1.4.1 To the extent permitted by law, the provisions of the Contract represent the parties’ entire agreement in relation to the subject matter of the Contract and supersedes all tendered offers and prior representations, communications, agreements, statements and understandings, whether oral or in writing.

1.5 Precedence of Documents

1.5.1 If there is any inconsistency between terms of the Contract, a descending order of precedence shall be accorded to:

a. the COC (including the Details Schedule) and the Glossary (other than the referenced documents in the Glossary);

b. the Statement of Work (SOW) and its annexes;

c. the attachments other than the SOW and the Glossary; and

d. any document incorporated by express reference or otherwise referenced as part of the Contract,

so that the term in the higher ranked document, to the extent of the inconsistency, prevails.

1.6 Contracted Requirement

1.6.1 The Contractor shall, for the Contract Price, and any other payment required under the Contract, provide the Supplies and comply with all its other obligations under the Contract.




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1.7 Option for Further Quantities and Optional Extras

1.7.1 The Contractor grants the Commonwealth the option to purchase additional quantities of the Supplies and optional extras as set out in Annex E to Attachment B, at any time and from time to time prior to the Commonwealth’s Acceptance of OPV #12 under the terms of the Contract, including those detailed in Annex E to Attachment B.

1.7.2 The Commonwealth may exercise the option by providing written notice to the Contractor identifying the optional extras or quantity and type of additional quantities of Supplies (as appropriate) to be purchased. The Contractor shall, within 30 days of receipt of the notice, submit a CCP in accordance with clause 10.1 to give effect to the exercise of the option.

1.8 Design Refresh Review

1.8.1 The Design Refresh Review shall be conducted in accordance with this clause 1.8 and clause 3.22 of the SOW.

1.8.2 In this clause 1.8, ‘Commonwealth’ includes all Commonwealth Personnel and Commonwealth Contractors.

1.8.3 The Contractor acknowledges and agrees that the objectives of the Design Refresh Review are to:

a. enable the Commonwealth to consider, at each Design Refresh Review meeting referred to in clause 3.22 of the SOW, opportunities to address issues relevant to the OPV design and delivery strategy, including improvements to the OPV capability, design, technical upgrades, obsolescence management, Australian Industry participation, improved efficiency and stakeholder and user feedback;

b. ensure that the Contractor delivers to the Commonwealth, as part of the Supplies, professional advice and recommendations on issues relevant to the OPV design and delivery (including those referred to in clause 1.8.3a and clause 3.22 of the SOW) and how those issues might be addressed in a manner which maximises the achievement of the Contract’s objectives as described in clause 1.2.2;

c. enable the Commonwealth to fully understand, and assess, all relevant risks and benefits that may result from implementing any one or more of the Contractor’s recommendations resulting from a Design Refresh Review; and

d. facilitate the Commonwealth’s review and Approval (if applicable) of CCPs to the Contract to maximise the achievement of the Contract’s objectives as described in clause 1.2.2.

1.8.4 The Contractor:

a. shall cooperate with the Commonwealth in respect of each Design Refresh Review;

b. shall do all things that the Commonwealth reasonably requires for the purpose of each Design Refresh Review, including providing information, advice and attending meetings with the Commonwealth, as the Commonwealth requires;

c. acknowledges and agrees that the Commonwealth will rely upon all information, advice and recommendations provided by the Contractor in connection with each Design Refresh Review including in conducting its review of any CCP proposed by the Contractor in accordance with this clause 1.8;

d. shall ensure that the information and advice provided to the Commonwealth in connection with each Design Refresh Review:

(i) is complete, accurate and able to be relied upon by the Commonwealth in determining whether, or not, to Approve any CCP arising out of the Design Refresh Review; and

(ii) enables the Commonwealth to fully understand all implications of proceeding with any one or more of the Contractor’s recommendations provided at each Design Refresh Review, including all technical, price and schedule implications;




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e. acknowledges and agrees that the Commonwealth’s decision to Approve, or not to Approve, any CCP arising out of or in connection with the Design Refresh Review does not limit or otherwise affect the Contractor’s obligations under the Contract.

1.8.5 If required by the Commonwealth pursuant to clause 3.22 of the SOW, the Contractor shall develop a CCP that:

a. complies with the requirements of clause 3.22 of the SOW and the Commonwealth’s requirements for the relevant CCP as notified to the Contractor in accordance with clause 3.22 of the SOW;

b. includes all supporting information reasonably required by the Commonwealth to enable the Commonwealth to fully and properly understand and assess the implications of Approving the CCP in accordance with clause 10.1;

c. contains full details of all pricing, schedule and technical impacts that implementing the Contractor’s recommendations may have on the delivery of the Contract including but not limited to the following details in relation to each CWBS element:

i a breakdown of Contractor labour engaged by labour category and the period for which engaged (including periods of leave or absence from duty);

ii Contractor labour rate and number of hours expended in relation to each CWBS;

iii materials used, including costs, financing charges, interest, overheads on materials, stock, facilities, plant and equipment utilised;

iv details of all margins applied;

v prices for Approved Subcontractors, detailing the breakdown of labour and material prices (where applicable); and

vi prices for any other Subcontractors detailing total labour and material prices (where applicable) per Subcontractor.

1.8.6 The Commonwealth shall consider any CCP produced by the Contractor under this clause 1.8 and clause 3.22 of the SOW in accordance with clause 10.1.

1.8.7 Without limiting clause 3.22 of the SOW or any other provision of the Contract, the Contractor shall and shall ensure that Approved Subcontractors shall:

a. provide all information referred to in this clause 1.8 and clause 3.22 of the SOW on an Open Book Basis;

b. promptly provide the Commonwealth with full access to internal cost estimation, programming, contingency and risk information used by the Contractor and the Approved Subcontractors (as applicable) for their own purposes in calculating the adjustments to the pricing and payments and, to the extent the Commonwealth reasonably considers the information relevant to its assessment of those adjustments;

c. allow the Commonwealth to review and undertake audits on reasonable notice at reasonable times so as to minimise disruption to the Contractor, the Approved Subcontractors (as applicable), or the Services, to enable the Commonwealth to:

i assess the reasonableness of the adjustments to the pricing and payments;

ii understand the basis on which those adjustments to the pricing and payments have been calculated; and

iii verify compliance with clause 3.22 of the SOW.

1.9 RRDS Contract

1.9.1 Nothing in this Contract limits any right or obligation of either party under the RRDS Contract and nothing in the RRDS Contract limits any right or obligation of either party under this Contract.

1.9.2 The Contractor acknowledges that it is responsible under this Contract for the design, development and production of the Supplies and its obligations (including warranties) in respect of the Supplies (including the design of the Supplies) are not affected or limited by




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the RRDS Contract or any Commonwealth act or omission under the RRDS Contract including any review, approval or comments on any deliverables from the RRDS Contract by the Commonwealth under the RRDS Contract or by the inclusion in this Contract of any deliverables from the RRDS Contract.

2 ROLES AND RESPONSIBILITIES

2.1 Commonwealth Representative

2.1.1 The Commonwealth Representative is responsible for administering the Contract on behalf of the Commonwealth.

2.1.2 The Commonwealth Representative may delegate its functions, or authorise that its functions be carried out on its behalf. The Commonwealth shall notify the Contractor of the persons who are Authorised Persons, which may include a person who is not a Commonwealth officer, from time to time, and the scope of their delegation or authorisation.

2.1.3 The Contractor shall comply with the reasonable directions of:

a. the Commonwealth Representative made within the scope of the administration of the Contract; and

b. an Authorised Person, within the scope of their delegation or authorisation.

2.1.4 If given orally, a direction shall be confirmed in writing within 10 Working Days. Unless otherwise specified in the Contract, the Commonwealth Representative or any Authorised Person has no authority to waive any provisions of, or release the Contractor from, its obligations under the Contract except in accordance with clause 10.1 or clause 8.4 of the SOW.

2.1.5 Unless authorised by the Contract, any work performed or cost incurred by the Contractor in response to a communication from the Commonwealth Representative or an Authorised Person is at the Contractor’s sole risk.

2.2 Contractor Representative

2.2.1 The Contractor shall on or before Effective Date specified in the Details Schedule notify the Commonwealth of the Contractor Representative with the authority to represent the Contractor for the purposes of the Contract.

2.3 Notices

2.3.1 Unless the contrary intention appears, any notice under the Contract shall be effective if it is in writing and sent from and delivered to the Commonwealth Representative or Contractor Representative, as the case may be, in accordance with the Notice Details specified in the Details Schedule.

2.3.2 A notice given in accordance with this clause 2.3 is deemed to be delivered:

a. if hand delivered, when received at the address;

b. if sent by pre-paid post, in three Working Days when sent within Australia and in eight Working Days when sent by air mail from one country to another;

c. not used; or

d. if sent as an email, when the email enters the recipient’s information system, unless the sender’s information system receives a message within one Working Day that the email has not been delivered to the recipient,

but if the receipt, transmission or entry into the information system is not on a Working Day or is after 5.00pm (recipient's local time) on a Working Day, the notice is taken to be received at 9.00am (recipient’s local time) on the next Working Day.

2.4 Cooperation and coordination

2.4.1 The Contractor acknowledges and agrees that:




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a. the performance of the Contract will occur in parallel with the performance of other significant Commonwealth contracts that are being performed, or will be performed in future, by Commonwealth Contractors or other Associated Parties;

b. the performance of the Contract will rely upon the Contractor’s use of facilities that are situated in close proximity to, and, in some cases shared with, Commonwealth Contractors or other Associated Parties;

c. the Contractor’s performance of the Contract may also rely upon infrastructure and other resources which may also required by Commonwealth Contractors or other Associated Parties to perform their contracts with the Commonwealth;

d. it is of significant importance to the Commonwealth that the Contractor performs its obligations under this Contract in a manner which does not adversely impact upon the performance of Commonwealth Contractors or other Associated Parties; and

e. it is reasonable for the Commonwealth to require the Contractor, as a professional and experienced contractor, to ensure that:

i to the extent reasonably practicable its activities in connection with the Contract are coordinated with Commonwealth Contractors or other Associated Parties that may work in proximity with the Contractor;

ii it cooperates with Commonwealth Contractors, Associated Parties, and the Commonwealth, as necessary to ensure that there is no, or minimal, disruption to the performance of the Contract and the contractual obligations owed to the Commonwealth by Commonwealth Contractors and other Associated Parties.

2.4.2 The Contractor shall:

a. ensure, to the extent reasonably practicable, that its use of facilities, equipment, infrastructure and other resources under or in connection with the Contract does not adversely impact on the performance of contractual obligations owed to the Commonwealth by Commonwealth Contractors and other Associated Parties;

b. cooperate with the Commonwealth, Commonwealth Contractors and other Associated Parties in relation to the performance of the Contract so as to avoid or minimise any adverse impacts on the performance of contractual obligations owed to the Commonwealth by Commonwealth Contractors and other Associated Parties;

c. to the extent reasonably practicable, coordinate its activities under or in connection with the Contract with Commonwealth Contractors and other Associated Parties, so as to:

i ensure that it is not delayed or otherwise disrupted in the performance of the Contract; and

ii avoid or minimise any adverse impacts on the performance of contractual obligations owed to the Commonwealth by Commonwealth Contractors or other Associated Parties;

d. ensure that the Commonwealth is kept informed of any actual or potential disruptions or conflicts between the work of the Contractor and the activities being conducted by Commonwealth Contractors or other Associated Parties; and

e. comply with the reasonable written directions of the Commonwealth in relation to the performance of activities by Commonwealth Contractors or other Associated Parties, including, where required by the Commonwealth ensuring that the Contractor makes available to, and does not interfere with or disrupt, Commonwealth Contractor’s, or other Associated Parties’, access to, and use of, facilities, infrastructure and resources.




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3 PRODUCTION OF THE SUPPLIES

3.1 Standards of Work and Conformity


a. carry out its work under the Contract (including designing, developing, manufacturing, constructing, installing, integrating and testing the Supplies, and providing services):

i in accordance with the standards specified in this Contract and all applicable laws; and

ii otherwise in accordance with good industry practice,

b. ensure that the Supplies conform to the requirements of the Contract; and

c. ensure that the Supplies are compatible with and do not restrict the performance of, or adversely affect, existing equipment specified or referred to in the Contract or that the Contractor knows or ought reasonably to know will, or may, be used with the Supplies.

3.1.2 For the purpose of this clause, 'good industry practice' means practices, methods and standards that would reasonably be expected from professional and experienced contractors in the relevant industry undertaking the same type of work as the Contractor in the same or similar circumstances.

3.2 Authorisations

3.2.1 The Contractor shall, and shall ensure that its Subcontractors:

a. obtain and maintain in full force all Authorisations (other than Export Approvals);

b. take all reasonable steps to obtain and maintain in full force all Export Approvals;

c. provide a copy of any Authorisations to the Commonwealth within five Working Days of request by the Commonwealth; and

d. ensure that all work under the Contract is performed and the Supplies are provided in accordance with all Authorisations.

3.2.2 The Contractor shall notify the Commonwealth Representative within five Working Days after receiving notification that an Authorisation is refused, revoked or qualified.

3.2.3 The Contractor shall notify the Commonwealth Representative within five Working Days after:

a. the application for an Export Approval;

b. the grant of, or a new requirement for, an Export Approval.

3.2.4 The Commonwealth shall, on request by the Contractor, give the Contractor all assistance reasonably required to facilitate the provision of an Export Approval, including the provision of a certificate by the Commonwealth as to the end use of the Supplies.

3.2.5 The Commonwealth shall take all reasonable steps to ensure that the provision and use of GFM by the Contractor under the Contract is permitted under all applicable Export Approvals.

3.2.6 The Contractor shall, on request by the Commonwealth, give the Commonwealth all assistance reasonably required to ensure that the provision and use of GFM by the Contractor is permitted under all applicable Export Approvals.

3.2.7 If a party becomes aware of a breach of an Export Approval, it shall promptly notify the other party and cooperate with any investigation or disclosure to the relevant government authorities in relation to such breach.

3.3 Imports and Customs Entry

3.3.1 The Contractor shall arrange customs entry and the payment of any customs duty applicable to any aspect of the provision of the Supplies at no additional cost to the Commonwealth, except as provided in this clause 3.3.




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3.3.2 The Contractor shall give the Commonwealth Representative a notice, including supporting evidence, of any variation to the rate of customs duty applicable to the Supplies between the Base Date specified in the Details Schedule and the relevant date of entry and:

a. in the case of an increase, the Contractor may claim reimbursement in the amount of such increase; or

b. in the case of a decrease, an amount equivalent to the reduction in the customs duty payable as a consequence of the decrease becomes a debt which the Commonwealth may recover under clause 12.6.

3.3.3 The Commonwealth shall not be liable to reimburse the Contractor for any fines or penalties imposed on the Contractor under any Australian customs, excise or duty legislation applicable to the importation of the Supplies.

3.4 Provision and Management of Government Furnished Material

Note to tenderers: Government Furnished Material (GFM) will be identified in Attachment D to the Contract and is Defence owned material which will be provided to the Contractor to apply in the performance of the Contract. Required GFM will be identified by the Commonwealth and the tenderers and the final list of GFM to be included in the Contract (including the timings for access to GFM) will be discussed and agreed during negotiations with the successful tenderer.

3.4.1 The Commonwealth shall deliver or provide access to, and the Contractor shall manage, GFM in accordance with the Contract.


a. the Commonwealth’s obligations to provide GFM on the dates or at the times described in Attachment D is subject to the Contractor delivering the Supplies in accordance with clause 6.1.1; and

b. any delay of the Contractor in meeting its obligations under the Contract may result in the Commonwealth not being able to provide GFM at the time the Contractor requires delivery of or access to that GFM.

3.4.3 Subject to any other rights of the Commonwealth under the Contract, if at any time the Commonwealth is unable to deliver or provide access to GFM in accordance with the Contract because of a delay by the Contractor in meeting its obligations under the Contract, the Commonwealth:

a. shall use reasonable endeavours to accommodate changes to the Contractor’s requirements for delivery or access to GFM and to deal with them in accordance with clause 10.1 and

b. is only required to deliver or provide access to the GFM at the time it becomes available for use for the purposes of the Contract,

and the Commonwealth shall give the Contractor such notice as is reasonably practicable in the circumstances of the dates on which the items of GFM will be made available.

3.4.4 To avoid doubt, clause 3.4.3 does not require the Commonwealth to remove GFM from operational requirements, or to provide GFM allocated to or available for other contracts.

3.4.5 If the Commonwealth fails to deliver or provide access to GFM on the dates:

a. set out in Annex A to Attachment D,

b. notified in accordance with clause 3.4.3,

the Contractor may make a claim for postponement of the date for delivery and postponement costs of affected Supplies, except to the extent that the failure to deliver or provide access to the GFM was caused by a default or an unlawful or negligent act or omission of the Contractor or Contractor Personnel. The process for submission and consideration of the claim shall be undertaken, and any rights of the Contractor determined, in accordance with clauses 6.2 and 6.4.

3.4.6 Subject to clause 3.4.7 the Commonwealth’s inability to deliver or provide access to GFM in the circumstances described in clause 3.4.3 is not an event beyond the reasonable control of the Contractor for the purposes of clause 6.3.1a.ii.




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3.4.7 Clause 3.4.6 does not operate to limit the operation of clause 6.4.1 in circumstances where:

a. the relevant GFM is Commonwealth Mandated GFM; or

b. the delay giving rise to the Contractor’s changed requirement for delivery of or access to GFM is an event in respect of which postponement was granted by the Commonwealth in accordance with clause 6.2.

3.4.8 The Contractor shall be responsible for ensuring that the GFM does not adversely impact on production, delivery or functionality of Supplies.

3.4.9 The Contractor acknowledges and agrees that the Commonwealth does not give any warranty or representation about the suitability or fitness of any GFM for any particular use or application, except as expressly set out in the Contract.


a. the Government Furnished Information (GFI) is not furnished to the Contractor for the purpose of either directing or guiding the Contractor’s task under the Contract;

b. the Commonwealth does not warrant the accuracy or precision of the GFI; and

c. the Contractor shall be responsible for the application or use of the GFI and any conclusions, assumptions or interpretations made by the Contractor on the basis of the GFI, or its application or use of them.

3.4.11 The Commonwealth shall ensure that each item of Government Furnished Data (GFD) and Commonwealth Mandated GFM is fit for the purpose specified in respect of that item in Attachment D, except to the extent that the item is not fit for the relevant purpose as a result of a failure, damage, defect or deficiency in the item that:

a. would have become apparent in the course of an examination or test of the item required by the Contract;

b. resulted from misuse of the item by the Contractor or Contractor Personnel;

c. resulted from a modification or integration action by the Contractor or Contractor Personnel;

d. was within the control of the Contractor or Contractor Personnel; or

e. was present in the item when it was provided to the Commonwealth by or through the Contractor or a Related Body Corporate (whether under the Contract or another contract).

3.5 Government Furnished Facilities (GFF)

Note to tenderers: For the purpose of responding to this RFT, tenderers should assume that the successful tenderer will be provided with access to buildings at the Osborne Precinct, Techport in South Australia (SA), as detailed in TDR E-12. However, as the buildings are not owned or managed by the Department of Defence, they will not necessarily be classified as GFF for the purpose of the Contract.

The parties to and terms of the access agreement are yet to be determined. This clause will only be included within the Contract if a GFF Licence is to be provided to the Contractor. If a GFF Licence is required, the Commonwealth will provide the tenderer with the proposed wording for the GFF Licence and proposed changes to the Contract or the SOW.

3.5.1 The Commonwealth grants to the Contractor a non-exclusive licence to occupy and use the GFF on the terms set out in Annex J to Attachment H.

3.5.2 Each party shall comply with its obligations under Annex J to Attachment H.

3.6 Key Persons

Note to tenderers: The Commonwealth may require certain personnel of the Contractor or key Subcontractors to be nominated to perform specific Key Staff Positions. This is intended to ensure that the Commonwealth has assurance that those personnel will be retained in their




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roles for the Project. It is also intended to ensure the Commonwealth has visibility of changes in personnel that the Commonwealth considers may be key to the success of the Project.

3.6.1 The Contractor shall ensure that each person named in Attachment L is appointed to the Key Staff Position nominated for that person.

3.6.2 If the Contractor becomes aware that a Key Person will or may become unavailable for the performance of work under the Contract for a period of four consecutive weeks or more the Contractor shall:

a. promptly notify the Commonwealth of the impending unavailability; and

b. as soon as possible, nominate a replacement with comparable experience, skills and expertise.

3.6.3 The Commonwealth may at any time give a notice, including reasons, directing the Contractor to remove Contractor Personnel or Subcontractor from work in respect of the Supplies, if in the Commonwealth Representative’s reasonable opinion the person specified in the notice is:

a. unable to perform the work required of them under the Contract for reasons of incapacity or incompetence; or

b. not appropriate to perform the work required of them under the Contract for reasons relating to WHS, security, equity and diversity, probity or the relationship between the Commonwealth and the Contractor.

3.6.4 If the Commonwealth gives the Contractor a notice under clause 3.6.3 the Contractor shall (or shall ensure that the relevant Subcontractor shall):

a. within the time specified in the notice remove the person from work; and

b. as soon as practicable, nominate a replacement with comparable experience, skills and expertise.

3.6.5 For any person nominated by the Contractor as a Key Person or to replace a Key Person under clause 3.6.2b or clause 3.6.4b, the Contractor shall give the Commonwealth with the documentation required by clause 3.4 of the SOW.

3.6.6 If the Contractor nominates a person to replace a Key Person under clause 3.6.2b or clause 3.6.4b, the Commonwealth shall notify the Contractor within 10 Working Days of receiving the documentation in clause 3.6.5 whether or not the nomination has been accepted (including reasons if not accepted). If the Commonwealth notifies the Contractor that a nomination is not accepted, the Contractor shall promptly nominate another person to replace the person.

3.6.7 Any requirement to remove or replace any Key Person under this clause, and the Contractor’s inability to find a suitable replacement person, shall not be taken to be an event beyond the reasonable control of the Contractor for the purposes of clause 6.3.1a.ii.

3.6.8 If the Contractor is required to replace any Key Person under this clause and a replacement person is not accepted by the Commonwealth under clause 3.6.6 within three months after the Commonwealth first receives a notice under clause 3.6.2 or the Commonwealth provides notice under clause 3.6.3, the Commonwealth may give the Contractor a Default Notice in accordance with clause 12.3.

3.7 Commonwealth Property

3.7.1 The Contractor acknowledges that GFM and any other Commonwealth Property provided to or used by the Contractor or a Subcontractor for the purposes of the Contract, remains the property of the Commonwealth.

3.7.2 The Commonwealth retains the right to identify Commonwealth Property as its property and the Contractor shall preserve any means of identification. The Commonwealth Representative shall notify the Contractor of any IP rights or foreign government restrictions applicable to GFM and any other Commonwealth Property provided to, or used by the Contractor or a Subcontractor, and the Contractor shall ensure that the GFM and relevant Commonwealth Property is used strictly in accordance with those rights and restrictions.




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3.7.3 The Contractor shall only use Commonwealth Property:

a. for the purposes of the Contract;

b. in a manner consistent with any applicable requirements for the Commonwealth Property, including as set out in the SOW; and

c. for the purposes for which the Commonwealth Property was designed, manufactured or constructed or as otherwise required by the Contract.

3.7.4 The Contractor shall not, without the prior written approval of the Commonwealth Representative do any of the following:

a. modify Commonwealth Property;

b. move Commonwealth Property from the location to which it was delivered (except to return the property to the Commonwealth); and

c. transfer possession or control of Commonwealth Property to any other person,

except to the extent reasonably necessary to enable the Contractor to satisfy an express requirement of the Contract..

3.7.5 The Contractor shall not, without the prior written approval of the Commonwealth Representative create or allow to be created any Security Interest over any Commonwealth Property.

3.7.6 The Contractor shall return all items of Commonwealth Property (including GFM) that are required to be returned to the Commonwealth in accordance with the SOW, Attachment D or as otherwise directed by the Commonwealth Representative.

3.7.7 The Contractor acknowledges that it may be provided with the ability to access Commonwealth-held information in connection with its performance of the Contract, including through access to Commonwealth information technology systems. The Contractor shall not access or use Commonwealth-held information except to the extent strictly required for the performance of the Contractor’s obligations under the Contract.

3.7.8 Without limiting the Contractor's other obligations with respect to Commonwealth Property under this Contract, the Contractor shall notify the Commonwealth Representative within five Working Days after becoming aware of any material loss or damage to, or any material defect in, any Commonwealth Property provided to, or used by, the Contractor or a Subcontractor for the purposes of the Contract.

4 AUSTRALIAN SHIPBUILDING INDUSTRY

4.1 Australian Ship Builder

4.1.1 The Contractor must ensure that:

a. the Australian Ship Builder; or

b. at least one shareholder in the Australian Ship Builder satisfies the following requirements for the term of the Contract:

i demonstrated capability to build or deliver major upgrades to vessels as close as possible to the Commonwealth’s requirements for the OPV (steel hull construction, indicative size of about 80 metres and 1800 tonnes);

ii current registration as an Australian registered company, having continuously maintained that registration for at least 15 years;

iii demonstrated capability to deliver an ongoing ship building or major upgrade program over the last 15 years;

iv demonstrated international competitiveness and compliance with appropriate industry quality control standards; and

v demonstrated financial viability.




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4.2 Australian Industry Capability

Note to tenderers: Maximising Australian Industry Capability in the Contract’s performance is of high importance to the Commonwealth. The tenderer is to Australian Industry Capability from the Effective Date of the Contract without impacting the following:

a. production commencement in 2018; and

b. compliance with the System Specification at Part B to Annex A of the SOW.

The Commonwealth will require the successful tenderer to continuously monitor and proactively identify opportunities for increasing Australian Industry Capability in the delivery of the Contract in accordance with clause 3.13 of the SOW. The successful tenderer will be required to present options for increasing AIC in accordance with clause 3.13 of the SOW and (if relevant) as part of any Design Refresh Review conducted in accordance with clause 3.22 of the SOW.

The Commonwealth has an overarching objective to establish a continuous naval surface ship building program and through it a highly skilled, sustainable and enduring Australian naval surface ship building industry. This includes establishing and maintaining a highly skilled Australian ship building workforce that has the necessary expertise and depth to support future Australian shipbuilding programs. It also includes building (where relevant) and maintaining a competitive and commercially viable Australian industrial supply chain.

The Commonwealth views the SEA1180-1 Project as an important contributor to the achievement of this objective. The Commonwealth’s expectation is that the successful tenderer will contribute to the achievement of this objective under any resultant Contract through the delivery of the OPVs and also by way of specific commitments to support Australian naval surface ship building industry.

The Commonwealth proposes to implement an incentive program to ensure the Contractor commits to maximising Australian Industry Capability and ship building productivity over the life of the program including as outlined in clause 3.13 and clause 3.22 of the SOW. The exact details of the proposed incentive program will be discussed with ODIA participants or the preferred tenderer during negotiations. Tenderers may wish to propose incentive arrangements which commit to maximising Australian Industry Capability and ship building productivity.

The successful tenderer will also be required to comply with Defence’s Australian Industry Capability policies through, among other things, the implementation of an agreed AIC Plan. For relevant information on Australian Industry policies and requirements – please refer to http://www.defence.gov.au/casg/DoingBusiness/Industry/Industryprograms/AustralianIndustryCapability/


a. the involvement of Australian Industry in the delivery of the Contract; and

b. its contribution to building and maintaining a skilled, sustainable and enduring Australian naval surface shipbuilding capability through the delivery of the Contract,

is of significant importance to the Commonwealth.

4.2.2 The Contractor shall comply with clause 3.13 of the SOW and the AIC Plan at Annex B to Attachment E.

Note to tenderers: Subject to the successful tenderer’s response to TDR A-7 and the outcomes of ODIAs and negotiations with the successful tenderer, clause 4.2.2 and clause 4.2.3 may be amended to include reference to the successful tenderer’s commitments regarding continuous Australian naval surface ship building capability.

4.2.3 Without limiting or affecting the Contractor’s obligations under clause 4.2.2, the Contractor shall:

a. take all necessary steps to maximise the participation of Australian Industry in the performance of the Contract on and from the Effective Date;




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b. continuously monitor and explore opportunities for the increased participation of Australian Industry in the performance of the Contract throughout the term of the Contract; and

c. liaise with the Commonwealth in relation to Australian Industry participation in the performance of the Contract throughout the term of the Contract, including in accordance with clause 3.13 of the SOW and the AIC Plan at Annex B to Attachment E.

4.2.4 The Contractor agrees that:

a. compliance with the AIC Plan and this clause 4.1 shall not relieve the Contractor from its liabilities or obligations under the Contract;

b. Acceptance of the Supplies shall not relieve the Contractor from meeting its obligations under the AIC Plan or otherwise under the Contract; and

c. the public AIC Plan section of the AIC Plan will be made publicly available on a Commonwealth internet website.

5 INTELLECTUAL PROPERTY

5.1 General Intellectual Property Obligations

5.1.1 The Contractor shall comply with clause 3.14 of the SOW, including by developing, delivering and updating the IP Plan in accordance with clause 3.14.1.2 of the SOW.

5.1.2 The Contractor acknowledges and agrees that any limitations set out in the IP Plan that are inconsistent with the minimum rights to IP and Technical Data described in clause 5.3.4 shall be deemed to have no force or effect and shall not operate to limit the Commonwealth’s rights to IP and Technical Data described in this clause 5.

Contractor to obtain required IP

5.1.3 The Contractor shall identify and obtain all the Technical Data (TD) and associated Intellectual Property (IP) rights necessary for:

a. the Contractor to fully and properly provide the Supplies in accordance with the Contract including complying with this clause 5;

b. the Commonwealth to perform the activities in respect of, and permitted by, this Contract, including the activities referred to in clause 5.

Work Instructions

5.1.4 The Contractor acknowledges the importance to the Commonwealth of being able to provide the Work Instructions delivered under the Contract to any tenderers to a Request issued by the Commonwealth in relation to the support of the OPVs and to any subsequent Contractor (Support) and its contractors.

5.1.5 Without limiting the Contractor’s obligations under clause 5.3, the Contractor shall obtain all IP rights and consents necessary to ensure that the Commonwealth can, and warrants that the Commonwealth will be entitled to:

a. use the Work Instructions delivered under the Contract for preparing for any Request related to the support of the OPVs;

b. provide the Work Instructions to participants in any such Request; and

c. provide the Work Instructions to the successful tenderer under any such Request.

5.2 Ownership of Intellectual Property

Note to tenderers: The definitions of Background, Foreground and Third Party IP are as set out in Attachment M to the Contract. The Commonwealth will require the successful tenderer to grant broad licences to IP to the Commonwealth to enable it to obtain the full use and benefit of the Supplies throughout their life of type. The Commonwealth will also require the successful tenderer to deliver Technical Data to the Commonwealth to (among other things) support the




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Commonwealth to exercise its IP rights. The Commonwealth’s IP rights as set out in clause 5 co-exist with the Commonwealth’s commitments relating to the protection of confidential information owned by the successful tenderer.

5.2.1 Nothing in the Contract affects the ownership of Background IP or Third Party IP.

5.2.2 Ownership of all Foreground IP vests on its creation in the Contractor or Approved Subcontractor as the case may be.

5.3 Intellectual Property Licences

Contractor Background IP

5.3.1 Subject to the limitations set out in the IP Plan, the Contractor grants to the Commonwealth a Licence in respect of all Background IP and Foreground IP that is owned (including jointly owned) by the Contractor or a Related Body Corporate of the Contractor to exercise the Background IP and Foreground IP for Defence Purposes.

Approved Subcontractor IP

5.3.2 Subject to the limitations set out in the IP Plan, before an Approved Subcontractor commences work in relation to the provision of the Supplies (or within 20 Working Days after the Effective Date, if that is later), the Contractor shall:

a. ensure that the Approved Subcontractor grants the Commonwealth a Licence in respect of all Background IP and any Foreground IP owned (including jointly owned) by the Approved Subcontractor (or a Related Body Corporate of the Approved Subcontractor) to exercise the Background IP and Foreground IP for Defence Purposes; and

b. arrange for the Approved Subcontractor to execute a deed substantially in the form of the Approved Subcontractor IP Deed set out at Annex A to Attachment H and provide the deed to the Commonwealth.

Third Party IP

5.3.3 The Contractor shall ensure that the Commonwealth is granted a licence in respect of all Third Party IP on the best available commercial terms consistent with clause 5.3.4.

Minimum Rights

Note to tenderers: this clause sets out the minimum IP rights required by the Commonwealth, not the IP rights the Commonwealth may be prepared to purchase on a value for money basis. Any tenderer indicating a non-compliance with this clause must: (1) specify the extent of non-compliance (including which paragraph it is not able to comply with and the particular part of the Supplies affected); and (2) propose a work-around (including proposed drafting) which satisfies the Commonwealth’s requirements to be able to approach the market for the sustainment of the Mission System and to obtain value for money in its procurements. The Commonwealth is prepared to accept certain limits on the right to modify and adapt some of the Supplies (or parts of the Supplies) but only in respect of material modifications or adaptions and provided there is protection offered in respect of the risks to the Commonwealth, including in respect of obtaining value for money for any work required.

5.3.4 The Contractor shall ensure that notwithstanding any limitations in the IP Plan, the licences granted or to be granted under clauses 5.3.1, 5.3.2 and 5.3.3 expressly include the right of the Commonwealth, or a person on behalf of the Commonwealth, to exercise the Background IP with the Foreground IP and to exercise the Third Party IP with the Background IP and Foreground IP (or any combination) to:

a. properly use and support the Supplies throughout and beyond their LOT;

b. dispose of the Supplies (including after their LOT);

c. modify, adapt and develop the Supplies (other than Expendables and Consumables) for Defence Purposes;

d. use and reproduce TD and data items for Defence Purposes;




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e. install and reinstall any software;

f. reproduce software for back up and security purposes;

g. integrate other supplies with the Supplies and do all things necessary to enable that integration to occur;

h. develop and create Training Equipment (including models, replicas, test environments and simulators) and Training Materials for Defence Purposes, develop Training Support and obtain or perform Training services;

i. undertake studies in respect of the Supplies for Defence Purposes including but not limited to replicating the setup on each OPV (including software) for simulation, test and evaluation purposes;

j. complete the Supplies upon termination of this Contract other than pursuant to clause 12.4;

k. remedy Defects in the Supplies in accordance with clauses 6.5.5, 6.8.7, and 9.3.5; and

l. sublicense any of the rights in clause 5.3.4a to clause 5.3.4k to a third party for the purpose of providing goods and services to the Commonwealth for Defence Purposes or for the purpose of responding to a Request for the purpose of engaging the person to do any of the things set out in clauses 5.3.4a to clause 5.3.4k.

5.3.5 Without limiting the Contractor's obligations under the Contract, if the Contractor, despite its best endeavours, cannot comply with clause 5.3.4 in respect of a licence of any Third Party IP, the Contractor shall:

a. notify the Commonwealth Representative in writing of the best alternative licence terms for that Third Party IP and not use that Third Party IP unless the Commonwealth Representative consents in writing to those terms; and

b. if the Commonwealth Representative does not consent, notify the Commonwealth Representative of any comparable Third Party IP and comply with its obligations under this clause 5 in respect of that comparable Third Party IP.

5.3.6 If the Commonwealth provides consent in writing under clause 5.3.5, the limitation shall be recorded in the IP Plan with a specific reference to the consent and the consent shall be included in the IP Records.

5.3.7 The Contractor warrants that the only IP embodied in the Supplies that has not been vested in the Commonwealth or in respect of which the Commonwealth has not been granted a Licence under clause 5.3.1 or clause 5.3.2 is Third Party IP.

5.4 Provision of Technical Data (TD)

5.4.1 Subject to clause 5.4.3, the Contractor shall deliver TD to the Commonwealth in accordance with the SOW.

5.4.2 Not Used.

5.4.3 The Contractor shall provide with the Supplies all TD necessary for the Commonwealth to exercise its IP rights for the purposes permitted by the licences granted under or pursuant to clause 5.3.

5.4.4 The Contractor acknowledges and agrees that the Commonwealth may provide TD to a third party to enable the Commonwealth to fully exercise its IP rights under clause 5.

5.4.5 The Contractor shall ensure that all TD provided to the Commonwealth will enable a reasonably skilled person to efficiently and effectively do the things permitted to be done by the Commonwealth in the exercise of its IP rights under clause 5.3.

5.4.6 When the Commonwealth Representative requires additional TD to enable the Commonwealth to fully exercise its IP rights under clause 5, the Contractor shall deliver such TD to the Commonwealth Representative no later than 30 Working Days from the date of the Commonwealth's written request, or as otherwise agreed at no additional cost to the Commonwealth.




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5.4.7 Before an Approved Subcontractor commences work in relation to the provision of the Supplies, the Contractor shall, in the relevant Approved Subcontract and in the deed referred to in clause 5.3.2b, include provisions functionally equivalent to the obligations contained in this clause 5.4.

5.5 Release to Third Parties

5.5.1 If the Commonwealth makes available to another person any IP rights that are owned by the Contractor or an Approved Subcontractor and which is Foreground IP or Background IP, the Commonwealth shall obtain from that person a deed of confidentiality or other form of commitment that that person shall maintain the confidentiality of the relevant IP.

5.6 Additional IP

5.6.1 The Contractor acknowledges that, when the Contractor is performing its obligations under this clause, the Commonwealth relies on the Contractor's good faith and expertise.

5.6.2 If, at any time up until 10 years after Final Acceptance, the Commonwealth requires IP or TD (or both) that is additional to that which the Commonwealth is entitled in accordance with clause 5 ('Additional IP'), the Commonwealth Representative may request the Contractor in writing to provide the Additional IP.

5.6.3 Within 20 Working Days, or another period agreed with the Commonwealth Representative, of receiving a written request from the Commonwealth Representative under clause 5.6.2 the Contractor shall:

a. to the extent the Additional IP is owned by the Contractor, offer to grant the Commonwealth a Licence to the Additional IP on terms no less favourable than the conditions of this Contract;

b. to the extent the Additional IP is owned by an Approved Subcontractor, exercise the right under the Deed from that Approved Subcontractor to obtain an offer to License that Additional IP to the Commonwealth on terms no less favourable than the conditions of the Approved Subcontract or on the best available terms, whichever is more favourable; and

c. to the extent the Additional IP is owned by a person other than the Contractor or any Approved Subcontractor, obtain an offer to license that Additional IP to the Commonwealth on the best available terms.

5.7 Moral Rights

5.7.1 The Contractor represents and warrants that the use of the Supplies for Defence Purposes or other purposes permitted by the Contract will not infringe the Moral Rights of the Contractor Personnel.

5.7.2 The Contractor shall ensure that none of the Contractor Personnel institute, maintain or support any claim or proceeding against the Commonwealth or Commonwealth Personnel for infringement of any of their Moral Rights.

5.8 Software Design Data

5.8.1 Without limiting the Contractor's obligations under this clause 5, the Contractor shall, and shall ensure that Approved Subcontractors shall, ensure that any Software Design Data to be provided as TD to the Commonwealth in accordance with this clause 5 shall be in sufficient detail to:

a. provide a clear understanding of the design and operation of internal interfacing and external interfacing software systems;

b. provide a complete and accurate technical description of the design and operation of the software system to permit investigation and isolation of software failures and defects in service; and

c. provide material and information to enable software maintenance, modifications and design enhancements to be implemented and fully tested.




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5.9 Survival

5.9.1 This clause 5 survives the expiry or termination of this Contract




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6 DELIVERY, ACCEPTANCE AND OWNERSHIP

6.1 Delivery

6.1.1 The Contractor shall deliver Supplies in accordance with the Contract, including the Price Schedule at Annex A to Attachment B and clause 2.2 of the SOW. The Contractor shall achieve the Milestones by the relevant Milestone Dates.

6.1.2 Without limiting the Commonwealth’s other rights and remedies under the Contract or at law, if the Contractor does not comply with its obligations under clause 6.1.1, the Commonwealth may be entitled to:

a. suspend some or all payments under the Contract in accordance with clause 7.7;

b. recover liquidated damages or accept compensation under clause 7.10; or

c. terminate the Contract under clause 12.2.1

6.1.3 Without limiting the Contractor’s obligations in clause 6.1.1, the Contractor shall, for each Milestone, ensure that the Commonwealth is placed in a position where it can perform the Commonwealth’s tasks required for achievement of that Milestone in sufficient time before the Milestone Date.

6.2 Delay

6.2.1 Without affecting the Contactor’s obligations under clause 6.1.1, the Contractor shall take all reasonable steps to prevent and minimise delay and to mitigate both parties’ Losses due to delay.

6.2.2 If the Contractor becomes aware that delivery of Supplies or the achievement of a Milestone will or may be delayed for any reason, the Contractor shall notify the Commonwealth Representative of the following matters, to the extent that the Contractor is aware of them:

a. the cause and nature of the delay;

b. the steps that the Contractor and its Subcontractors are taking and will take to minimise the delay;

c. the anticipated duration of the delay; and

d. whether the Contractor proposes to claim postponement of a date for delivery of Supplies or the Milestone Date, or seeks any other change to the Contract, on the basis of the delay.

6.2.3 A notice under clause 6.2 shall be given as soon as practicable after the Contractor becomes aware of the delay or potential delay, but no later than 30 days after the Contractor becomes so aware.

6.2.4 The Contractor shall notify the Commonwealth as soon as practicable after the Contractor becomes aware of a material change to information notified under clause 6.2.

6.2.5 The Contractor shall comply with any request by the Commonwealth Representative for information concerning a delay or potential delay in the delivery of Supplies or the achievement of a Milestone.

6.3 Postponement

6.3.1 Subject to clauses 6.3.2 and 6.3.3, the Contractor shall be entitled to postponement of a date for delivery of Supplies or a Milestone Date to the extent that:

a. an event or circumstance:

i delays the Contractor in the performance of its obligations under the Contract;

ii is beyond the reasonable control of the Contractor and its Subcontractors; and

iii could not have been reasonably contemplated and allowed for by the Contractor or its Subcontractors before entering the Contract; or

b. the Contractor is delayed in the performance of its obligations under the Contract by:

i a Commonwealth Default;




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ii an Excepted Risk; or

iii a GFF Delay Event,

but only if:

c. the Contractor has notified the Commonwealth as required by clauses 6.2.2 to 6.2.5 in relation to the relevant event or circumstance;

d. the work under the Contract cannot be performed in such a way as to meet the date for delivery of Supplies or the Milestone Date as is reasonable having regard to the Contract Price and any other relevant circumstances;

e. the Contractor has made and will make all reasonable endeavours to minimise delay and mitigate both parties’ Losses;

f. in the case of a delay resulting from an Excepted Risk, the Contractor has taken reasonable steps to prevent the delay occurring; and

g. the Contractor submits a claim for postponement in accordance with clause 6.3.4 and 6.3.6.

6.3.2 Without limiting clause 6.3.1c to 6.3.1g, the Contractor shall not be entitled to postponement of a date for delivery of Supplies or a Milestone Date to the extent that the relevant delay resulted from:

a. a Contractor Default;

b. compliance with a direction under clause 11.4.10; or

c. the Commonwealth’s inability to action a data item within the timeframes described in the CDRL in circumstances described in clause 2.3.8.2 of the SOW.

6.3.3 The Contractor shall not be entitled to postponement of a date for delivery of Supplies or a Milestone Date for a period longer than the duration of the relevant delay.

6.3.4 The Contractor claims postponement of a date for delivery of Supplies or a Milestone Date by submitting to the Commonwealth:

a. a notice setting out the details of its claim and the relevant event or circumstance;

b. a CCP for the postponement; and

c. documentation demonstrating the Contractor’s entitlement to postponement.

6.3.5 If the delay affects more than one delivery date or Milestone Date, the CCP shall include a revised Annex A and Annex B to Attachment B, as appropriate.

6.3.6 If the Contractor has notified the Commonwealth that it proposes to claim postponement of a date for delivery of Supplies or a Milestone Date, or to seek some other change to the Contract, on the basis of a delay, the Contractor shall make the claim, or seek the change:

a. as soon as it is practicable to do so after that notification; or

b. if the Commonwealth directs the Contractor to do so, in accordance with the direction.

6.3.7 Whether or not the Contractor has sought, or is entitled to, postponement under this clause 6.3, the Commonwealth Representative may, at any time, by notice to the Contractor, postpone the date for delivery of Supplies or a Milestone Date to a date specified in the notice.

6.3.8 The parties acknowledge that:

a. a notice under clause 6.3.7 does not affect any rights the Contractor may have to claim under this clause 6.3 for postponement of the date for delivery of Supplies or a Milestone Date to a date that is later than the date specified in the notice;

b. the Commonwealth Representative is not required to give a notice under clause 6.3.7 merely because it would benefit the Contractor; and

c. giving, or failing to give, a notice under clause 6.3.7 is not capable of being the subject of a dispute for the purposes of clause 12.1 or otherwise subject to review.




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6.3.9 If the Commonwealth Representative issues a notice under clause 6.3.7 and unless the Contractor proposes to claim for postponement under this clause 6.3, the Contractor shall submit a CCP to give effect to the notice.

6.4 Postponement Costs

6.4.1 Subject to clause 6.4.3 and except to the extent that another provision of the Contract provides to the contrary, the Contractor shall only be entitled to postponement costs in respect of a delay when all of the following are satisfied:

a. the delay resulted from a Commonwealth Default or GFF Delay Event;

b. a CCP postponing a date for delivery of Supplies or postponing a Milestone Date in accordance with clause 6.3 in respect of the delay has come into effect;

c. the Contractor claims the postponement costs by notifying the Commonwealth Representative of the amount of the postponement costs as soon as practicable after the determination of the amount by the Contractor but no later than six months after the CCP came into effect; and

d. the Contractor provides substantiating evidence to the satisfaction of the Commonwealth Representative of the costs incurred and steps taken to mitigate the Contractor's Loss.

6.4.2 The Commonwealth Representative shall, within 30 days of receiving a claim under clause 6.4.1

a. Approve the claim, if it satisfies the requirements of clause 6.4.1, and notify the Contractor of the amount of the postponement costs to be paid; or

b. reject the claim, if it does not satisfy the requirements of clause 6.4.1, and notify the Contractor of the reason for rejection.

6.4.3 The Contractor shall only be entitled to postponement costs equal to the unavoidable additional costs incurred by the Contractor as a direct consequence of the Commonwealth Default or GFF Delay Event referred to in clause 6.4.1a.

6.4.4 The Contractor shall maintain books, records, documents and other evidence and accounting procedures and practices, sufficient to justify all postponement costs claimed to have been incurred by the Contractor.

6.5 Acceptance

6.5.1 The Contractor shall offer for Acceptance conforming Supplies to the Commonwealth Representative at the delivery points and dates specified under the Contract.

6.5.2 The Contractor shall, when seeking Acceptance of the Supplies in accordance with clause 6.5.1:

a. complete and present a signed Supplies Acceptance Certificate (SAC) in the form of Annex B to Attachment H, certifying that the Supplies listed on the SAC conform with the requirements of the Contract, except for any:

i Defects that have been previously Approved by the Commonwealth Representative under clause 6.5.4; or

ii minor Defects,

which are detailed on the SAC or attachment to the SAC; and

b. provide any other supporting evidence required by the Commonwealth Representative, including confirmation of successful completion of any AV&V or Acceptance testing required by the Contract.

6.5.3 The Commonwealth Representative shall, within 15 Working Days (or such other period specified in the Contract) after the offer of Supplies for Acceptance:

a. subject to clause 6.5.4, Accept the Supplies by signing the SAC where all requirements in clause 6.5.2 have been met; or




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b. reject the Supplies where the requirements in clause 6.5.2 have not all been met, in which case the Commonwealth Representative shall notify the Contractor in writing of the reasons for rejection and the extent of any non-conformance.

6.5.4 The Commonwealth Representative may Accept Supplies despite the existence of minor Defects in the Supplies. The Commonwealth Representative shall endorse such Defects on the SAC (or on an attachment to the SAC). The Contractor shall, within 10 Working Days after Acceptance (or such longer period as the Commonwealth Representative may agree in writing), make good the items endorsed on the SAC as Defects to the satisfaction of the Commonwealth Representative.

6.5.5 Where the Contractor fails to make good the Defects in accordance with clause 6.5.4 the Commonwealth may, without limiting the Contractor’s warranties and obligations under clause 9, perform or have performed the necessary remedial work at the expense of the Contractor and may recover such expense as a debt due to the Commonwealth under clause 12.6.

6.5.6 If the Commonwealth Representative rejects Supplies under clause 6.5.3b, the Contractor shall, within 10 Working Days of receipt of the advice, provide full written details to the Commonwealth Representative of its proposed remedy.

6.5.7 The Commonwealth Representative shall within 10 Working Days of receipt of the written notice referred to in clause 6.5.6 either:

a. direct the Contractor in writing to complete any course of action proposed by the Contractor within a specified time; or

b. reject the Contractor’s proposal and direct the Contractor to submit an alternative proposal within 10 Working Days after that notice.

6.5.8 If an application for Acceptance is rejected and resubmitted, processing of the resubmitted application shall be subject to the same conditions as if it were the original.


a. the specification of the requirements for the Supplies in the Contract is the result of resource-intensive Commonwealth definition, approval and procurement processes and has been developed based on professional advice and representations given by the Contractor to the Commonwealth including under the RRDS Contract;

b. the Commonwealth has relied on the Contractor’s professional advice and representations about time and specifications for the Supplies (including as reflected in the Contract) when entering into the Contract;

c. the Commonwealth’s determination that the Contract represents value for money is, in part, on the basis that the Acceptance of those Supplies that are subject to Acceptance is achieved with no delay; and

d. it is reasonable that the Commonwealth at all times during the period of the Contract has current knowledge and be advised by the Contractor of:

i progress under the Contract;

ii risks to achievement of Acceptance including potential minor Defects;

iii any other potential or actual non-compliance with the Contract (including non-conforming materials or work);

iv risk management by the Contractor including of emerging risks; and

v any potential delay in meeting any timing obligation in the Contract, for any reason, and whether or not the delay risk was foreseeable or has been previously identified.

6.5.10 Without limiting or affecting the Contractor’s other obligations and the Commonwealth’s rights under the Contract, the Contractor shall:

a. proactively ensure that the Commonwealth is kept informed of matters relevant to the issues in clause 6.5.9, using the communication channels and reporting processes in the Contract; and




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b. comply with any directions by the Commonwealth or the exercise of any other Commonwealth powers under or in relation to the Contract in dealing with such matters.

6.5.11 If the Commonwealth agrees that Acceptance may be achieved despite any minor Defects , the Commonwealth may, after consultation with the Contractor:

a. determine a revised Contract Price reflecting the reduction in value for money of the non-complying Supplies (‘Reduction Amount’);

b. direct the Contractor to provide an Request for Variance in accordance with clause 8.4 of the SOW that is consistent with this clause; and

c. recover the Reduction Amount under clause 12.6 as a debt due to the Commonwealth.

6.5.12 The Commonwealth Representative may require the Contractor to retake possession of any item of Supplies within five Working Days where a notice rejecting the Supplies is issued under clause 6.5.3b. Repossession of Supplies shall not affect the obligation of the Contractor to provide conforming Supplies.

6.5.13 The Contractor shall bear all costs associated with replacing or correcting rejected Supplies and of complying with the directions of the Commonwealth Representative. The Contractor shall have the discretion as to whether it corrects or replaces the Supplies, but any correction or replacement shall conform to the Contract and be capable of Acceptance.

6.5.14 Any action of the Contractor in correcting or replacing the Supplies and in complying with the directions of the Commonwealth Representative under this clause 6.5 shall not entitle the Contractor to claim postponement of the date of delivery of the Supplies under clause 6.4 or relieve the Contractor from performing its obligations under the Contract.

6.6 Final Acceptance

6.6.1 The Contractor shall, when seeking Final Acceptance of the Supplies:

a. complete and present a signed Final Acceptance Certificate (FAC) in the form of Annex C to Attachment H, certifying that the Contractor has fulfilled its obligations under the Contract, except to the extent that the Contractor’s obligations expressly, or by implication, survive the Final Acceptance Milestone, including the obligations in clause 12.6; and

b. provide any other supporting evidence required by the Commonwealth Representative, including confirmation of successful completion of any Final Acceptance testing required by the Contract.

6.6.2 The Commonwealth Representative shall, within 15 Working Days of the Contractor seeking Final Acceptance:

a. endorse the FAC if the following requirements are met:

i the Contractor has achieved all previous Milestones and Acceptance of all Supplies in accordance with clause 6.5; and

ii the Contractor demonstrates to the satisfaction of the Commonwealth Representative that the Supplies function and integrate as required by the Contract and that the Contractor has fulfilled its obligations in accordance with the Contract, except to the extent that the Contractor’s obligations expressly, or by implication, survive the Final Acceptance Milestone, including the obligations in clause 12.6; or

b. reject the FAC where the requirements of Final Acceptance in clause 6.6.2a have not all been met, in which case the Commonwealth Representative shall notify the Contractor in writing of the reasons for the failure.

6.6.3 If the Commonwealth Representative rejects the FAC under clause 6.6.2b, the Contractor shall, within 10 Working Days of receipt of that advice, provide full written details to the Commonwealth Representative of its proposed remedy.

6.6.4 The Commonwealth Representative shall within 10 Working Days of receipt of the written notice referred to in clause 6.6.3 either:




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a. direct the Contractor in writing to complete any course of action proposed by the Contractor within a specified time; or

b. reject the Contractor’s proposal and direct the Contractor to submit an alternative proposal within 10 Working Days after that notice.

6.6.5 If an application for Final Acceptance is rejected and resubmitted, processing of the resubmitted application shall be subject to the same conditions as if it were the original.

6.6.6 The Commonwealth Representative may require the Contractor to retake possession of any item of Supplies within five Working Days where a notice of failure to achieve Final Acceptance is issued under clause 6.6.2b. Repossession of Supplies shall not affect the obligation of the Contractor to provide conforming Supplies.

6.6.7 The Contractor shall bear all costs associated with achieving Final Acceptance and of complying with the directions of the Commonwealth Representative.

6.6.8 Any action of the Contractor in achieving Final Acceptance and in complying with the directions of the Commonwealth Representative under clause 6.6 shall not relieve the Contractor from performing its obligations under the Contract.

6.6A Acceptance and Final Acceptance Not to Affect Commonwealth’s Other Rights

6.6A.1 The Contractor acknowledges and agrees that neither Acceptance nor Final Acceptance of Supplies affects the Commonwealth’s continuing rights, or the Contractor’s continuing obligations, in relation to Supplies, including under clauses 8 and 9.

6.7 Ownership

6.7.1 Subject to clauses 5 and 12.5.3, ownership of Supplies shall pass to the Commonwealth at the following times:

a. for Supplies that are included in a Milestone, upon payment of a claim for that Milestone in accordance with clause 7.2; or

b. for all other Supplies:

i if the Supplies are to be Accepted, upon payment of a claim for the Milestone relating to the Acceptance of the Supplies or, if no Milestone applies, upon Acceptance of the Supplies; or

ii if the Supplies are not subject to Acceptance, upon delivery to the Commonwealth under the Contract.

6.7.2 The Contractor warrants and shall ensure that, at the time ownership of any item of Supplies passes to the Commonwealth under clause 6.7.1:

a. the Contractor has full power and authority to transfer full legal and beneficial ownership in those Supplies to the Commonwealth; and

b. the Commonwealth will obtain good title to those Supplies, free from any Security Interest.

6.7.3 When ownership of Supplies passes to the Commonwealth in accordance with clause 6.7.1a and those Supplies are subsequently rejected by the Commonwealth Representative in accordance with clauses 6.5 or 6.6 the Commonwealth Representative may elect to re-pass ownership of those Supplies to the Contractor by giving the Contractor notice within 10 Working Days after issuing a notice of rejection under clauses 6.5.3.or 6.6.2b

6.8 Progress Certification

6.8.1 If the Contractor seeks Progress Certification of a Milestone, the Contractor shall complete and present a signed Progress Certificate in the form of Annex I to Attachment H, certifying that the Milestone has been achieved in accordance with the Contract.

6.8.2 The Commonwealth Representative shall, within 10 Working Days after the presentation of the Progress Certificate in accordance with clause 6.8.1, notify the Contractor that:

a. the Contractor has achieved the Milestone, in which case the Commonwealth Representative shall sign and issue the Progress Certificate; or




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b. the Contractor has failed to achieve the Milestone, in which case the Commonwealth Representative shall notify the Contractor of the reason for the failure.

6.8.3 If the Contractor has failed to achieve a Milestone because the Contractor has failed to deliver Supplies that were required for the Milestone (“missing Milestone Supplies”), the Commonwealth Representative may, instead of notifying the Contractor as described in clause 6.8.2b:

a. sign and issue the Progress Certificate but only in respect of the Supplies that were delivered; and

b. require the Contractor to submit a CCP to amend Annex B and Annex C to Attachment B:

i to adjust the Milestones by postponing the delivery requirements for the missing Milestone Supplies; and

ii to adjust Milestone Payments to reflect the adjustment of the Milestones.

6.8.4 If the parties have not agreed the amendments to the Contract within 10 Working Days after submission of the CCP under clause 6.8.3b, or another period agreed by the Commonwealth, the Commonwealth Representative shall notify the Contractor that it has failed to achieve the Milestone.

6.8.5 The issue of a Progress Certificate by the Commonwealth Representative does not constitute Acceptance, or bind the Commonwealth Representative to any later Acceptance, of any Supplies to which the Progress Certificate relates.

6.8.6 The Commonwealth Representative may issue a Progress Certificate despite the existence of Defects in the Supplies. The Commonwealth Representative shall set out the detail of the Defects on the Progress Certificate or on an attachment to the Progress Certificate. The Contractor shall rectify the Defects within 10 Working Days (or another period agreed by the Commonwealth) after issue of the Progress Certificate.

6.8.7 If the Contractor fails to rectify a Defect in accordance with clause 6.8.6, the Commonwealth may:

a. without limiting the Contractor’s other obligations, rectify the Defect itself or by a third party; and

b. elect to recover from the Contractor under clause 13.6 the costs incurred by the Commonwealth in rectifying the Defect. No amount shall be owing to the Commonwealth under this clause 6.8.7 until the Commonwealth elects to recover the amount.

6.8.8 If the Commonwealth Representative notifies the Contractor under clause 6.8.2b or 6.8.4 that it has failed to achieve the Milestone, the Contractor shall, within 10 Working Days after receipt of the notice, provide full written details to the Commonwealth Representative of its proposed remedy.

6.8.9 The Commonwealth Representative shall by notice, within 10 Working Days after receipt of the Contractor’s proposed remedy referred to in clause 6.8.8:

a. direct the Contractor to complete any course of action proposed by the Contractor within a specified period; or

b. reject the Contractor’s proposal and direct the Contractor to submit an alternative proposal within 10 Working Days.

6.8.10 A resubmitted:

a. application for Progress Certification;

b. remediation proposal following rejection under clause 6.8.9b,

shall be subject to the same process as the original.




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7 PRICE AND PAYMENT

7.1 Price and Price Basis

7.1.1 Not used

7.1.2 The Contract Price is set out in Annex A to Attachment B and, subject to clauses 7.3 and 10.1, is unalterable.

7.2 Payment

Note to tenderers: It is Commonwealth policy to pay its suppliers by direct credit. If it has not done so in the past, the successful tenderer should prior to Contract signature provide the Commonwealth Representative with details of the bank account into which payments should be directed.

7.2.1 If the Contractor submits a claim for payment it shall:

a. if the Milestone relates to Progress Certification of the Supplies, be accompanied by the relevant Progress Certificate signed by both parties;

b. if the Milestone relates to Acceptance of the Supplies, be accompanied by the SAC signed by both parties for Supplies listed in Attachment B in relation to that Milestone and other Supplies Accepted since the previous Milestone;

c. if the Milestone relates to Final Acceptance of the Supplies, be accompanied by the FAC signed by both parties;

d. be in the form of a valid Tax Invoice,

e. contain sufficient information to enable the Commonwealth Representative to verify the claim; and

f. be accompanied by any substantiating documentation requested by the Commonwealth Representative, and contain a statement by the Contractor that the claim is complete and accurate.

7.2.2 On receipt of a claim for payment the Commonwealth Representative shall either:

a. Approve the claim where it is submitted in accordance with clause 7.2.1; or

b. reject the claim where the claim is not submitted in accordance with clause 7.2.1.

7.2.3 When a claim is Approved under clause 7.2.2, the Commonwealth shall make payment 30 days after the Milestone Date or the submission of the claim, whichever occurs last.

7.2.4 If the Commonwealth Representative rejects the claim under clause 7.2.2, the Commonwealth Representative shall notify the Contractor within 10 Working Days of receipt of the claim providing reasons for rejection and any action to be taken by the Contractor for the claim to be rendered correct for payment.

7.2.5 Upon receipt of a notice issued pursuant to clause 7.2.4 the Contractor shall promptly take all necessary steps to make the claim for payment conform to the requirements of the Contract and shall submit a revised claim to the Commonwealth Representative when such action is complete. The resubmitted claim shall be subject to the same conditions as if it were the original claim.

7.3 Adjustments

Note to tenderers: These clauses may be included in any resultant contract following receipt of the tenderers response and a determination by the Commonwealth as to whether adjustments relating to the cost of labour and materials and/or adjustments for Exchange Rates will be allowed.

7.3.1 The formulae in Annex D to Attachment B shall be applied to:

a. Milestone Payments, for fluctuations in the cost of labour and materials occurring between the Base Date and the Milestone Date or achievement by the Contractor of that Milestone, whichever occurs first; and




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b. the Mobilisation Payment, for fluctuations in the cost of labour and materials occurring between the Base Date and the date the Mobilisation Payment is made by the Commonwealth.

7.3.2 If the amount calculated in accordance with clause 7.3.1 is to the credit of the Contractor, the Contractor shall submit a separate claim for payment of that amount, no later than three months after the publication of the indices for the period referred to in clause 7.3.1 to which the application of the formulae relates.

7.3.3 If the amount calculated in accordance with clause 7.3.1 is to the credit of the Commonwealth, the Contractor shall notify the Commonwealth in writing of the amount of the credit, no later than three months after the publication of the indices for the period referred to in clause 7.3.1.

7.3.4 Not used

7.3.5 Not used

7.3.6 Not used

7.3.7 The Commonwealth shall not be liable for any claims for payment under clause 7.3 submitted after the end of the three month period referred to in clause 7.3.2.

7.3.8 On receipt of a claim for payment under this clause 7.3 the Commonwealth Representative shall either:

a. Approve the claim if it is submitted in accordance with clause 7.3.2 and make payment within 30 days of receipt of the claim; or

b. reject the claim if it is not submitted in accordance with clause 7.3.2 and notify the Contractor, within 10 Working Days after receipt of the claim, providing reasons for the rejection.

7.3.9 If a claim is rejected under clause 7.3.8b, the Contractor may resubmit the claim no later than 30 days after notice of the rejection. The resubmitted claim shall be subject to the same conditions as if it were the original claim. If the Contractor fails to resubmit the claim within 30 days, or the Commonwealth rejects the resubmitted claim, the Commonwealth shall not be liable for any adjustment claims in relation to the relevant period.

7.3.10 If an amount calculated in accordance with this clause 7.3 is to the credit of the Commonwealth, the Commonwealth may elect to recover the amount from the Contractor under clause 12.6.

7.4 Mobilisation Payment and Security

Note to tenderers: in some cases the Commonwealth may be prepared to make an upfront payment to the successful tenderer to reflect Contract start up costs and the payment structure ultimately agreed under the Contract. The value of any Mobilisation Payment will be subject to negotiations between the Commonwealth and the successful tenderer and review by the Commonwealth of the successful tenderer’s costs, and pricing and payment structure under the Contract. For further information on the Commonwealth’s policy relating to Mobilisation Payments, please refer to the Defence Procurement Policy Manual (DPPM) available at http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/Policies/DefenceProcurementPolicyManual/

7.4.1 The Commonwealth shall not be obligated to pay the Mobilisation Payment specified in the Details Schedule until it has received the Bank Guarantee in accordance with this clause 7.4.

7.4.2 The Contractor shall provide a Bank Guarantee equal to the Bank Guarantee Amount specified in the Details Schedule to the Commonwealth no later than the date specified in the Details Schedule. The security shall be unconditional and shall be from a bank or financial institution acceptable to the Commonwealth Representative, in the form of the Bank Guarantee set out at Annex G to Attachment H.

7.4.3 The Commonwealth shall release the Bank Guarantee provided under clause 7.4.2 within 10 Working Days of the date on which the sum of amounts deemed to have been paid under clause 7.4.5 equals or is greater than the amount of the Mobilisation Payment.




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7.4.4 The Commonwealth’s rights under the Bank Guarantee provided under clause 7.4.2 shall be exercisable by the Commonwealth for either or both of the following:

a. to obtain repayment of an amount equal to the value of the Mobilisation Payment that has not been offset against amounts payable by the Commonwealth to the Contractor under the Contract in the event of termination of the Contract in accordance with clause 12.2; or

b. to recover any debts owing by the Contractor to the Commonwealth in relation to the Contract.

7.4.5 The Mobilisation Payment shall be offset against amounts payable by the Commonwealth to the Contractor under the Contract. The Commonwealth shall be deemed to have paid those claims for payment Approved in accordance with clauses 7.2 and 7.3, until the sum of the Approved claims for payment equals the amount of the Mobilisation Payment.

7.5 Bank Guarantee

Note to tenderers: Tenderers should note that whether the Commonwealth requires both a Bank Guarantee in respect of the Contractor's performance and a Deed of Guarantee and Indemnity will be determined during negotiations with the preferred tenderer and based on the risk profile associated with the preferred tenderer’s provision of the Supplies. The Commonwealth expects it will only require both types of security where it is assessed as necessary in the circumstances.

Where the Commonwealth determines that it does not require a security, the amount nominated for a security will be deducted from the tendered price and will not be included in any resultant Contract.

7.5.1 The Contractor shall provide a Bank Guarantee for performance of the Contract, equal to the Bank Guarantee Amount specified in the Details Schedule no later than the relevant date specified in the Details Schedule.

7.5.2 The Bank Guarantee provided under clause 7.5.1 shall be unconditional and shall be from a bank or financial institution acceptable to the Commonwealth Representative and in the form of the Bank Guarantee set out at Annex G to Attachment H.

7.5.3 The Bank Guarantee shall be released by the Commonwealth within 10 Working Days after the Release Event date specified in the Details Schedule occurs.

7.5.4 The Commonwealth’s rights under the Bank Guarantee provided under clause 7.5.1, shall be exercisable by the Commonwealth for either or both of the following:

a. to obtain compensation for Loss suffered in the event that the Contractor fails to perform the Contract, including upon termination of the Contract in accordance with clause 12.2; or

b. to recover any debts owing by the Contractor to the Commonwealth in relation to the Contract.

Option: For when the Contractor’s performance will be secured by a Deed of Guarantee and Indemnity.

7.5.5 The Contractor shall, on the Effective Date specified in the Details Schedule, provide the Commonwealth Representative with a deed in the form of the Deed of Guarantee and Indemnity set out in Annex H to Attachment H from (…INSERT GUARANTOR’S NAME…) ("the Guarantor") to the Commonwealth Representative.

Note to tenderers: If the successful tenderer proposes a Joint Venture to perform any resultant Contract the Commonwealth may require revised or additional guarantees including parent guarantees from the tenderer and its Australian Ship Builder and cross guarantees from each shareholder in the Joint Venture.




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7.6 Exercise of Securities

7.6.1 If the Contractor fails to provide or maintain any security required under clauses 7.4 or 7.5, the Commonwealth may withhold all or part of any payment under the Contract until the Contractor meets those obligations.

7.6.2 If the Commonwealth exercises any or all of its rights under the securities provided under clause 7.4 or 7.5, the Commonwealth shall not be liable for, and the Contractor shall release the Commonwealth from liability for, any resultant Loss or damage to the Contractor.

7.6.3 The rights of the Commonwealth to recover from the Contractor the balance, after draw down of any securities provided under the Contract, of Loss or damage suffered by the Commonwealth shall not be limited by the Commonwealth’s exercise of those securities.

7.7 Stop Payment

Note to tenderers: The Commonwealth may specify certain key Milestones as Stop Payment Milestones under the Contract. If the Contractor fails to achieve a Stop Payment Milestone, the Commonwealth is entitled to (but not required to) stop any or all payments under the Contract until the relevant Milestone is achieved. This mechanisms reflects the importance of the achievement of certain Milestones and seeks to focus and incentivise the Contractor to ensure those Milestones are delivered in a timely manner.

7.7.1 The Commonwealth may suspend some or all payments under the Contract if a Stop Payment Milestone is not achieved by the relevant Milestone Date.

7.7.2 The Commonwealth shall cease the suspension of payments under clause 7.7.1 if the relevant Stop Payment Milestone has been achieved.

7.7.3 The exercise by the Commonwealth of its rights under this clause 7.7 shall not:

a. entitle the Contractor to claim performance relief under clause 6.3.1;

b. relieve the Contractor from performing any of its obligations under the Contract; or

c. in the case of a suspended payment which is subsequently made, entitle the Contractor to claim interest in accordance with clause 7.8.

7.7.4 The Commonwealth’s rights under this clause 7.7 do not affect the Commonwealth’s rights in respect of any Default of the Contractor, including:

a. to give the Contractor a Default Notice under clause 12.3;

b. to recover compensation or damages; or

c. to terminate the Contract for Contractor Default.

7.8 Early and Late Payment

7.8.1 If payment of an amount due to the Contractor under the Contract is made early, interest shall be payable by the Contractor to the Commonwealth in accordance with the formula at clause 7.8.1.

7.8.2 If payment of an amount due to the Contractor under the Contract is made late, interest shall be payable to the Contractor by the Commonwealth in accordance with the formula at clause 7.8.1. Any payment not made within 60 days after the date it is to be made under the Contract shall be in breach of the Contract.

For the purposes of this clause, an interest payment shall be calculated in accordance with the following formula:

365% nPI ××

where:

‘I%’ for early payments =

the Reserve Bank of Australia cash rate target current at the date of payment expressed as a percentage

‘I%’ for late the ATO sourced General Interest Charge rate current at the due date of




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payments = payment expressed as a percentage

P = the amount of the early or late payment

n = the number of days before or after the due date for payment that the payment is made

7.8.3 If the interest payment is not offset or paid as part of the subject claim, the Commonwealth Representative shall adjust the next approved payment under the Contract. If there are no further payments, the relevant party shall pay the interest payment within 30 days of being provided with notice in the form of a Tax Invoice.

7.9 Incentive Payments

Note to tenderers: As indicated in TDRs A-7, C-9 and D, the Commonwealth proposes to implement an incentive program to ensure the Contractor commits to support a continuous Australian naval surface ship building capability and to maximise Australian Industry Capability and ship building productivity over the life of the program. The exact details of the proposed incentive program will be discussed with ODIA participants or the preferred tenderer during negotiations. Subject to the outcomes of negotiations, the Commonwealth may require clauses in relation to the incentive program to be included in this clause 7.9.

7.10 Liquidated Damages and Other Compensation

7.10.1 The parties acknowledge that, if the Contractor fails to achieve a Milestone listed in Attachment C by the applicable Milestone Date:

a. the Commonwealth will suffer loss and damage; and

b. all such loss and damage will, having regard to the governmental and non-commercial nature of the Supplies and their significance to the defence of Australia, be impossible, complex or expensive to quantify accurately in financial terms,

and therefore, the parties agree that the liquidated damages specified in, or calculated in accordance with, Attachment C in respect of each Milestone identified in Attachment C is:

c. a genuine pre-estimate of the Loss which would be suffered by the Commonwealth resulting from a Contractor delay in achievement of that Milestone; and

d. an appropriate protection of the Commonwealth's legitimate interests in relation to the performance of the Contract.

7.10.2 If a Milestone listed in Attachment C is not achieved by the Milestone Date for the Milestone, the Commonwealth shall be entitled to recover from the Contractor, as liquidated damages and not as a penalty, the amount specified in, or calculated in accordance with, Attachment C for that Milestone.

7.10.3 No amount shall be owing to the Commonwealth under this clause 7.10 until the Commonwealth elects, in accordance with this clause 7.10, to recover the amount.

7.10.4 The Commonwealth may elect:

a. to recover an amount of liquidated damages to which it is entitled in one amount;

b. to recover an amount of liquidated damages to which it is entitled in two or more amounts;

c. to accept compensation (instead of liquidated damages) as agreed in writing between the parties; or

d. to accept compensation as agreed between the parties and to recover part of the liquidated damages to which it is entitled as agreed in writing between the parties in one or more amounts.

7.10.5 If the Commonwealth makes an election under clauses 7.10.4b or 7.10.4d in respect of a failure to achieve a Milestone, the Commonwealth may make one or more further elections in relation to the failure (up to any applicable cap on liquidated damages specified in clause 8.9).




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7.10.6 An election by the Commonwealth under this clause 7.10 in respect of a failure to achieve a Milestone shall, unless otherwise agreeing in writing between the parties, be made and notified to the Contractor no later than:

a. if an applicable cap on the Contractor’s liability for liquidated damages is reached before the Milestone is achieved – the end of four months after the Commonwealth receives notice from the Contractor that the cap has been reached; or

b. if the Milestone is achieved before the Commonwealth receives notice under clause 7.10.6a – the end of four months after the Milestone is achieved.

7.10.7 If the Commonwealth does not elect before the end of the period determined in accordance with clause 7.10.6 in respect of all or some of the liquidated damages for a Milestone listed in Attachment C, the Commonwealth will be taken to have elected and notified the Contractor at that time to recover the whole or the balance of the liquidated damages owed by the Contractor (as relevant).

7.10.8 Unless the Commonwealth expressly agrees otherwise, a change to a Milestone Date effected by a CCP does not affect the Commonwealth’s entitlement to liquidated damages already accrued in respect of the period from the original Milestone Date to the date when the CCP takes effect to change the Milestone Date.

7.10.9 If the Commonwealth elects to accept compensation instead of liquidated damages (whether in the form of further supplies or services or otherwise), the Contractor shall prepare a CCP to effect a change to the Contract and any other contract between the Commonwealth and the Contractor that may be affected.

7.10.10 The Commonwealth’s rights under this clause 7.10 in respect of a delay in the achievement of a Milestone listed in Attachment C are the Commonwealth’s only entitlement to recover compensation or damages in respect of Loss of the Commonwealth resulting from that delay. To avoid doubt, no Commonwealth rights other than to compensation or damages in respect of that delay (for example, termination rights or rights in respect of a misrepresentation) are affected.

7.11 Taxes and Duties

7.11.1 All Taxes imposed or levied in Australia or overseas in connection with the Contract shall be met by the Contractor and shall be included within the Contract Price.

7.11.2 The Contract Price set out in Annex A to Attachment B includes GST for Supplies to be delivered under the Contract which are taxable supplies within the meaning of the GST Act.

7.11.3 Each Tax Invoice provided under clause 7.2.2 shall include the amount and method of calculation of any GST payable by the Contractor in relation to that claim for payment as a separate item.

7.11.4 If the Contractor incorrectly states the amount of GST payable, or paid, by the Commonwealth on an otherwise valid Tax Invoice, the Contractor shall issue to the Commonwealth a valid Adjustment Note in accordance with the GST Act.

7.11.5 If the Commonwealth makes, or is assessed by the ATO as having made, a taxable supply in accordance with the GST Act to the Contractor under or in connection with the Contract, the Commonwealth shall be entitled to recover from the Contractor upon presentation of a valid Tax Invoice, the amount of GST paid or payable by the Commonwealth to the ATO.

7.11.6 Any amount of GST to be paid by the Contractor under clause 7.11.5 shall be a debt recoverable by the Commonwealth in accordance with clause 12.6.

7.11.7 If the Contractor has a claim for an amount under the Contract, the claim is for the amount less any input tax credit to which the Contractor is entitled in respect of the claim. The Commonwealth may treat the Contractor as entitled to full input tax credits for GST included in an amount unless the Contractor satisfies the Commonwealth otherwise.




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7.12 GST Agent

Note to tenderers: This clause will only be included where the Contractor appoints a resident agent. (Refer to TDR-D). Tenderers should make their own inquiries regarding the suitability of proposing an agent to act for them for the purposes of Division 57 of the GST Act.

7.12.1 The Contractor has appointed the GST Agent specified in the Details Schedule (if any) as its resident agent for the purposes of Division 57 of the GST Act.

7.12.2 The Contractor, by appointing a resident agent, shall not be relieved of its liabilities or obligations under the Contract and shall at all times be responsible for ensuring that the resident agent complies with the requirements of this clause 7.12.

7.12.3 Without limiting clause 7.12.2, the Contractor shall ensure that its resident agent:

a. provides all necessary documentation required by the Commonwealth for a claim for payment to be considered under clause 7.11, and

b. complies with Division 57 of the GST Act.

7.12.4 The Commonwealth shall make all payments otherwise due to the Contractor under clause 6.7 to the resident agent. The Contractor agrees that such payments to the resident agent shall discharge, to the extent of the payment, the Commonwealth’s liability to the Contractor for those Supplies.

7.12.5 If the Contractor appoints an alternative resident agent, the Contractor shall notify the Commonwealth Representative in writing within 10 Working Days of the change, and provide the information required in the Details Schedule.

7.12.6 The Contractor, if requested by the Commonwealth Representative, shall provide a copy of the resident agency agreement, which copy need not contain prices.

7.13 Cost Principles

Note to tenderers: The CASG Cost Principles are available at http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/DefenceCostPrinciples/. They articulate certain pricing and cost principles that the Commonwealth expects its suppliers to adhere to when seeking payment from the Commonwealth.

7.13.1 The Contractor shall apply the CASG Cost Principles (including as supplemented by Annex H to Attachment B) when preparing any:

a. claim for postponement costs under clause 6.4;

b. price for any CCP under clause 10.1; or

c. claim for costs if the Contract is terminated.

8 INDEMNITIES, DAMAGES, RISK, INSURANCE AND LIABILITY

8.1 Contractor’s Officers and Employees

8.1.1 The Contractor shall indemnify the Commonwealth and Commonwealth Officers in respect of any Loss in connection with the death, personal injury, disease or illness of any Contractor Personnel in relation to the Contract.

8.1.2 The liability of the Contractor under clause 8.1.1 shall be reduced to the extent that the Contractor demonstrates that the Loss arose out of or as a consequence of a Commonwealth Default.

8.1.3 The Contractor shall release the Commonwealth and Commonwealth Officers in respect of any liability for Loss referred to in clause 8.1.1, except to the extent that the Contractor demonstrates that the Loss arose out of or as a consequence of a Commonwealth Default.

8.2 Other Third Party Claims

8.2.1 The Contractor shall indemnify the Commonwealth and Commonwealth Officers in respect of any Loss in connection with a Claim by a third party arising out of or as a consequence of a Contractor Default, including a Claim in respect of:






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a. the death, personal injury, disease or illness of any person; or

b. loss of or damage to any property.

8.2.2 The liability of the Contractor under clause 8.2.1 shall be reduced to the extent that the Contractor demonstrates that the Loss arose out of or as a consequence of:

a. a Commonwealth Default;

b. an Excepted Risk; or

c. a breach of a general law duty or an applicable law by an Unrelated Party.

8.3 Proceedings relating to Indemnities

The Commonwealth is subject to obligations under the Legal Services Directions 2005 (issued under the Judiciary Act 1903) in relation to the way it handles claims. The provisions below reflect the Commonwealth’s obligations in this regard. For more information, refer to https://www.ag.gov.au/LegalSystem/LegalServicesCoordination/Pages/Legalservicesdirectionsandguidancenotes.aspx

8.3.1 If:

a. a Claim is brought or threatened against the Commonwealth; and

b. the Claim is one that is or may be the subject of an indemnity given by the Contractor under the Contract,

the Commonwealth shall give the Contractor notice of the Claim, which shall include particulars of the Claim so far as known to the Commonwealth Representative and so far as the Commonwealth considers it appropriate to disclose particulars of the Claim to the Contractor.

8.3.2 The Commonwealth shall, for any proceedings relating to a Claim of the type referred to in clause 8.3.1:

a. keep the Contractor informed of all developments in relation to the proceedings;

b. conduct the proceedings in accordance with any reasonable directions of the Contractor, subject to the Legal Services Directions 2005 and other relevant Commonwealth policies; and

c. not agree to a settlement in relation to the Claim without the prior consent of the Contractor, unless a failure to agree the settlement would be contrary to the Legal Services Directions 2005 and other relevant Commonwealth policies.

8.3.3 The Commonwealth may, following a request from the Contractor, agree to apply for leave to withdraw from proceedings relating to a Claim. If the Commonwealth is granted leave to withdraw from the proceedings:

a. the Commonwealth shall withdraw from the proceedings;

b. the Contractor shall comply with any conditions imposed by the court in relation to the grant of such leave; and

c. the Contractor shall, in its own name and at its own expense, conduct the proceedings.

8.4 Other Provisions Relating to Indemnities

8.4.1 The Commonwealth holds the benefit of each indemnity given in favour of a Commonwealth Officer (each a 'protected person') under clauses 8.1, 8.2 and 8.8 on trust for the protected person.

8.4.2 The Commonwealth may recover from the Contractor an amount under an indemnity given by the Contractor under the Contract before the Commonwealth makes a payment in respect of such amount.

8.5 Loss of or Damage to the Supplies

8.5.1 Risk in relation to any loss of or damage to the Supplies resides with the Contractor:




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a. until the Supplies are delivered to the Commonwealth in accordance with the Contract; and

b. at any time after delivery (but prior to Acceptance of the Supplies) where the Contractor retakes possession of the Supplies in accordance with the Contract.

8.5.2 The Contractor shall replace or reinstate any Supplies that are lost and repair any Supplies that are damaged while the risk resides with the Contractor under clause 8.5.1.

8.5.3 The Commonwealth shall take reasonable care to prevent loss of or damage to Supplies that have been delivered to it in accordance with the Contract but which have not yet been Accepted.

8.6 Loss of or Damage to Commonwealth Property

8.6.1 The Contractor shall (and shall ensure that all Contractor Personnel) take reasonable care, to prevent loss of or damage to Commonwealth Property in connection with:

a. the work under the Contract; and

b. the use or occupation of any GFF.

8.6.2 The Contractor shall be liable for any Loss incurred by the Commonwealth in connection with any loss of or damage to:

a. any Commonwealth Property while it is:

i on any Contractor Premises;

ii being stored or transported by or on behalf of the Contractor, a Related Body Corporate of the Contractor, or a Subcontractor; or

b. any GFF (other than fair wear and tear) during the GFF Licence term,

in connection with the Contract, whether or not the loss or damage arises out of or as a consequence of a Contractor Default.

8.6.3 The liability of the Contractor under clause 8.6.2 will be reduced to the extent that the Contractor demonstrates that the loss or damage arose out of or as a consequence of:

a. a Commonwealth Default; or

b. an Excepted Risk, except to the extent that the loss or damage could have been prevented or mitigated by reasonable care on the part of the Contractor or Contractor Personnel.

8.6.4 Without limiting clause 8.6.2, the Contractor shall be liable for any Loss incurred by the Commonwealth in connection with any loss of or damage to Commonwealth Property arising out of or as a consequence of a Contractor Default.

8.6.5 The liability of the Contractor under clause 8.6.4 will be reduced to the extent that the Contractor demonstrates that the loss or damage arose out of or as a consequence of:

a. a Commonwealth Default; or

b. an Excepted Risk, except to the extent that the loss or damage could have been prevented or mitigated by reasonable care on the part of the Contractor or Contractor Personnel; or

c. a breach of a general law duty or an applicable law by an Unrelated Party.

8.7 Exclusions of Certain Losses

8.7.1 The Contractor is not liable to:

a. pay compensation or damages under or in relation to this Contract; and

b. make a payment under an indemnity in this Contract,

for Loss resulting from:

c. damage to reputation or exemplary or punitive damages incurred by the Commonwealth; or




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d. diminished revenue, profits or business opportunity suffered by the Commonwealth.

8.7.2 The Commonwealth is not liable to pay compensation or damages under or in relation to this Contract for Loss resulting from damage to reputation or exemplary or punitive damages incurred by the Contractor.

8.7.3 The Commonwealth has no liability to the Contractor for any Loss resulting from loss of revenue or profits or loss of business opportunity suffered or incurred by the Contractor in connection with any occupation or use of the GFF by the Contractor for a purpose that is not related to the performance of the Contract.

8.8 Intellectual Property and Confidentiality

8.8.1 The Contractor shall indemnify the Commonwealth and Commonwealth Officers in respect of any Loss in connection with a Claim by a third party in respect of:

a. an infringement or alleged infringement of that third party’s IP rights (including Moral Rights) arising out of or as a consequence of an activity permitted or purportedly permitted by or under a licence or assignment of IP rights under or referred to in the Contract (including in clause 5); or

b. breach or alleged breach of any obligation of confidentiality owed to that third party arising out of or as a consequence of any act or omission of the Contractor or any Contractor Personnel.

8.8.2 The liability of the Contractor under clause 8.8.1 will be reduced to the extent that the Contractor demonstrates that the Loss arose out of or as a consequence of a Commonwealth Default.

8.8.3 In this clause 8.8:

‘infringement’ of a right includes an act or omission that would,, but for the operation of section 163 of the Patents Act 1990 (Cth), section 100 of the Designs Act 2003 (Cth), section 183 of the Copyright Act 1968 (Cth), and section 25 of the Circuits Layout Act 1989 (Cth), constitute an infringement.

8.9 Liability Caps

Note to tenderers: The limitation of liability amounts were determined by the Commonwealth based on a liability risk assessment conducted in accordance with the Defence Liability Risk Management Process (LRMP) guide, which can be accessed at http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/LiabilityRiskManagementProcess/.

8.9.1 The maximum amount that the Contractor is liable to pay as compensation or damages in connection with the Contract (including at general law, in negligence or in equity) in respect of Loss suffered by the Commonwealth for:

a. loss of or damage to Defence Property (other than Supplies);

b. liquidated damages;

c. loss of use of Supplies after Acceptance; and

d. loss of or damage to Supplies (other than loss of use of Supplies), and Losses suffered by the Commonwealth other than those referred to in clauses 8.9.1a to 8.9.1c,

is limited in aggregate to the relevant Limitation Amount specified in the Details Schedule.

Each of the Limitation Amounts referred to in clause 8.9.1 is mutually exclusive and is to be applied separately.

8.9.2 The liability caps in this clause 8.9.1 and exclusions of liability under clause 8.7 do not apply to a liability of the Contractor under or arising out of the Contract in relation to:

d. (third party claims) a Claim by a third party in respect of:

(i) the death, personal injury, disease or illness of any person; or

(ii) loss of or damage to property of a third party;

http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/LiabilityRiskManagementProcess/

http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/LiabilityRiskManagementProcess/




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e. (IP) an infringement of an intellectual property right (including a Moral Right) of any person;

f. (confidentiality) a breach of an obligation of confidence;

g. (death of or personal injury to Commonwealth Officers) the death, injury, disease or illness of a Commonwealth Officer;

h. (non-Defence Commonwealth Property) the loss of or damage to Commonwealth Property (other than Defence Property);

i. (Defence security) a breach of the Contractor's obligations in relation to Defence security;

j. (privacy) a breach of a written law with respect to privacy;

k. (criminal offences) an act or omission of the Contractor or any Contractor Personnel, where the person concerned has been convicted or found guilty of an offence comprised in the act or omission;

l. (Wilful Default) a Wilful Default of the Contractor or Contractor Personnel;

m. (repudiation) repudiation of the Contract by the Contractor where the Contractor has intentionally abandoned the Contract; or

n. (restitution) restitution of amounts paid under a mistake of fact or law in relation to the Contract.

8.9.3 Each paragraph of clause 8.9.2 is independent of, and its application is not affected by, any of the other paragraphs.

8.9.4 The amount of a Limitation Amount in clause 8.9.1 shall be adjusted in accordance with the formula:

where:

Base Date CPI means the CPI most recently published before the Base Date;

CPI means the Consumer Price Index, All Groups, Weighted Average of Eight Capital Cities published by the ABS in Catalogue number 6401.0, Table 7, Series ID A2325846C or, if that Index is no longer published by the ABS, the index published by the ABS that most closely corresponds to that Index; and

most recent CPI means the CPI most recently published before the question whether a Limitation Amount has been reached is determined.

8.10 Renegotiation of liquidated damages and Limitation Amounts

8.10.1 If:

a. a party proposes a change to the Contract Price by a CCP; and

b. the change, together with other changes to the Contract Price since this clause 8.10 was last applied, increases or decreases the Contract Price by more than the Renegotiation Threshold specified in the Details Schedule,

the parties shall negotiate in good faith, taking into account any increased risk relating to the Contract, to make amendments to the Limitation Amounts and the liquidated damages amounts set out in Attachment C.

8.11 Proportionate Liability Laws

8.11.1 The parties agree that, to the extent permitted by law the provisions of the Contract:

a. are express provisions for their rights, obligations and liabilities with respect to matters to which a Proportionate Liability Law applies; and

b. exclude, modify and restrict the provisions of a Proportionate Liability Law to the extent of their inconsistency with the Proportionate Liability Law.




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8.12 Insurance

Note to tenderers: The operation of this clause 8.12.1 will vary depending on whether the Contractor has Approved Contractor Insurance Program (ACIP) status and, where a Contractor has ACIP status, to the extent any of the policies required by clause 8.12.1 are within the Contractor’s ACIP.

As per clause 8.12.27, for Contractors with ACIP status, the Contractor will be deemed compliant with relevant requirements of this clause where the policy is within the scope of the Contractor’s ACIP. Information on the ACIP Initiative and the list of companies with current ACIP status is at http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/ContractorInsuranceProgramInitiative/

8.12.1 The Contractor shall effect and maintain the insurances (which, for the purposes of this clause 8.12.1 will be satisfied where the Contractor causes such insurances to be effected and maintained or where the Contractor is insured under such insurances) for the times and in the manner specified in this clause 8.12.1, without requiring insurance to be effected to the extent that a particular risk:

a. is insured against under other insurance effected in compliance with this clause 8.12.1; or

b. has been expressly retained by the Commonwealth, except to the extent that such retention by the Commonwealth is dependent on the Contractor being liable only to the extent that it is insured for the liability.

For the avoidance of doubt, the terms of this clause 8.12.1 do not alter the allocation of risk or liability between the parties as provided for under any other clause of the Contract.

8.12.2 The Contractor shall use its reasonable endeavours to ensure that its Subcontractors and their officers, employees and agents are insured as required by this clause 8.12.1, as is appropriate (including with respect to the amount of insurance, types of insurance and period of insurance) given the nature of services or work to be performed by them, as if they were the Contractor.

8.12.3 (workers compensation) The Contractor shall effect and maintain:

a. workers compensation insurance or registrations as required by law, in respect of the Contractor's liability to its employees engaged in the performance of any obligation or the exercise of any right under the Contract. Where permitted under the relevant statutory workers compensation or accident compensation scheme, the insurance or registrations shall extend to cover the vicarious liability of the Commonwealth for the acts or omissions of the Contractor. However, the requirements of this clause 8.12.3a do not apply to the extent and for such time as the Contractor is a licensed self-insurer or exempt employer in the relevant jurisdiction; and

b. in each jurisdiction where common law claims can be brought outside of the statutory workers compensation or accident compensation scheme referred to in clause 8.12.3a, employer's liability insurance with a limit of indemnity of not less than the amount customarily effected by prudent insureds for this risk in each relevant jurisdiction, covering any work-related injury, damage, expense, loss or liability suffered or incurred by any person engaged by the Contractor in the work under the Contract (or their dependants). Such insurance shall extend to cover the vicarious liability of the Commonwealth for the acts or omissions of the Contractor.

8.12.4 (public and products liability) The Contractor shall effect and maintain public and products liability insurance written on an occurrence basis with a limit of indemnity of not less than:

a. the amount specified in the Details Schedule each and every occurrence for public liability claims; and

b. the amount specified in the Details Schedule each occurrence and in the aggregate for all occurrences in any 12 month policy period for products liability claims,

which covers:

http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/ContractorInsuranceProgramInitiative/

http://www.defence.gov.au/casg/DoingBusiness/ProcurementDefence/ContractinginCASG/ContractorInsuranceProgramInitiative/




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c. the Contractor and the Contractor's employees, officers and agents (including for liability to each other); and

d. the Commonwealth and the Commonwealth Representative for their vicarious liability for the acts or omissions of the Contractor and the Contractor's employees, officers and agents,

for their respective liabilities for any:

e. loss of, damage to, or loss of use of, any tangible property (including GFF, GFE and any other Commonwealth Property in the care, custody or control of the Contractor or its Subcontractors for a sublimit of not less than the amount specified in the Details Schedule each occurrence and in the aggregate for all occurrences in any 12 month policy period, unless that property is insured against the risks of loss and damage under the insurance referred to in clause 8.12.6 (Industrial Special Risks); and

f. the bodily injury, disease, illness or death of any person,

caused by, arising out of, or in connection with the negligent performance of any obligation or the exercise of any right under the Contract or under any GFF licence entered into for the purposes of this Contract by the Contractor or Contractor Personnel, including in respect of the manufacture, processing, alteration, repair, installation, supply, distribution or sale of any product. This insurance shall have a worldwide territorial limits.

8.12.5 (professional indemnity) The Contractor shall effect and maintain professional indemnity insurance with a limit of indemnity of not less than the amount specified in the Details Schedule per claim and in the aggregate for all claims in any 12 month policy period, and including a right of reinstatement, which covers the liability of the Contractor at general law arising from a negligent breach of duty owed in a professional capacity, by reason of any act or omission of the Contractor or Contractor Personnel. Such insurance shall:

a. have a definition of professional services broad enough to include all professional services, activities and duties to be provided or performed by the Contractor and Contractor Personnel under the Contract;

b. extend to cover claims related to software and IT risks;

c. extend to cover claims for unintentional breaches of intellectual property rights;

d. extend to cover claims for unintentional breaches of trade practices laws;

e. have a retroactive date of no later than the earlier of the commencement of the work under the Contract or any preparatory work by the Contractor and Contractor Personnel; and

f. have worldwide territorial and jurisdictional limits.

8.12.6 (Industrial Special Risks) The Contractor shall effect and maintain:

a. all risks property insurance covering:

i the tangible Supplies, unless and to the extent that the liability of the Contractor for the loss or damage of that property is insured under the insurance referred to in clause 8.12.4 (public and products liability);

ii GFE, GFF and any other property of the Commonwealth in the care, custody or control of the Contractor or its Subcontractors unless and to the extent that the liability of the Contractor for the loss or damage of that property is insured under the insurance referred to in clause 8.12.4 (public and products liability); and

iii all other property, plant and equipment in the care, custody or control of the Contractor or Contractor Personnel, material to the Contractor's ability to perform its obligations under the Contract,

against the risks of loss, damage or destruction by all commercially insurable risks (including earthquake, fire, flood, lightning, storm and tempest, theft, malicious damage and resulting loss or damage arising from faulty material, workmanship or design), for the full replacement or reinstatement value of such insured property and




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including cover for professional fees, extra costs of reinstatement, and removal of debris. The insurance shall insure the respective interests of the Contractor and the Commonwealth in the property insured. Where the GFF constitutes only a part of a building or facility, the requirement for insurance for GFF under this clause 8.6.6 only applies in respect of the Licensed Fittings (as defined in the GFF Licence); and

b. business interruption insurance for a period of not less than the period specified in the Details Schedule with a limit sufficient to cover the loss of profit and increased costs of working due to the interruption of the Contractor's operations or activities caused by damage to insured property by a peril required to be insured against under clause 8.12.6a.i.

8.12.7 (transit) The Contractor shall effect and maintain insurance covering any tangible property referred to in clause 8.12.6 (Industrial Special Risks), against the risks of loss, damage or destruction caused by all commercially insurable risks for an amount not less than their full replacement value plus freight and insurance on an indemnity basis during transits of such property by land, sea or air and during loading or unloading and storage during transit, where such transits are at the risk of the Contractor. The insurance shall insure the respective interests of the Contractor and the Commonwealth in the property insured.

8.12.8 (motor vehicle) The Contractor shall effect and maintain:

a. compulsory third party insurance as required by law in respect of all registered plant and motor vehicles used by the Contractor and Contractor Personnel in connection with the work under the Contract; and

b. motor vehicle liability insurance written on an occurrence basis with a limit of indemnity of not less than the amount specified in the Details Schedule each and every occurrence covering:

i third party property loss or damage arising out of the use by the Contractor and Contractor Personnel of any registered or unregistered plant or vehicles; and

ii third party bodily injury, disease, illness or death arising out of the use by the Contractor and Contractor Personnel of any unregistered plant or vehicles and, any registered vehicles not required to be insured under compulsory third party insurance in a foreign jurisdiction,

in connection with the work under the Contract or on or around any GFF by the Contractor or Contractor Personnel.

8.12.9 Not used

8.12.10 Not used

8.12.11 Not used

8.12.12 (marine hull) The Contractor shall effect and maintain marine hull insurance for the full replacement value (or, where it is the practice for such property to be insured for its market or agreed value by prudent insureds in accordance with insurance market practice for this type of risk, then for such market or agreed value) of each vessel to be used in the performance of the work under the Contract against the risks of loss, damage or destruction by all commercially insurable risks (including war risks) whilst each vessel is at the risk of the Contractor and which insures the respective interests of the Contractor and the Commonwealth in the property insured.

8.12.13 (marine liability) The Contractor shall effect and maintain marine liability (or protection and indemnity) insurance written on an occurrence basis with a limit of indemnity of not less than the amount specified in the Details Schedule each and every occurrence which covers:

a. the Contractor and Contractor Personnel (including for liability to each other); and

b. the Commonwealth and the Commonwealth Representative for their vicarious liability for the acts or omissions of the Contractor and Contractor Personnel,





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c. loss of, damage to, or loss of use of, any tangible property (including GFE, GFF and any other property of the Commonwealth in the care, custody or control of the Contractor or its Subcontractors for a sublimit of not less than the amount specified in the Details Schedule each occurrence and in the aggregate for all occurrences in any 12 month policy period, unless that property is insured against the risks of loss and damage under the insurance referred to in clause 8.12.6 (Industrial Special Risks) or 8.12.12 (marine hull)); and

d. bodily injury, disease, illness or death of any person,

caused by, arising out of, or in connection with, the use, operation or ownership of any vessel by the Contractor or Contractor Personnel in the performance of the Contract, including cover for war risks.

8.12.14 (ship builders) The Contractor shall effect and maintain ship builders insurance written on an occurrence basis:

a. which covers the hull under construction and any plant and equipment used in the construction of the hull (including GFF, GFE and any other property of the Commonwealth in the care, custody or control of the Contractor or its Subcontractors) against the risks of loss, damage or destruction by all commercially insurable risks for their full replacement or reinstatement value (or, where it is the practice for such property to be insured for its market or agreed value by prudent insureds in accordance with insurance market practice for this type of risk, then for such market or agreed value), which insures the respective interests of the Contractor and the Commonwealth in the property insured; and

b. which covers:

i the Contractor and Contractor Personnel (including for liability to each other), and

ii the Commonwealth and the Commonwealth Representative for their vicarious liability for the acts or omissions of the Contractor and Contractor Personnel,


iii loss of, damage to, or loss of use of, any tangible property; and

iv the bodily injury, disease, illness or death of any person,

caused by, arising out of, or in connection with the negligent performance of ship building work under the Contract by the Contractor or Contractor Personnel, with a limit of indemnity of not less than the amount specified in the Details Schedule each and every occurrence. The insurance referred to in clause 8.12.14b shall include war risks cover. The insurance referred to in clause 8.12.14a and 8.12.14b shall include:

c. Institute Clauses for Builders Risks (1/6/88) subject to the following amendments:

i clause 5.1 (perils) amended to include cover for the cost of renewing faulty welds;

ii clause 6 (earthquake and volcanic eruption exclusion) deleted;

iii clause 10 (deductible) amended in respect of claims for total loss or constructive total loss, the deductible should not apply to clause 17, 18, 19 or 20 if claim arising from same incident;

iv clauses 17.4.5 and 19.3.10 (pollution exclusion) deleted;

v clause 19.3.4 (cargo exclusion) deleted;

vi clauses 22 (strikes exclusion) and 23 (malicious acts exclusion) deleted;

d. seepage and pollution buy back clause;

e. leased equipment clause; and

f. consequential loss following insured loss (but excluding delay due to lack of performance).




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8.12.15 (contract works) The Contractor shall effect and maintain all risks insurance covering the whole of any construction works for the purposes of performing the Contract (including any temporary works), plant and equipment and any other property on the construction sites (including while in storage off site and while in transit to or from the site) for use in performing or incorporation into the construction works against the risks of loss, damage or destruction by all commercially insurable risks (including earthquake, fire, flood, lightning, storm and tempest, theft, malicious damage and resulting loss or damage arising from faulty material, workmanship or design), for the full replacement or reinstatement value of such insured property and including cover for professional fees, extra costs of reinstatement, and removal of debris and insuring the respective interests of the Contractor, its employees and agents and the Commonwealth in the property insured.

8.12.16 The insurances and registrations referred to in:

a. the following clauses shall be effected before the Contractor commences work under the Contract, and thereafter be maintained until all work under the Contract is completed (and all applicable Defects corrections periods in respect of any works have expired):

i clause 8.12.3 (workers compensation);

ii clause 8.12.6 (Industrial Special Risks);

iii not used;

iv not used;

v clause 8.12.12 (marine hull);

vi clause 8.12.13 (marine liability); and

vii clause 8.12.14 (ship builders);

b. clause 8.12.4 (public and products liability) shall be effected before the Contractor commences work under the Contract, and thereafter be maintained until all work under the Contract is completed and, in respect of products liability for 10 years following completion of the work under the Contract;

c. not used;

d. clause 8.12.5 (professional indemnity) shall be effected before the Contractor commences work under the Contract, and thereafter be maintained until the earlier of:

i 10 years following completion of the work under the Contract; or

ii 10 years following an earlier termination of the Contract;

e. clause 8.12.7 (transit) shall be effected on or before the start of each conveyance and maintained until the end of each conveyance by delivery at the work site;

f. clauses 8.12.8 (motor vehicle) shall be effected on or before the date the plant or vehicle is used in connection with the work under the Contract or on or around the GFF (whichever is the earlier) and maintained until such plant or vehicle ceases to be so used; and

g. clause 8.12.15 (contract works) shall be effected on or before the construction works commence and maintained until the expiry of any Defects corrections periods in relation to the construction works to which the insurance relates.

8.12.17 To the extent that the Contractor's insurances and registrations required by clause 8.12 of this Contract are in fact written on a claims made basis (notwithstanding any requirements of this Contract for such insurances to be written on an occurrence basis) then the Contractor shall maintain those insurances and registrations until the earlier of:

a. 10 years following completion of the work under the Contract; or

b. 10 years following an earlier termination of the Contract.

8.12.18 With the exception of statutory insurances, the insurances referred to in this clause 8.12 shall:




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a. be effected with an insurer with a financial security rating of "A-" or better by Standard & Poors (or the equivalent rating with another recognised rating agency), or an insurer approved by the Commonwealth, acting reasonably; and

b. provide that the insurer agrees:

i to provide at least 30 days written notice of cancellation to the policyholder;

ii that the policy operates (with the exception of limits of indemnity) as if there was a separate policy of insurance covering each party comprising the insured;

iii that a failure by any insured to observe and fulfil the terms of the policy or to comply with the pre-contractual duty of disclosure does not prejudice the insurance of any other insured;

iv that the state of mind and knowledge of one insured will not be imputed to any other insured for the purposes of determining the availability of cover under the policy;

v to waive all rights of salvage in respect of property of the Commonwealth which the Commonwealth notifies to the Contractor at or before the time of loss is of a sensitive nature from a national security perspective. Where the Commonwealth obtains proceeds from the salvage sale from any such property of the Commonwealth insured under the Contractor’s insurance, the insurer may deduct the actual payment of such salvage sale proceeds obtained by the Commonwealth from the amount of claim payment. Where the Commonwealth does not sell but instead reuses such property, the insurer may deduct a reasonable amount from the amount of the claim payment to reflect the value the Commonwealth has obtained from the reuse of the property. However this clause 8.12.18b.v only applies to the insurances referred to in the following clauses:

1) clause 8.12.4 (public and products liability);

2) clause 8.12.6 (Industrial Special Risks);

3) clause 8.12.7 (transit);

4) not used;

5) not used; and

6) clause 8.12.12 (marine hull);

7) clause 8.12.14 (ship builders liability); and

vi that a notice of a claim by any insured will be accepted as notice by all insureds.

8.12.19 The Contractor shall, on request, produce evidence satisfactory to the Commonwealth Representative of the currency and terms of the insurances referred to in this clause 8.12, including:

a. certificates of currency issued by the insurer or by the Contractor's insurance broker which contains sufficient detail to enable the Commonwealth to ascertain whether the insurances are in compliance with this clause 8.12;

b. copies of all policies (except for statutory insurances and provided that, in relation to commercially sensitive policies only, for the purpose of complying with this clause 8.12.19b, such policies may be made available for inspection by the Commonwealth or the Commonwealth's advisers, at a place and time reasonably convenient to the Commonwealth or the Commonwealth's advisers); and

c. other evidence of the insurances which the Commonwealth reasonably requires.

8.12.20 If the Contractor fails to comply with clause 8.12.19, the Commonwealth may, but is not obliged to, effect and maintain the relevant insurances and may:

a. recover the cost of doing so under clause 12.6 as a debt due to the Commonwealth; or

b. deduct the premiums payable for the relevant insurances from amounts payable to the Contractor under the Contract.




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8.12.21 In the event the Commonwealth elects to exercise its rights under clause 8.12.20, the Contractor shall provide the Commonwealth with all reasonable assistance to allow the Commonwealth to exercise those rights, including by executing documents and providing insurance proposal information to the Commonwealth's insurance broker and proposed insurers.

8.12.22 In respect of each insurance referred to in this clause 8.12, the Contractor shall:

a. pay (or cause to be paid) all premiums and deductibles as and when they are due;

b. not do anything or fail to do anything or (insofar as it is reasonably within its power) permit anything to occur which prejudices any insurance;

c. if necessary, rectify anything which might prejudice any insurance;

d. reinstate an insurance policy if it lapses;

e. not cancel, materially adversely vary or allow an insurance policy to lapse without the prior written consent of the Commonwealth;

f. promptly notify the Commonwealth of any event (including the issue of a notice of intention to cancel by the insurer to the policyholder) which may result in an insurance policy lapsing or being cancelled;

g. promptly inform the Commonwealth if it becomes aware of any actual, threatened or likely claims (with the exception of claims or potential claims by the Commonwealth against the Contractor) which could materially reduce the available limits of indemnity or which may involve the Commonwealth, and shall reinstate or replace any depleted aggregate limit of indemnity resulting from claims that are unrelated to the work under the Contract, if requested to do so in writing by the Commonwealth;

h. give full, true and particular information to the insurer of all matters and things the non-disclosure of which might in any way prejudice or affect any policy or the payment of any claims under the insurance; and

i. do everything reasonably required by the Commonwealth in order to allow the Commonwealth or any other person for whose benefit the policy is effected to claim and to collect or recover monies due under any insurance policy.

8.12.23 The Contractor shall not do anything which has been notified to the Contractor in writing by the Commonwealth that may invalidate or prejudice any insurance policy held by the Commonwealth or any indemnity to which the Commonwealth may be entitled.

8.12.24 The Commonwealth may increase or decrease the limits of indemnity required for the insurances referred to in, or change the types of insurances required by, this clause 8.12 at each renewal date of the relevant insurance by providing three months prior written notice to the Contractor. The Commonwealth shall only increase the limits of indemnity required for the insurances referred to in, or require additional insurances under, this clause 8.12 where it has obtained an opinion from a reputable insurance broker or otherwise appropriately qualified consultant that an increase is required in order to conform with current prudent insurance practice for a company with a risk profile comparable to the Contractor. The Contractor shall, within 30 days of receipt of a notice from the Commonwealth to increase or decrease the limits of indemnity required for the insurances referred to in, or change the types of insurances required by, this clause 8.12, submit a CCP to effect a change to the Contract.

8.12.25 If the Contractor becomes aware that a risk to be covered by an insurance policy referred to in this clause 8.12 has or is to become Uninsurable then:

a. the Contractor shall promptly notify the Commonwealth in writing together with all details available to the Contractor as to the reason why the risk is Uninsurable, steps taken by the Contractor to obtain insurance for the risk, the date on which the risk became or will become Uninsurable, and details as to what the Contractor suggests is appropriate to mitigate, manage or control the risk while it remains Uninsurable;

b. the parties shall meet as soon as reasonably practicable, but (unless otherwise agreed between the parties) no later than five Working Days after the notification in clause 8.12.25a to discuss all practical means by which the risk shall be managed (including,




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if the risk is material, the option of the Commonwealth providing an indemnity to the Contractor covering substantially the risks which have become Uninsurable or varying the Contract);

c. if the parties cannot agree as to how an Uninsurable risk is to be managed then, if the Uninsurable risk is material, either party (provided that the party is adversely affected by the Uninsurable risk), acting reasonably and in good faith, may terminate the Contract by written notice with the exception that the Contractor shall not terminate the Contract if the Commonwealth offers an indemnity in substitution for insurance for the Uninsurable risk and that indemnity is no less broad than the insurance held by the Contractor for that risk immediately before the risk became Uninsurable. For the avoidance of doubt, termination pursuant to this clause is not to be treated under any circumstances as the exercise of a termination right under any other provision of this Contract, even if such a right may otherwise exist;

d. the Contractor shall, in respect of any risk that has become Uninsurable:

i monitor the insurance industry on a regular basis (and not less than twice a year) and attempt to obtain insurance for the risk which is Uninsurable;

ii provide the Commonwealth with details of attempts made by the Contractor to obtain insurance for the Uninsurable risk; and

iii as soon as it is able to do so, obtain insurance for the Uninsurable risk;

e. the Contractor acknowledges that the Commonwealth may undertake its own enquiries as to the availability of insurance for Uninsurable risks and as to the terms and conditions, including price, on which it is available. If the Commonwealth's own enquiries show that the insurance for Uninsurable risks is available on terms and conditions that are commercially reasonable in all of the circumstances, the Contractor shall obtain that insurance without unreasonable delay; and

f. the Contractor is relieved of its obligations under this clause 8.12 to effect insurance for any risk that is Uninsurable for the period that the risk remains Uninsurable.

8.12.26 For the purposes of clause 8.12.25, Uninsurable means, in relation to a risk, either that:

a. insurance required pursuant to this clause 8.12 is not available in the international insurance markets with insurers with a financial security rating of "A-" or better by Standard & Poors (or the equivalent rating with another reputable rating agency); or

b. the insurance premium for insuring that risk is at such a level or the terms and conditions are such that the risk is not generally being insured against in the international insurance market with reputable insurers by prudent corporates with a risk profile comparable to the Contractor.

Note to tenderers: Clause 8.12.27 will only be included if the Contractor has an ACIP and may require amendment to only apply to those insurances to be covered by the ACIP.

8.12.27 The Contractor shall be:

a. deemed compliant with the requirements of the following clauses:

i clause 8.12.1;

ii clause 8.12.3 (workers compensation);

iii clause 8.12.4 (public and products liability);

iv clause 8.12.5 (professional indemnity);

v clause 8.12.6 (Industrial Special Risks);

vi clause 8.12.7 (transit);

vii clause 8.12.8 (motor vehicle);

viii not used;

ix not used;

x not used;




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xi clause 8.12.12 (marine hull);

xii clause 8.12.13 (marine liability);

xiii clause 8.12.14 (ship builders liability);

xiv clause 8.12.15 (contract works);

xv clauses 8.12.16, 8.12.17 and 8.12.18; and

b. relieved of its obligations under clauses 8.12.19 and 8.12.22,

in respect of a particular insurance listed in clause 8.12.27a for any period during which the Contractor’s insurance program holds ACIP status under CASG’s centralised process for monitoring the compliance of contractors with contractual insurance requirements, subject to any limitations on or conditions of that approval (including whether the Contractor’s ACIP status extends to that type of insurance). The Contractor shall advise the Commonwealth Representative within five Working Days if its ACIP status is withdrawn or suspended by the Commonwealth.

9 WARRANTIES AND SUPPORT OF THE SUPPLIES

9.1 Fitness for Purpose

9.1.1 The Contractor shall ensure that the Supplies are fit for the purposes provided for in the Contract, except to the extent that the failure of the Supplies to be fit for purpose results from a Commonwealth Default.

9.2 Notification of Defects

9.2.1 If during the Defect Notification Period specified in the Details Schedule the Contractor becomes aware of any Defect in the Supplies which adversely affects, or is likely to adversely affect:

a. the safety of the Supplies or the safety of persons, the Contractor shall notify the Commonwealth Representative of the Defect within one Working Day; or

b. the operation or capability of the Supplies, the Contractor shall notify the Commonwealth Representative of the Defect within five Working Days.

9.2.2 The Contractor shall within 30 days of the notification under clause 9.2.1 provide the Commonwealth with a report the nature of the Defect, its cause and effects, and proposed rectification action.

9.3 Defect Rectification Obligations

9.3.1 If the Commonwealth Representative notifies the Contractor of a Defect in Supplies during the Defect Rectification Period (specified in the Details Schedule) applicable to the Supplies, the Contractor shall, within the time specified in the notice but no longer than 30 Working Days after the notification (or a longer period agreed in writing by the Commonwealth), by repair, replacement or modification:

a. rectify the Defect; and

b. rectify any adverse effect of the Defect or the rectification on other Supplies,

whether or not the Defect arises out of or as a consequence of a Contractor Default.

9.3.2 The Contractor shall be entitled to claim for an additional amount (calculated in accordance with Attachment B and on the same basis as the Contract Price) for any rectification work performed under clause 9.3.1 but only to the extent that the Defect arose out of or as a consequence of any of the following:

a. a Commonwealth Default;

b. the Commonwealth’s wilfully damaging the relevant Supplies;

c. damage to the Supplies caused by:




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i the Supplies not being stored, installed, configured, used, maintained or modified by the Commonwealth or a Commonwealth Contractor (other than a Related Body Corporate of the Contractor) in accordance with any specifications, instructions or manuals delivered to the Commonwealth in respect of the relevant Supplies, provided that compliance with the specifications, instructions or manuals would not prevent the relevant Supplies from being fit for purpose in accordance with clause 9.1;

ii an Excepted Risk occurring after the Supplies were delivered to the Commonwealth, except to the extent that the loss or damage could have been prevented or mitigated by reasonable care on the part of the Contractor or Contractor Personnel;

iii a breach of a general law duty or an applicable law by an Unrelated Party, except to the extent that the Contractor is liable for such damage under clause 8.6.2.

9.3.3 The Contractor’s obligations under clause 9.3.1 do not require the Contractor to remedy a Defect in GFM incorporated into Supplies, except to the extent that the Defect resulted from a Contractor Default.

9.3.4 Subject to clauses 9.3.2 and 9.3.8, the Contractor shall, except to the extent that the Commonwealth Representative otherwise agrees, bear all costs of, and incidental to, rectifying Defects as required by the Contract, including the costs of any removal, disassembly, packing, freight, relevant testing, re-assembly and reinstallation.

9.3.5 If the Contractor fails to rectify a Defect within the period specified in clause 9.3.1, the Commonwealth may rectify the Defect itself or by a third party. If the Commonwealth retains a third party to rectify the Defect, the Contractor's warranties and obligations will be reduced to the extent of the warranty given by the third party in relation to the rectification work. The Commonwealth may elect to recover from the Contractor under clause 9.3.1 the amount of the Commonwealth’s costs of rectifying the Defect. No amount shall be owing to the Commonwealth under this clause 9.3.5 until the Commonwealth elects to recover the amount.

9.3.6 If a Defect (other than a Latent Defect) in any Supplies is rectified in accordance with clause 9.3.1, the Defect Rectification Period for those Supplies shall expire on the later of:

a. the end of the original Defect Rectification Period; or

b. the date that is half the original Defect Rectification Period after the rectified Supplies are returned to the Commonwealth.

9.3.7 If the Contractor has performed rectification work on Supplies as required by this clause 9.3 and the Commonwealth is not satisfied that the Defect has been rectified, the Contractor shall perform any additional tests that are required by the Commonwealth to determine whether the Defect has been rectified.

9.3.8 If tests conducted under clause 9.3.7 show that the Defect has been rectified, the cost of the tests shall be borne by the Commonwealth. If the tests show that the Defect has not been rectified:

a. the Contractor shall rectify the Defect as soon as practicable; and

b. the costs of the rectification work and the tests shall be borne by the Contractor.

9.3.9 The rights and remedies in this clause 9.3 are in addition to, and shall not limit, any other rights of the Commonwealth under the Contract or otherwise.

9.4 Manufacturer's and Other Warranties

9.4.1 The Contractor shall ensure that the Commonwealth obtains the benefit of any manufacturer, supplier or other third party warranty applicable relating to the Supplies (including after the expiry of the Defect Rectification Period for the relevant Supplies), including by taking all reasonable action to enforce such a warranty, until the expiry of the warranty or clause 9.4.2 applies.




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9.4.2 Following achievement of Final Acceptance or the termination or expiry of the Contract, the Contractor shall:

a. assign the benefit of any remaining third party warranties for those Supplies to the Commonwealth; or

b. if the Contractor is not permitted to assign those third party warranties, otherwise ensure that the Commonwealth obtains the benefit of any remaining third party warranties for those Supplies, including by taking all reasonable action to enforce such a third party warranty until the expiry of the relevant warranty.

9.5 Spare Parts and Support Equipment

9.5.1 The Contractor shall for the period of 10 years commencing immediately after Acceptance of OPV #1 provide facilities for the supply of sufficient quantities of spare parts and support equipment to maintain the Supplies in effective operation.

9.5.2 If during the period set in clause 9.5.1 the Contractor becomes aware that its ability to provide spare parts or support equipment may be adversely affected it shall provide the Commonwealth with advance notice being not less than 30 days of that event. If there will be a final production run of spare parts or support equipment the Contractor shall nominate in the notice the date by which the Commonwealth may place final orders.

9.5.3 The Commonwealth shall not be bound to order any, or any particular quantity of, spare parts or support equipment from the Contractor.

9.6 Draft Data Items

9.6.1 The Contractor acknowledges that it has previously been contracted by the Commonwealth to produce the draft Data Items referred to in clause 2.3.10 of the SOW. The Contractor agrees that it is not entitled to, and will not, seek payment in respect of the delivery of the draft Data Items referred to in clause 2.3.10 of the SOW, except to the extent that any such payment relates to additional work performed by the Contractor on those draft Data Items under the Contract.

9.6.2 The Contractor warrants that the draft Data Items referred to in clause 2.3.10 of the SOW are entirely satisfactory for the purposes for which they are to be used in accordance with the Contract. Neither:

a. the inclusion of any of those draft data items in Attachment N as part of the Contract;

b. non-Approval by the Commonwealth Representative of any CDRL data item because it does not conform with any of those draft Data Items; or

c. any agreement by the Commonwealth Representative to an amendment, proposed by the Contractor, to any of those draft data items,

shall relieve the Contractor of any obligation under the Contract.

10 CONTRACT MANAGEMENT

10.1 Change to the Contract

10.1.1 Except as expressly permitted in the Contract, the Contract shall only be changed by CCP in accordance with this clause 10.1. The parties are not liable to each other for any additional work undertaken or expenditure incurred unless the change is agreed in accordance with this clause 10.1.

10.1.2 Either party may propose a change to the Contract. CCPs shall:

a. be in the format set out at Annex D to Attachment H; and

b. if the proposal is a change to the SOW, and except where otherwise directed by the Commonwealth Representative, be accompanied by an ECP in the format set out at Annex E to Attachment H, a draft of which has been approved in writing by the Commonwealth Representative prior to submission of the CCP.

10.1.3 If the Commonwealth Representative proposes a change to the Contract it shall by notice to the Contractor:




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a. require the Contractor to prepare the CCP and the Contractor shall within 30 days of receipt of such notice, submit a CCP in accordance with this clause 10.1 to the Commonwealth to give effect to the change; or

b. provide a CCP to the Contractor and the Contractor shall, within 30 days of receipt, notify the Commonwealth Representative of any changes it requires to the CCP.

10.1.4 Prior to the Contractor preparing a CCP, the Commonwealth may require the Contractor to provide a NTE quote for the preparation of a CCP. If the Commonwealth exercises its discretion under this clause, the amount payable under clause 10.1.7 shall not exceed the NTE quote provided.

10.1.5 Unless otherwise agreed in writing, the Commonwealth Representative shall:

a. within such period as specified in clause 2.3 of the SOW; or

b. if no such period is specified, within 30 days after receipt,

either Approve the CCP, or reject the CCP giving reasons for such rejection. A CCP that has been Approved shall take effect when executed by both parties unless otherwise set out in the CCP.

10.1.6 The cost of preparing the following CCPs shall be borne by the Contractor including where the CCP is required by the Commonwealth for:

a. a CCP under clauses 1.7.2, 6.3.4, 6.3.9, 7.10.9, 8.12.24 or 10.9.4;

b. a CCP under clause 2.3.6 of the SOW; and

c. any other CCP which is proposed or required to address any non-performance of the Contractor under the Contract.

10.1.7 Subject to clauses 10.1.4 and 10.1.6, for a CCP required by the Commonwealth the Commonwealth shall meet the reasonable cost of preparation of the CCP whether or not the CCP is agreed by the Contractor.

10.1.8 The Commonwealth Representative may issue an amendment to the Contract to incorporate CCPs that have taken affect under clause 10.1.5. The amendment does not affect the legal status of the CCP as determined under clause 10.1.5.

10.1.9 Without limiting the Commonwealth’s other rights under the Contract, the Contractor agrees that:

a. each CCP should be priced in accordance with the basis of estimates set out in Annex H to Attachment B to the Contract;

b. the Commonwealth may take into account all relevant information set out in Annex H to Attachment B to the Contract when considering whether to Approve or reject any CCP in accordance with clause 10.1.5; and

c. the Contractor will make information relevant to the proposed pricing of each CCP submitted under this clause 10.1 available to the Commonwealth on an Open Book Basis.

10.2 Condition as to Disclosure by the Contractor

10.2.1 The Contractor shall promptly notify and fully disclose to the Commonwealth, in writing, any event or occurrence actual or threatened during the performance of the Contract which may materially affect the Contractor’s ability to perform any of its obligations under the Contract.

10.2.2 The Contractor:

a. warrants that, to the best of its knowledge after making diligent inquiry, no conflict of interest exists at the Effective Date specified in the Details Schedule, or is likely to arise in the performance of its obligations under the Contract by itself, Contractor Personnel or any Approved Subcontractors; and

b. shall promptly notify the Commonwealth in writing if such a conflict or risk of such a conflict of interest arises.




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10.2.3 Within five Working Days after giving notice under clause 10.2.1 or 10.2.2, the Contractor shall notify the Commonwealth, in writing, of the steps the Contractor will take to resolve the issue. If the Commonwealth considers those steps are inadequate, it may direct the Contractor to resolve the issue in a manner proposed by the Commonwealth.

10.2.4 If the Contractor fails to notify the Commonwealth in accordance with clauses 10.2.1 or 10.2.2b or 10.2.3 or is unable or unwilling to resolve the conflict of interest as required, or in the opinion of the Commonwealth, the conflict cannot be satisfactorily resolved, the Commonwealth may give the Contractor a notice of termination for default under clause 12.2.1e.

10.2.5 The Contractor shall ensure that all Approved Subcontracts contain equivalent provisions to those set out in this clause 10.2.

10.3 Waiver

10.3.1 Failure by either party to enforce a term of the Contract shall not be construed as in any way affecting the enforceability of that term or the Contract as a whole.

10.3.2 The exercise of the Commonwealth’s rights under the Contract does not affect any other rights of the Commonwealth under the Contract or otherwise, and does not constitute:

a. an election to exercise those rights instead of other rights; or

b. a representation that the Commonwealth will not exercise other rights.

10.4 Confidential Information

10.4.1 Each party shall ensure that Confidential Information provided by the other party is not disclosed, except to the extent the disclosure is:

a. required by law or statutory or portfolio duties or required for public accountability reasons, including following a request by parliament or parliamentary committee;

b. necessary for the conduct of any legal proceedings arising in relation to the Contract;

c. necessary for a party to fulfil its obligations under the Contract; or

d. necessary to enable the Commonwealth to exercise its IP rights under the Contract,

unless the other party has provided its prior written consent to the disclosure.

10.4.2 Clause 10.4.1 does not apply to a disclosure to a professional adviser, insurer, financier or auditor of a party.

10.4.3 The Contractor shall, if required by the Commonwealth, ensure that Contractor Personnel engaged in the performance of the Contract give a written undertaking in the form of a deed of confidentiality prior to the disclosure of Confidential Information. The Contractor shall provide properly executed deeds as required by this clause.

10.4.4 Without limiting any rights of the Commonwealth provided for elsewhere in the Contract, and in particular in clauses 5 and 10.4, the Contractor grants to the Commonwealth the right to disclose information relating to communication protocols, interface standards, message formats, or any other electrical, mechanical or optical interface or other requirements which may be required to be released by the Commonwealth so as to allow software or equipment to connect to or communicate with anything provided to the Commonwealth in the course of performing the Contract.

10.4.5 Only the Contract clauses and outputs listed in Attachment K are Confidential Information for the relevant party. The Contractor shall not, in marking information supplied to the Commonwealth, misuse the term ‘Confidential Information’ or equivalent terms. The marking of information as Confidential Information (or by use of any other similar term) is not determinative as to whether the information is Confidential Information for the purposes of the Contract.

10.4.6 If either party proposes an amendment to Attachment K, including to identify any Confidential Information to which access is provided under clause 10.4 that party shall submit a CCP in accordance with clause 10.1.




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10.4.7 The Contractor shall deliver to the Commonwealth, as required by the Commonwealth, all documents in its possession, power or control which contain or relate to any information that is Confidential Information of the Commonwealth on the earlier of:

a. demand by the Commonwealth; or

b. the time the documents and other material are no longer required for the purposes of the Contract.

10.4.8 If the Commonwealth makes a demand under clause 10.4.7 and the Contractor has placed or is aware that documents containing the Confidential Information are beyond its possession or control, then the Contractor shall provide full particulars of the whereabouts of the documents containing the Confidential Information, and the identity of the person in whose custody or control they lie.

10.4.9 The Contractor, when directed by the Commonwealth in writing, agrees to destroy any document in its possession, power or control which contain or relate to any Confidential Information.

10.4.10 Return or destruction of the documents referred to in this clause 10.4 does not release the Contractor from its obligations under the Contract.

10.5 Assignment and Novation

10.5.1 Neither party may, without the written consent of the other, assign its rights under the Contract or novate its rights or obligations under the Contract.

10.5.2 If the Contractor proposes to enter into any arrangement which will require the novation of the Contract, it shall notify and seek the consent of the Commonwealth Representative within a reasonable period prior to the proposed novation.

10.5.3 The Commonwealth may refuse to consent to an arrangement proposed by the Contractor under clause 10.5.2.

10.6 Negation of Employment and Agency

10.6.1 The Contractor shall not represent itself, and shall ensure that the Contractor Personnel do not represent themselves, as being employees, partners or agents of the Commonwealth.

10.6.2 The Contractor and Contractor Personnel shall not by virtue of the Contract be, or for any purposes deemed to be, an employee, partner or agent of the Commonwealth.

10.7 Commonwealth Access and Records

Note to tenderers: The Commonwealth is subject to obligations relating to its expenditure and use of Commonwealth resources that require the Commonwealth to obtain and maintain rights of audit and inspection under its contracts. The rights set out in clause 10.7 below support the Commonwealth to discharge its public accountability obligations and expectations.

10.7.1 During the performance of the Contract, the Contractor shall, subject to the Commonwealth giving five Working Days' prior notice to the Contractor, provide the Commonwealth Representative and any Commonwealth Personnel authorised by the Commonwealth Representative with access to its premises, records and accounts for any purpose related to the Contract. However, in the event of an emergency, an accident or incident investigation, a threat to WHS or the Environment, the Commonwealth may require, and the Contractor shall provide, immediate access to the premises, records or accounts for any purpose related the Supplies or the Contract. The Commonwealth may copy any records or accounts for such purposes The Commonwealth may copy any records or accounts for the purposes of the Contract.

10.7.2 The Contractor shall ensure that Approved Subcontracts require Approved Subcontractors to give the Commonwealth Representative and any person authorised by the Commonwealth Representative, access to Approved Subcontractors’ premises, and to records and accounts in connection with the performance of work under the Subcontract, including the right to copy. However, in the event of an emergency, an accident or incident investigation, a threat to WHS or the Environment, the Commonwealth may require, and the Contractor shall ensure that the Approved Subcontractor provides, immediate access to the premises, records or




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accounts for any purpose related the Supplies or the Contract. The Contractor shall ensure that the Commonwealth may copy any records or accounts for such purposes.

10.7.3 Without limiting clauses 10.7.1, 10.7.2 and 10.7.4, the Contractor acknowledges and agrees that:

a. the Auditor-General has the power under the Auditor Act 1997 (Cth) to conduct audits (including performance audits) of the Contractor and Subcontractors in relation to the Contract;

b. the Auditor-General may give a copy of, or an extract from, a report on an audit in relation to the Contract to any person (including a Minister) who, in the Auditor-General’s opinion, has a special interest in the report or the content of the extract; and

c. the Commonwealth Representative may authorise the Auditor-General, or member of the staff of the Australian National Audit Office, to access premises, records and accounts under clause 10.7.1.

10.7.4 Without limiting the generality of clause 10.7.1 and 10.7.3, the purposes for which the Commonwealth Representative or any person authorised by the Commonwealth Representative may require access include:

a. inspecting Commonwealth Property, attending, checking or conducting stocktakes of Commonwealth Property, including viewing and assessing the Contractor’s inventory control and stocktaking systems, and removing Commonwealth Property that are no longer required by the Contractor or Subcontractor for the performance of the Contract;

b. validating the Contractor's progress in meeting the AIC Plan;

c. investigating the reasonableness of proposed prices or costs in any CCP submitted in accordance with clause 10.1. For the purpose of this investigation, the Contractor shall permit the Commonwealth to, or facilitate the Commonwealth being able to, exercise it access rights in this clause 10.7 including providing access to Related Bodies’ Corporate records (including subsidiary and parent company records) relating to transfer pricing, cross-subsidisation with Related Bodies Corporate and the allocation of overheads between the Contractor and the Related Bodies Corporate to the extent that such records relate to the CCP;

d. verifying that an offer submitted by the Contractor meets the requirements of clause 5.6.3.

e. determining whether and to what extent steps should be taken to register or otherwise protect Commonwealth IP;

f. validating the Contractor’s progress in meeting the IP Plan;

g. auditing raw measurement data, Software Design Data, software, and Source Code for the purpose of validating the Contractor’s performance under the Contract;

h. performing reviews of the Earned Value Management System (EVMS) in accordance with clause 3.2.5 of the SOW;

i. investigating the reasonableness of any cost claims made by the Contractor under the Contract, including any claims for postponement costs submitted in accordance with clause 6.4; and

j. without being under any obligation to do so, monitoring the Contractor's compliance with any applicable laws or Approved plans in connection with the protection of WHS or the Environment, including the development and implementation of any systems, policies or procedures related to WHS and environmental compliance as required under the Contract.

10.7.5 The Commonwealth shall comply with, and shall require any delegate or person authorised by the Commonwealth Representative to comply with, any reasonable Contractor or Approved Subcontractor safety and security requirements or codes of behaviour for the premises.




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10.8 Contractor Access

10.8.1 The Commonwealth shall, during the period of the Contract, provide access to any Commonwealth Premises for persons Approved under this clause 10.8 as necessary for the Contractor’s performance of the Contract.

10.8.2 Subject to clause 3.5 and unless otherwise agreed, the Contractor shall seek written permission from the Commonwealth Representative, at least five Working Days prior to entry being required, for each person the Contractor wishes to have access to Commonwealth Premises.

10.8.3 The Commonwealth Representative may grant or refuse to grant a person access to the Commonwealth Premises. If access to any person specified by the Contractor is refused, the Contractor may request access for any other replacement person necessary for the performance of the Contract.

10.8.4 The Commonwealth Representative may by notice to the Contractor withdraw access rights to Commonwealth Premises at any time for any period.

10.8.5 The Contractor shall comply with, and require persons afforded access under this clause 10.8 to comply with, any relevant Commonwealth safety and security requirements, regulations, standing orders, or codes of behaviour for the Commonwealth Premises.

10.8.6 The Commonwealth Representative may notify the Contractor of, and the Contractor shall comply with, any special security or access provisions that apply to a particular Commonwealth Premises relevant to the Contract.

10.8.7 This clause 10.8 does not apply in relation to the GFF.

10.9 Subcontracts

Note to tenderers: Tenderers should note that Approved Subcontracts are required under the Contract to include certain provisions that the Commonwealth considers important. These include clauses 10.2 (Conditions on Disclosure) 10.7, (Commonwealth Access), 10.12 (Confidential Information), 11.4 (WHS) and 12.4 (Termination or Reduction for Convenience).

10.9.1 The Contractor shall not Subcontract the whole of the work under the Contract.

10.9.2 The Contractor may, but shall not be required to, Subcontract with one or more of the Approved Subcontractors.

10.9.3 The Contractor shall not Subcontract work under the Contract to a Subcontractor if:

a. the total value of all work with the Subcontractor is expected to exceed the Approved Subcontractor Threshold specified in the Details Schedule; or

b. the Subcontractor will bring IP to the proposed Subcontract or create IP under the proposed Subcontract necessary to enable the Commonwealth to use and support the Supplies;

c. the Subcontractor is a classification society for any Supply; or

d. the work involves:

i design and development activities;

ii modification of systems or equipment, such as Deviations;

iii systems installation or integration;

iv tasks to meet Industry Requirements;

v development and delivery of training for the Mission System; and

vi development of safety-related systems,

unless that Subcontractor is an Approved Subcontractor.

10.9.4 The Contractor may request the inclusion of additional Approved Subcontractors in Attachment G by submitting a CCP in accordance with clause 10.1. The CCP shall include full particulars of the work to be Subcontracted, the name and address of each proposed




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Subcontractor and any other information about the Subcontractor required by the Commonwealth Representative.

10.9.5 The Commonwealth Representative shall Approve or reject the CCP in accordance with clause 10.1.4. The Commonwealth Representative’s approval shall not be unreasonably withheld.

10.9.6 The Contractor, by subcontracting any part of the work under the Contract shall not be relieved of its liabilities or obligations under the Contract, and shall be responsible for all Subcontractors. The Contractor shall not attempt to reduce its liability for any loss or damage suffered by the Commonwealth by claiming that a Subcontractor is a concurrent wrongdoer under proportionate liability legislation.

10.9.7 If a Subcontract is terminated, repudiated or rescinded, whether in relation to its terms or as a result of any legislation relating to bankruptcy, liquidation or official management, the Contractor shall promptly notify the Commonwealth Representative and shall complete the work under the Contract either by itself or by engaging another Subcontractor.

10.9.8 Without limiting the Contractor's obligations under the Contract, the Contractor shall ensure that each Subcontractor that requires access to any Commonwealth Premise or to security classified information complies with clause 10.10.

10.9.9 The Contractor, if requested by the Commonwealth Representative, shall provide the Commonwealth representative with names of all Subcontractors and a copy of any Subcontract, which for Approved Subcontracts shall contain prices. The Contractor shall inform its Subcontractors that the Commonwealth may be required to publicly disclose the Subcontractors’ participation in the performance of the Contract.

10.9.10 The Contractor shall not enter into a Subcontract under the Contract with a Subcontractor named by the Workplace Gender Equality Agency as an employer currently not complying with the Workplace Gender Equality Act 2012 (Cth).

10.10 Defence Security

10.10.1 If the Contractor requires access to any Commonwealth Premises under the control or responsibility of Defence, the Contractor shall:

a. comply with any security requirements (including those contained in the DSM) notified to the Contractor by the Commonwealth Representative from time to time; and

b. ensure that Contractor Personnel are aware of and comply with the Commonwealth’s security requirements.


a. ensure that Contractor Personnel, undertake any security checks, clearances or accreditations as required by the Commonwealth;

b. promptly notify the Commonwealth of any changes to circumstances which may affect the Contractor’s capacity to provide the Supplies in accordance with the Commonwealth’s security requirements; and

c. provide a written undertaking in respect of security or access to the Commonwealth Premises in the form required by the Commonwealth.

Note to tenderers: For information on security classification, and required facility accreditations refer to Part 2:4, Part 2:7 and Part 2:30 of the DSM. For information on the Defence Industry Security Program refer to Part 2:42 of the DSM. For access to the DSM tenderers should contact the Contact Officer listed in the Tender Details Schedule.

10.10.3 The security classification of the Supplies will be up to and including the level specified in the Details Schedule. The Contractor shall:

a. if required in the Details Schedule, obtain and maintain membership of DISP in accordance with Part 2:42 of the DSM;

b. if not required to be a member of the DISP, comply with the classification and protection of official information requirements of Part 2:30 of the DSM;




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c. ensure that all required personnel (if any) possess a personnel security clearance specified in the Details Schedule, and comply with the requirements and procedures of Part 2:20 of the DSM;

d. possess the facility accreditation (if any) and ICT system accreditation (if any) specified in the Details Schedule and comply with the requirements and procedures of Part 2:4 of the DSM; and

e. comply with the reporting requirements for security incidents (if any) in accordance with Parts 2:12 and 2:59 of the DSM.

Note to tenderers: If the tenderer proposes to perform work at an overseas location and that work involved information and/or equipment that is subject to a security classification, and that aspect proposal is agreed in any resultant Contract, the following clauses will be included.

10.10.4 Where work under the Contract is performed overseas, the Contractor shall comply with:

a. the requirements of clauses 10.10.3c and 10.10.3d for the classification level (if any) specified in the Details Schedule or equivalent classification; and

b. comply with the relevant overseas government industry security policy.

10.10.5 For the purposes of clause 10.10.4, accreditations shall be issued by the relevant overseas government security authority, and shall be verified by the DSVS (through a bilateral security instrument or otherwise).

10.10.6 The Contractor shall classify all information in its possession relating to the performance of the Contract according to the Security Classification and Categorisation Guide in Attachment I and shall ensure that such information is safeguarded and protected according to its level of security classification.

10.10.7 With respect to security classified information, the Contractor shall:

a. ensure that no security classified information furnished or generated under the Contract shall be released to a third party, including a representative of another country, without prior written approval of the originator through the Commonwealth Representative;

b. promptly report to the Commonwealth Representative any security incident, as defined by the DSM, including instances in which it is known or suspected that security classified information furnished or generated under the Contract has been lost or disclosed to unauthorised parties, including a representative of another country; and

c. ensure that all security classified information transmitted between the parties or a party and a Subcontractor, in Australia, whether generated in Australia or overseas, shall be subject to the terms of Part 2:33 of the DSM.

10.10.8 Where COMSEC material is transmitted in Australia, the Contractor shall ensure that:

a. without limiting clause 10.10.7c, all COMSEC material transmitted between the parties or a party and a Subcontractor in Australia shall be subject to the special security provisions of Part 2:53 of the DSM; and

b. all security classified information transmitted between the parties or a party and a Subcontractor located overseas whether generated in Australia or by another country shall be subject to the laws of the overseas country regarding the custody and protection of security classified information and to any bilateral security instrument between Australia and the overseas country.

10.10.9 Where COMSEC material is transmitted in overseas, the Contractor shall ensure that

a. all COMSEC material transmitted between the parties or a party and Subcontractor located overseas shall be subject to approval in the first instance by the Director ASD, in respect of Australian COMSEC material, and by the respective COMSEC authorities in other countries in respect of COMSEC material originating from those countries.

b. Once approved for release, the material shall be subject to the laws of the overseas country regarding the custody and protection of COMSEC material as determined by




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the Director ASD and to any bilateral security instrument between Australia and the overseas country.

10.10.10 If there has been a breach by the Contractor or Contractor Personnel of this clause 10.10, the Commonwealth Representative may give the Contractor a notice of termination for default under clause 12.2.1d.

10.11 Post Defence Separation Employment

10.11.1 Except with the prior written Approval of the Commonwealth Representative, the Contractor shall not permit (and shall ensure that each Approved Subcontractor does not permit) any Defence Personnel or Defence Service Provider who, at any time during the preceding 12 month period was engaged or involved in:

a. the preparation or management of the Contract;

b. the assessment or selection of the Contractor; or

c. the planning or performance of the procurement or any activity relevant or related to the Contract,

to perform, contribute to or advise on the performance of the Contract (or Approved Subcontract).

10.11.2 To avoid doubt, the 12 month period referred to in clause 10.11.1 applies from the date which is 12 months before the date on which the Contractor proposes that the person start performing or contributing to the performance of the Contract (or Approved Subcontract).

10.11.3 The Commonwealth Representative shall not unreasonably withhold approval of a person under clause 10.11.1 and, in making a decision, shall consider:

a. the character and duration of the engagement, services or work that was performed by the person during the relevant 12 month period;

b. any information provided by the Contractor about the character and duration of the services proposed to be performed by the person under the Contract (or Approved Subcontract);

c. the potential for real or perceived conflicts of interest or probity concerns to arise if the person performs or contributes to the performance of the Contract (or Approved Subcontract) in the manner proposed under 10.11.3b, and the arrangements which the Contractor (or Approved Subcontractor) proposes to put in place to manage or reduce those conflicts of interest or probity concerns;

d. any information provided by the Contractor concerning any significant effect that withholding Approval will have on the person’s employment or remuneration opportunities or the performance of the Contract; and

e. the policy requirements set out in DI(G)PERS 25-4, as applicable.

10.12 Change Of Control

10.12.1 The Contractor shall ensure that all Approved Subcontracts contain equivalent provisions to those set out in this clause 10.12.

10.12.2 Subject to clause 10.12.3, the Contractor shall seek the Commonwealth Representative's prior written consent to any proposed Change of Control of:

a. the Contractor;

b. the Guarantor; or

c. an Approved Subcontractor,

by providing notice to the Commonwealth at least 15 Working Days before the proposed Change of Control is to occur.

10.12.3 If a Change of Control of the Contractor, the Guarantor or an Approved Subcontractor occurs as a result of a transfer of shares or other interests listed on a recognised stock exchange and the consent of the Commonwealth Representative could not have been obtained in




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accordance with clause 10.12.2, the Contractor shall seek that consent by providing notice to the Commonwealth within 5 Working Days after the Change of Control.

10.12.4 In any notice given to the Commonwealth seeking consent to a Change of Control, the Contractor shall include the following details:

a. the ownership and management arrangements of the Contractor, the Guarantor or the Approved Subcontractor that were in place immediately before the change or, if the change has yet to occur, that were in place at the time the Contractor became aware of the prospective change;

b. the ownership and management arrangements of the Contractor, the Guarantor or the Approved Subcontractor that have been or will be put in place as a consequence of the change or, if the change has yet to occur, that the Contractor reasonably expects to be put in place if the change occurs;

c. the impact (if any) that the change has had on the Contractor’s, the Guarantor's or the Approved Subcontractor’s ability to meet its obligations under the Contract or, if the change has yet to occur, that the Contractor reasonably expects the change to have on that ability; and

d. the steps the Contractor, the Guarantor or the Approved Subcontractor has taken or proposes to take to minimise the impact of the change or prospective change.

10.12.5 If there is a Change of Control of the Contractor, the Guarantor or the Approved Subcontractor and the Commonwealth Representative does not consent to the Change of Control, then the Commonwealth may:

a. give the Contractor a notice of termination under clause 12.2.1d; or

b. agree not to give the Contractor a notice of termination under clause 12.2.1d, subject to the Contractor providing further information, giving specified undertakings, or executing further agreements (including a CCP), as may be required by the Commonwealth.

10.12.6 Nothing in this clause 10.12 requires the Contractor, the Guarantor or the Approved Subcontractor to act in a manner inconsistent with its obligations under the Corporations Act 2001 (Cth) or equivalent laws and regulations in a foreign jurisdiction.

10.13 Joint Venture Requirements

Note to tenderers: If the successful tenderer proposes that:

(a) the Commonwealth contract with a Joint Venture under any resultant Contract; or

(b) the tenderer subcontract with a Joint Venture under any resultant Contract (e.g. where the Australian Ship Builder is a Joint Venture),

the Commonwealth may require additional clauses to be included below to address potential risks associated with the relevant contracting model.

In the case of paragraph (a), this may include provisions requiring cross guarantees from each shareholder of the Joint Venture, restricting changes in the Joint Venture’s shareholding (and related constituent documents), and requirements for the shareholders of the Joint Venture to assume joint and several liability for the performance of the Joint Venture.

In the case of paragraph (b), this may include the provisions outlined above (where relevant) and provisions aimed at ensuring that the requirements of clause 4.1 of the Contract are met by at least one shareholder in the Joint Venture, that the delivery of the Contract will not be adversely affected by the Australian Ship Builder being a Joint Venture and that, there is an appropriate degree of management and control over decision making and Subcontract delivery by the relevant shareholder(s) in the Joint Venture that meet the requirements of clause 4.1.




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Any additional clauses will be provided to, and negotiated with, the successful tenderer during ODIAs and negotiations.

11 POLICY AND LAW

11.1 Governing Law

11.1.1 The laws of the State or Territory specified in the Details Schedule shall apply to the Contract. The courts of that State or Territory shall have non-exclusive jurisdiction to decide any matter arising out of the Contract.

11.1.2 The United Nations Convention on Contracts for the International Sale of Goods shall not apply to the Contract.

11.2 Compliance with Laws

11.2.1 The Contractor shall, in the performance of the Contract, comply with and ensure that Contractor Personnel comply with, the laws from time to time in force in the State, Territory, or other jurisdictions (including overseas) in which any part of the Contract is to be carried out.

11.2.2 The Contractor shall provide to the Commonwealth Representative within 10 Working Days after a request by the Commonwealth written confirmation that, to the best of the Contractor’s knowledge and based on reasonable enquiries undertaken by the Contractor or the Contractor Personnel are compliant with all laws (including foreign anti-corruption legislation) regarding the offering of unlawful inducements whether in Australia or otherwise in connection with the performance of the Contract and the Subcontracts.

11.3 Policy Requirements

11.3.1 Subject to clause 11.3.2, the Contractor shall comply with and require the Contractor Personnel to comply with the following Commonwealth policies of general application relevant or applicable to the Contract:

a. Conflicts of interest; Gifts, hospitality and sponsorship; Notification of post separation employment; Management and reporting of unacceptable behaviour; The reporting and management of notifiable incidents; and Incident recording policies as detailed in the DPPM, DI(G) PERS 25-6, DI(G) PERS 25-7,DI(G) PERS 25-4, DI(G) PERS 35-3, DI(G) ADMIN 45-2 and DI(G) ADMIN 67-2 and Defence and the Private Sector – An Ethical Relationship;

b. Public Interest Disclosure policy as detailed in the DPPM;

c. Defence Environmental, Hazardous Substances, Ozone Depleting Substances, Synthetic Greenhouse Gases, Work Health and Safety and Workplace Gender Equality policies as detailed in the DPPM;

d. Company Scorecard policy as detailed in the DPPM; and

e. Defence Stocktaking and Assets Assurance Checking policy as detailed in DEFLOGMAN Part 2 Volume 5.

11.3.2 Notwithstanding clause 1.5, if the SOW is inconsistent with a policy referred to in clause 11.3.1, the Contractor shall comply with the SOW to the extent of the inconsistency and provided that compliance with the SOW does not result in a breach of any laws.

Note to tenderers: It is Commonwealth policy to stimulate Indigenous entrepreneurship and business development, providing Indigenous Australians with more opportunities to participate in the economy.

11.3.3 The Contractor shall use its reasonable endeavours to increase its:

a. purchasing from Indigenous enterprises; and

b. employment of Indigenous Australians,

in the performance of the Contract. For the purposes of this clause “Indigenous enterprise” means an organisation that is 50 per cent or more Indigenous owned that is operating a




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business. Supply Nation maintains a list of enterprises that meet the definition of “Indigenous enterprises” (www.supplynation.org.au).

Note to tenderers: These clauses 11.3.4 and 11.3.5 apply only to the extent that the tenderer has identified itself as a Relevant Employer for the purposes of the Workplace Gender Equality Procurement Principles. The Workplace Gender Equality Procurement Principles will only apply to overseas based contractors to the extent that they have 100 or more employees in Australia.

11.3.4 The Contractor shall comply with its obligations under the Workplace Gender Equality Act 2012 (Cth) (WGE Act).

11.3.5 If the Contractor becomes non-compliant with the WGE Act during the period of the Contract, the Contractor shall notify the Commonwealth Representative.

11.4 Work Health and Safety

11.4.1 The Commonwealth and the Contractor:

a. shall, where applicable, comply with, and the Contractor shall ensure that all Subcontractors comply with, the obligation under the WHS Legislation to, so far as is reasonably practicable, consult, co-operate and co-ordinate activities with the Commonwealth, the Contractor or the Subcontractors (as the case may be) and any other person who, concurrently with the Commonwealth, the Contractor or the Subcontractor (as the case may be), has a WHS duty under the WHS Legislation in relation to the same matter; and

b. acknowledge that they have a duty under the applicable WHS Legislation to ensure, so far as is reasonably practicable, the health and safety of:

i Commonwealth Personnel;

ii Contractor Personnel; and

iii other persons,

in connection with the Supplies or work performed under the Contract.

11.4.2 Without limiting the application of the WHS Legislation, the Contractor acknowledges that to the extent that any Commonwealth Personnel:

a. are located on the Contractor's or Subcontractor's premises in relation to the Contract; and

b. whose activities in carrying out work in relation to the Contract are influenced or directed by the Contractor,

such Commonwealth Personnel will be taken to be workers for the purposes of the applicable WHS Legislation.

11.4.3 The Contractor represents and warrants that:

a. it has given careful, prudent and comprehensive consideration to the WHS implications of the work to be performed by it under the Contract; and

b. the proposed method of performance of that work complies with, and includes a system for identifying and managing WHS risks which complies with, all applicable legislation relating to WHS including the WHS Legislation.


a. provide the Supplies in such a way that the Commonwealth and Commonwealth Personnel are able to undertake any roles or obligations in connection with the Supplies (such as in relation to testing or auditing); and

b. ensure that the Commonwealth and Commonwealth Personnel are able to make full use of the Supplies for the purposes for which they are intended, and to maintain, support and develop the Supplies,

http://www.supplynation.org.au/




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without the Commonwealth or Commonwealth Personnel contravening any legislation relating to WHS including the WHS Legislation, any applicable standards relating to WHS or any policy relating to WHS identified in the Contract. ***

11.4.5 Without limiting the application of the WHS Legislation (and subject to any relevant foreign government restrictions), the Contractor shall, in connection with or related to the Supplies or the work performed under the Contract, provide, and shall:

a. ensure that an Approved Subcontractor provides;

b. and use its reasonable endeavours to ensure that any other Subcontractor engaged in any Prescribed Activities provides in respect of those Prescribed Activities,

to the Commonwealth Representative:

c. within 10 Working Days (or such other period as agreed in writing by the Commonwealth in writing) of a request by the Commonwealth Representative any information or copies of documentation requested by the Commonwealth Representative and held by the Contractor or Subcontractor (as the case may be) to enable the Commonwealth to comply with its obligations under the WHS Legislation;

d. in respect of:

i the Contractor or an Approved Subcontractor, within 10 Working Days after receipt or submission of the notice, written communication or written undertaking by the Contractor or Approved Subcontractor (as the case may be); or

ii any other Subcontractor engaged in any Prescribed Activities, within 10 Working Days of a request by the Commonwealth,

copies of:

iii all formal notices and written communications issued by a regulator or agent of the regulator under or in compliance with the applicable WHS Legislation to the Contractor or Subcontractor (as the case may be) relating to WHS matters;

iv all formal notices issued by a health and safety representative of the Contractor or Subcontractor (as the case may be), under or in compliance with the applicable WHS Legislation; and

v all formal notices, written communications and written undertakings given by the Contractor or Subcontractor (as the case may be), to the regulator or agent of the regulator under or in compliance with the applicable WHS Legislation; and

e. within 10 Working Days of a request by the Commonwealth Representative written assurances specifying that to the best of the Contractor's or the Subcontractor's (as the case may be) knowledge that knowledge that the Contractor and Contractor Personnel are compliant with:

i the applicable WHS Legislation; and

ii any relevant or applicable approved codes of practice under the Work Health and Safety Act 2011 (Cth) except where the Contractor complies with the WHS Legislation in a manner that is different from the relevant code of practice but provides a standard of WHS that is equivalent to or higher than the standard required in the code of practice,

and that the Contractor or Subcontractor (as the case may be) has made reasonable enquiries before providing the written assurances.

11.4.6 Subject to clause 10.10 and any relevant foreign government restrictions, the Commonwealth shall provide to the Contractor in a timely manner any information or copies of documentation reasonably requested by the Contractor and held by the Commonwealth to enable the Contractor to comply with its obligations under the applicable WHS Legislation in relation to the Contract.

11.4.7 The Contractor shall ensure that if the WHS Legislation requires that:

a. a person (including a Subcontractor):




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i be authorised or licensed (in accordance with the WHS Legislation) to carry out any works at the workplace, that person is so authorised or licensed and complies with any conditions of such Authorisation; and/or

ii has prescribed qualifications or experience, or if not, is to be supervised by a person who has prescribed qualifications or experience (as defined in the WHS Legislation), that person has the required qualifications or experience or is so supervised; or

b. a workplace, plant or substance (or design), or work (or class of work) be authorised, registered or licensed, that workplace, plant or substance (or design), or work (or class of work) is so authorised, registered or licensed.

11.4.8 If the Contractor becomes aware of any intention on the part of a regulatory authority to cancel, revoke, suspend or amend an Authorisation relating to WHS, it shall immediately notify the Commonwealth giving full particulars (so far as they are known to it).

11.4.9 Without limiting clause 10.7, the Contractor shall give and ensure that an Approved Subcontractor gives the Commonwealth Representative and any person authorised by the Commonwealth Representative access to:

a. premises to conduct site inspections for the purpose of monitoring the Contractor’s or the Approved Subcontractor's (as the case may be) compliance with any applicable laws, Authorisations or Approved plans in connection with WHS in relation to the Contract; and

b. all internal and third party audit results in relation to WHS in relation to the Supplies or the work performed under the Contract.

11.4.10 To the extent not inconsistent with the express requirements of the Contract, the Commonwealth Representative may direct the Contractor to take specified measures that the Commonwealth Representative considers reasonably necessary to comply with applicable legislation relating to WHS including the WHS Legislation in relation to the Supplies or the work performed under the Contract. The Contractor shall comply with the direction unless the Contractor demonstrates to the reasonable satisfaction of the Commonwealth Representative that it is already complying with the WHS Legislation in relation to the matter to which the direction relates or the direction goes beyond what is reasonably necessary to achieve compliance with the WHS Legislation. The Contractor shall not be entitled to claim postponement under clause 6.1.1 as a result of compliance with the direction.

11.4.11 The Contractor shall comply with clause 9 of the SOW.

11.4.12 The Contractor shall not provide Supplies containing ACM and shall not take ACM onto any Commonwealth Premises in connection with providing the Supplies.

11.4.13 The Contractor shall ensure, so far as is reasonably practicable, that the Supplies are without risk to the health and safety of persons who:

a. use the Supplies for a purpose for which they were designed or manufactured;

b. handle or store the Supplies;

c. carry out any reasonably foreseeable activity in relation to the assembly or use of the Supplies for a purpose for which they were designed or manufactured, or the proper storage, decommissioning, dismantling, demolition or disposal of the Supplies; or

d. may be exposed to the Supplies or whose health or safety may be affected by a use or activity referred to in this clause 11.4.13a to 11.4.13c.

11.4.14 The Contractor shall carry out, or arrange the carrying out of, any calculations, analysis, testing or examination that may be necessary to comply with clause 11.4.13.

11.4.15 The Contractor shall give adequate information to the Commonwealth concerning:

a. each purpose for which the Supplies were designed or manufactured;

b. the results of any calculations, analysis, testing or examination referred to in clause 11.4.14, including any hazardous properties identified by testing; and




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c. any conditions necessary to ensure that the Supplies are without risks to health and safety when used for a purpose for which they were designed or manufactured or when carrying out any activity referred to in clauses 11.4.13a to 11.4.13c.

11.4.16 The Contractor shall, on request, so far as is reasonably practicable, give current relevant information on the matters referred to in clause 11.4.15 to the Commonwealth.

11.4.17 Subject to clause 11.4.17b and without limiting the Contractor's obligations under the Contract:

a. the Contractor shall ensure that all Approved Subcontracts contain equivalent provisions to those set out in this clause 11.4 (other than clause 11.4.18); and

b. where in relation to an Approved Subcontract:

i the WHS Legislation does not apply in respect of any work performed under that Approved Subcontract; and

ii the Commonwealth does not have any duties or obligations under the WHS Legislation in respect of the workers engaged or caused to be engaged by the relevant Approved Subcontractor,

the Contractor shall only be required to ensure that an Approved Subcontract contains equivalent provisions to those set out in clauses 11.4.3, 11.4.4, and 11.4.12 to 11.4.16 in respect of that Approved Subcontract.

11.4.18 To the extent that work to be performed by the Contractor under the Contract is construction work for the purposes of the:

a. WHS Legislation, in accordance with Regulation 293 of the Work Health and Safety Regulations 2011 (Cth) (in respect of the Commonwealth and the harmonised WHS Legislation of each of the States or Territories in which the construction work is carried out), the Contractor is engaged as the principal contractor for the construction work the subject of the Contract and is authorised to have management or control of the workplace and discharge the duties imposed on a principal contractor for the purpose of the WHS Legislation;

b. Occupational Health and Safety Regulations 2007 (Vic), in accordance with Regulation 5.1.14 of the Occupational Health and Safety Regulations 2007 (Vic), the Contractor is appointed as the principal contractor for the construction work the subject of the Contract and is authorised to have management or control of the workplace and discharge the duties imposed on a principal contractor for the purpose of the Occupational Health and Safety Regulations 2007 (Vic); and

c. Occupational Health and Safety Regulations 1996 (WA), in accordance with Regulation 1.3 of the Occupational Health and Safety Regulations 1996 (WA), the Contractor is the main contractor for the construction work the subject of the Contract and is taken to have control of the site and the workplace and is required to discharge the duties imposed on a main contractor for the purpose of the Occupational Health and Safety Regulations 1996 (WA).

11.5 Environmental Obligations

11.5.1 The Contractor shall perform its obligations under the Contract in such a way that:

a. the Commonwealth is not placed in breach of; and

b. the Commonwealth is able to support and to make full use of the Supplies for the purposes for which they are intended without being in breach of,

any applicable environmental legislation including the Environment Protection and Biodiversity Conservation ACT 1999 (Cth).

11.6 Severability

11.6.1 If any part of the Contract is or becomes illegal, invalid or unenforceable, the legality, validity or enforceability of the remainder of the Contract shall not be affected and shall be read as if that part had been severed.




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11.7 Privacy


a. if it obtains Personal Information in the course of performing the Contract, use or disclose that Personal Information only for the purposes of the Contract subject to any applicable exceptions in the Privacy Act 1988 (Cth);

b. comply with its obligations under the Privacy Act 1988 (Cth); and

c. as a contracted service provider, not do any act or engage in any practice which, if done or engaged in by the Commonwealth, would be a breach of the Australian Privacy Principles.

11.7.2 The Contractor shall notify the Commonwealth as soon as reasonably practicable if:

a. it becomes aware of a breach or possible breach of any of the obligations contained, or referred to, in this clause 11.7, whether by the Contractor, Contractor Personnel or any other person to whom the Personal Information has been disclosed for the purposes of the Contract; or

b. in relation to Personal Information obtained in the course of performing the Contract:

(i) it becomes aware that a disclosure of such Personal Information may be required by law; or

(ii) it is approached by the Privacy Commissioner.

11.7.3 The Contractor shall ensure that Contractor Personnel who deal with Personal Information for the purposes of the Contract are aware of, and comply with, this clause 11.7.

11.7.4 The Contractor shall ensure that any Subcontract entered into for the purposes of fulfilling its obligations under the Contract, contains provisions to ensure that the Subcontractor complies with clauses 11.7.1, 11.7.2a and 11.7.2.

12 DISPUTES AND TERMINATION

12.1 Resolution of Disputes

12.1.1 A party shall not commence court proceedings relating to any Dispute except as permitted under this clause 12.1.

12.1.2 The parties shall negotiate in good faith and use all reasonable efforts to resolve Disputes as quickly as practicable.

12.1.3 If the Dispute is not resolved by the Management Representatives (specified in the Details Schedule) within 30 days of the Dispute Notice being issued, the Dispute shall be referred to the Senior Representatives specified in the Details Schedule.

12.1.4 If the Dispute is not resolved within 30 days of the Dispute being referred to the Senior Representatives specified in the Details Schedule and the parties have not been able to agree on an alternative dispute resolution process (including mediation, arbitration or expert determination) for resolving the Dispute, either party may commence legal proceedings in respect of the Dispute.

12.1.5 The parties shall, despite any Dispute occurring, continue to perform their respective obligations under the Contract.

12.1.6 Nothing in this clause 12.1 prevents any party from seeking urgent interlocutory relief in relation to a Dispute.

12.2 Termination Without Prior Notice for Contractor Default

12.2.1 The Commonwealth may terminate the Contract by notice to the Contractor if any of the following occurs:

a. an Insolvency Event occurs in relation to the Contractor;

b. an Insolvency Event occurs in relation to the Guarantor and the Commonwealth does not receive a replacement Deed of Guarantee and Indemnity from another guarantor




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acceptable to the Commonwealth within 10 Working Days (or another period agreed in writing by the Commonwealth);

c. the Contractor has failed to remedy a Default specified in a Default Notice within the period specified in the Default Notice;

d. the Contractor commits a breach of the Contract that, in the Commonwealth's opinion, is not capable of being remedied;

e. an event occurs in respect of which the Contract provides that a notice of termination may be given under this clause 12.2.1e;

f. the Contractor assigns its rights under the Contract otherwise than in accordance with the requirements of the Contract; or

g. the Contractor would have, except for the operation of any limitation of liability under clause 8.9, been liable to the Commonwealth for Loss in aggregate for an amount greater than the relevant Limitation Amount.

12.2.2 To avoid doubt, the Commonwealth is not required to provide prior notice of an exercise of its rights under clause 12.2.1.

12.3 Default Notices

12.3.1 If the Commonwealth considers that the Contractor or any Contractor Personnel has committed a Contractor Default, the Commonwealth may give the Contractor a notice (a “Default Notice”) specifying the Default and requiring the Contractor to remedy the Default within a specified period.

12.3.2 If the Commonwealth gives the Contractor a Default Notice, the Contractor shall:

a. remedy the Default within the period specified in the Default Notice;

b. comply with any directions given to the Contractor by the Commonwealth in relation to the Default; and

c. mitigate all Loss (including the costs of its compliance with any directions) in connection with the Default, including those arising from affected Subcontracts.

12.4 Termination or reduction for Convenience

12.4.1 In addition to any other rights it has in relation to the Contract, the Commonwealth may at any time terminate the Contract or reduce the scope of the Contract by notifying the Contractor.

12.4.2 None of the other provisions of the Contract limit the Commonwealth’s ability to terminate or reduce the scope of the Contract under this clause 12.4.

12.4.3 If the Contract is terminated or the scope of the Contract is reduced under this clause 12.4, the Commonwealth’s liability in respect of the termination or scope reduction is limited to:

a. payments under the payment provisions of the Contract in respect of work performed before the date the termination takes effect; and

b. any reasonable costs incurred by the Contractor that are directly attributable to the termination or scope reduction,

and then only when the Contractor substantiates these amounts to the satisfaction of the Commonwealth Representative. In particular, the Contractor shall not be entitled to profit calculated by reference to any period after the date the termination or scope reduction takes effect.

12.4.4 The Contractor, in each Approved Subcontract, shall secure a right of termination and scope reduction and provisions for compensation functionally equivalent to this clause 12.4.

12.5 General Termination Provisions

12.5.1 If the Contract is terminated under clause 12.1.5, 12.4 or otherwise:

a. the termination takes effect on:

(i) the date of the notice of termination; or




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(ii) if the notice of termination specifies a later date, the later date;

b. the Contractor shall:

(i) stop work in accordance with the notice of termination;

(ii) comply with any directions given to the Contractor by the Commonwealth; and

(iii) mitigate all loss, costs (including the costs of its compliance with any directions) and expenses in connection with the termination, including those arising from affected Subcontracts;

c. the Contractor shall deliver to the Commonwealth, as required by the Commonwealth, all documents in its possession, power or control or in the possession, power or control of itself or Contractor Personnel that contain or relate to any Confidential Information or which are security classified;

d. the Contractor shall repay the Mobilisation Payment or any portion of the Mobilisation Payment that has not been offset in accordance with clause 7.4.5;

e. subject to clause 12.6.4, the parties shall be relieved from future performance, without prejudice to any right of action that has accrued at the date of termination;

f. subject to the Limitation Amounts set out in clause 8.9 and clause 12.4, the right to recover damages, including full contractual damages, shall not be affected;

g. the Contractor shall, within 30 days after receipt of the notice of termination, or other period agreed in writing by the parties, deliver the Technical Data (in its then current state of development) for Supplies produced prior to the date of termination; and

h. the Contractor shall deliver to the Commonwealth all Commonwealth Property that it or any Contractor Personnel have in their possession in connection with the Contract.

12.5.2 To avoid doubt, and despite anything else in the Contract, if the Contractor delays in meeting a Milestone, delivering Supplies or complying with any other obligation in accordance with the Contract, each day of delay is a new breach of the Contract for which the Commonwealth may exercise its rights under clause 12.1.5 or 12.3 or at law, despite any conduct by the Commonwealth or any election not to terminate the Contract for a previous breach of the Contract.

12.5.3 Upon termination of the Contract:

a. subject to clause 12.5.4, the Commonwealth shall retain ownership of any Supplies in respect of which title has passed to the Commonwealth under clause 6.7; and

b. all Supplies that have been Accepted by the Commonwealth shall be deemed to be owned by the Commonwealth (whether or not ownership has passed under clause 6.7); and

c. the Contractor shall be entitled to payment of that part of the Contract Price attributable to the Supplies referred to in clause 12.5.3b, having regard to the amounts already paid or payable in respect of the Supplies and the condition of the Supplies at that time.

12.5.4 The Commonwealth may, in a termination notice under clause 12.2.1 or 12.4:

a. require Supplies not owned by the Commonwealth in the possession of the Contractor or a Subcontractor (whether completed or not) to be delivered to the Commonwealth and:

(i) the Contractor shall deliver the Supplies (in their current state of development) in accordance with the notice;

(ii) ownership in the Supplies shall pass to the Commonwealth upon delivery, free of any Security Interest; and

(iii) the Contractor shall be entitled to payment of that part of the Contract Price attributable to the Supplies, having regard to the amounts already paid or payable in respect of the Supplies and the condition of the Supplies at that time.




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12.5.5 The Commonwealth may, in a termination notice under clause 12.2.1, require the Contractor to retake possession of Supplies previously delivered to the Commonwealth under the Contract and:

(iv) the Contractor shall retake possession of the Supplies in accordance with the notice;

(v) ownership in the Supplies shall pass to the Contractor upon delivery, free of any Security Interest; and

(vi) the Commonwealth shall be entitled to repayment of that part of the Contract Price attributable to the Supplies, having regard to the amounts already paid or payable in respect of the Supplies.

b. The rights of the Commonwealth to terminate or reduce the scope of the Contract under clauses 12.1.5 and 12.4 are in addition to any other right or remedy the Commonwealth may have in relation to the Contract.

12.6 Right of Commonwealth to Recover Debts

12.6.1 Without limiting the Commonwealth’s rights under the Contract, if the Commonwealth elects in accordance with the Contract to recover an amount from the Contractor or the Contractor otherwise owes any debt to the Commonwealth in relation to the Contract, the Commonwealth may exercise one or both of the following:

a. deduct the amount from payment of any claim; or

b. give the Contractor notice of the existence of a debt recoverable which shall be paid by the Contractor within 30 days after receipt of notice.

12.6.2 The Commonwealth may exercise any or all of its rights in respect of any security provided in accordance with clause 7.4 or 7.5 to recover any debt owing by the Contractor, except to the extent otherwise recovered by the Commonwealth under clause 12.6.1.

12.6.3 If the Commonwealth deducts the amount of a debt from any payment or security, it shall notify the Contractor that it has done so.

12.6.4 If any sum of money owed to the Commonwealth is not received by its due date for payment, the Contractor shall pay to the Commonwealth interest at the ATO sourced General Interest Charge rate current at the date the payment was due for each day the payment is late.

12.7 Survivorship

12.7.1 Any provision of the Contract which expressly or by implication from its nature is intended to survive the termination or expiration of the Contract and any rights arising on termination or expiration shall survive, including Confidential Information, Intellectual Property, Right of the Commonwealth to Recover Money, Defence Security, Privacy, Spare Parts and Support Equipment and any warranties, guarantees, licences (other than the licence given under clause 3.5), indemnities, liability caps or financial and performance securities given under the Contract.



Version 2.0 EX-1

SIGNED AS AN AGREEMENT

SIGNED for and on behalf of

THE COMMONWEALTH OF AUSTRALIA:

(signature) (print name and position) (date)

In the presence of:

(signature) (print name) (date)

SIGNED for and on behalf of

THE CONTRACTOR:

(INSERT APPROPRIATE CONTRACTOR'S EXECUTION CLAUSE)