Sec.  16.307   Contract clauses.

2.  Amend section 16.307 by revising paragraph (a)(1); and adding paragraphs (a)(3) through (5) to read as follows:

Sec. 16.307 Contract clauses.

(a)(1)  The contracting officer shall insert the clause at 52.216-7,

Allowable Cost and Payment, in solicitations and contracts when a cost-reimbursement contract or a time-and-materials contract (other than a contract for a commercial item) is contemplated. If the contract is a time-and-materials contract, the clause at 52.216-7 applies in conjunction with the clause at 52.232-7, but only to the portion of the contract that provides for reimbursement of materials (as defined in the clause at 52.232-7) at actual cost. Further, the clause at 52.216-7 does not apply to labor-hour contracts.

* * * * *

(3)  If the contract is with an educational institution, the contracting officer shall use the clause at 52.216-7 with its Alternate II.

(4)  If the contract is with a State or local government, the contracting officer shall use the clause at 52.216-7 with its Alternate III.

(5)  If the contract is with a nonprofit organization other than an educational institution, a State or local government, or a nonprofit organization exempted under OMB Circular No. A-122, the contracting officer shall use the clause at 52.216-7 with its Alternate IV.

* * * * *