AWARD/CONTRACT 1. THIS CONTRACT IS A RATED RATING DOA6 PAGE 1 OF 35 ORDER UNDER DPAS (15 CFR 700) ------------------------------------------------------------- --------------------------------------------------------------------- 2. CONTRACT (PROC....

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EXHIBIT 10.6

AWARD/CONTRACT 1. THIS CONTRACT IS A RATED RATING DOA6 PAGE 1 OF 35
ORDER UNDER DPAS (15
CFR 700)
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2. CONTRACT (PROC. INST. IDENT) NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE REQUEST/PROJECT No.

W52P1J-05-C-0024
2005APR18 SEE SCHEDULE

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5. ISSUED BY CODE W52PIJ 6. ADMINISTERED BY (IF OTHER THAN ITEM 5) CODE S4404A

HQ AFSC DCMA SAN ANTONIO
AMSFS CCA-M XXXXXXXX XXXX (000) 000-0000 000 XXXX XXXXXXX XXXXXX
XXXX XXXXXX, XX 00000-6500 P 0 BOX 1040
SAN ANTONIO TX 78294-1040

BLDGS 350 & 390 SCD C PAS S4404A4906APC ADP PT HQ0338
E-MAIL ADDRESS: WISES@AFSC. ARMY. MIL
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8. DELIVERY
7. NAME AND ADDRESS OF CONTRACTOR (NO. STREET, CITY, COUNTY, STATE, AND ZIP CODE) [ ] FOB ORIGIN [X] OTHER (SEE BELOW)
SEE SCHEDULE

VALENTEC SYSTEMS INC. 9. DISCOUNT FOR PROMPT PAYMENT
0000 XXXX XXX
XXXXXX, XX 00000-0000

10. SUBMIT INVOICES ITEM
TYPE BUSINESS: Other Small 3 Performing in U.S. (4 COPIES UNLESS OTHERWISE SPECIFIED) 12
TO THE ADDRESS SHOWN IN:

--------------------------------------------------------------------

Code 1PD90 FACILITY CODE
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11. SHIP TO/MARK FOR CODE 12. PAYMENT WILL BE MADE BY CODE HQ0339
SEE SCHEDULE DFAS COLUMBUS CENTER
DFAS-CO/WEST ENTITLEMENT OPERATIONS
P.O. BOX 182381
COLUMBUS, OH 43218-2317

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13. AUTHORITY FOR USING OTHER THAN FULL AND 14. ACCOUNTING AND APPROPRIATION DATA
OPEN COMPETITION:
[ ] 10 U.S.C. 2304(c) ( ) [ ] 41 U.S.C. 253(c)( ) ACRN: AA 21 42034000041B1B06P41303226EB S28017 W52P1J

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15A. ITEM NO. 15B. SCHEDULE OF SUPPLIES/SERVICES 15C. QUANTITY 15D. UNIT 15E. UNIT PRICE 15F. AMOUNT
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SEE SCHEDULE CONTRACT TYPE: KIND OF CONTRACT:
Firm-Fixed-Price Supply Contracts and Priced Orders

15G. TOTAL AMOUNT OF CONTRACT $594,286.00

16. TABLE OF CONTENTS

(X) Section Description Page(s) (X) Section Description Page(s)
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Part I - The Schedule Part II - Contract Clauses
X A Solicitation/Contract Form 1 x I Contract Clauses 26
X B Supplies or Services and 5 Part III - List Of Documents, Exhibits,
Prices/Costs And Other Attachments
X C Description/Specs/Work 7 x J List of Attachments 35
Statement
X D Packaging and Marking 13 Part IV - Representations And Instructions
X E Inspection and Acceptance 14 K Representations,
Certifications, and
Other Statements of
Offerors
X F Deliveries or Performance 21
X G Contract Administration 23 L Instrs., Conds., and Notices to
Data Offerors
X H Special Contract 24 M Evaluation Factors for Award
Requirements

Contracting Officer Will Complete Item 17 Or 18 As Applicable

17. [ ] Contractor's Negotiated Agreement 18. [X] Award (Contractors is not required to sign
(Contractor is required to sign this document this document.) Your offer on Solicitation
and return __________ copies to issuing Number W52P1J04R0184 Including the
office.) Contractor agrees to furnish and additions or changes made by you which additions or
deliver all items or perform all the services changes arc set forth In full above, is hereby
set forth or otherwise Identified above and on accepted as to the items listed above and on any
any continuation sheets for the consideration continuation sheets. This award consummates the
stated herein. The rights and obligations of contract which consists of the following documents:
the parties to this contract shall be subject (a) the Government's solicitation and your offer, and
to and governed by the following documents: (b) this award/contract. No further contractual
(a) this award/contract, (b) the solicitation, document is necessary.
If any, and (c) such provisions,
representations, certifications, and
specifications, as are attached or
incorporated by reference herein. (Attachments
are listed herein.)
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19A. NAME AND TITLE OF SIGNER (TYPE OR PRINT) 20A. NAME OF CONTRACTING OFFICER
XXXX XXXX XXXXXXX
XXXXXXX@AFSC. ARMY. MIL (000) 000-0000

----------------------- ---------------- ----------------------------- ----------------
19B. NAME OF CONTRACTOR 19C. DATE SIGNED 20B. UNITED STATES OF AMERICA 20C. DATE SIGNED

2005APR18

By ________________________________________ By /SIGNED/
---------------------------------
(Signature of person authorized to sign) (Signature of Contracting Officer)

NSN 7540-01 -152-8069 25-106 STANDARD FORM 26 (REV. 4-85)
PRESCRIBED BY GSA-FAR (4.8 CFR) 53.214(A)
PREVIOUS EDITIONS UNUSABLE GPO : 1985 0 - 000-000

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 2 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION A - SUPPLEMENTAL INFORMATION

For Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

Regulatory Cite Title Date
--------------- ----------------- --------

A-1 52.252-4500 FULL TEXT CLAUSES SEP/1997
LOCAL

1. This contract incorporates one or more clauses and provisions by reference,
with the same force and effect as if they were set forth in full text. Upon
request the Contracting Officer will make their full text available.

2. The entire body of full text regulatory and command unique clauses and
provisions will no longer be included in solicitations or contracts. These
clauses and provisions have the same force and effect as if the entire full text
was included in the solicitation/contract. Where text has been incorporated by
reference three astericks are put in its place (***).

3. You can view or obtain a copy of the clauses and provisions on the internet
at:

www.afac. xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx. Click on command unique
first to locate the clause. If it is not located under command unique click on
regulatory to find.

4. All full text clauses have a 6 or 7 as the third digit of the clause number
(i.e. AS7000).

(End of clause)

(AS7001)

1. This procurement is restricted to Small Business Firms only.

2. This solicitation is for the M661 Green Star Parachute, NSN:
1310-00-541-6148.

3. Total quantity of this solicitation is 19,976 each.

4. The solicitation requests prices for with and with out First Article Testing
on an F.O.B. Origin basis.

5. Offers should be priced on proposal lines. With and Without First Article.
(Note: Disregard the pricing lines directly across from the Line Item).

6. A 100% evaluated option clause is included in Section I of this solicitation.

7. The lowest price technically acceptable source selection process will be used
to evaluate this procurement.

8. The Government will make one award from this solicitation.

9. A Security Preaward Survey is required.

*** END OF NARRATIVE A 001 ***

1. This contract solicitation contains a Critical Characteristics Clause,
ES7500, found in section E.

*** END OF NARRATIVE A 002 ***

The following GFM is supplied on this contract:

ITEM: M2A1 MMETAL BOX

NSN: 8140-00-960-1699

PART NO.: 7553296

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 3 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

QTY: 923

Please refer to attachment 001 and clause HS6075.

*** END OF NARRATIVE A 003 ***

1. The purpose of this amendment to extend the closing date to 02 DEC 2004 due
to extenuating circumstances.

*** END OF NARRATIVE A 004 ***

1. The purpose of this solicitation amendment is to extend the proposal receipt
date to 06 JAN 2005. This extension is necessary to allow time for the
Government to resolve several issues regarding the supply of conforming M9
Propellant.

2.Your POC is Xxxx X. Xxxxxxx, Contract Specialist, ph. 0000-000-0000, e-mail:
xxxx.xxxxxxx@xx.xxxx.xxx

3. All other terms of the solicitation remain unchanged.

*** END OF NARRATIVE A 005 ***

1. The purpose of Amendment 0003 is to extend the proposal receipt date to 20
Jan 2005. This extension is necessary to allow additional time for the
Government to resolve issues concerning M9 Propellant.

2. The new contract specialist for this solicitation is Xx. Xxxxxxxx Xxxx,
AMSFS-CCA-L, (000)000-0000, email Xxxxxxxx.Xxxx@xx.xxxx.xxx. The contracting
officer is Xx. Xxxx Xxxx Xxxxxxx, (000)000-0000, email:
xxxxxxxx.xxxxxxx@xx.xxxx.xxx.

3. All other terms and conditions remain the same.

*** END OF NARRATIVE A 006 ***

1. The purpose of Amendment 0004 is to incorporate Attachment 014, Request for
Deviation (RFD) R04S7031, Use of M9 Propellant in Loading of M195 Cartridge Case
for 40mm M583A1 Production. The Configuration Control Board has extended use of
this deviation to the M661 Green Star Parachute. The following additional
information is provided regarding use of this RFD:

The successful offeror shall provide the PCO with the certificate of
analysis, a certified traceability of the New River Energetics (NRE) lot used
and a detailed explanation of the parenthetical lot number prior to release to
production (i.e., genealogy). The successful offeror shall annotate the lot
ammunition data card with RFD R04S7031 and, to assure traceability, the source
lots as applicable. Propellant covered by this deviation will be unambiguously
labeled as non-compliant M9 propellant.

2. All other terms and conditions remain the same.

*** END OF NARRATIVE A 007 ***

ITEM: 40mm Ctg M661 Green Star Parachute
NSN: 1310-00-541-6148

1. This contract award constitutes government acceptance of the offer submitted
by Valentec Systems, Inc. in response to Request for Proposal (RFP)
W52P1J-04-R-0184 with amendments 0001 through 0004 (hereby incorporated and made
a part of this contract) for 19,976 each 40mm Cartridge M661 Green Star
Parachute at a unit price of $29.75, FOB Origin, with First Article. As
contemplated by referenced RFP, this contract is a Firm Fixed Price contract.
This contract contains an option to increase the quantity by 100% of the basic
award.

2. The following Engineering Change Proposals (ECPs) incorporated during
discussions are hereby formally incorporated into the contract:

a. Attachment 15, ECP R04Q2057, Change Critical defects to reflect
standard

b. Attachment 16, ECP R04Q2016, New DTL Specification

3. In accordance with the requirements of the Defense Finance and Accounting
Service, provisions from the RFP have been electronically incorporated into the
contractual document.

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 4 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

4. Earlier delivery is acceptable at no additional cost to the government.

*** END OF NARRATIVE A 008 ***

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 5 OF 35
PIIN/SIIN W52P1J-O5-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
------- ------------------------------------ -------- ---- ---- ----- --------

SECTION B - SUPPLIES OR SERVICES AND
PRICES/COSTS

0001 GREEN STAR PARACHUTE 19976 EA

NSN: 1310-00-541-6148
NOUN: M661 GREEN STAR PROD QTY
FSCM: 19200
PART NR: 9317509
SECURITY CLASS: Unclassified

0001AA DATA ITEM 1 LO $ **NSP** $ **NSP**
---------- -----------

NOUN: FIRST ARTICLE TEST REPORT

Packaging and Marking

Inspection and Acceptance
INSPECTION: Origin ACCEPTANCE: Origin
Government Approval/Disapproval Days: 30

Deliveries or Performance
DOC SUPPL
REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD
001 Z55555 3
DEL REL CD QUANTITY DEL DATE
001 1 13-SEP-2005

FOB POINT: Origin

SHIP TO: PARCEL POST ADDRESS
(Z55555) SEE SECTION E

0001AB PRODUCTION QTY W FIRST ARTICLE 19976 EA $ 29.75000 $594,286.00
---------- -----------

NOUN: CTG 40MM GREEN STAR PARA M661
PRON: R14A0R844A PRON AMD: 01 ACRN: AA
AMS CD: 41303222008
CUSTOMER ORDER NO: R14M44164AM2

Packaging and Marking

Inspection and Acceptance
INSPECTION: Origin ACCEPTANCE: Origin
Government Approval/Disapproval Days: 30

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 6 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT
------- --------------------------------------- -------- ---- ---- ----- ------

Deliveries or Performance
DOC SUPPL

REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD
001 N4906533014Q01 N00109 J 3
PROJ CD BRK BLK PT
HMK
DEL REL CD QUANTITY DEL DATE
001 10,000 06-JAN-2006

FOB POINT: Origin

SHIP TO: PARCEL POST ADDRESS
(N00109) ATLANTIC ORDNANCE COMMAND
P O BOX 410
YORKTOWN VA 23691-0410

DOC SUPPL
REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD
002 N4906533014Q02 N476l5 J 3
PROJ CD BRK BLK PT
HMK
DEL REL CD QUANTITY DEL DATE
001 9,976 06-FEB-2006

FOB POINT: Origin

SHIP TO: PARCEL POST ADDRESS
(N47615) NAVAL WEAPONS STATION SEAL BEACH
000 XXXX XXXXX XXXX
XXXX XXXXX XX 00000-0000

TAC N82B

(End of narrative F001)

0002 DATA ITEM $ ** NSP** $ **NSP **
---------- ----------

NOUN: DD FORM 1423
SECURITY CLASS: Unclassified

Inspection and Acceptance
INSPECTION: Origin ACCEPTANCE: Origin

Contractor will prepare and deliver the
technical data in accordance with the
requirements, quantities and schedules set
forth in the Contract Data Requirements Lists
(DD Form 1423), Exhibit A.

A DD 250 IS NOT REQUIRED.

(End of narrative FOOD)

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 7 OF 35

PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT

For Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

Regulatory Cite Title Date
--------------- ----- ----

C-1 52.210-4501 DRAWINGS/SPECIFICATIONS MAR/1988
LOCAL

In addition to the drawing (s) and/or specifications listed below, other
documents which are part of this procurement and which apply to
Preservation/Packaging/Packing and Inspection and Acceptance are contained
elsewhere.

The following drawing(s) and specifications are applicable to this
procurement.

Drawings and Specifications in accordance with enclosed Technical Data
Package Listing - TDPL 9317509 with revisions in effect as of 10/22/02 (except
as follows):

ENGINEERING EXCEPTIONS: The following engineering changes apply to this
procurement action(s):

DOCUMENT DELETE REPLACE WITH
-------- ------ ------------

9207989 FED-STD-151 ASTM B117
9252395 MIL-P-48240 143-7-4
9243986 QQ-A-225/3 ASTM B211

All product drawings add:

Distribution statement A: Approved for public release; distribution is
unlimited. The above is applicable to all drawings in the TDP for this
procurement action.

DWG. 9201392:

Note B.11.3 is no longer applicable.

Note B.11.2 is to read as follows - "Alternate photocell housing (DWG.
No's 9255806, 9255811, 955812, 9255817) will be supplied upon request.
Equivalent photocell can be used upon approval. Alternate methods for color
value verification require review and approval by Picatinny Arsenal
(AMSTA-AR-CCL-C). Requests can be submitted through the contracting officer.

All Packaging Drawings without distribution add: Distribution Statement A.

ADD: Distribution Statement A. to all Inspection Drawings.
ADD:

HCSDS REV DATE NOMEN REF-DOC
----- --- ---- ----- -------

38 F 01/25/93 POTASSIUM NITRATE MIL-P-156
5 E 05/01/91 ZIRCONIUM HYDRIDE MIL-Z-21353
8 E 05/03/91 MAGNESIUM MIL -P-14067
664 A 03/10/75 DIMETHYLPHTHLATE JAN-D-709
50 D 2/03/93 TUNGSTEN POWDER 9212697

Replacement for MIL-P-20307 cannot be found. PCO is to provide a copy of
MIL-P-20307 to potential solicitors upon RFP.

GFM/GFE: Drawing No. 7553296

Mylars required (check one): (Y) or X(N)

(End of statement of work)
(CS6100)

C-2 52.247-4503 STATEMENT OF WORK - TRANSPORTATION SECURITY REQUIREMENTS MAR/2004
LOCAL

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 8 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

Supplies procured under this contract are identified as Sensitive Category IV,
requiring Transportation Protective Service (TPS) in accordance with DoD
5100.76M (Physical Security of Sensitive Conventional Arms, Ammunition, and
Explosives) and DoD 4500.9R, Defense Transportation Regulation, parts II and
III, as added to or amended by applicable military service policies in
accordance with guidance provided by Defense Logistics Agency (DLA)/Defense
Contract Management Agency (DCMA) or other components assigned to provide
contract administration services (CAS) within designated/delegated geographic
areas as specified under DOD 4105.59H, DOD Directory of Contract Administration
Service Components, dated January 1935. and subsequent issues thereof for
offshore/OCONUS procurements.

(End of statement of work)
(CS6101)

C-3 52.246-4506 STATEMENT OF WORK FOR STATISTICAL PROCESS CONTROL FEB/1999
LOCAL

In accordance with DI-MGMT-80004 and contract clause 52.246-4506, the
following supplemental information shall be considered and used when designing
your general and detailed SPC plans.

1.0 General Management Plan

This section shall define management's SPC responsibilities and
involvement and shall include management's commitment to continuous process
improvement. The plan shall embrace a total commitment to quality and shall be
capable of standing on its own merit.

1.1 Policy/Scope: Describe the Contractor's policy for applying SPC, including
goals and management commitment to SPC.

1.2 Applicable Document: List documents that are the basis for the contractor's
SPC program (i.e., ANSI standard, textbooks, Government documents).

1.3 SPC Management Structure: Define the SPC management structure within the
organization. Identify and include interrelationships of all departments
involved in SPC (i.e., Production, Quality, Engineering, Purchasing, etc.).
Identify by job title or position all key personnel within departments involved
in the application of SPC. Describe which functions are performed by key
personnel and when these functions are performed (i.e., include personnel
responsible for performing inspections/audits, charting and interpreting data;
personnel responsible for determining, initiating and implementing corrective
action upon detecting assignable causes, etc.).

1.4 SPC Training: Identify by job title or position the primary individual
responsible for overseeing that SPC training is accomplished. Describe the
qualification program required and in use for all personnel utilizing SPC
techniques, including the qualification of trainers, identify who is to be
trained and the type, extent and length of such training (i.e., on-the-job,
classroom, etc.). Identify when refresher training is required and how personnel
using SPC techniques are monitored.

1.5 Manufacturing Controls: Identify the criteria for performing SPC gage
capability studies and describe how and when these studies should be applied.
Repeatability and accuracy of gages should be addressed.

1.6 Determination of SPC Use: Describe how the process/operation parameters are
determined appropriate for SPC application and explain what actions are taken if
SPC is not deemed appropriate for critical, special and major process/operation
parameters (i.e., Pareto analysis, analysis of characteristics with tight
tolerances, etc.).

1.7 Process Stability and Capability:

a. Identify the criteria for performing process capability studies and
describe how and when these studies are applied. Describe how the process
capability index is calculated and include the frequency of these calculations.
Describe what actions are taken as methodologies when process capability is for
variable and attribute data. To determine a capable process, the
process/operation parameters shall meet the following requirements:

(1)Variable data: Process capability (Cp) shall be determined.
Process performance index shall be greater than or equal to 1.33 (Cpk). For
critical parameters/characteristics, the process performance index shall be
greater than or equal to 2.0 (Cpk).

(2)Attribute data: Process capability/performance shall be the
percent beyond the upper/lower specification limit less than or equal to .003
percent (Cpk = 1.33).

b. Describe what actions will be taken if process/operation is
sub-marginal or marginal (Cpk less than 1.33 or 2.0 for criticals or grand
average fraction defective is greater than .003 percent).

c. Include analysis of statisical distributions and define all formulas
and symbology utilized.

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 9 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

1.8 Control Chart Policy:

a. Type of charts to be used (i.e., x bar/R x bar/S, etc.) and rationale
for use; the criteria for selection of sample size, frequency of sampling and
rational subgroups.

b. Procedures for establishing and updating control limits, including
frequency of adjustments.

c. Criteria for determining out-of-control conditions (i.e., trends,
points beyond control limits, etc.) and the corrective action taken, to include
failure analysis when the process is unstable or when nonconforming product has
resulted from unstable processes. Illustrate out-of-control tests.

d. Describe the method of recording pertinent facts on control charts such
as changes in raw materiel, machines, manufacturing methods and environment, and
corrective actions taken and describe how control charts are traceable to the
product.

1.9 vendor/Subcontractor Purchase Controls: Identify whether suppliers are
required to utilize SPC and describe the extent the vendor's policies and
procedures are consistent with in-house procedures of the prime contractor.
Describe the following: methods utilized to determine that suppliers have
adequate controls to assure defective product is not produced and delivered; the
system utilized to audit suppliers, what will be audited and how often, what
action will be taken when out-of-control conditions exist at
subcontractor/vendor facilities.

1.10 SPC Audit System: At a minimum, the contractor's SPC Audit System shall
consist of auditing compliance with the planned arrangements specified in the
general and detailed SPC plans followed by a review and analysis of the outcome
to include implementation of necessary corrective action.

1.11 SPC Records: Identify various records to be used in support of SPC and
describe their use. Identify retention periods.

2.0 Detailed Plan:

This section shall detail specific manufacturing process/operation
parameters under control.

2.1 Control of Process/Operation Parameters or Characteristics:

a. Identify the following for each process/operation by name or
characteristic under control:

(1) Identify process/operation by name or characteristic and provide
rationale for selection; justification for nonselection if the parameter or
characteristic is identified as critical, special and/or major.

(2) Describe how the characteristic is proceduced; the chain of
events, type and number of machines involved, location of manufacturing
facility, tolerances maintained, etc.

(3) Production and inspection machinery used. Include the production
rate, number of shifts and length of shifts plus whether inspection is fully or
semi-automatic or manual. If manual, identify the type of gages in use.

(4) Identify the type of charts to be maintained and whether the
process/operation is performed in-house or subcontracted output; identify
facility/vendor where process/operation parameters are targeted for SPC.

2.2 Reduction or Elimination of Inspection/Test: The Procuring Contracting
Officer (PCO) will accept submissions of requests for reduction or elimination
of final acceptance inspection/testing when the requirements of the SPC contract
clause and this SOW are met. Each request shall contain and/or address the
following: control charts documenting twenty (20) consecutive production shifts
or more for the same process/operation parameter under control; type of control
chart utilized; control chart limits and process average or grand average
fraction defective (as applicable); definition of out-of-control condition and
corrective actions taken during out-of-control conditions; specification and
part number.

(End of statement of work)
(CS7100)

C-4 52.246-4535 STATEMENT OF WORK-AMMUNITION DATA CARDS AND REPORT OF CONTRACTOR AUG/2004
LOCAL BALLISTIC TESTING

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 10 OF 35
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

Ammunition Data Cards shall be prepared in accordance with MIL-STD-1168 and
shall follow the format required by the world wide web application identified as
WARP or worldwide Ammunition-data Repository Program. The Report of Contractor
Ballistic Testing is prepared IAW DI-MISC-80246. Additional details on both of
these WARP applications are provided below. Prior to gaining access to WARP
contractor/facility personnel involved in the preparation of ammunition data
cards shall obtain a userid and password for the Army Electronic Product Support
(AEPS) network. Instructions and help for obtaining an AEPS Userid and password
are as follows:

AEPS Access Procedures

The Army Electronic Product Support (AEPS) is a Department of Defense logistics
website. Entering AEPS will allow you access to the SECURED AREA of the Army
Electronic Product Support Network. A username and password are required to
enter this area. Only authorized DoD personnel and contractors with current
active contracts with DoD will receive access into the AEPS website. If you have
a requirement for the AEPS website, you must fill out and submit the AEPS Access
Request Form found at the following web address:

xxxx://xxxx.xxx.xxxx.xxx/xxxxxxxxxx.xxx

You must click on "Access Request Form" and continue through the steps until
completion and click on SUBMIT. You are required to provide a supervisor name,
email and phone number if you are a DoD civilian or military. Government
contractors are required to provide CAGE code, Contract Number and COR/COTR with
"Government" email address. All requestors must provide their Information
Assurance Security Officer's (IASO, formerly ISSO) name, email, DSN phone and
commercial phone.

After submitting the request, your supervisor/COR/COTR will be emailed a copy of
your request and will be asked to verify your information before a user ID will
be issued. AEPS User ID and AEPS Login Name mean the same. Your supervisor must
REPLY back to the email providing the following:

Approval? (YES/NO)
Supervisor Name
Supervisor E-Mail
Supervisor Phone

The COR/COTR must also provide the same information stated above in his/her
REPLY plus provide the Contract Expiration Date (format - MM/DD/YYYY).

Upon notification from your supervisor/COR/COTR, you will be emailed an AEPS
User Login Name and instructions for logging into the AEPS website. You will use
the AEPS password that you assigned to yourself when you filled out the access
request form.

Once you gain access to the AEPS website, you can change your personal
information when needed to keep your file current.

AEPS HELP-DESK and Problem Reporting Procedures

Reporting problems - The AEPS Help Desk has several means of reporting problems:

Call 0-000-XXX-XXXX (0-000-000-0000) to speak to an AEPS representative
Contact the AEPS Help-Desk at Comm. (000) 000-0000 or DSN 793-0699 or
(000) 000-0000 or DSN 000-0000
Contact the AEPS Help-Desk by FAX: (000) 000-0000 or DSN 000-0000
Contact the AEPS Webmaster by Email: Webmaster (xxxxxxX0@xxx.xxxx.xxx)

Each phone call, email or fax is handled in a prompt and courteous manner.
Responses to problems are provided by phone and/or email.

Other means to help assist you in identifying your problems can be found on the
AEPS Help Section at web link:

xxxx://xxxx/xxx.xxxx.xxx/xxxx.xxx

Here you will find Questions and Answers by clicking in either of the two FAQ
subcategories reflected under the HELP tab:

FAQs - AEPS Access Request Process or SSL FAQs. Secured Socket Layer

You may also check out our new Frequently Asked Questions
(xxxxx://xxxx.xxx.xxxx.xxx/xxxxxx.xxx) page to get answers on access problems as
another means of assistance.

The AEPS Help Section screen xxxx://xxxx.xxx.xxxx.xxx/xxxx.xxx also reflects two
other topics that can be clicked on to provide further assistance:

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 11 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

"Password Problems or Request Status" at
xxxxx://xxxx.xxx.xxxx.xxx/xxxxxxx/xxxx/XxxxXxxxxx.xxx
"Ask the AEPS Public Help Knowledge Base" at
xxxx://xxxx.xxx.xxxx.xxx/xxxx/xxxxxxxxxxxx.xxx

Worldwide Ammunition-data Repository Program (WARP)

Once you have obtained an AEPS userid and password allowing entry to the secured
area of AEPS you can access the WARP application by acrolling to the bottom of
the list of AEPS applications. The WARP opening main page and all subsequent
pages contain multiple navigational aids to guide you through the process of
inputting information necessary for creating a new ammunition data card. An
online users manual will provide additional help in the development of an
ammunition data card and it is recommended that you download and read the users
manual prior to inputting your initial data card. The user's manual also
contains screen shots, which depict what the inputter will see during the ADC
input process.

Ammunition Data Card Input

ADC input allows current contractors and government facilities the capability to
create, and submit for approval, ADCs which meet the format requirement of
MIL-STD-1168B. ADCs are automatically forwarded to the respective Governmental
Agency Responsible for Acceptance (GARA). The GARA, in most cases the Defense
Contract Management Agency (DCMA) Quality Assurance Representataive (QAR),
reviews contractor input for accuracy and completeness, and after updating the
disposition code for the specific lot, submits the ADC to the database. The
inputter is granted access only to ADCs identified with its specific
manufacturing code, as identified in MIL-HDBK-1461A, Manufacturer's Symbols. The
use of previously inputted ADCs through the TEMPLATE option, significantly
reduces input effort, while increasing accuracy and consistency of data.

Email Notification

WARP provides immediate, automated notification to process participants when
actions are required. When the producer has completed an ADC submission, an
email message is routed to the GARA advising that an ADC awaits review and
approval. If the GARA approves the ADC as submitted, the, ADC is released to the
base and an email, with approved data card, is routed back to the originator. If
the ADC requires modification or correction to be in accordance with
MIL-STD-1I68B requirements, an email is provided to the ADC originator advising
that corrective action is required prior to approval.

Information Updates

It is important that the System Administrators are apprised when a producer
receives a new contract. The producer shall notify XXX-XXXX@xxx.xxxx.xxx within
30 days after receipt of a new contract. Information to be included shall be the
contract number, item, GARA, Manufacturer's identification symbol and the names
of the individuals who will be inputting ADCs ino the system. If you are a new
producer and do not have a Manufacturer's identification symbol, you can obtain
one by sending an email to XXX-XXXX@xxx.xxxx.xxx. The email must contain
manufacturer's name, address where performance of the contract will take place,
and a point of contact.

Report of Contractor Ballistic Testing Module

In addition to its ADC function, WARP also serves as a repository for reports of
contractor ballistic (or functional) testing. Whenever the contract requires
contractor performance of ballistic testing, the results of such testing shall
be captured by you, the performing contractor, within a specially designed Lot
Acceptance Test Report (LATR) module.

Within the LATR module, you are required to provide a report of any contractor
ballistic testing and to submit the report in electronic fashion via the WWW.
The report must be a .pdf file for the upload process to work.

The LATR tab on the WARP opening page provides access to the upload process.

An online users manual will provide additional help in the upload process for a
Report of Contractor Ballistic Testing. It is recommended that you download and
read the users manual prior to uploading your initial Report of Contractor
Ballistic Testing. The users manual also contains screen shots which depict the
upload process.

The upload process is simple and direct. After inputting several key pieces of
information (contract number, noun, etc.) on the LATR initial page the inputter
selects the upload button and the LATR module will browse the inputter's hard
drive until the correct file is found. At the click of a button the file is
uploaded to WARP and the process is complete.

(End of statement of work)

(CS7200)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 12 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

c-5 52.248-4502 CONFIGURATION MANAGEMENT DOCUMENTATION MAY/2001
LOCAL

The contractor may submit Engineering Change Proposals (ECPs), Value Engineering
Change Proposals (VECPs) (Code V shall be assigned to an engineering change that
will effect a net life cycle cost), including Notices of Revision (NORs), and
Requests for Deviation (RFDs) for the documents in the Technical Data Package
(TDP). The contractor shall prepare these documents in accordance with the Data
Item Descriptions cited in block 04 on the enclosed DD Form 1423, Contract Data
Requirements List.

Contractor ECPs/VECPs shall describe and justify all proposed changes and shall
include NORs completely defining the changes to be made, contractors may also
submit RFDs, which define a temporary departure from the TOP or other baseline
documentation under Government control. The contractor shall not deliver any
units incorporating any change/deviation to Government documentation until
notified by the Government that the change/deviation has been approved and the
change/deviation has been incorporated in the contract.

If the Government receives the same or substantially the same VECPs from two or
more contractors, the contractor whose VECP is received first will be entitled
to share with the Government in all instant, concurrent, future, and collateral
savings.

Duplicate VECPs, which are received subsequently, will be returned to the
contractor(s) without formal evaluation, regardless of whether or not the first
VECP has been approved and accepted by the Government.

(End of clause)

(CS7600)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 13 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION D - PACKAGING AND MARKING

For Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

Regulatory Cite Title Date
--------------- ----- ----

D-l 52.211-4508 PACKAGING REQUIREMENTS JUL/1997
LOCAL

Packaging shall be in accordance with 9209205 revision AA, dated 27 MAR 2001.

When lot numbering is required, no more than one lot shall be packaged in an
outer shipping container.

Marking shall be in accordance with 9209205, REV AA, dated 27 MAR 2001. Bar code
marking is required in accordance 8796522, Rev BK, dated 27 FEB 2003. ECP
R3K3016, R3K3021 AND R2K2063 apply to 8796522.

EXCEPTION:

PERFORMANCE ORIENTED PACKAGING (POP) VERIFICATION:

In no case shall a container be shipped if the gross weight marked on the
package is greater than the POP certified weight. If the average gross weight of
the packed containers (determined by weighing two representative samples and
averaging the weight) is greater than the certified weight, container marking
operations shall cease and the procuring activity shall be contacted
immediately.

EXCEPTION TO PERFORMANCE ORIENTED PACKAGING (POP) MARKINGS:

If manufactured outside the USA, contractor shall not apply the UN POP
certification marking provided on the drawing 9209205. Contractors (outside the
USA) are responsible to perform UN POP tests on packaging requirements provided
in this contract and apply UN POP certification marking authorized by the
Competent Authority of the state (country) of manufacture.

Heat treat requirements for all non-manufactured wood used in packaging applies
to this contract. ECP R3K3015 applies to MIL-B-46506. In addition, foreign
manufacturers shall have the heat treatment of non-manufactured wood products
verified in accordance with their National Plant Protection Organization's
compliance program.

(End of clause)

(DS6303)

D-2 52.247-4517 PALLETIZATION INSTRUCTION MAR/1992
LOCAL

Palletization shall be in accordance with 19-48-4116/26H, revision 2. dated OCT
1987, 19-48-4116/2, Rev 5, dated Feb 2002 and 19-48-4116, Rev 7, dated Sep 2001.
ECP R2K3000 and R2K3010 apply to 19-48-4116. Marking shall be in accordance with
drawing ACV00561, Rev B, dated 1 APR 2002. ECP R3K3017, R3K3024, R3K3016 and
R3K3021 apply to ACV00561.

Heat treatment requirements for all non-manufactured wood used in the palletized
load applies to this contract. In addition, foreign manufacturers shall have the
heat treatment of non-manufactured wool products verified in accordance with
their National Plant Protection Organization's compliance program.

(End of clause)

(DS6204)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 14 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION E - INSPECTION AND ACCEPTANCE

For Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

The following Federal Acquisition Regulation (FAR), DoD FAR Supplement clauses
and provisions, the full text of which will be made available upon request, are
incorporated herein by reference with the same force and effect as if set forth
in full text.

The text of the clauses incorporated by reference herein are available from the
contract specialist indicated in block 7 of the Standard Form 33 or (as
applicable) the contracting officer and will be furnished upon request. Other
documents are available as indicated in the schedule.

Any company/individual wishing to purchase a copy of the Federal Acquisition
Regulation (FAR), the Army FAR Supplement or the DOD FAR Supplement, may do so
from the Superintendent of Documents, US Government Printing Office, Washington
DC 20402

(EA7001)

Regulatory cite Title Date
--------------- ----- ----

E-1 52.216-2 INSPECTION OF SUPPLIES-FIXED-PRICE AUG/1996
E-2 52.246-16 RESPONSIBILITY FOR SUPPLIES APR/1984
E-3 52.209-4512 FIRST ARTICLE TEST (CONTRACTOR TESTING) MAY/1994
LOCAL

a. The first article shall consist of:

FAT shall consist of those items and quantities cited in item spec MIL-C-63092A
w/notice 1, dated 2/12/96 as listed in TDP 9317509. Is also noted that all
components, subassemblies and assemblies FAT quantities are all to be inspected
for all unlisted characteristics.

which shall be examined and tested in accordance with contract requirements, the
item specifications), Quality Assurance Provisions (QAPS) and all drawings
listed in the Technical Data Package.

b. The first article shall be representative of items to be manufactured
using the same processes and procedures and at the same facility as contract
production. All parts and materials, including packaging and packing, shall be
obtained from the same source of supply as will be used during regular
production. All components, subassemblies, and assemblies in the first article
sample shall have been produced by the Contractor (including subcontractors)
using the technical data package provided by the Government.

c. The first article shall be inspected and tested by the contractor for
all requirements of the drawing(s), the QAPs, and specifications) referenced
thereon, except for:

(1) Inspections and tests contained in material specifications
provided that the required inspection and tests have been performed previously
and certificates of conformance are submitted with the First Article Test
Report.

(2) Inspections and tests for Military Standard (MS) components and
parts provided that inspection and tests have been performed previously and
certifications for the components and parts are submitted with the First Article
Test Report.

(3) Corrosion resistance tests over 10 days in length provided that
a test specimen or sample representing the same process has successfully passed
the same test within 30 days prior to processing the first article, and results
of the tests are submitted with the First Article Test Report.

(4) Life cycle tests over 10 days in length provided that the same
or similar items manufactured using the same processes have successfully passed
the same test within 1 year prior to processing the first article and results of
the tests are submitted with the First Article Test Report.

(5) Onetime qualification tests, which are defined as a onetime on
the drawing(s), provided that the same or similar item manufactured using the
same processes has successfully passed the tests, and results of the test are on
file at the contractor's facility and certifications are submitted with the
First Article Test Report.

d. The Contractor shall provide to the Contracting Officer at least 15
calendar days advance notice of the scheduled date for final inspection and test
of the first article. Those inspections which are of a destructive nature shall
be performed upon additional sample parts selected from the same lot(s) or
batch(es) from which the first article was selected.

e. A First Article Test Report shall be compiled by the contractor
documenting the results of all inspections and tests (including

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CONTINUATION SHEET
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NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

supplier's and Vendor's inspection records and certifications, when applicable).
The First Article Test Report shall include actual inspection and test results
to include all measurements, recorded test data, and certifications (if
applicable) keyed to each drawing, specification and QAP requirement and
identified by each individual QAP characteristic, drawing/specification
characteristic and unlisted characteristic. The Government Quality Assurance
Representative's (QAR) findings shall be documented on DD Form 1222, Request for
and Results of Tests, and attached to the contractor's test report. Two copies
of the First Article Test Report and the DD Form 1222 will be submitted through
the Administrative Contracting Officer to the Contracting Officer with an
additional information copy furnished to QAR to AMSJM-CDC to PCO.

f. Notwithstanding the provisions for waiver of first article, an
additional first article sample or portion thereof, may be ordered by the
Contracting Officer in writing when (i) a major change is made to the technical
data, (ii) whenever there is a lapse in production for a period in excess of 90
days, or (iii) whenever a change occurs in place of performance, manufacturing
process, material used, drawing, specification or source of supply, when
conditions (i), (ii), or (iii) above occurs, the Contractor shall notify the
Contracting Officer so that a determination can be made concerning the need for
the additional first article sample or portion thereof, and instructions
provided concerning the submission, inspection, and notification of results.
Costs of the first article testing resulting from production process change,
change in the place of performance, or material substitution shall be borne by
the contractor.

(End of clause)
(ES6031)

E-4 52.245-4540 GOVERNMENT FURNISHED TEST SUPPORT EQUIPMENT JAN/1995
LOCAL

The Government will furnish the following test equipment to support First
Article, Reliability, and/or Acceptance Tests. The Contractor will submit a
written request for this property to the Contracting Officer no later than
thirty (30) days prior to the desired delivery date.

(a) Item National Cost Unit of
Nomenclature Stock Number Quantity Each Issue

m16 Rifle 1005-01-128-9936 1 NA EA
M203 Launcher 1010-00-179-6447 2 NA EA
M203 Barrels 1010-01-376-3342 6 NA EA

(b) Estimated Height: NA pounds.

(End of clause)

(ES6115)

E-5 52.246-11 HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT FEB/2004
LOCAL

(a) Definition. "Contract date", as used in this clause, means the date
set for bid opening; or if this is a negotiated contract or a modification, the
effective date of this contract or modification.

(b) The Contractor shall comply with:

( ) ISO 9002

(X) ISO 9001-2000; only design/development exclusions permitted

( ) ISO 9001-2000; no exclusions permitted

or an alternate program/system approved by the activity listed in block 7 of the
Standard Form 33, in effect on the contract date and which is hereby
incorporated into this contract.

(End of clause)

(ES6001)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 16 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

E-6 52.246-4506 STATISTICAL PROCESS CONTROL (SPC) FEB/2004
LOCAL

a. In addition to the quality requirements of the technical data package,
the Contractor shall implement Statistical Process Control (SPC) in accordance
with a government accepted SPC Program Plan. Control chart techniques shall be
in accordance with the American National Standards Institute (ANSI) Bl, B2 and
B3. Alternate SPC charting methods may be proposed and submitted to the
Government for review.

b. The SPC Program Plan developed by the contractor shall consist of a
general plan and a detailed plan. The plans shall be structured as delineated on
the Data Item Description referenced in the DD Form 1423. The general and the
detailed plans shall be submitted to the government for review per DD Form 1423
requirements. Notification by the Government of acceptance or non-acceptance of
the plans shall be provided in accordance with the time frames specified on the
DD Form 1423. Once a general plan for a facility has been approved by this
Command, the approval remains in effect for subsequent contracts as long as the
contractual requirements remain substantially unchanged from contract to
contract. Therefore, resubmission of a previously accepted general SPC plan is
not required if current SPC contract clause and Data Item Description (DID)
requirements are fulfilled. If this Command has previously accepted the general
SPC plan under essentially the same SPC contractual requirements, so indicate by
providing the Contracting Officer with the following information:

Date of Acceptance_________

Contract Number (is)_______

c. The contractor is responsible for updating the general plan to current
SPC contractual requirements. If errors or omissions are encountered in a
previously accepted SPC general plan, opportunities for improvement will be
identified by the Government, and corrective action shall be accomplished by the
contractor.

d. A milestone schedule will be submitted for those facilities who do not
have, or have never had, a fully implemented SPC program and will not have a
fully operational SPC program once production is initiated. The milestones shall
provide a time phased schedule of all efforts planned relative to implementation
of an SPC program acceptable to the Government. A milestone schedule shall
include implementation start and complete dates for those SPC subjects addressed
in the Statistical Process Control Statement of Work located in Section C. The
milestone schedule shall only include those actions that can not be accomplished
prior to first article or the initiation of production, if a first article is
not required. Milestones shall be developed for each commodity identified for
SPC application. Milestones shall be submitted through the Government Quality
Assurance Representative to the Contracting Officer for review and acceptance.
Any deviations from the accepted milestones, to include justification for such
deviations, shall be resubmitted through the same channels for review. The
Government reserves the right to disapprove any changes to the previously
accepted milestones. Notification by the Government of the acceptance or
non-acceptance of the milestones shall be furnished to the Contractor by the
Contracting Officer.

e. The Contractor shall review all process and operation parameters for
possible application of SPC techniques. This review shall include processes and
operations under the control of the prime contractor and those under the control
of subcontractor or vendor facilities. A written justification shall be included
in the detailed plan for each process and operation parameter that controls or
influences characteristics identified as critical, special, or major which have
been deemed impractical for the application of SPC techniques. A pamphlet on
application of SPC for short production runs is available through the
Contracting Officer.

f. Statistical evidence in the form of control charts shall be prepared
and maintained for each process or operation parameter identified in the
detailed plan. These charts shall identify all corrective actions taken on
statistical signal. During production runs, control charts shall be maintained
in such a manner to assure product is traceable to the control charts. At the
conclusion of the production run, a collection of charts traceable to the
product, shall be maintained for a minimum of 3 years. The control charts shall
be provided to the Government for review at any time upon request.

g. When the process or operation parameter under control has demonstrated
both stability and capability, the Contractor shall request, in writing, through
Administrative Contracting Officer (ACO) and Contracting Officer (CO) channels
to the Product Assurance and Test Directorate, that acceptance inspection or
testing performed in accordance with contract requirements be reduced or
eliminated. Upon approval by the CO. acceptance shall then be based upon the
accepted SPC plan, procedures, practices and the control charts.

h. The Government will not consider requests for reduction or elimination
of 100% acceptance inspection and testing of parameters or characteristics
identified as critical in the technical data package, specifications or drawings
of this contract if any one of the following conditions exist:

(1) The existing process currently utilizes a fully automated, cost
effective, and sufficiently reliable method of 100% acceptance inspection or
testing for an attribute-type critical parameter or characteristic.

(2) The Contractor utilizes attribute SPC control chart methods for
the critical parameter or characteristic.

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 17 OF 35
CONTINUATION SHEET
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NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

(3) The critical parameter or characteristic is a first order,
single point safety failure mode (non-conformance of the critical parameter or
characteristic in and of itself would cause a catastrophic failure).

i. The Government will only consider reduction or elimination of the 100%
acceptance inspection or test requirement for other critical parameters or
characteristics if either of the following conditions are met:

(1) The process is in a state of statistical control utilizing
variable control chart methods for the critical parameter or characteristic
under control and the process performance index (Cpk) is at least 2.0. The
Contractor shall maintain objective quality evidence through periodic audits
that the process performance index is being maintained for each production
delivery.

(2) The critical parameter or characteristic is conclusively shown
to be completely controlled by one or more process or operation parameters
earlier in the process, and those parameters are in a state of statistical
control utilising variable data, and the product of the probability of the
conformance for each earlier parameter associated to the critical characteristic
is better than or equal to a value equivalent to that provided by a Cpk of at
least 2.0. The Contractor shall maintain objective quality evidence through
periodic audits that the process performance indexes are being maintained for
each production delivery.

j. For characteristics other than critical, requests for reduction or
elimination of acceptance inspection and testing shall be considered when the
process performance index is greater than or equal to a Cpk of 1.33 for
variables data. Requests shall be considered for attributes data when the
percent beyond the specification limits is less than or equal to .003
(cpk-1.33).

k. Process or operation parameters under reduced or eliminated inspection
or testing that undergo a break in production less than 6 months in length, may
continue to operate under reduced or eliminated inspection or testing provided
there has been no degradation below a Cpk of 1.33 (2.0 for criticals). Any break
in production greater than 6 months shall require resubmission of the request
for reduction or elimination of inspection or testing through the same channels
cited in paragraph g above.

l. Not used.

m. Immediately following a change to a process or operation parameter
under reduced or eliminated inspection, the process capability (Cp) or process
performance indexes (Cpk) shall be recalculated and documented for variable
data; the grand average fraction defective shall be recalculated for attribute
data. If any of these values have deteriorated, immediate notification shall be
made to the Government along with the associated documentation. Return to
original inspection and test requirements may be imposed as stipulated in
paragraph n below.

n. The Government reserves the right to withdraw authorization to reduce
or eliminate final acceptance inspection or testing and direct the Contractor to
return to original contract inspection or test procedures at any indication of
loss of process control or deterioration of quality.

(End of clause)

(ES6034)

E-7 52.245-4545 MIL-STD-1916 OCT/2000
LOCAL

The Department of Defense (DoD) Preferred Methods for this Acceptance of
Product, MIL-STD-1916, shall be used for this procurement action. All references
to MIL-STD-1Q5, MIL-STD-414, MIL-STD-1235, and ANSI Zl.4 appearing in the
Technical Data Package (TDP) are replaced by MIL-STD-1916. Verification Levels
(VL) shall replace AQLs and shall be XX XX for major characteristcs and XX XX
for minor characteristics.

(End of clause)

(ES7650)

E-8 52.246-4528 REWORK AND REPAIR OF NONCOMFORMING MATERIAL MAY/1994
LOCAL

a. Rework and Repair are defined as follows:

(1) Rework - The reprocessing of nonconforming material to make it
conform completely to the drawings, specifications or contract requirements.

(2) Repair - The reprocessing of nonconforming material in
accordance with approved written procedures and operations to reduce, but not
completely eliminate, the nonconformance. The purpose of repair is to bring
nonconforming material into a

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 18 OF 35
CONTINUATION SHEET
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NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

usable condition. Repair is distinguished from rework in that the item after
repair still does not completely conform to all of the applicable drawings,
specifications or contract requirements.

b. Rework procedures along with the associated inspection procedures shall
be documented by the Contractor and submitted to the Government Quality
Assurance Representative (QAR) for review prior to implementation. Rework
procedures are subject to the QAR's disapproval.

c. Repair procedures shall be documented by the Contractor and submitted
on a Request for Deviation/Waiver, DD Form 1694, to the Contracting Officer for
review and written approval prior to implementation.

d. whenever the Contractor submits a repair or rework procedure for
Government review, the submission shall also include a description of the cause
for the nonconformances and a description of the action taken or to be taken to
prevent recurrence.

e. The rework or repair procedure shall also contain a provision for
reinspection which will take precedence over the Technical Data Package
requirements and shall, in addition, provide the Government assurance that the
reworked or repaired items have met reprocessing requirements.

(End of clause)

(ES7012)

E-9 52.246.4531 ACCEPTANCE INSPECTION EQUIPMENT MAY/1994
LOCAL

a. Acquisition, maintenance, and disposition of inspection equipment shall
be in accordance with ANSI/NCSL Z540-1 or ISO 10012-1.

b. The Contractor shall provide all Acceptance Inspection Equipment (AIE)
(except for any equipment listed as available in Section H and/or in Appendix I
of this contract) necessary to assure conformance of components and end items to
contract requirements. Equipment listed as available shall be furnished by the
Government in accordance with the Government Property clause of this contract.
Government furnished Acceptance Inspection Equipment shall not be used by the
contractor or his subcontractors in lieu of work gages.

c. All AIE shall be available for use prior to First Article submission,
if First Article is required, or prior to initiation of production under this
contract.

d. Contractor furnished AIE shall be made (i) in accordance with the
equipment drawings specified in Section C description/specifications section),
or (ii) in accordance with any other design, provided that the design
documentation is approved by the Government. AIE designs utilized for inspection
of characteristics that are classified as Minor require approval by the
Government Quality Assurance Representative (QAR). AIE design documentation for
inspection of characteristics listed as Critical, Special, or Major shall be
submitted to the Government for review and approval in accordance with the
Contract Data Requirements List, DD Form 1423.

e. Resubmission of AIE design documentation for approval on a follow on
contract is not required provided inspection characteristic parameters)
specified in the current technical data package and the previously approved AIE
design documentation remain unchanged. The contractor shall provide the contract
number and identify previously approved AIE documentation that meets the above
prerequisites. .

f. The Government reserves the right to disapprove at any time during
performance of this contract, use of any AIE not meeting the requirements of the
approved design documentation.

(End of clause)

(ES7010)

E-10 52.246-4532 DESTRUCTIVE TESTING MAY/1994
LOCAL

a. All costs for destructive testing by the Contractor and items destroyed
by the Government are considered as being included in the contract unit price.

b. Where destructive testing of items or components thereof is required by
contract or specification, the number of items or components required to be
destructively tested, whether destructively tested or not, shall be in addition
to the quantity

CONTINUATION SHEET REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 19 OF 35
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NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

to the delivered to the Government as set forth in the Contract Schedule.

c. All pieces of the complete First Article shall be considered as
destructively tested items unless specifically exempted by other provisions of
this contract.

d. The Contractor shall not reuse any components from items used in a
destructive test during First Article, lot acceptance r inprocess testing,
unless specifically authorized by the Contracting Officer.

e. The Government reserves the right to take title to all or any items or
components described above. The Government may take title to all or any items or
components upon notice to the Contractor. The items or components of items to
which the Government takes title shall be shipped in accordance with the
Contracting Officer's instructions. Those items and components to which the
Government does not obtain title shall be rendered inoperable and disposed of as
scrap by the Contractor.

(End of clause)

(ES7011)

E-11 52.246-4550 CRITICAL CHARACTERISTICS FEB/2004
LOCAL

a.The contractors processes shall be designed to prevent the creation or
occurrence of critical nonconformances. The contractor shall establish, document
and maintain specific procedures, work and handling instructions and process
controls relating to any critical characteristics.

b.The contractor shall assure his critical processes are robust in design such
that product and performance are relatively insensitive to design and
manufacturing parameters. A robust design anticipates changes and problems.
Robust processes shall be designed to yield less than one nonconformance in one
million.

c.An inspection/verification system shall be employed that will verify the
robustness of your critical processes. Maximum use should be made of automated
inspection equipment to accomplish verification of product quality. Mistake
proofing techniques of your material handling and inspection systems are
encouraged.

d.Previous Practices/Special Characteristics. As a result of previous practices,
the governments technical data may refer to Critical (not annotated with I or
II) and Special characteristics. Characteristics classified as Critical (not
annotated with a I or II) shall be subject to all requirements herein associated
with Critical (I) characteristics and level I Critical nonconformances. Unless
otherwise stated in Section C, characteristics classified as Special shall be
subject to all requirements herein associated with Critical (II) and Level (II)
Critical nonconformances.

e. Contractor Identified Critical Characteristics List (CICCL). Not including
critical characteristics defined in the governments technical data (drawings,
specifications, etc.), the contractor shall identify and document all material,
component, subassembly and assembly characteristics whose nonconformances may
result in hazardous or unsafe conditions for individuals using, maintaining or
depending upon the product. All additional critical characteristics identified
by the contractor shall comply with the critical characteristic requirements of
the technical data package, supplemented herein. The contractors additional
critical characteristics shall be classified as Critical (I) or Critical (II),
and shall be reviewed and approved by the procuring activity prior to
manufacturing (XX-XXXX-80970A). The following definitions are provided. Level I
critical nonconformance. A nonconformance of a critical characteristic that
judgment and experience indicate would result in hazardous or unsafe conditions
for individuals using, maintaining or depending upon the product; or a
nonconformance that judgment and experience indicate would prevent performance
of the tactical function of a weapon system or major end item. The following (as
a minimum) are classified as Level I critical nonconformances:

(1) A nonconformance that will result in a hazardous or unsafe
condition (often referred to as a single point failure).

(2) A nonconformance that will remove or degrade a safety feature
(such as those in a safe and arm device or fuzing system).

(3) A nonconformance that will result in violation of mandatory
safety policies or standards. Level II critical nonconformance; A nonconformance
of a critical characteristic, other than Level I. This includes the
nonconformance of a characteristic that judgment and experience indicate may,
depending upon the degree of variance from the design requirement, the presence
of other nonconformances or procedural errors,:

(1) result in a hazardous or unsafe conditions for individuals
using, maintaining or depending upon the product, or

(2) prevent performance of the tactical function of a major end
item.

f. In the event that a Critical nonconformance is found anywhere in the
production process, the contractor, as part of his quality system, shall have
procedures in place to ensure:

(1) The nonconformance is positively identified and segregated so
that there is no possibility of the item inadvertently re-entering the
production process. This control shall be accomplished without affecting or
impairing subsequent defect analysis.

(2) The operation that produced the defective component or assembly
and any other operations incorporating that component or assembly is immediately
stopped.

(3) The government is immediately notified of the critical
nonconformance (telephonically and electronic mail.) (XX-XXXX-8097QA).

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 20 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

(4) Any suspect material (material in process that may contain the
same defect) is identified, segregated and suspended from any further
processing.

(5) An investigation is conducted to determine the cause of the
deficiency and required corrective actions. A report of this investigation shall
be submitted to the government (XX-XXXX-80970A). The use of the DID report shall
not delay notification to the government.

(6) A request to restart manufacturing or to use any suspect
material associated with the critical nonconformance is submitted to the
government (XX-XXXX-80970A). Restart of production shall not occur until the
investigations are complete or upon authorization from the procuring contracting
officer. All objective evidence of the investigations to date shall be available
for review at the time of restart. Suspect materiel found to be nonconforming
shall not be used without Government approval.

g. The contractor may develop alternative plans and provisions relative to
government or contractor identified Critical level (I)and Critical Level (II)
characteristics. The provisions shall be submitted to the government for
advanced approval and shall address the following:

(1) Complete explanation of potential failure mode(s) together with
supporting historical and statistical data.

(2) Pre-established plan of action (POA) to be taken when a critical
nonconformance occurs and a description of controls to ensure there is no
possibility of the nonconforming item inadvertently entering the production
process.

(3) Means of tracking nonconformance rate, investigative results and
corrective actions taken.

(14) Method to immediately verify that a produced critical
nonconformance is consistent with the identified failure model(s) and does not
exceed the historical nonconformance rate.

The contractor can resume production without specific government approval based
upon the pre-approved alternate plans and provisions for Critical (I)
characteristics and level (I) Critical nonconformances and Critical (II)
characteristics and level (II) Critical nonconformances.

h. If a critical nonconformance is discovered during further processing or
loading, the original manufacturer who introduced the critical nonconformance
shall bear responsibility for the nonconformance.

i. The Government Quality Assurance Representative will perform the surveillance
actions necessary to ensure compliance with this clause.

(End of clause)

(ES7500)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 21 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION F - DELIVERIES OR PERFORMANCE

For Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

(FA7001)

Regulatory Cite Title Date
--------------- ----- ----

F-l 52.242-17 GOVERNMENT DELAY OF WORK APR/1984
F-2 52.214-29 F.O.B. ORIGIN JUN/1988
F-3 52.247-58 LOADING, BLOCKING, AND BRACING OF FREIGHT CAR SHIPMENTS APR/1984
F-4 52.247-59 F.O.B. ORIGIN - XXXXXXX AND TRUCKLOAD SHIPMENTS APR/1984
F-5 52.247-61 F.O.B. ORIGIN-MINIMUM SIZE OF SHIPMENTS APR/1984
F-6 252.247-7023 TRANSPORTATION OF SUPPLIES BY SEA MAY/2002
DFARS

F-7 52.247-4504 TRANSPORTATION SECURITY REQUIREMENTS FOR CONTRACTOR - MAR/2004
LOCAL TO - CONTRACTOR SHIPMENTS

(a) Supplies procured or furnished under this contract/subcontract, which
are shipped between two or more contractors, and which are qualified as
sensitive in accordance with DoD 5100.76-M (Physical Security of Sensitive
Conventional Arms, Ammunition, and Explosives), or are shipped as DOT Class A or
B Explosives, require special Transportation Protective Service (TPS) during
shipment from all points of origin to all destinations. TPS will be equivalent
to the DoD security standard for the applicable sensitive category or explosive
class identified under DoD 4500.9R, Defense Transportation Regulation, parts II
and III, as added to or amended by applicable military service policies in
accordance with guidance provided by Defense Logistics Agency (DLA)/Defense
Contract Management Agency (DCMA).

(b) Xxxxxxx's Defense Contract Management Agency (DCMA) transportation
offices will furnish assistance in providing the sensitive category of items to
be shipped, determining the TPS required, and obtaining the TPS from commercial
carriers as necessary.

(End of clause)

(FS7115)

F-8 52.247-4531 COGNIZANT TRANSPORTATION OFFICER MAY/1993
LOCAL

(a) The contract administration office designated at the time of contract
award, or the office servicing the point of shipment if subsequently designated
by the original office, will be the contact point to which the contractor will:

(1) Submit, as necessary, DD Form 1659, Application for U.S.
Government Bill(s) of Lading/Export Traffic Release, in triplicate at least ten
days prior to date supplies will be available for shipment;

(2) Obtain shipping instructions as necessary for F.O.B. Destination
delivery, and

(3) Furnish necessary information for MILSTRIP/MILSTAMP or other
shipment documentation and movement control, including air and water terminal
clearances.

(4) For FMS, at least ten days in advance of actual shipping date
the contractor should request verification of "Ship to" and "Notification"
address from the appropriate DCMAO.

(b) The contract administration office will provide to the contractor data
necessary for shipment marking and freight routing.

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 22 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

(c) The contractor shall not ship directly to a military air or water port
terminal without authorization by the designated point of contact.

(End of clause)

(FS7240)

F-9 47.305-15(B) SPECIAL TRANSPORT/LOADING REQUIREMENTS (HAZARDOUS) FEB/1996
LOCAL

(a) In addition to requirements set forth under General Provision,
"Loading, Bracing, and Blocking of Freight Car Shipments," rail shipments will
be loaded, blocked and braced in accordance with rules and methods contained in
the current editions of Uniform Freight Classification, Association of American
Railroads Pamphlet No. 14, Circular 42G and Rules Governing Loading of
Commodities on Open Top Cars, Bureau of Explosives Tariff NO. BOE 6000
publishing Hazardous Materials Regulations of the Department of Transportation,
and Bureau of Explosives pamphlets NO. 6, 6A as applicable. Uniform Freight
Classification may be procured from the regulatory classification agent covering
territory from which shipment will be made. AAR Pamphlets, Circular and Rules
may be procured from the Bureau of Explosives, 00 X. Xxx Xxxxx Xx., Xxxxxxx, XX
00000. Bureau of Explosives Tariff No. BOE 6000 and Burea of Explosives
pamphlets may be procured from the Burea of Explosives, Association of American
Railroads, 0000 X Xxxxxx, Xxxxxxxxxx, X.X. 00000. U.S. Army Defense Ammunition
Center (USADAC) approved drawings contained within Index of U.S. Army
Unitization, Storage and Outloading Drawings for Ammunition and Components is
specifically applicable to rail loading, blocking and bracing of this item and
may be secured by the Contracting Officer or the Defense Contract Management
Agency (DCMA).

(b) Truck shipments will be loaded, blocked and braced in accordance with
rules and methods contained in the current editions of National Motor Freight
Classification and American Trucking Association, Inc., Motor Carrier's
Explosives and Dangerous Articles Tariff, as applicable and effective at the
time of shipment. These publications may be procured from the American Trucking
Association, Inc., Tariff Order Section, 1616 P St., N.W., Washington, D.C.
20036. USADACS approved drawings contained within Index of U.S. Army
Unitization, Storage and Outloading Drawings for Ammunition and Components is
specifically applicable to motor, loading, blocking and bracing of this item and
can be secured from the Contracting Officer or DCMA.

(c) TOFC "Piggyback" shipments will be loaded, blocked and braced in
accordance with Bureau of Explosives Pamphlet No. 6C or AAR circular NO. 43,
copies may be obtained from addresses given in para (a) above. USADAC approved
drawings contained within Index of U.S. Army Unitization, Storage and Outloading
Drawings for Ammunition and Components is specifically applicable to loading,
blocking and bracing for TOFC shipments and may be obtained from the Contracting
Officer or DCMA.

(d) Container shipments will be loaded, blocked and braced in accordance
with USADAC drawings contained within Index of U.S. Army Unitization, Storage
and Outloading Drawings for Ammunition and Components which is specifically
applicable to loading, blocking and bracing of container shipments and may be
secured from the Contracting Officer or the DCMA.

Except as the carrier(s) may be liable, the contractor shall be liable to the
Government for any loss or damage resulting from improper loading and/or
furnishing and installing dunnage material by the contractor for shipments to be
made under this contract.

(End of clause)

(FS7007)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 23 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION G - CONTRACT ADMINISTRATION DATA

PRON/ JOB
LINE AMS CD/ OBLG ORDER ACCOUNTING OBLIGATED
ITEM MIPR ACRN STAT ACCOUNTING CLASSIFICATION NUMBER STATION AMOUNT
---- ------------ ---- ---- --------------------------------------- ------ ---------- -------------

0001AB R14A0R844A AA 2 21 42034000041B1B06P41303226EB S28017 4P1R84 W52P1J $ 594,286.00
41303222008
R14M44164AM2

-------------
TOTAL $ 594,286.00

SERVICE ACCOUNTING OBLIGATED
NAME TOTAL BY ACRN ACCOUNTING CLASSIFICATION STATION AMOUNT
------- ------------- --------------------------------------- ---------- -------------

Army AA 21 42034000041B1B06P41303226EB S28017 W52P1J $ 594,286.00
-------------

TOTAL $ 594,286.00

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 24 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION H - SPECIAL CONTRACT REQUIREMENTS

for Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

The following Federal Acquisition Regulation (FAR), DOD FAR Supplement clauses
and provisions, the full text of which will be made available upon request, are
incorporated herein by reference with the same force and effect as if set forth
in full text.

Any company/individual wishing to purchase a copy of the Federal Acquisition
Regulation (FAR) , the Army FAR Supplement or the DOD FAR Supplement, may do so
from the Superintendent of Documents, US Government Printing Office, Washington
DC 20402.

(HA7001)

Regulatory Cite Title Date
--------------- ------------------------------------------------- --------

H-l 252.247 - 7024 NOTIFICATION OF TRANSPORTATION OF SUPPLIES BY SEA MAR/2000
DFARS

H-2 52.245 - 4506 GOVERNMENT FURNISHED PROPERTY OCT/1994
LOCAL

Schedule of Government Furnished Property

(a) Pursuant to the Government Property clause in Section I of this
contract, the Government shall furnish F.O.B. contractor's place of performance,
the Government-owned property listed in attachment number 001 of this document
for use in the performance of this contract.

(b) The property shall be delivered in accordance with the schedule set
forth in attachment number 001 of this document.

(c) If the property is not received in accordance with the schedule set
forth in attachment number 001 of this document, the Contractor shall
immediately notify the Contracting Officer in writing.

(d) The quantity of Government Furnished Material (GFM) which is offered
herein is contingent upon award of the total quantity solicited herein. Should
the actual quantity awarded be less than the total quantity solicited, the
Government retains the right to unilaterally reduce the quantity of GFM which
will be provided under any resultant contract. Any said reduction shall be on a
pro-rata basis.

(End of Clause)

(HS6075)

H-3 246.671 LOCAL MATERIAL INSPECTION AND RECEIVING REPORTS (DD FORM 250)
JAN/1995

Material inspection and Receiving Report (DD Form 250), required to be prepared
and furnished to the Government under the clause of this contract entitled
'Material Inspection and Receiving Report', will be distributed by the
Contractor in accordance with DOD FAR Supplement Appendix F, Part 4.

Send copies to;

1. Purchasing Office

Xx. Xxxx Xxxx Xxxxxxx
HQ, AFSC, AMSFS-CCA-L
Rock Island, IL 61299-6500

2. Production Management

Xx. Xxxx Xxxxxx
HQ, AFSC, SFSJM-CDM
Rock Island, IL 61299-6500

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 25 OF 35
CONTINUATION SHEET

PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

(End of clause)

(HA6025)

H-4 242-1107(B) INSTRUCTIONS FOR PREPARATION AND SUBMISSION OF PRODUCTION PROGRESS JUN/1996
LOCAL REPORTS OF DELAYS IN DELIVERY

a. Production Progress Report (DD Form 375) and Production Progress Report
Continuation (DD Form 375c) shall be prepared in accordance with instructions
thereon: These forms shall be submitted as required for each separate contract
item (identified by noun description not by line item number). The remarks
section will provide process-oriented information where relevant to the delay.

b. The contractor shall promptly submit a DD Form 375 reporting any delay
in the scheduled delivery or completion as soon as known or anticipated. In
addition, the form(s) shall be submitted on a monthly basis within 2 work days
after each reporting period, beginning with the end of the first full month
following the initial report submission and continuing until contract
completion/termination. The forms shall be distributed as follows:

ACTIVITY ADDRESS NO. OF COPIES
--------------------------- -------------------------- -------------

Purchasing Office (PCO) Xx. Xxxx Xxxx Xxxxxxx 1
HQ, AFSC, AMSFS-CCA-L
Rock Island, IL 61299-6500

Administration Office (ACO) See Award document. 3

Production Manager Xx. Xxxx Xxxxxx
HQ, AFSC, SFSJM-CDM 1
Rock Island, IL 61299-6500

(End of clause)

(HS6028)

H-5 52.247-4545 PLACE OF CONTRACT SHIPPING POINT, RAIL INFORMATION MAY/1993
LOCAL

The bidder/offeror is to fill in the 'Shipped From' address, if different from
'Place of Performance' indicated elsewhere in this section.

Shipped From:

_________________________________

For contracts involving F.O.B. Origin shipments furnish the following rail
information:

Does Shipping Point have a private railroad siding//// [ ] YES [ ] NO

If YES, give name of rail carrier serving it: ______________

If NO, give name and address of nearest rail freight station and carrier serving
it:

Rail Freight Station Name and Address: ______________

Serving Carrier: _________________

(End of Clause)

(HS7600)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 26 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION I - CONTRACT CLAUSES

For Local Clauses See: xxxx://xxx.xxxx.xxxx.xxx/xx/xxxx/xxx/xxxxxxx/xxxxx.xxx

Regulatory Cite Title Date
--------------- --------------------------------------------------------------------- --------

I-1 52.202-1 DEFINITIONS JUL/2004
I-2 52.203-3 GRATUITIES APR/1984
I-3 52.203-5 COVENANT AGAINST CONTINGENT FEES APR/1984
I-4 52.203-6 RESTRICTIONS ON SUBCONTRACTOR SALES TO THE GOVERNMENT JUL/1995
I-5 52.203-7 ANTI-KICKBACK PROCEDURES JUL/1995
I-6 52.203-8 CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR JAN/1997
IMPROPER ACTIVITY
I-7 52.303-10 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY JAN/1997
I-8 52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS JUN/2003
I-9 52.204-4 PRINTED OR COPIED DOUBLE-SIDED ON RECYCLED PAPER AUG/2000
I-10 52.204-7 CENTRAL CONTRACTOR REGISTRATION OCT/2003
I-11 52.209-6 PROTECTING THE GOVERNMENT'S INTEREST WHEN SUBCONTRACTING WITH XXX/2005
CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT
I-12 52.211-5 MATERIAL REQUIREMENTS AUG/2000
I-13 52.211-15 DEFENSE PRIORITY AND ALLOCATION REQUIREMENTS SEP/1990
I-14 52.215-2 AUDIT AND RECORDS - NEGOTIATION JUN/1999
1-15 52.215-8 ORDER OF PRECEDENCE-UNIFORM CONTRACT FORMAT OCT/1997
I-16 52.215-14 INTEGRITY OF UNIT PRICES OCT/1997
I-17 52.219-6 NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE JUN/2003
I-18 52.219-8 UTILIZATION OF SMALL BUSINESS CONCERNS MAY/2004
I-19 52.219-14 LIMITATIONS ON SUBCONTRACTING DEC/1996
I-20 52.222-19 CHILD LABOR-COOPERATION WITH AUTHORITIES AND REMEDIES JUN/2004
I-21 52.222-20 XXXXX-XXXXXX PUBLIC CONTRACTS ACT DEC/1996
I-22 52.222-26 EQUAL OPPORTUNITY APR/2002
I-23 52.222-35 EQUAL OPPORTUNITY FOR SPECIAL DISABLED VETERANS, VETERANS OF THE DEC/2001
VIETNAM ERA, AND OTHER ELIGIBLE VETERANS
I-24 52.222-36 AFFIRMATIVE ACTION FOR WORKERS WITH DISABILITIES JUN/1998
I-25 52.222-37 EMPLOYMENT REPORTS ON SPECIAL DISABLED VETERANS, VETERANS OF THE DEC/2001
VIETNAM ERA, AND OTHER ELIGIBLE VETERANS
I-26 52.223-6 DRUG-FREE WORKPLACE MAY/2001
I-27 52.229-3 FEDERAL, STATE, AND LOCAL TAXES APR/2003
I-26 52.232-1 PAYMENTS APR/1984
I-29 52.232-8 DISCOUNTS FOR PROMPT PAYMENT FEB/2002
I-30 52.232-11 EXTRAS APR/1984
I-31 52.232-16 PROGRESS PAYMENTS APR/2003
I-32 52.232-16 PROGRESS PAYMENTS (APR 2003) - ALTERNATE I MAR/2000
I-33 52.232-17 INTEREST JUN/1996
I-34 52.232-23 ASSIGNMENT OF CLAIMS JAN/1986
I-35 52.232-25 PROMPT PAYMENT OCT/2003
I-36 52.232-33 PAYMENT BY ELECTRONIC FUNDS TRANSFER - CENTRAL CONTRACTOR OCT/2003
REGISTRATION
I-37 52.233-1 DISPUTES JUL/2002
I-38 52.233-3 PROTEST AFTER AWARD AUG/1996
I-39 52.242-12 REPORT OF SHIPMENT (REPSHIP) JUN/2003
I-40 52.242-13 BANKRUPTCY JUL/1995
I-41 52.243-1 CHANGES - FIXED PRICE AUG/1987
I-42 52.243-7 NOTIFICATION OF CHANGES APR/1984
I-43 52.245-2 GOVERNMENT PROPERTY (FIXED PRICE CONTRACTS) MAY/2004
I-44 52.246-1 CONTRACTOR INSPECTION REQUIREMENTS APR/1984
I-45 52.247-15 CONTRACTOR RESPONSIBILITY FOR LOADING AND UNLOADING APR/1984
I-46 52.247-63 PREFERENCE FOR U.S. - FLAG AIR CARRIERS JUN/2003
I-47 52.249-2 TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) MAY/2004
I-48 52.249-8 DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) APR/1984
I-49 52.253-1 COMPUTER GENERATED FORMS JAN/1991
I-50 252.203-7001 PROHIBITION ON PERSONS CONVICTED OF FRAUD OR OTHER DEFENSE - CONTRACT MAR/1999
DFARS - RELATED FELONIES
I-51 252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT APR/1992
DFARS
I-52 252.204-7004 REQUIRED CENTRAL CONTRACTOR REGISTRATION NOV/2003

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 27 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

Regulatory Cite Title Date
--------------- ---------------------------------------------------------- --------

DFARS
I-53 252.204-7005 ORAL ATTESTATION OF SECURITY RESPONSIBILITIES NOV/2001
DFARS
I-54 252.205-7000 PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS DEC/1991
DFARS
I-55 252.223-7002 SAFETY PRECAUTIONS FOR AMMUNITION AND EXPLOSIVES MAY/1994
DFARS
I-56 252.223-7003 CHANGE IN PLACE OF PERFORMANCE-AMMUNITION AND EXPLOSIVES DEC/1991
DFARS
I-57 252.225-7012 PREFERENCE FOR CERTAIN DOMESTIC COMMODITIES MAY/2004
DFARS
I-58 252.225-7041 CORRESPONDENCE IN ENGLISH JUN/1997
DFARS
I-59 252.226-7001 UTILIZATION OF INDIAN ORGANIZATIONS, INDIAN-OWNED ECONOMIC SEP/2004
DFARS ENTERPRISES, AND NATIVE HAWAIIAN SMALL BUSINESS CONCERNS
I-60 252.231-7000 SUPPLEMENTAL COST PRINCIPLES DEC/1991
DFARS
I-61 252.232-7004 DOD PROGRESS PAYMENT RATES OCT/2001
DFARS
I-62 252.242-7000 POSTAWARD CONFERENCE DEC/1991
DFARS
I-63 252.243-7001 PRICING OF CONTRACT MODIFICATIONS DEC/1991
DFARS
I-64 252.246-7000 MATERIAL INSPECTION AND RECEIVING REPORT MAR/2003
DFARS

I-65 52.217-6 EVALUATED OPTION FOR INCREASED QUANTITY MAR/1989

a.This solicitation includes an evaluated option (See Section M).

b.The Government reserves the right to increase the quantity of item(s)
CLIN 0001 by a quantity of up to and including but not exceeding 100 percent as
an evaluated option at the price(s) quoted below.

c.If the Contractor does not quote a price hereunder, the lowest price
offered/bid in the Schedule for item(s) CLIN 0001 shall be the price used for
evaluation/award of any option quantities. All evaluation factors identified in
the solicitation, except F.O.B. Origin transportation costs, will be applied to
the option quantity for evaluation purposes.

d.The Contracting Officer may exercise the evaluated option at any time
prior to the last delivery by giving written notice to the, Contractor.

x.Xxxxxxxx of the items added by exercise of this option shall continue
immediately after, and at the same rate as delivery of like items called for
under the contract, unless the parties agree otherwise.

f.Subject to the limitations contained in this clause, the Government may
exercise this option on one or more occasions.

g.Offered Unit Prices for the Option Quantities are:

Unit Price
----------

Evaluated Option
(F.O.B . Origin) $ 27.75 CLIN 0001
----------

Varying prices may be offered for the option quantities actually ordered
and the dates when ordered. In as much as the unit price for the basic quantity
may contain starting, load, testing, tooling, transportation or other costs not
applicable to option quantities, offerors are requested to take these factors
into consideration while setting forth the unit price(s) for the option
quantities. The option price is expected (but not required) to be lower than the
unit price for the initial quantity.

(End of clause)

(IF608O)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 28 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

I-66 52.243-7 NOTIFICATION OP CHANGES APR/1984

(a) Definitions. "Contracting Officer," as used in this clause, does not
include any representative of the Contracting Officer. "Specifically Authorized
Representative (SAR)," as used in this clause, means any person the Contracting
Officer has so designated by written notice (a copy of which shall be provided
to the Contractor) which shall refer to this paragraph and shall be issued to
the designated representative before the SAR exercises such authority.

(b) Notice. The primary purpose of this clause is to obtain prompt
reporting of Government conduct that the Contractor considers to constitute a
change to this contract. Except for changes identified as such in writing and
signed by the Contracting Officer, the Contractor shall notify the
Administrative Contracting Officer in writing promptly, within _________ (to be
negotiated) calendar days from the date that the Contractor identifies any
Government conduct (including actions, inactions, and written or oral
communications) that the Contractor regards as a change to the contract terms
and conditions. On the basis of the most accurate information available to the
Contractor, the notice shall state-

(1) The date, nature, and circumstances of the conduct regarded as a
change;

(2) The name, function, and activity of each Government individual
and Contractor official or employee involved in or knowledgeable about such
conduct;

(3) The identification of any documents and the substance of any
oral communication involved in such conduct;

(4) In the instance of alleged acceleration of scheduled performance
or delivery, the basis upon which it arose;

(5) The particular elements of contract performance for which the
Contractor may seek an equitable adjustment under this clause, including-

(i) What contract line items have been or may be affected by
the alleged change;

(ii) What labor or materials or both have been or may be
added, deleted, or wasted by the alleged change;

(iii) To the extent practicable, what delay and disruption in
the manner and sequence of performance and effect on continued performance have
been or may be caused by the alleged change;

(iv) What adjustments to contract price, delivery schedule,
and other provisions affected by the alleged change are estimated; and

(6) The Contractor's estimate of the time by which the Government
must respond to the Contractor's notice to minimize cost, delay or disruption of
performance.

(c) continued performance. Following submission of the notice required by
paragraph (b) of this clause, the Contractor shall diligently continue
performance of this contract to the maximum extent possible in accordance with
its terms and conditions as construed by the Contractor, unless the notice
reports a direction of the Contracting Officer or a communication from a SAR of
the Contracting Officer, in either of which events the Contractor shall continue
performance; provided, however, that if the Contractor regards the direction or
communication as a change as described in paragraph (b) of this clause, notice
shall be given in the manner provided. All directions, communications,
interpretations, orders and similar actions of the SAR shall be reduced to
writing promptly and copies furnished to the Contractor and to the Contracting
Officer. The Contracting Officer shall promptly countermand any action which
exceeds the authority of the SAR.

(d) Government response. The Contracting Officer shall promptly, within
__________ (to be negotiated) calendar days after receipt of notice, respond to
the notice in writing. In responding, the Contracting Officer shall either-

(1) Confirm that the conduct of which the Contractor gave notice
constitutes a change and when necessary direct the mode of further performance;

(2) Countermand any communication regarded as a change;

(3) Deny that the conduct of which the Contractor gave notice
constitutes a change and when necessary direct the mode of further performance;
or

(4) In the event the Contractor's notice information is inadequate
to make a decision under paragraphs (d)(1), (2), or (3) of this clause, advise
the Contractor what additional information is required, and establish the date
by which it should be furnished and the date thereafter by which the Government
will respond.

(e) Equitable adjustments.

(1) If the Contracting Officer confirms that Government conduct
effected a change as alleged by the Contractor, and the conduct causes an
increase or decrease in the Contractor's cost of, or the time required for,
performance of any part of the work under this contract, whether changed or not
changed by such conduct, an equitable adjustment shall be made-

(i) In the contract price or delivery schedule or both; and

(ii) In such other provisions of the contract as may be
affected.

(2) The contract shall be modified in writing accordingly. In the
case of drawings, designs or specifications which are defective and for which
the Government is responsible, the equitable adjustment shall include the cost
and time extension for delay reasonably incurred by the Contractor in attempting
to comply with the defective drawings, designs or specifications before the
Contractor identified, or reasonably should have identified, such defect. When
the cost of property made obsolete or excess as a result of a change confirmed
by the Contracting Officer under this clause is included in the equitable
adjustment, the Contracting Officer shall have the right to prescribe the manner
of disposition of the property. The equitable adjustment shall not include
increased costs or time extensions for delay resulting from the Contractor's
failure to provide notice or to continue performance as provided, respectively,
in paragraphs (b) and (c) of this clause.

Note: The phrases "contract price" and "cost" wherever they appear in the
clause, may be appropriately modified to apply to cost-reimbursement or
incentive contracts, or to combinations thereof.

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 29 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

(End of clause)

(IF6250)

I-67 52.246-17 WARRANTY OF SUPPLIES OF A NONCOMPLEX NATURE JUN/2003

***

(b) Contractor's obligations.

(1) Notwithstanding inspection and acceptance by the Government of
supplies furnished under this contract, or any condition of this contract
concerning the conclusiveness thereof, the Contractor warrants that for 1095
days. [Contracting officer shall state specific period of time after delivery,
or the specified event whose occurrence will terminate the warranty period;
e.g., the number of miles or hours of use, or combinations of any applicable
events or periods of time]-

***

(1) The Contracting Officer shall give written notice to the
Contractor of any breach of warranties in paragraph (b) (1) of this clause
within 120 days. [contracting Officer shall insert specific period of time;
e.g., "45 days of the last delivery under this contract," or "45 days after
discovery of the defect"].

***

(End of clause)

(IF6070)

I-68 252.223-7007 SAFEGUARDING SENSITIVE CONVENTIONAL ARMS, AMMUNITION, AND EXPLOSIVES SEP/1999
DFARS

(a) Definition. Arms, ammunition, and explosives (AA&E), as used in this
clause, means those items within the scope (chapter 1, paragraph B) of DoD
5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and
Explosives.

(b) The requirements of DOD 5100.76-M apply to the following items of AA&E
being developed, produced, manufactured, or purchased for the Government, or
provided to the Contractor as Government-furnished property under this contract:

NOMENCLATURE NATIONAL STOCK NUMBER SENSITIVITY/CATEGORY

M661 Green Star Parachute 1310-00-541-6148 Sensitive Category IV

(c) The Contractor shall comply with the requirements of DoD 5100.76-M, as
specified in the statement of work. The edition of DoD 5100.76-M in effect on
the date of issuance of the solicitation for this contract shall apply.

(d) The Contractor shall allow representatives of the Defense Security
Service (DSS), and representatives of other appropriate offices of the
Government, access at all reasonable times into its facilities and those of its
subcontractors, for the purpose of performing surveys, inspections, and
investigations necessary to review compliance with the physical security
standards applicable to this contract.

(e) The Contractor shall notify the cognizant DSS field office of any
subcontract involving AA&E within 10 days after award of the subcontract.

(f) The Contractor shall ensure that the requirements of this clause are
included in all subcontracts, at every tier

(1) For the development, production, manufacture, or purchase of
AA&E; or

(2) When AA&E will be provided to the subcontractor as
Government-furnished property.

(g) Nothing in this clause shall relieve the Contractor of its
responsibility for complying with applicable Federal, state, and local laws,
ordinances, codes, and regulations (including requirements for obtaining
licenses and permits) in connection with the performance of this contract.

(End of clause)

(IA6200)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 30 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

I-69 52.209-3 FIRST ARTICLE APPROVAL - CONTRACTOR TESTING SEP/1989

(a) The Contractor shall test * unit(s) of Lot/Item * as specified
in this contract. At least fifteen (15) calendar days before the beginning of
first article tests, the Contractor shall notify the Contracting Officer, in
writing, of the time and location of the testing so that the Government may
witness the tests.

(b) The Contractor shall submit the first article test report within
15 calendar days from the date of this contract to * marked "FIRST ARTICLE TEST
REPORT: Contract No._________,Lot/Item No. _____." Within thirty (30) calendar
days after the Government receives the test report, the Contracting Officer
shall notify the Contractor, in writing, of the conditional approval, approval,
or disapproval of the first article; except that the number of days from receipt
of the test report until the Contractor is notified shall be sixty (60) calendar
days (instead of 30) when the option to perform confirmatory testing is
exercised by the Government. The notice of conditional approval or approval
shall not relieve the Contractor from complying with all requirements of the
specifications and all other terms and conditions of this contract. A notice of
conditional approval shall state any further action required of the Contractor.
A notice of disapproval shall cite reasons for the disapproval.

***

* (See instructions regarding submission of First Article clause)

** (See Schedule B)

(End of Clause)

(IF7018)

I-70 52.245-9 USE AND CHARGES (DEVIATION) APR/1984

(a) Definitions. As used in this clause--

"Acquisition cost" means the acquisition cost recorded in the
contractor's property control system or, in the absence of such record, the
value attributed by the Government to a government property item for purposes of
determining a reasonable rental charge.

"Government property" means property owned or leased by the
Government.

"Real property" means land and rights in land, ground improvements,
utility distribution systems, and buildings and other structures, It does not
include foundations and other work necessary for installing special tooling,
special test equipment, or equipment.

"Rental period" means the calendar period during which government
property is made available for commercial purposes.

"Rental time" means the number of hours, to the nearest whole hour,
rented property is actually used for commercial purposes. It includes time to
set up the property for such purposes, perform required maintenance, and restore
the property to its condition prior to rental (less normal wear and tear).

(b) General.

(1) Rental requests must be submitted to the administrative
Contracting Officer, identify the property for which rental is requested,
propose a rental period, and calculate an estimated rental charge by using the
Contractor's best estimate of rental time in the formulae described in paragraph
(c) of this clause.

(2) The Contractor shall not use government property for commercial
purposes, including Independent Research and Development, until a rental charge
for real property, or estimated rental charge for other property, is agreed
upon. Rented property shall be used only a noninterference basis.

(1) Real property and associated fixtures.

(i) The Contractor shall obtain, at its expense, a property
appraisal from an independent licensed, accredited, or certified appraiser that
computes a monthly, daily, or hourly rental rate for comparable commercial
property. The appraisal may be used to compute rentals under this clause
throughout its effective period or, if an effective period is not stated in the
appraisal, for one year following the date the appraisal was performed. The
Contractor shall submit the appraisal to the administrative Contracting Officer
at least 30 days prior to the date the property is needed for commercial use.
Except as provided in paragraph (c)(1)(iii) of this clause,, the administrative
Contracting Officer shall use the appraisal rental rate to determine a
reasonable rental charge.

(ii) Rental charges shall be determined by multiplying the
rental time by the appraisal rental rate expressed as a rate per hour. Monthly
or daily appraisal rental rates shall be divided by 720 or 24, respectively, to
determine an hourly rental rate.

(iii) When the administrative Contracting Officer has reason
to believe the appraisal rental rate is not reasonable, he or she shall promptly
notify the Contractor and provide his or her rationale. The parties may agree on
an alternate means for computing a

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 31 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

reasonable rental charge.

(2) Other government property. The Contractor may elect to calculate
the final rental charge using the appraisal method described in paragraph (c)(1)
of this clause subject to the constraints therein or the following formula in
which rental time portions of hours rounded to the next higher hour--

Rental charge = (Rental Time in hours) (.02 per month) (Acquisition
Cost)/720 hours per month

(3) Alternate methodology. The Contractor may request consideration
of an alternate basis for computing the rental charge if it considers the
monthly rental rate or a time-based rental unreasonable or impractical.

(d) Rental payments.

(1) Rent is due at the time and place specified by the Contracting
Officer. If a time is not specified, the rental is due 60 days following
completion of the rental period. The Contractor shall calculate the rental due,
and furnish records or other supporting data in sufficient detail to permit the
administrative Contracting Officer to verify the rental time and computation.
Unless otherwise permitted by law, payment shall be made by check payable to the
Treasurer of the United States and sent to the contract administration office
identified in this contract or by electronic funds transfer to that office.

(2) Interest will be charged if payment is not made by the specified
payment date or, in the absence of a specified date, the 61st day following
completion of the rental period. Interest will accrue at the "Renegotiation
Board Interest Rate" (published in the Federal Register semiannually on or about
January 1st and July 1st) for the period in which the rent is due.

(3) The Government's acceptance of any rental payment under this
clause, in whole or in part, shall not be construed as a waiver of
relinquishment of any rights it may have against the contractor stemming from
the Contractor's unauthorized use of government property or any other failure to
perform this contract according to its terms.

(e) Use revocation. At any time during the rental period, the Government
may revoke commercial use authorization and require the Contractor, at the
Contractor's expense, to return the property to the Government, restore the
property to its pre-rental condition (less normal wear and tear), or both.

(f) Unauthorized use. The unauthorized use of government property can
subject a person to fines, imprisonment, or both, under 18 U.S.C. 641.

(End of clause)

(IF7007)

I-71 52.252-6 AUTHORIZED DEVIATIONS IN CLAUSES APR/1984

(a) The use in this solicitation or contract of any Federal Acquisition
Regulation (48 CFR Chapter 1) clause with an authorized deviation is indicated
by the addition of "(DEVIATION)" after the date of the clause.

(b) The use in this solicitation or contract of any DOD FAR SUPPLEMENT (48
CFR Chapter 2) clause with an authorized deviation is indicated by the addition
of "(DEVIATION)" after the name of the regulation.

(End of clause)

(IF7016)

I-72 29.303(C) CALIFORNIA SALES AND USE TAX NOTICE (AL 92-1) MAY/1992

(End of clause)

(IF7002)

I-73 252.211-7005 SUBSTITUTIONS FOR MILITARY OR FEDERAL SPECIFICATIONS AND STANDARDS FEB/2003
DFARS

(a) Definition. SPI process, as used in this clause, means a
management or manufacturing process that has been accepted previously by the
Department of Defense under the Single Process Initiative (SPI) for use in lieu
of a specific military or Federal specification or standard at specific
facilities. Under SPI, these processes are reviewed and accepted by a Management
Council, which includes representatives of the Contractor, the Defense Contract
Management Agency, the Defense Contract Audit Agency, and the military
departments.

(b) Offerors are encouraged to propose SPI processes in lieu of
military or Federal specifications and standards cited in the solicitation. A
listing of SPI processes accepted at specific facilities is available via the
Internet in Excel format

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 32 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

at xxxx://xxx.xxxx.xxx/xxxxxxx/0.0/0.0./0.0.0/xxxxxxx/xxxxxxxx.xxx.

(c) An offeror proposing to use an SPI process in lieu of military or
Federal specifications or standards cited in the solicitation shall

(1) Identify the specific military or Federal specification or
standard for which the SPI process has been accepted;

(2) Identify each facility at which the offeror proposes to use the
specific SPI process in lieu of military or Federal specifications or standards
cited in the solicitation;

(3) Identify the contract line items, subline items, components, or
elements affected by the SPI process; and

(4) If the proposed SPI process has been accepted at the facility at
which it is proposed for use, but is not yet listed at the Internet site
specified in paragraph (b) of this clause, submit documentation of Department of
Defense acceptance of the SPI process.

(d) Absent a determination that an SPI process is not acceptable for this
procurement, the Contractor shall use the following SPI processes in lieu of
military or Federal specifications or standards:

(Offeror insert information for each SPI process)

SPI Process:

Facility:

Military or Federal Specification or Standard:

Affected Contract Line Item Number, Subline Item Number, Component, or Element:

(e) If a prospective offeror wishes to obtain, prior to the time specified
for receipt of offers, verification that an SPI process is an acceptable
replacement for military or Federal specifications or standards required by the
solicitation, the prospective offeror

(1) May submit the information required by paragraph (d) of this
clause to the Contracting Officer prior to submission of an offer; but

(2) Must submit the information to the Contracting Officer at least
10 working days prior to the date specified for receipt of offers.

(End of clause)

(IA7015)

I-74 252.225-7001 BUY AMERICAN ACT AND BALANCE OF PAYMENTS PROGRAM APR/2003
DFARS

(a) Definitions. As used in this clause-

(1) Component means an article, material, or supply incorporated
directly into an end product.

(2) Domestic end product means

(i) An unmanufactured end product that has been mined or
produced in the United States; or

(ii) An end product manufactured in the United States if the
cost of its qualifying country components and its components that are mined,
produced, or manufactured in the United States exceeds 50 percent of the cost of
all its components. The cost of components includes transportation costs to the
place of incorporation into the end product and U.S. duty (whether or not a
duty-free entry certificate is issued). Scrap generated, collected, and prepared
for processing in the United States is considered domestic. A component is
considered to have been mined, produced, or manufactured in the United States
(regardless of its source in fact) if the end product in which it is
incorporated is manufactured in the United States and the component is of a
class or kind for which the Government has determined that

(A) Sufficient and reasonably available commercial
quantities of a satisfactory quality are not mined, produced, or manufactured in
the United States; or

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 33 OF 35
CONTINUATION SHEET
PIIN/SIIN N52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

(B) It is inconsistent with the public interest to apply
the restrictions of the Buy American Act.

(3) End product means those articles, materials, and supplies to be
acquired under this contract for public use.

(4) Foreign end product means an end product other than a domestic
end product.

(5) Qualifying country means any country set forth in subsection
225.872-1 of the Defense Federal Acquisition Regulation Supplement (DFARS).

(6) Qualifying country component means a component mined, produced,
or manufactured in a qualifying country.

(7) Qualifying country end product means

(i) An unmanufactured end product mined or produced in a
qualifying country; or

(ii) An end product manufactured in a qualifying country if
the cost of the following types of components exceeds 50 percent of the cost of
all its components:

(A) Components mined, produced, or manufactured in a
qualifying country.

(B) Components mined, produced, or manufactured in the
United States.

(C) Components of foreign origin of a class or kind for
which the Government had determined that sufficient and reasonably available
commercial quantities of a satisfactory quality are not mined, produced, or
manufactured in the United States.

(b) This clause implements the Buy American Act (41 U.S.C. Section lOa-d).
Unless otherwise specified, this clause applies to all line items in the
contract.

(c) The Contractor shall deliver only domestic end products unless, in its
offer, it specified delivery of other end products in the Buy American
ActBalance of Payments Program Certificate provision of the solicitation. If the
Contractor certified in its offer that it will deliver a qualifying country end
product, the Contractor shall deliver a qualifying country end product or, at
the Contractors option, a domestic end product.

(d) The contract price does not include duty for end products or
components for which the Contractor will claim duty- free entry.

(End of clause)

(IA7732)

I-75 252.243-7002 REQUESTS FOR EQUITABLE ADJUSTMENT MAR/1998
DFARS

***

(b) In accordance with 10 U.S.C. 2410(a), any request for equitable
adjustment to contract terms that exceeds the simplified acquisition threshold
shall bear, at the time of submission, the following certificate executed by an
individual authorized to certify the request on behalf of the Contractor:

I certify that the request is made in good faith, and that the
supporting data are accurate and complete to the best of my
knowledge and belief.

___________________________________

(Official's Name)

___________________________________

(Title)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 34 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

***

(End of clause)

(IA7035)

I-76 52.201-4500 AUTHORITY OF GOVERNMENT REPRESENTATIVE FEB/1993
LOCAL

AUTHORITY OF GOVERNMENT REPRESENTATIVE
52.201-4500 OSC (FEB 1993)

The Contractor is advised that contract changes, such as engineering
changes, will be authorized only by the Contracting Officer or his
representative in accordance with the terms of the contract. No other Government
representative, whether in the act of technical supervision or administration,
is authorized to make any commitment to the Contractor or to instruct the
Contractor to perform or terminate any work, or to incur any obligation. Project
Engineers. Technical Supervisors and other groups are not authorized to make or
otherwise direct changes which in any way affect the contractual relationship of
the Government and the Contractor.

(End of clause)

(IS7025)

REFERENCE NO. OF DOCUMENT BEING CONTINUED PAGE 35 OF 35
CONTINUATION SHEET
PIIN/SIIN W52P1J-05-C-0024 MOD/AMD

NAME OF OFFEROR OR CONTRACTOR: VALENTEC SYSTEMS INC.

SECTION J - LIST OF ATTACHMENTS

List Of Number
Addenda Title Date of Pages Transmitted By
-------------- --------------------------------------------------------- --------- -------- --------------

Exhibit A CONTRACT DATA REQUIREMENT LIST DD 1423
Attachment 001 LIST AND SCHEDULE OF GFM 19-JUL-04 001 DATA
Attachment 002 GUIDANCE ON DOCUMENTATION OF CONTRACT REQUIREMENTS LIST
(CDRL)
Attachment 003 DATA DELIVERY DESCRIPTION - ENGINEERING CHANGE PROPOSAL
Attachment 004 DATA DELIVERY DESCRIPTION - NOTICE OF REVISION (NOR)
Attachment 005 DATA DELIVERY DESCRIPTION - REQUEST FOR DEVIATION (RFD)
Attachment 006 DOCUMENT SUMMARY LIST
Attachment 007 ACCOUNTIBILITY STATEMENT OF WORK
Attachment 008 ADDRESS CODE FOR DISTRIBUTION FOR ECP/RFD/VECP
Attachment 009 INSTRUCTIONS FOR COMPLETEING DD FORM 1423
Attachment 010 DISCLOSURE OF LOBBYING ACTIVITIES
Attachment 011 DEFENSE ALLOCATION AND PRIORITIES
Attachment 012 SECURITY SCOPE OF WORK
Attachment 013 AFSC FORM - WARNING LABEL
Attachment 014 RFD R04S7031, USE OF M9 PROPBLLANT IN LOADING OF M195 CTG 001
CASE FOR 40MM M583A1 PRODUCTION
Attachment 015 ECP R04Q2057, CHANGE CRITICAL DEFECTS TO REFLECT STANDARD
Attachment 016 ECP R04Q2016, NEW DTL SPECIFICATION

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