SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1998
Commission File Number 333-5753
Exigent International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 59-3379927
(State of Incorporation) (IRS Employer
Identification Number)
1225 Evans Road
Melbourne, Florida 32904-2314
(Address of principal executive offices)
(407) 952-7550
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___
The number of shares outstanding of the registrant's common stock, $.01 par
value, on June 1, 1998 was 4,009,957.
<PAGE>
EXIGENT INTERNATIONAL, INC.
QUARTER ENDED APRIL 30, 1998
INDEX
PART I - FINANCIAL INFORMATION
PAGE
ITEM 1. FINANCIAL STATEMENTS. 2
Consolidated Balance Sheets as of April 30, 1998 and January 31, 1998 2
Consolidated Statements of Income for the Three Months Ended
April 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the Three Months Ended
April 30, 1998 and 1997 5
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS 9
PART II - OTHER INFORMATION 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 14
Signatures 15
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
April 30, 1998 January 31,
(unaudited) 1998
--------------------- ---------------------
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,272,290 $ 3,640,508
Accounts receivable, pledged 1,857,683 2,747,383
Costs and estimated earnings in excess of
billings on uncompleted contracts, pledged 4,911,426 3,823,768
Inventories 5,288 5,288
Prepaid expenses 63,913 64,288
Deferred income taxes 663,000 663,000
--------------------- ---------------------
TOTAL CURRENT ASSETS 8,773,600 10,944,235
--------------------- ---------------------
PROPERTY AND EQUIPMENT
Cost 5,625,806 5,304,630
Accumulated depreciation (3,320,570) (3,135,923)
--------------------- ---------------------
NET PROPERTY AND EQUIPMENT 2,305,236 2,168,707
--------------------- ---------------------
OTHER ASSETS
Software development costs, net of accumulated amortization 2,718,270 1,508,887
Organizational costs 10,638 10,638
Deposits 48,871 43,466
Cash surrender value of life insurance 17,028 17,028
--------------------- ---------------------
TOTAL OTHER ASSETS 2,794,807 1,580,019
--------------------- ---------------------
TOTAL ASSETS $ 13,873,643 $ 14,692,961
===================== =====================
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
April 30, 1998 January 31,
(unaudited) 1998
-------------------- ---------------------
CURRENT LIABILITIES
<S> <C> <C>
Accounts payable $ 59,775 $ 392,799
Accrued expenses 3,670,832 3,401,311
Billings in excess of costs and estimated earnings
on uncompleted contracts 550,000 1,252,700
Income taxes payable 57,887 242,524
Current portion, long-term debt 444,444 511,111
-------------------- ---------------------
TOTAL CURRENT LIABILITIES 4,782,938 5,800,445
-------------------- ---------------------
LONG-TERM LIABILITIES
Long-term debt, less current portion 400,000 466,667
Deferred income taxes 645,000 645,000
-------------------- ---------------------
TOTAL LONG-TERM LIABILITIES 1,045,000 1,111,667
-------------------- ---------------------
TOTAL LIABILITIES 5,827,938 6,912,112
-------------------- ---------------------
STOCKHOLDERS' EQUITY
Class A Preferred Shares, $.01 par value, 5,000,000
shares authorized, 627,509 and 688,792 issued and
outstanding at April 30, 1998 and January 31, 1998,
respectively, at $2.50 per share liquidation/dissolution
preference 6,275 6,888
Common Shares, $.01 par value, 30,000,000 shares
authorized, 4,007,909 and 3,872,655 issued and
outstanding at April 30, 1998 and January 31, 1998,
respectively 40,079 38,726
Class B Common Shares, $.01 par value, 600,000 shares
authorized, no shares issued or outstanding - -
Paid in capital 1,751,505 1,585,007
Retained earnings 6,247,846 6,150,228
-------------------- ---------------------
TOTAL STOCKHOLDERS' EQUITY 8,045,705 7,780,849
-------------------- ---------------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 13,873,643 $ 14,692,961
==================== =====================
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
For the three months ending April 30,
1998 1997
(unaudited) (unaudited)
------------------------- ----------------------
<S> <C> <C>
REVENUES FROM SERVICES $ 7,685,375 $ 8,114,034
COST OF SALES 6,054,795 6,329,502
------------------------- ----------------------
GROSS PROFIT 1,630,580 1,784,532
GENERAL AND ADMINISTRATIVE EXPENSES 1,413,208 1,270,791
RESEARCH AND DEVELOPMENT COSTS 48,266 -
------------------------- ----------------------
OPERATING INCOME 169,106 513,741
------------------------- ----------------------
OTHER INCOME (EXPENSE)
Interest income 8,609 139
Interest expense (15,964) (28,082)
Loss on disposal of fixed assets - -
Other, net - -
------------------------- ----------------------
TOTAL OTHER INCOME (EXPENSE) (7,355) (27,943)
------------------------- ----------------------
INCOME BEFORE INCOME TAXES 161,751 485,798
INCOME TAX EXPENSE 64,133 197,250
------------------------- ----------------------
NET INCOME $ 97,618 $ 288,548
========================= ======================
EARNINGS PER SHARE - BASIC $ 0.02 $ 0.06
========================= ======================
========================= ======================
EARNINGS PER SHARE - DILUTED $ 0.02 $ 0.06
========================= ======================
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended April 30,
1998 1997
(unaudited) (unaudited)
---------------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Cash received from customers $ 7,054,238 $ 6,793,865
Interest received 8,609 139
Cash paid to suppliers and employees (7,502,349) (7,709,475)
Interest paid (15,964) (28,082)
Income tax paid (248,770) -
---------------------- ----------------
NET CASH USED IN OPERATING
ACTIVITIES (704,236) (943,553)
---------------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for acquisition of capital assets (321,176) (103,123)
Cash paid for capitalized software development (1,376,710) (346,645)
---------------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (1,697,886) (449,768)
---------------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under line of credit - 1,033,116
Principal payments on long-term debt (133,334) (68,500)
Proceeds from exercise of stock options 167,238 -
---------------------- ----------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 33,904 964,616
---------------------- ----------------
NET DECREASE IN CASH AND CASH
EQUIVALENTS (2,368,218) (428,705)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,640,508 428,705
---------------------- ----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,272,290 $ -
====================== ================
See accompanying Notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXIGENT INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the Three Months Ended April 30,
1998 1997
(unaudited) (unaudited)
------------------- -----------------
RECONCILIATION OF NET INCOME TO NET CASH
USED IN OPERATING ACTIVITIES:
<S> <C> <C>
Net income $ 97,618 $ 288,548
------------------ -----------------
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 351,974 226,458
Decrease (increase) in accounts receivable 889,700 (2,591,089)
Decrease (increase) on costs and estimated earnings in
excess of billings on uncompleted contracts (1,087,658) 1,006,051
Decrease (increase) in prepaid expenses 375 (17,504)
Decrease (increase) in deferred income tax asset - (107,000)
Decrease in income taxes receivable - 180,980
Decrease (increase) in deposits (5,405) 2,095
Decrease in cash surrender value of life insurance - 2,571
Decrease in accounts payable (333,024) (471,910)
Increase in accrued expenses 269,521 152,922
Increase (decrease) in billings in excess of costs and
estimated earnings on uncompleted contracts (702,700) 262,298
Decrease in income taxes payable (184,637) -
Increase in deferred income tax liability - 122,000
Decrease in other liabilities - 27
------------------ -----------------
Total adjustments (801,854) (1,232,101)
------------------ -----------------
NET CASH USED IN OPERATING
ACTIVITIES $ (704,236) $ (943,553)
================== =================
See accompanying Notes
</TABLE>
<PAGE>
EXIGENT INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information in response to the requirements of Article 10 of
Regulation S-X. Accordingly, they do not contain all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The condensed consolidated financial statements for the
three month periods ended April 30, 1998 and April 30, 1997 are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position and operating results for the interim periods. The condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained in Exigent International, Inc.'s ("Exigent's" or the "Company's")
Annual Report on Form 10-K for the fiscal year ended January 31, 1998. The
results of operations for the three months ended April 30, 1998 are not
necessarily indicative of the results that may be expected for the entire fiscal
year.
As of February 1, 1998 the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components. However, the adoption of
this Statement had no impact on the Company's net income or shareholders' equity
for the quarters ended April 30, 1998 and 1997.
NOTE 2 - LINE OF CREDIT
Software Technology, Inc. ("STI"), Exigent's primary subsidiary, had a
$1,800,000 line of credit available from a bank as of April 30, 1998 and January
31, 1998. The note bears interest on the unpaid principal balances at a rate per
annum equal to the bank's prime rate plus .25%. As of April 30, 1998 and January
31, 1998 the outstanding draws against the line were $0. The interest rate at
April 30, 1998 and January 31, 1998 was 8.75%. All accounts receivable,
equipment, furniture and fixtures of STI are pledged as collateral on the line
of credit.
An additional line of credit was entered into for $500,000 to fund the startup
expenses associated with Exigent's other subsidiary, FotoTag, Inc. ("FotoTag").
This note bears the same terms as STI's line of credit. No amounts have been
drawn as of April 30, 1998 or January 31, 1998.
The weighted average interest rate on short-term borrowings outstanding at April
30, 1998 and January 31, 1998 was 8.75%.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
The Company had outstanding purchase commitments of $1,224,756 and $145,309 as
of April 30, 1998 and January 31, 1998, respectively. These represent
outstanding purchase orders for which neither the item nor invoice has been
received.
NOTE 4 - CAPITALIZED SOFTWARE DEVELOPMENT
Effective February 1, 1998, the Company determined that the amortization life of
the existing capitalized software should be changed to two years to more
appropriately reflect the life span of the product release, rather than the
current three years. As a result of this change in estimate, the increase in
amortization expense for this quarter ended April 30, 1998 amounted to
approximately $30,000.
NOTE 5 - EARNINGS PER SHARE
In 1997, the FASB issued SFAS No. 128, Earnings per Share. This statement
replaced the calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per share, basic
earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share are very similar to the
previously reported fully diluted earnings per share. All earnings per share
amounts have been presented and, where appropriate, restated to conform to
Statement 128 requirements. The following table sets the computation of basic
and diluted earnings per share:
<TABLE>
<CAPTION>
For the Three Months Ended April 30,
1998 1997
(unaudited) (unaudited)
------------------- -----------------
Numerator:
Net income (numerator for basic and diluted
<S> <C> <C>
earnings per share) $ 97,618 $ 288,548
=================== =================
Denominator:
Denominator for basic earnings per share-
weighted average shares 4,603,471 4,483,899
Effect of dilutive securities:
Options and Warrants 337,957 -
------------------- -----------------
Denominator for diluted earnings per share -
adjusted weighted average shares 4,941,428 4,483,899
------------------- -----------------
Basic earnings per share $ 0.02 $ 0.06
=================== =================
Diluted earnings per share $ 0.02 $ 0.06
=================== =================
</TABLE>
NOTE 6 - STOCKHOLDERS' EQUITY
The consolidated changes in stockholders' equity for the three months ended
April 30, 1998 are as follows:
<TABLE>
<CAPTION>
Additional
Common Stock Class A Preferred Paid in Retained
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------- ------- ------- ------- ------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE JANUARY 31, 1998 3,872,655 $ 38,726 688,792 $ 6,888 $ 1,585,007 $ 6,150,228 $ 7,780,849
Exercise of convertible securities 74,096 741 - - 166,497 - 167,238
Class A preferred converted 61,283 613 (61,283) (613) -
to common
Cancelled shares (125) (1) 1 -
Net income 97,618 97,618
--------- ------ -------- ------ --------- --------- ---------
BALANCE APRIL 30, 1998 4,007,909 $ 40,079 627,509 $ 6,275 $ 1,751,505 $ 6,247,846 $ 8,045,705
========= ====== ======== ====== ========= ========= =========
</TABLE>
NOTE 7 - FISCAL YEAR CHANGE
The Company will change its fiscal year to correspond with a calendar year end,
effective December 31, 1998. The current fiscal year will therefore end on
December 31, 1998. The fiscal quarters will remain unchanged with the exception
of the fourth quarter which will be a two month quarter ending on December 31,
1998.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following is management's discussion and analysis of (i) the consolidated
financial condition as of April 30, 1998 as compared with the fiscal year ended
January 31, 1998; and (ii) the consolidated results of operations for the three
months ended April 30, 1998 and 1997, of Exigent and its subsidiaries STI and
FotoTag. It should be read together with Exigent's Form 10-K for the fiscal year
ended January 31, 1998.
LIQUIDITY As of April 30, 1998, Exigent's ratio of current assets to current
liabilities was consistent at 1.8 compared to 1.9 at January 31, 1998. The quick
liquidity ratios were also consistent at 1.7 and 1.8 at April 30, 1998 and at
January 31, 1998, respectively.
Exigent's cash portfolio (cash and cash equivalents) decreased $2,368,218 during
the three months ended April 30, 1998. The decrease was due to cash used in
operating activities of $704,236, cash used in investing activities of
$1,697,886 and cash provided by financing activities of $33,904. Exigent's cash
portfolio decreased $428,705 for the three months ended April 30, 1997. The
decrease was due to cash used in operating activities of $943,553, cash used in
investing activities of $449,768 and cash provided by financing activities of
$964,616. The decrease in cash from operating activities from January 31, 1998
to April 30, 1998 was primarily the result of an increase in investment on
Exigent's fixed price time and materials ("T&M") projects. Negotiations with one
of the Company's major commercial customers for billing rates on T&M contracts
were finalized following the close of the first quarter. This resulted in a
delay in the billing of cost associated with the new rates until after the close
of the quarter ended April 30, 1998.
In the three months ended April 30, 1998, Exigent acquired $321,176 of capital
assets compared to $103,123 in the three months ended April 30, 1997. This was
due primarily to the relocation of staff into new Company headquarters and
related furniture needs. Capital needs are expected to continue as Exigent
remains current with computing technologies. This expansion will be funded in
part through an operating lease set up with an external leasing company. The
lease will extend for a period of three years from each draw against the funding
limit of $600,000. Through the period ended April 30, 1998, Exigent had drawn
down $450,000 against this line of credit. In the three months ended April 30,
1998 and April 30, 1997, Exigent also spent $1,376,710 and $346,645,
respectively, in capitalized software development costs related to two new
products. The increase in the first three months of fiscal year 1998 resulted
from costs incurred in completing the development of FotoTag(R), developing
product additions for the OS/COMET(TM) product family, and development of its
newest product, Active Tracking Engine(TM) (ATE). Exigent used $133,334 of cash
during the three months ended April 30, 1998 to reduce its long-term debt. For
the three months ended April 30, 1997, Exigent borrowed $1,033,116 under the
line of credit to fund its operations and reduced long-term debt by $68,500.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED APRIL 30, 1998 AND 1997 Sales
for the three months ended April 30, 1998 were $7,685,374, down 5.3% from
$8,114,034 for the three months ended April 30, 1997, due to a decrease in the
volume of commercial contracts. The breakdown between government and commercial
sales for each of the three-month periods is as follows:
April 30, 1998 April 30, 1997
---------------- ------------------
Government $ 5,449,707 71% $ 5,010,146 62%
Commercial 2,235,667 29% 3,103,888 38%
--------
=== ============ == =============== =========
$ 7,685,374 100% $ 8,114,034 100%
=== ============ ======== == =============== =========
Gross profit was down slightly at $1,630,580 (21.2% of sales) compared to
$1,784,532 (22.0% of sales) for the three months ended April 30, 1998 and April
30, 1997, respectively. Net income was down significantly at $97,618 (1.3% of
sales) for the three months ended April 30, 1998 versus $288,548 (3.6% of sales)
for the three months ended April 30, 1997. This decrease was due to the increase
in general and administrative expenses (explained below) and a decrease in
revenue from commercial customers. This decrease in revenue was the result of
the winding down of development work on a major fixed price contract and a delay
in finalizing calendar year 1998 rates for T&M contracts and maintenance fees
owed the Company for the OS/COMET licensed product. These two factors decreased
first quarter operating income by approximately $225,000. The change in
amortization schedule for the internally developed software products also
decreased first quarter profit. After completing a review of the current
releases and the schedule for new releases, management determined that a
twenty-four month amortization would be more appropriate. This change in
estimate impacted net income before taxes by approximately $30,000 for the
quarter ended April 30, 1998.
General and administrative expenses for the three months ended April 30, 1998
were $1,413,208, 11.2% or $142,417 higher than expenses of $1,270,791 for the
three months ended April 30, 1997. This increase resulted primarily from
$250,000 in administrative labor costs associated with the resources required to
manage a public company, including the addition of the CEO and several other key
executives. Management believes existing cash, funds generated by operations and
the available line of credit will be sufficient to meet Exigent's current
operating and debt service requirements through the fiscal year ending December
31, 1998 for its existing business, excluding the potential need for cash to
fund possible acquisitions and new products.
ANALYSIS OF OPERATIONS In 1995, STI obtained its first significant commercial
contracts from Motorola, Inc. to provide satellite ground station software for a
constellation of satellites that will provide a direct link with portable
handsets for worldwide cellular telephone service. The Motorola multi-year
contract allowed STI to leverage its technology into the commercial arena. In
1996, STI was awarded a contract to provide similar software for the Global
Positioning Satellite (GPS) System. With these two contracts, STI is involved in
two premier satellite endeavors.
The backlog as of April 30, 1998 for commercial and government contracts was
$70,047,624, of which $64,223,598 is unfunded. In April 1998, STI executed a
contract with the Naval Research Laboratory to provide services over the next
five years for a value of $61,538,419. With the addition of this contract, the
current contract base provides sufficient backlog to maintain STI's operations
through December 31, 2001.
STI has invested in excess of $4,000,000 over the last three years in its
premier software product OS/COMET. This investment facilitated the significant
contract awards that management believes would have been otherwise unattainable.
Commitment to maintain support for the product will continue.
Exigent continued development of a new commercial software product, FotoTag, and
has invested approximately $850,000 during the last three fiscal years.
Management is committed to support the development of this product, which is
planned to be completed in June 1998. FotoTag is currently being marketed
worldwide to address the growing need for airport baggage and passenger
reconciliation and security products.
OUTLOOK
Exigent completed expansion of its corporate headquarters in February 1998 with
the completion of a new building at its Melbourne, Florida location. This new
facility houses the corporate staff as well as the Product Development team and
the FotoTag staff. These increased facility costs should not affect Exigent's
overhead as these increases were made to accommodate existing needs. The
commercial satellite business is projected to continue with strong sales
worldwide and is expected to show moderate increases throughout the end of the
decade, providing additional opportunities for Exigent.
Demand for software engineers continues to provide new opportunities for
Exigent, but will place a premium on the efforts to retain the current work
force. This risk will put additional pressure on overall payroll costs, but is
an industry wide challenge. Management believes that benefits offered by Exigent
remain above the level of its competition and should help to stabilize its
workforce. Overhead costs for benefits should remain at the same percentage of
wages for the fiscal year ending December 31, 1998 as compared to the fiscal
year ended January 31, 1998. Management believes it is important that Exigent
not reduce benefits. To do so and hold costs stable has been a management
challenge and will continue to be so in the near future. Maintaining Exigent's
comprehensive benefit plan will also facilitate its ability to sustain an
effective recruiting campaign.
The Company's current long term business plan is to seek opportunities for
growth and diversification of its product and service offerings through
acquisitions and internal growth. To implement its long term growth strategy,
the Company may seek to raise capital through private or public debt or equity
financings.
RISKS AND UNCERTAINTIES
Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. In addition, words such as
"believes," "anticipates," "expects" and similar expressions are intended to
identify forward-looking statements. Such forward-looking statements involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of the Company or events, or timing
of events, relating to the Company to differ materially from any future results,
performance or achievements of the Company or events, or timing of events,
relating to the Company expressed or implied by such forward-looking statements.
The more prominent known risks and uncertainties inherent in the Company's
business are set forth below. However, not all possible risks and uncertainties
to which the Company is subject are discussed herein, nor can it be assumed that
there are not other risks and uncertainties which may be more significant to the
Company.
Such other factors include, among others, those described in "Outlook" and the
following:
continued dependence on a small number of significant customers for
substantially all of the Company's revenue and the potential loss of one or
more of the Company's principal customers;
continued dependence on government agencies for a significant portion of
the Company's revenue;
the shortage of qualified and competent software engineers and the risk
that the Company will be unable to retain its key employees and managers,
especially in the event the Company loses one or more contracts or
principal customers;
dependence on the satellite command and control industry and the potential
failure to diversify the Company's product and service offerings and to
expand its markets for commercial applications;
possible difficulties in raising private or public capital for financing
potential acquisitions on terms favorable or acceptable to the Company;
the possible inability of the Company to find or secure acquisitions on
terms favorable or acceptable to the Company in pursuit of its plan for
growth and diversification;
the unanticipated expense of new product development, the potential failure
by the Company to develop new products under development and others to be
developed in the future successfully or on a timely basis, and the failure
of such products to achieve substantial market acceptance;
the potential loss of customers or opportunities because of the Company's
relationship as a competitor to some of its principal customers;
the potential loss of other customer opportunities because of the Company's
subcontractor relationship with Motorola SatCom on the IRIDIUM project;
the possibility that Motorola will elect not to move forward with the
Celestri project, or that Motorola may choose a vendor other than the
Company; and
the potential impact of increases in salary rates due to the amount of
revenue related to services.
The Company cannot assure that it will be able to anticipate or respond timely
to changes which could adversely affect its operating results in one or more
fiscal quarters. Results of operations in any past period should not be
considered indicative of results to be expected in future periods. Fluctuations
in operating results may result in fluctuations in the price of the Company's
common stock.
YEAR 2000 ISSUES
Some existing computer programs will be unable to recognize dates properly in
the Year 2000 ("Y2K") and beyond. During 1997, Exigent conducted an informal
study of its products, systems and operations, including systems under
development, to improve business functionality, to identify those of its
computer hardware, software and process control systems that do not properly
recognize dates after December 31, 1999, and those that are linked to third
parties' systems. Based on this informal study, Exigent recognized that the
OS/COMET product required certain modifications to be Y2K compliant. Those
modifications have been made to the software and are available in the current
release, Version 3.5. Exigent has also initiated communications with certain
third parties whose computer systems' functionality could adversely impact the
Company. These communications will facilitate coordination of any necessary Y2K
conversions and will, additionally, permit Exigent to determine the extent to
which the Company may be vulnerable to the failure of third parties to address
their own Y2K issues.
The costs of Exigent's Y2K compliance efforts are being funded with cash flows
from operations. Some of these costs relate solely to the modification of
existing systems, while others are for new systems that will improve business
functionality. In total, these costs are not expected to be substantially
different from the normal, recurring costs that are incurred for systems
development and implementation, in part due to the reallocation of internal
resources and the deferral of other projects. As a result, these costs are not
expected to have a material adverse effect on Exigent's overall results of
operations or cash flows.
The assessment of the costs of Exigent's Y2K compliance effort, and the
timetable for the Company's planned completion of its own Y2K modifications, are
management's best estimates. These estimates were based upon numerous
assumptions regarding future events, including assumptions as to the continued
availability of certain resources, and, in particular, personnel with expertise
in this area, and as to the ability of such personnel to locate and either
re-program or replace, and test, all affected computer hardware, software and
process control systems in accordance with the Company's planned schedule. There
can be no guarantee that these estimates will prove accurate, and actual results
could differ from those estimated if these assumptions prove inaccurate.
Based upon progress to date, however, Exigent believes that it is unlikely that
the foregoing factors will cause actual results to differ significantly from
those estimated. As to the systems of the third parties that are linked to
Exigent's, there can be no guarantee that those of such systems that are not now
Y2K-compliant will be timely converted to compliance. Additionally, there can be
no guarantee that third parties of business importance to Exigent will
successfully and timely reprogram or replace, and test, all of their own
computer hardware, software and process control systems.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
Exhibits:
NUMBER DESCRIPTION
Exhibit 10.17 Contract between Naval Research Laboratory and
Software Technology, Inc., dated April 30, 1998
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed a report on Form 8-K on (i) March 30, 1998 to report (A)
a change in its certifying accountant from Hoyman, Dobson & Company, P.A. to
Ernst & Young LLP., effective after the audit for the fiscal year ended January
31, 1998, and (B) the adoption of a stock option plan for non-employee
directors, and (ii) April 21, 1998 to report the adoption of an incentive stock
option plan for employees.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Exigent International, Inc.
By: /S/ BERNIE SMEDLEY
---------------------------------------
B. R. "Bernie" Smedley,
Chief Executive Officer
Date: June 12, 1998
By: /S/ DON F. RIORDAN, JR.
---------------------------------------
Don F. Riordan, Jr.,
Chief Financial Officer
Date: June 12, 1998
<PAGE>
Exhibit 10[____]
AWARD/CONTRACT
1. THIS CONTRACT IS RATED ORDER UNDER DPAS (15 CFR 350)
RATING: DO-C9
PAGE 1 of 17 PAGES
2. CONTRACT (Proc. Inst. Ident.) NO. N00173-98-D-2007
3. EFFECTIVE DATE : SEE BLOCK 20C
4. REQUISITION/PURCHASE REQUEST/PROJECT NO.: 81-8048-97
5. ISSUED BY:
CONTRACTING OFFICER
NAVAL RESEARCH LABORATORY
4555 OVERLOOK AVE, SW
WASHINGTON DC 20375-5326
6. ADMINISTERED BY (If other than Item 5) CODE S1002A
DCMC ORLANDO
3555 MAGUIRE BLVD
ORLANDO FL 32803-3726
SCD: C
7. NAME AND ADDRESS OF CONTRACTOR (No., street, city, county, State and Zip
Code)
SOFTWARE TECHNOLOGY INC.
1225 EVANS ROAD
MELBOURNE FL 32904-2314
CODE 3R623
8. DELIVERY: [_] FOB ORIGIN [X] OTHER (See below)
9. DISCOUNT FOR PROMPT PAYMENT: NET 30
10. SUBMIT INVOICES (4 Copies unless otherwise specified) TO THE ADDRESS SHOWN
IN: SEE ITEM 12
11. SHIP TO/MARK FOR CODE N00173
SEE SECTION F - DELIVERIES OR PERFORMANCE
12. PAYMENT WILL BE MADE BY CODE HQ0338
DFAS COLUMBUS CENTER
SOUTH ENTITLEMENT OPERATIONS
COLUMBUS OH 43218-2264
13. AUTHORITY FOR USING OTHER THAN FULL AND OPEN COMPETITION:
[_] 10 U.S.C 2304(c) () [_] 41 U.S.C. 253(c) ()
14. ACCOUNTING AND APPROPRIATION DATA: SEE SECTION G
15A. ITEM NO.
15B. SUPPLIES/SERVICES: SEE PAGE 2
Attn: LISA A. FLEMING 3230.LS 202/767-3739
15C. QUANTITY
15D. UNIT
15E. UNIT PRICE
15F. AMOUNT
15G. TOTAL AMOUNT OF CONTRACT > $61,538,419.00
16. TABLE OF CONTENTS
(X) SEC. DESCRIPTION PAGES(S)
PART 1 - THE SCHEDULE
A SOLICITATION/CONTRACT FORM
B SUPPLIES OR SERVICES AND PRICES/COSTS
C DESCRIPTION/SPECS./WORK STATEMENT
D PACKAGING AND MARKING
E INSPECTION AND ACCEPTANCE
F DELIVERIES OR PERFORMANCE
G CONTRACT ADMINISTRATION DATA
H SPECIAL CONTRACT REQUIREMENTS
PART II - CONTRACT CLAUSES
I CONTRACT CLAUSES
PART III - LIST OF DOCUMENTS, EXHIBITS AND OTHER ATTACHMENTS
J LIST OF ATTACHMENTS
PART IV - REPRESENTATIONS AND INSTRUCTIONS
K REPRESENTATIONS, CERTIFICATIONS AND
OTHER STATEMENTS OF OFFERORS
L INSTRS., CONDS. AND NOTICES TO OFFERORS
M EVALUATION FACTORS FOR AWARD
CONTRACTING OFFICER WILL COMPLETE ITEM 17 OR 18 AS APPLICABLE
17. [X] CONTRACTOR'S NEGOTIATED AGREEMENT (Contractor is required to sign this
document and return 2 copies to issuing office.) Contractor agrees to furnish
and deliver all items or perform all the services set forth or otherwise
identified above and on any continuation sheets for the consideration stated
herein. The rights and obligations of the parties to this contract shall be
subject to and governed by the following documents: (a) this award/contract, (b)
the solicitation, if any, and (c) such provisions, representations,
certifications, and specifications, as are attached or incorporated by reference
herein. (Attachments are listed herein.)
18. [ ] AWARD (Contractor is not required to sign this document) Your offer on
Solicitation Number _______ including the additions or changes made by you which
additions or changes are set forth in full above, is hereby accepted as to the
items listed above and on any continuation sheets. This award consummates the
contract which consists of the following documents: (a) the Government's
solicitation and your offer and (b) this award/contract. No further contractual
document is necessary.
19A. NAME AND TITLE OF SIGNER (Type or print)
H.R. TREW DIRECTOR OF CONTRACTS
19B. NAME OF CONTRACTOR 19C. DATE SIGNED
BY /s/ H. R. Trew 4-30-98
---------------------------------------
(Signature of person authorized to sign)
20A. NAME OF CONTRACTING OFFICER
JOSEPH C. ELY
CONTRACTING OFFICER
20B. UNITED STATES OF AMERICA 20C. DATE SIGNED
BY /s/ Joseph C. Ely APR 30, 1998
(Signature of Contracting Officer)
- --------------------------------------------------------------------------------
NSN 7540-01-152-8069 26-107 STANDARD FORM 26 (REV 4-45)
PREVIOUS EDITION *U.S.G.P.O.: Prescribed by GSA
UNUSABLE 1990-262-081/20013
<PAGE>
<TABLE>
<CAPTION>
PART I - THE SCHEDULE
SECTION B
SUPPLIES OR SERVICES AND PRICES/COSTS
B-1 SUPPLIES/SERVICES AND COSTS
TOTAL EST.
ITEM SUPPLIES OR SERVICES MAXIMUM MAXIMUM MAXIMUM
NUMBER ESTIMATED FIXED TOTAL EST. COST PLUS
COST FEE FIXED FEE
0001 The Contractor shall provide
software and engineering
<S> <C> <C> <C>
support in accordance with Section C. $57,167,518.00 $4,370,901.00 $61,538,419.00
0002 Data in accordance
with Exhibit A (DD 1423) *NSP *NSP *NSP
and Enclosure (1)
TOTAL ESTIMATED COST PLUS FIXED FEE: $61,638,419.00
*Not separately priced
</TABLE>
B-2 MINIMUM AND MAXIMUM QUANTITIES
As contemplated by the clause of the solicitation entitled, "Indefinite
Quantity", the minimum quantity that will be ordered by the Government during
the effective period of the contract is research and development support
requiring the contractor to provide a level of effort of 95,680 direct labor
hours.
The maximum quantity that the Government may order during the effective period
of the contract is research and development support requiring the contractor to
provide a level of effort of 911 600 direct labor hours.
The minimum and maximum quantities may consist of any combination of the tasks
contained in the statement of work.
SECTION C
DESCRIPTION/SPECIFICATIONS/WORK STATEMENT
C-1 WORK STATEMENT
The work and services to be performed hereunder shall be subject to the
requirements and standards contained in Attachment (1), Statement of Work, with
Exhibit A, Contract Data Requirements List, and all other Attachments cited in
Section J, which are incorporated by reference into Section C.
C-2 The specific work to be carried out shall be further described in task
orders issued under this contract.
SECTION D
PACKAGING AND MARKING
D-1 PACKAGING AND MARKING
Preservation, packaging, packing and marking of all deliverable contract line
items must conform to normal commercial packing standards to assure safe
delivery at destination.
SECTION E
INSPECTION AND ACCEPTANCE
E-1 INSPECTION AND ACCEPTANCE CLAUSES INCORPORATED BY REFERENCE
FAR CLAUSE TITLE
52.246-9 - Inspection of Research And Development (Short Form) (APR 1984)
DFARS CLAUSE TITLE
252.246-7000 - Material Inspection And Receiving Report (DEC 1991)
E-2 INSPECTION AND ACCEPTANCE
Inspection and acceptance of the final delivery under this contract must be
accomplished by the Contracting Officer's Representative (COR) designated in
Section G of this contract within seven (7) days after delivery of final report.
Inspection and acceptance will be performed at the Naval Research Laboratory,
Washington DC 20375-5326.
SECTION F
DELIVERIES OR PERFORMANCE
F-1 DELIVERIES OR PERFORMANCE CLAUSES INCORPORATED BY REFERENCE:
FAR CLAUSE TITLE
52.242-15 - Stop-Work Order (AUG 1989) - Alternate I (APR 1984)
52.247-34 - F.O.B. Destination (NOV 1991)
F-2 DELIVERIES OR PERFORMANCE
(a) The effective period of this contract during which delivery orders/task
orders may be issued is from date of contract award through five (5) years
thereafter.
(b) Each delivery order/task order shall specify the period of performance.
(c) Each delivery order/task order shall specify the place of performance.
SECTION G
CONTRACT ADMINISTRATION DATA
G-1 PROCURING OFFICE REPRESENTATIVE
In order to expedite administration of this contract, the Administrative
Contracting Officer (ACO) will direct inquiries to the appropriate officer
listed below. Please do not direct routine inquiries to the person listed in
Item 20A on Standard Form 26.
Contract Matters Lisa Fleming, Code 3230.LS, (202) 767-3739, DSN 297-3739,
Telecopier (202) 767-6197 or e-mail: [email protected]
Security Matters - Mr. Charles Rogers, Code 1221, (202) 767-2240, DSN 297-2240
Safety Matters - Mr. Kirk J. King, Code 1240, (202) 767-2232, DSN 297-2232
Patent Matters - Mr. Thomas McDonnell, Code 3008.2, (202)767-3427, DSN 297-3427
Release of Data - Mr. Richard H. Baturin, Code 1230, (202)767-2541, DSN 297-2541
The ACO will forward invention disclosures and reports directly to the Associate
Counsel for Patents Code 3008.2, Naval Research Laboratory, Washington DC
20375-5320. The Associate Counsel for Patents will return the reports along with
a recommendation to the Administrative Contracting Officer. The Associate
Counsel for Patents will represent the Contracting Officer with regard to
invention reporting matters arising under this contract.
G-2 CONTRACTING OFFICER'S REPRESENTATIVE (COR) - FUNCTIONS AND LIMITATIONS
Jeffrey Cleveland, Code 8133, is hereby designated the cognizant COR who will
represent the Contracting Officer in the administration of technical details
within the scope of this contract and inspection and acceptance. The COR is not
otherwise authorized to make any representations or commitments of any kind on
behalf of the Contracting Officer or the Government. The COR may be personally
liable for unauthorized acts. The COR does not have the authority to alter the
Contractor's obligations or change the specifications in the contract. If, as a
result of technical discussions, it is desirable to alter contract obligations
or statements of work, a modification must be issued in writing and signed by
the Contracting Officer. The COR is responsible for reviewing the bills and
charges submitted by the Contractor and informing the ACO of areas where
exceptions are to be taken. This COR appointment shall be effective through the
life of this contract unless otherwise relieved in writing and is not
redelegable.
G-3 TECHNICAL DIRECTION MEMORANDUM (TDM)
(a) For the purposes of this clause, technical direction includes the following:
(1) Direction to the Contractor which shifts work emphasis between
work areas or tasks, requires pursuit of certain lines of
inquiry, fills in details or otherwise describes work which will
accomplish the objectives described in the statement of work;
(2) Guidelines to the Contractor which assist in interpretation of
drawings, specifications or technical portions of work
description.
(b) Technical instructions must be within the scope of work stated in the
contract. Technical instructions may not be used to:
(1) Assign additional work under the contract;
(2) Direct a change as defined in the contract clause entitled
"Changes";
(3) Increase or decrease the estimated contract cost, the fixed fee,
or the time required for contract performance; or
(4) Change any of the terms, conditions or specifications of the
contract
(c) The TDM shall be written by the Contracting Officer's Representative (COR),
with the original given to the Contractor and a copy retained in the CORs file.
Technical direction may be issued orally only in emergency situations. If
technical direction is issued orally, a TDM must follow within two (2) working
days from the date of the oral direction. Amendments, corrections, or changes to
TDMs shall also be in written format and shall include all the information set
forth in e. below.
(d) A TDM shall be considered issued when the Government deposits it in the
mail, or if transmitted by other means, when it is physically delivered to the
contractor.
(e) TDMs shall include, but not limited to, the following information:
(1) Date of TDM,
(2) Contract Number,
(3) Reference to the relevant portion or item in the Statement of
Work, (4) The specific technical direction or clarification, and
(5) The signature of the COR.
(f) CORs shall retain all files containing TDMs for a period of two (2) years
after the final contract completion date.
(g) The only individual authorized in any way to amend or modify any of the
terms of this contract shall be the Contracting Officer. When, in the opinion of
the Contractor, any technical direction calls for effort outside the scope of
the contract or inconsistent with this special provision, the Contractor shall
notify the Contracting Officer in writing within ten (10) working days after its
receipt.
G-4 NAPS 5252.232-9001 - SUBMISSION OF INVOICES (COST-REIMBURSEMENT,
TIME-AND-MATERIALS, LABOR-HOUR, OR FIXED PRICE INCENTIVE (JUL 1992))
(a) "Invoice" as used in this clause includes contractor requests for interim
payments using public vouchers (SF 1034) but does not include contractor
requests for progress payments under fixed price incentive contracts.
(b) The Contractor shall submit invoices and any necessary supporting
documentation, in an original and 4 copies, to the contract auditor at the
following address:
DCAA Melbourne Branch Office
6767 N. Wickman Rd., Suite 507
Melbourne, FL 32940-9998
unless delivery orders are applicable, in which case invoices will be segregated
by individual order and submitted to the address specified in the order. In
addition, an information copy shall be submitted to [See Section G for
designated COR]. Following verification, the contract auditor will forward the
invoice to the designated payment office for payment in the amount determined to
be owing, in accordance with the applicable payment (and fee) clause(s) of this
contract.
(c) Invoices requesting interim payments shall be submitted no more than once
every two weeks, unless another time period is specified in the Payments clause
of this contract. For indefinite delivery type contracts, interim payment
invoices shall be submitted no more than once every two weeks for each delivery
orders. There shall be a lapse of no more than 30 calendar days between
performance and submission of an interim payment invoice.
(d) In addition to the information identified in the Prompt Payment clause
herein, each invoice shall contain the following information, as applicable:
(1) Contract line item number (CLIN)
(2) Subline item number (SLIN)
(3) Accounting Classification Reference Number (ACRN)
(4) Payment terms
(5) Procuring activity
(6) Date supplies provided or services performed
(7) Costs incurred and allowable under the contract
(8) Vessel (e.g., ship, submarine or other craft) or system for which
supply/service is provided
(e) A DD Form 250, "Material Inspection and Receiving Report",
** is required with each invoice submittal.
X is required only with the final invoice.
** is not required.
(f) A Certificate of Performance
** shall be provided with each invoice submittal.
X is not required.
(g) The Contractor's final invoice shall be identified as such, and shall list
all other invoices (if any) previously tendered under this contract.
(h) Cost of performance shall be segregated, accumulated and invoiced to the
appropriate ACRN categories to the extent possible. When such segregation of
costs by ACRN is not possible for invoices submitted with CLIN/SLINS with more
than one ACRN, an allocation ratio shall be established in the same ratio as the
obligations cited in the accounting data so that costs are allocated on a
proportional basis.
G-5 INCREMENTAL FUNDING
Orders issued under this contract may be incrementally funded. Incrementally
funded orders will contain a provision substantially as follows:
(* To be completed in each individual task when incrementally funded)
G-6 PAYMENT INSTRUCTIONS FOR MULTIPLE ACCOUNTING CLASSIFICATION CITATIONS
(COST-REIMBURSEMENT)
The purpose of these instructions is to permit the paying office to charge the
accounting classification citations in the contract in a manner that reflects
the performance of the contract. These instructions do not create any obligation
on the part of the Government or the contractor nor do they in any way alter any
obligation created by any other provision of the contract. Invoices should be
paid from available ACRNs in the following order:
(a) ACRNs cited on the contractor's invoice.
(b) On a proportional basis from any ACRNs assigned to funds which will cancel
at the end of the current fiscal year.
(c) The ACRN assigned to the following line of accounting:
97X4930.NH4A 000 77777 0 000173 2F 000000 N00173Z45000.
(d) If funds appropriated in more than one fiscal year are allotted to the
contract, the ACRN assigned to the oldest allotment of funds.
(e) On a proportional basis from all ACRNs assigned to allotments of funds
appropriated in a single fiscal year.
G-7 ACCOUNTING AND APPROPRIATION DATA
Each delivery order/task order will contain the accounting and appropriation
data for payment under the contract.
G-8 TASK ORDER PROCEDURES FOR INDEFINITE QUANTITY CONTRACTS
The following procedure shall be followed when placing task orders under this
contract:
(a) Only properly appointed Contracting Officers employed at the Naval Research
Laboratory (NRL) shall issue task orders under this contract.
(b) A DD Form 1155 will be issued for each task order. The DD Form 1155, "Order
for Supplies or Services", shall constitute the instrument for the placement of
requirements under this contract.
(c) Each task order shall be subject to FAR 52.232-20 Limitation of Cost or FAR
52.232-22 Limitation of Funds clause, as appropriate. Each task order is subject
to the terms and conditions of the clause in Section H entitled, "Level of
Effort Task Orders".
(d) Prior to the issuance of a task order, the contractor will be provided with
the statement of work and shall promptly submit a cost proposal for performing
the work. The fixed fee shall be in the same proportion to the estimated cost
for each task order as a maximum fixed fee is to the maximum estimated cost for
the contract as set forth in Section B.
(e) Task orders issued shall include, but not be limited to, the following
information:
(1) Date of Order
(2) Contract Number and Task Order Number
(3) Accounting and Appropriation Data
(4) Description of the Work to be Performed
(5) Level of Effort
(6) DD Form 1423 (Contract Data Requirements List)
(7) Place of Performance
(8) Period of Performance
(9) Estimated Cost Plus Fixed Fee
(10) DD Form 254 (Contract Security Classification Specifications)
(11) List of Government furnished material and the estimated value
thereof for each order
(f) The ceiling amount for each task order will be the ceiling price stated
therein and may not be exceeded except when authorized by a modification to the
task order.
SECTION H
SPECIAL CONTRACT REQUIREMENT
H-1 TYPE OF CONTRACT
This is an Indefinite Delivery Indefinite Quantity type contract with Cost Plus
Fixed Fee Term task orders.
H-2 ONR 5252.237-9705 - KEY PERSONNEL (DEC 88)
(a) The Contractor agrees to assign to the contract tasks those persons whose
resumes where submitted with its proposal and who are necessary to fulfill the
requirements of the contract as "key personnel". No substitutions may be made
except in accordance with this clause.
(b) The Contractor understands that during the first ninety (90) days of the
contract performance period, no personnel substitutions will be permitted unless
these substitutions are unavoidable because of the incumbent's sudden illness,
death or termination of employment. In any of these events, the Contractor shall
promptly notify the Contracting Officer and provide the information described in
paragraph (c) below. After the initial ninety (90) day period the Contractor
must submit to the Contracting Officer all proposed substitutions, in writing,
at least fifteen (15) days in advance (thirty (30) days if security clearance
must be obtained) of any proposed substitution and provide the information
required by paragraph (c) below.
(c) Any request for substitution must include a detailed explanation of the
circumstances necessitating the proposed substitution, a resume for the proposed
substitute, and any other information requested by the Contracting Officer. Any
proposed substitute must have qualifications equal to or superior to the
qualifications of the incumbent. The Contracting Officer or his/her authorized
representative will evaluate such requests and promptly notify the Contractor of
his/her approval or disapproval thereof.
(d) In the event that any of the identified key personnel cease to perform under
the contract and the substitute is disapproved, the contract may be immediately
terminated in accordance with the Termination clause of the contract.
The following are identified as key personnel:
(To be identified in each individual task order)
H-3 LEVEL OF EFFORT TASK ORDERS
(a) In the performance of each task order issued under this contract, the
Contractor agrees to provide the level of effort specified in the task order and
in accordance with this provision.
(b) The level of effort per task order shall be expended at the average monthly
rate specified therein. It is understood and agreed that the rate of direct
labor hours expended each month may fluctuate in pursuit of the technical
objective, provided such fluctuation does not result in the use of the total
hours of effort prior to the expiration of the term of the task order.
(c) The Contractor is required to notify the Contracting Officer when any of the
following situations occur, or are anticipated to occur: If during any three
consecutive months the monthly average is exceeded by 25% or, at any time it is
forecast that during the last three months of the task order less than 50% of
the monthly average will be used during any given month; or, when 85% of the
total level of effort has been expended.
(d) If, during the term of the contract, the Contractor finds it necessary to
accelerate the expenditure of direct labor under a task order to such an extent
that the total hours of effort specified would be used prior to the expiration
of the term, the Contractor shall notify the Contracting Officer in writing
setting forth the acceleration required, the probable benefits which would
result, and an offer to undertake the acceleration at no increase in the
estimated cost or fixed fee together with an offer setting forth a proposed
level of effort, cost breakdown, and proposed fixed-fee for continuation of the
work until expiration of the term hereof. The offer shall provide that the work
proposed will be subject to the terms and conditions of this contract and any
additions or changes required by then current law, regulations, or directives,
and that the offer, with a written notice of acceptance by the Contracting
Officer, shall constitute a binding contract. The Contractor shall not
accelerate any effort until receipt of such written approval by the Contracting
Officer. Any agreement to accelerate will be formalized by contract
modification.
(e) The Contracting Officer may, by written order, direct the Contractor to
accelerate the expenditure of direct labor under a task order such that the
labor-hours of effort specified therein would be used prior to the expiration of
the term. This order shall specify the acceleration required and the resulting
revised term. The Contractor shall acknowledge this order within ten days of
receipt.
(f) If the total level of effort specified in each task order is not provided by
the Contractor during the term of the task order, the Contracting Officer shall
either (i) reduce the fixed fee of this contract as follows:
Fee Reduction = Fixed Fee x (Required LOE Hours - Expended LOE Hours)
Required LOE Hours
or (ii) subject to the provisions of the clause of this contract entitled
"Limitation of Cost," require the Contractor to continue to perform the work
until the total number of hours of direct labor specified in the task order
shall have been expended, at no increase in the fixed fee of this contract.
(g) In the event the Government fails to fully fund the task order in a timely
manner, the term of the task order may be extended accordingly with no change to
cost or fee. If the Government fails to fully fund the task order, the fee will
be adjusted in direct proportion to that effort which was performed.
(h) Notwithstanding any of the provisions of the above paragraphs, the
Contractor may furnish labor-hours up to five percent in excess of the total
direct labor-hours specified in the task order provided that the additional
effort is furnished within the term hereof, and provided further that no
increase in the estimated cost or fixed-fee is required, and no adjustment in
the fixed-fee shall be made provided that the Contractor has delivered at least
95% of the level of effort specified in the task order.
(i) It is understood that the mix of labor categories provided by the Contractor
under the task order, as well as the distribution of effort among those
categories, may vary considerably from the initial mix and distribution of
effort which was estimated by the Government or proposed by the Contractor.
(j) Nothing herein shall be construed to alter or waive any of the rights or
obligations of either party pursuant to the Clause entitled "Limitations of
Costs" or Limitation of Funds," either of which incorporated herein applies to
each task order under this contract.
H-4 SUBCONTRACTORS/CONSULTANTS
(a) The following subcontractors/consultants have been identified in the
Contractor's proposal as necessary for performance of this contract.
Subcontractor/Consultant Name Time or Unit Estimated Cost
(To be identified in each individual task order)
(b) The Contracting Officer's consent required by Paragraph (c) of the contract
clause entitled "Subcontracts (Cost-Reimbursement and Letter Contracts)" is
hereby given for the listed subcontracts/consultants unless (i) they are of the
cost-reimbursement, time-and-materials, or labor-hour type and are estimated to
exceed $10,000, including any fee, (ii) are proposed to exceed $100,000, or
(iii) are one of a number of subcontracts with a single subcontractor, under
this contract, for the same or related supplies or services that, in the
aggregate, are expected to exceed $100,000. In such cases consent shall be
requested from the Administrative Contracting Officer.
(c) Any changes to the above list must be authorized by the Administrative
Contracting Officer (ACO).
H-5 ONR 5252.235-9714 - REPORT PREPARATION (FEB 97)
Scientific or technical reports prepared by the Contractor and deliverable under
the terms of this contract will be prepared in accordance with format
requirements contained in ANSI/NISO Z39.18-1995, "Scientific and Technical
Reports: Elements, Organization, and Design." [NOTE: ANSI Z39.18 may be obtained
from NISO Press Fulfillment Center, P.O. Box 338, Oxon Hill, MD 20750-0338.
Telephone 1-800-282-6476].
H-6 ON-SITE USE OF GOVERNMENT PROPERTY
It is anticipated that Government property will be used by the contractor's
personnel in the performance of that portion of the contract performed on-site
at the U.S. Naval Research Laboratory (NRL) including any of its field sites.
Such use will be on a rent free basis and all such property shall be considered
to remain in the possession and control of the NRL for property responsibility
and accountability purposes.
H-7 GOVERNMENT-FURNISHED PROPERTY
The following Government property will be furnished to the contractor on a
rent-free basis for use in performing the contract:
The contractor personnel working at NRL shall be provided office space and
furniture as well as direct access to NRL computer resources. The off-site
contractor personnel shall be provided either communication access to the
computer resources at NRL.
An NRL supported dial-up teleconferencing link will be provided. The
characteristics of this link are:
(a) Video Equipment - CLI Gallery 235 Video System with Codec running Rembrandt
II/VP Software and T1 interface. Capable of far end control.
(b) Digital Line Interface - ISDN Primary Rate Interface 23B+D B8ZS ESF. Dial-up
via switched 384 HO, (6 channels bundled).
(c) Network Interface - General Data Communication Image *TMS Model 40 switched
network access unit.
The teleconferencing facility is available to the contractor for
technical meetings associated with the work described in this SOW. Scheduling of
the facility is, limited by exceptional situations, done on a first-come basis.
H-8 REPRESENTATIONS AND CERTIFICATIONS
The Contractor's completed Representations, Certifications, and Other Statements
of Offerors is incorporated herein by reference in any resultant award.
PART II - CONTRACT CLAUSES
SECTION I
CONTRACT CLAUSES
I-1 52.252.2 - CLAUSES INCORPORATED BY REFERENCE (JUN 1988)
This contract incorporates one or more clauses by reference, with the same force
and effect as if they were given in full text. Upon request, the Contracting
Officer will make their full text available.
a. FEDERAL ACQUISITION REGULATION CLAUSES
FAR CLAUSE TITLE
52.202-1 - Definitions OCT 1995)
52.203-3 - Gratuities (APR 1984)
52.203-5 - Covenant Against Contingent Fees (APR 1984)
52.203-6 - Restrictions On Subcontractor Sales To The Government (JUL
1995)
52.203-7 - Anti-Kickback Procedures (JUL 1995)
52.203-8 - Cancellations, Rescission, And Recovery Of Funds For Illegal Or
Improper Activity (JAN 1997)
52.203-10 - Price Or Fee Adjustment For Illegal Or Improper Activity (JAN
1997)
52.203-12 - Limitation On Payments To Influence Certain Federal
Transactions (Jan 1990)
52.204-2 - Security Requirements (AUG 1996)
52.204-4 - Printing/Copying Double-Sided On Recycled Paper (JUN 1996)
52.209-6 - Protecting The Government's Interest When Subcontracting With
Contractors Debarred, Suspended, Or Proposed For Debarment
(JUL 1995)
52.211-15 - Defense Priority and Allocation Requirements (SEP 1990)
52.215-2 - Audit And Records-Negotiation (AUG 1996)
52.215-22 - Price Reduction For Defective Cost Or Pricing Data (OCT 1995)
52.215-24 - Subcontractor Cost Or Pricing Data (OCT 1995)
52.215-27 - Termination Of Defined Benefit Pension Plans (MAR 1996)
52.215-31 - Waiver Of Facilities Capital Cost Of Money (SEP 1987)
52.215-33 - Order Of Precedence (JAN 1986)
52.215-39 - Reversion Or Adjustment Of Plans For Post-Retirement Benefits
Other Than Pensions (PRB) (MAR 1996)
52.215-40 - Notification Of Ownership Changes (FEB 1995)
52.216-7 - Allowable Cost And Payment (FEB 1997)
52.216-8 - Fixed-Fee (MAR 1997)
52.219-8 - Utilization Of Small, Small Disadvantaged And Women-Owned Small
Business Concerns (OCT 1995)
52.219-9 - Small, Small Disadvantaged and Women-Owned Small Business
Subcontracting Plan (AUG 1996) - Alternate II (MAR 1996)
52.219-16 - Liquidated Damages-Subcontracting Plan (OCT 1995)
52.222-1 - Notice To The Government Of Labor Disputes (FEB 1997)
52.222-2 - Payment For Overtime Premiums (JUL 1990) - The Use Of Overtime
is Authorized Under This Contract If The Overtime Premium
Does Not Exceed __ "0" --
52.222-3 - Convict Labor (AUG 1996)
52.222-26 - Equal Opportunity (APR 1984)
52.222-28 - Equal Opportunity Preaward Clearance Of Subcontracts (APR 1984)
52.222-35 - Affirmative Action For Special Disabled And Vietnam Era
Veterans (APR 1984)
52.222-36 - Affirmative Action For Handicapped Workers (APR 1984)
52.222-37 - Employment Reports On Special Disabled Veterans And Veterans Of
The Vietnam Era (JAN 1988)
52.223-2 - Clean Air And Water (APR 1984)
52.223-3 - Hazardous Material Identification And Material Safety Data (JAN
1997)
52.223-5 - Pollution Prevention and Right-To-Know Information (MAR 1997)
52.223-6 - Drug-Free Workplace (JAN 1997)
52.223-14 - Toxic Chemical Release Reporting (OCT 1996)
52.225-11 - Restrictions On Certain Foreign Purchases (OCT 1996)
52.226-1 - Utilization Of Indian Organizations And Indian-Owned Economic
Enterprises (SEP 1996)
52.227-1 - Authorization And Consent (JUL 1995) - Alternate I (APR 1984)
52.227-2 - Notice And Assistance Regarding Patent And Copyright
Infringement (AUG 1996)
52.227-12 - Patent Rights - Retention By The Contractor (Long Form) (JAN
1997)
52.228-7 - Insurance - Liability To Third Persons (MAR 1996)
52.232-9 - Limitation On Withholding Of Payments (APR 1984)
52.232-18 - Availability Of Funds (APR 1984)
52.232-20 - Limitation Of Cost (APR 1984) (Applicable when the contract or
task order is fully funded)
52.232-22 - Limitation Of Funds (APR 1984) (Applicable when the contract or
task order is not fully funded)
52.232-23 - Assignment Of Claims (JAN 1986) Alternate I (APR 1984)
52.232-25 - Prompt Payment (MAY 1997)
52.232-33 - Mandatory Information For Electronic Funds Transfer Payment
(AUG 1996)
52.233-1 - Disputes (OCT 1995) - Alternate I (DEC 1991)
52.233-3 - Protest After Award (AUG 1996) - Alternate I (JUN 1985)
52.237-2 - Protection Of Government Buildings, Equipment And Vegetation
(APR 1984)
52.237-3 - Continuity Of Services (JAN 1991)
52.242-1 - Notices Of Intent To Disallow Costs APR 1984)
52.242-3 - Penalties For Unallowable Costs (OCT 1995)
52.242-4 - Certification of Final Indirect Costs (JAN 1997)
52.242-13 - Bankruptcy (JUL 1995)
52.243-2 - Changes - Cost Reimbursement (AUG 1987) - Alternate V (APR
1984)
52.243-6 - Change Order Accounting (APR 1984)
52.243-7 - Notification Of Changes (APR 1984)
52.244-2 - Subcontracts (Cost-Reimbursement And Letter Contracts) (FEB
1997) - Alternate I (AUG 1996)
52.244-5 - Competition In Subcontracting (JAN 1996)
52.244-6 - Subcontracts for Commercial Items and Commercial Components
(OCT 1995)
52.245-5 - Government Property (Cost-Reimbursement, Time-And-Material, Or
Labor-Hour Contracts) (JAN 1986)
52.245-9 - Use And Charges (APR 1984) (DEVIATION)
52.245-19 - Government Property Furnished "As-Is" (APR 1984)
52.246-23 - Limitation of Liability (FEB 1997)
52.247-1 - Commercial Bill Of Lading Notations (APR 1984)
52.247-63 - Preference For U.S. Flag Carriers (JAN 1997)
52.249-6 - Termination (Cost-Reimbursement) (SEP 1996)
52.249-14 - Excusable Delays (APR 1984)
52.251-1 - Government Supply Sources (APR 1984)
52.252-6 - Authorized Deviations in Clauses (APR 1984) fill in 52.245-9
Use And Charges
52.253-1 - Computer Generated Forms (JAN 1991)
b. DEPARTMENT OF DEFENSE FEDERAL ACQUISITION REGULATION CLAUSES
DFARS CLAUSE TITLE
252.201-7000 - Contracting Officer's Representative (DEC 1991)
252.203-7001 - Special Prohibition On Employment (JUN 1997)
525.203-7002 - Display of DoD Hotline Poster (DEC 1991)
252.204-7000 - Disclosure of Information (DEC 1991)
252.204-7003 - Control Of Government Personnel Work Product (APR 1992)
252.205-7000 - Provision Of Information To Cooperative Agreement Holders (DEC
1991)
252.209-7000 - Acquisition From Subcontractors Subject To On-Site Inspection
Under The Intermediate-Range Nuclear Forces (INF) Treaty
(NOV 1995)
252.215-7000 - Pricing Adjustments (DEC 1991)
252.215-7002 - Cost Estimating System Requirements (DEC 1991)
252.219-7003 - Small Business And Small Disadvantaged Business Subcontracting
Plan (DoD Contracts) (APR 1996)
252.219-7005 - Incentive For Subcontracting With Small Businesses, Small
Disadvantaged Businesses, Historically Black Colleges And
Universities, And Minority Institutions (NOV 1995) If the
Contractor exceeds the small disadvantaged business
historically black college and university, minority institution
goal of its subcontracting plan, at completion of contract
performance, the Contractor will receive 1 percent of the
excess.
252.223-7004 - Drug-Free Work Force (SEP 1988)
252.223-7006 - Prohibition On Storage And Disposal Of Toxic And Hazardous
Materials (APR 1993)
252.225-7012 - Preference For Certain Domestic Commodities (SEP 1997)
252.225-7018 - Notice of Prohibition of Certain Contracts With Foreign
Entities for the Conduct of Ballistic Missile Defense RDT&E
(MAY 1994)
252.225-7025 - Restriction On Acquisition Of Forgings (JUN 1997)
252.225-7026 - Reporting Of Contracting Performance Outside The United States
(NOV 1995)
252.225-7031 - Secondary Arab Boycott Of Israel (JUN 1992)
252.227-7013 - Rights In Technical Data - Noncommercial Items (NOV 1995)
252.227-7014 - Rights in Noncommercial Computer Software And Noncommerical
Computer Software Documentation (JUN 1995)
252.227-7016 - Rights In Bids or Proposal Information (Jun 1995)
252.227-7019 - Validation Of Asserted Restrictions--Computer Software (JUN
1995)
252.227-7025 - Limitations On The Use Or Disclosure Of Government-Furnished
Information Marked With Restrictive Legends (JUN 1995)
252.227-7030 - Technical Data -- Withholding Of Payment (OCT 1988)
252.227-7034 - Patents -- Subcontracts (APR 1984)
252.227-7036 - Certification Of Technical Data Conformity (MAY 1987)
252.227-7037 - Validation Of Restrictive Markings On Technical Data (NOV 1995)
252.227-7039 - Patents -- Reporting of Subject Inventions (APR 1990)
252.231-7000 - Supplemental Cost Principles (DEC 1991)
252.232-7006 - Reduction Or Suspension Of Contract Payments Upon Finding Of
Fraud (AUG 1992)
252.233-7000 - Certification Of Claims And Requests For Adjustment Or Relief
(MAY 1994)
252.235-7010 - Acknowledgment of Support and Disclaimer (MAY 1995)
252.235-7011 - Final Scientific Or Technical Report (MAY 1995)
252.242-7000 - Post Award Conference (DEC 1991)
252.242-7004 - Material Management And Accounting System (SEP 1996)
252.243-7002 - Certification of Requests for Equitable Adjustment (JUL 1997)
252.245-7001 - Reports of Government Property (MAY 1994)
252.246-7001 - Warranty of Data (DEC 1991)
252.247-7023 - Transportation Of Supplies By Sea (NOV 1995)
252.247-7024 - Notification Of Transportation Of Supplies By Sea (NOV 1995)
252.249-7001 - Notification Of Substantial Impact On Employment (DEC 1991)
252.251-7000 - Ordering From Government Supply Sources (MAY 1995)
I-2 FAR 52.223-11 - OZONE-DEPLETING SUBSTANCES (JUN 1996)
(a) Definitions.
"Ozone-depleting substance", as used in this clause, means any substance
designated as Class I by the Environmental Protection Agency (EPA) (40 CFR Part
82), including but not limited to chlorofluorocarbons, halons, carbon
tetrachloride, and methyl chloroform; or any substance designated as Class II by
EPA (40 CFR Part 82), including but not limited to hydrochlorofluorocarbons.
(b) The Contractor shall label products which contain or are manufactured
with ozone-depleting substances in the manner and to the extent required by 42
U.S.C. 7671j (b), (c), and (d) and 40 CFR Part 82, Subpart E, as follows:
"WARNING: Contains (or manufactured with, if applicable) _________________ a
substance(s) which harm(s) public health and environment by destroying ozone in
the upper atmosphere."
*The Contractor shall insert the name of the substance(s).
I-3 INDEFINITE DELIVERY, INDEFINITE QUANTITY CLAUSES:
FAR 52.216-18 ORDERING (OCT 1995)
(a) Any supplies and services to be furnished under this contract shall be
ordered by issuance of delivery orders or task orders by the individuals or
activities designated in the Schedule. Such orders may be issued from date of
contract award through the effective period of the contract.
(b) All delivery orders or task orders are subject to the terms and conditions
of this contract. In the event of conflict between a delivery order or task
order and this contract, the contract shall control.
(c) If mailed, a delivery order or task order is considered "issued" when the
Government deposits the order in the mail. Orders may be issued orally, by
facsimile, or by electronic commerce methods only if authorized in the Schedule.
I-4 FAR 52.216-19 ORDER LIMITATIONS (OCT 1995)
(a) Minimum order. When the Government requires supplies or services covered by
this contract in an amount of less than $100,000, the Government is not
obligated to purchase, nor is the Contractor obligated to furnish, those
supplies or services under the contract.
(b) Maximum order. The Contractor is not obligated to honor -
(1) Any order for a single item in excess of $5,000,000
(2) Any order for a combination of items in excess of $20,000,000; or
(3) A series of orders from the same ordering office within 60 days that
together call for quantities exceeding the limitation in subparagraph
(1) or (2) above.
(c) If this is a requirements contract (i.e., includes the Requirements clause
at subsection 52 216-21 of the Federal Acquisition Regulation (FAR)), the
Government is not required to order a part of any one requirement from the
Contractor if that requirement exceeds the maximum-order limitations in
paragraph (b) above.
(d) Notwithstanding paragraphs (b) and (c) of this section, the Contractor shall
honor any order exceeding the maximum order limitations in paragraph (b), unless
that order (or orders) is returned to the ordering office within 60 days after
issuance, with written notice stating the Contractor's intent not to ship the
item (or items) called for and the reasons. Upon receiving this notice, the
Government may acquire the supplies or services from another source.
I-5 FAR 52.516-22 INDEFINITE QUANTITY (OCT 1995)
(a) This is an indefinite-quantity contract for the supplies or services
specified, and effective for the period stated, in the Schedule. The quantities
of supplies and services specified in the Schedule are estimates only and are
not purchased by this contract.
(b) Delivery or performance shall be made only as authorized by orders issued in
accordance with the Ordering clause. The Contractor shall furnish to the
Government, when and if ordered, the supplies or services specified in the
Schedule up to and including the quantity designated in the Schedule as the
"maximum". The Government shall order at least the quantity of supplies or
services designated in the Schedule as the "minimum".
(c) Except for any limitations or quantities in the Order Limitations clause or
in the Schedule, there is no limit on the number of orders that may be issued.
The Government may issue orders requiring delivery to multiple destinations or
performance at multiple locations.
(d) Any order issued during the effective period of this contract and not
completed within that period shall be completed by the Contractor within the
time specified in the order. The contract shall govern the Contractor's and
Government's rights and obligations with respect to that order to the same
extent as if the order were completed during the contract's effective period;
provided, that the Contractor shall not be required to make any deliveries under
this contract after a ninety (90) day period following contract expiration.
PART III - LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACHMENTS
SECTION J
LIST OF ATTACHMENTS
J-1 Attachment (1) - Statement of Work - 32 Pages, With Exhibit A - DD
Form 1423, Contract Data Requirements And Enclosure (1) - Instructions
For Distribution - 8 Pages
J-2 Attachment (2) - Requirement For On-Site Contractors - 5 Pages
J-3 Attachment (3) - DD 254, Contract Security Classification
Specification Form Ser 100-97 Dated - Pages 2
J-4 Attachment (4) - Personnel Qualifications - 35 Pages
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