AeroVironment, Inc.
AeroVironment Inc (Form: 10-Q, Received: 11/27/2013 06:01:55)

Table of Contents

 

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 


 

FORM 10-Q

 


 

x       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

 

For the quarterly period ended October 26, 2013

 

OR

 

o          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from           to           

 

Commission File Number: 001-33261

 


 

AEROVIRONMENT, INC.

(Exact name of registrant as specified in its charter)

 

Delaware

 

95-2705790

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

 

 

181 W. Huntington Drive, Suite 202

 

 

Monrovia, California

 

91016

(Address of principal executive offices)

 

(Zip Code)

 

(626) 357-9983

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 


 

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 o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x   No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o

 

Accelerated filer x

 

 

 

Non-accelerated filer o

 

Smaller reporting company o

(Do not check if smaller reporting company)

 

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o   No x

 

As of November 15, 2013, the number of shares outstanding of the registrant’s common stock, $0.0001 par value, was 22,708,489.

 

 

 



Table of Contents

 

AeroVironment, Inc.

 

Table of Contents

 

PART I. FINANCIAL INFORMATION

 

 

 

Item 1.

Financial Statements:

 

 

Consolidated Balance Sheets as of October 26, 2013 (Unaudited) and April 30, 2013

3

 

Consolidated Statements of Operations for the three and six months ended October 26, 2013 (Unaudited) and October 27, 2012 (Unaudited)

4

 

Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended October 26, 2013 (Unaudited) and October 27, 2012 (Unaudited)

5

 

Consolidated Statements of Cash Flows for the six months ended October 26, 2013 (Unaudited) and October 27, 2012 (Unaudited)

6

 

Notes to Consolidated Financial Statements (Unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

20

Item 4.

Controls and Procedures

20

 

 

PART II. OTHER INFORMATION

 

 

 

Item 1.

Legal Proceedings

21

Item 1A.

Risk Factors

21

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

21

Item 3.

Defaults Upon Senior Securities

21

Item 4.

Mine Safety Disclosures

21

Item 5.

Other Information

21

Item 6.

Exhibits

21

Signatures

 

22

Exhibit Index

 

 

 

2



Table of Contents

 

PART I. FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

AeroVironment, Inc.

Consolidated Balance Sheets

(In thousands except share and per share data)

 

 

 

October 26,
2013

 

April 30,
2013

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

66,126

 

$

75,332

 

Short-term investments

 

77,677

 

73,241

 

Accounts receivable, net of allowance for doubtful accounts of $531 at October 26, 2013 and $936 at April 30, 2013

 

36,238

 

19,770

 

Unbilled receivables and retentions

 

7,256

 

11,304

 

Inventories, net

 

60,629

 

62,561

 

Income tax receivable

 

8,120

 

11,777

 

Deferred income taxes

 

5,400

 

5,166

 

Prepaid expenses and other current assets

 

4,317

 

4,303

 

Total current assets

 

265,763

 

263,454

 

Long-term investments

 

51,707

 

68,916

 

Property and equipment, net

 

26,039

 

24,429

 

Deferred income taxes

 

5,587

 

5,606

 

Other assets

 

1,720

 

1,060

 

Total assets

 

$

350,816

 

$

363,465

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

11,774

 

$

16,144

 

Wages and related accruals

 

11,669

 

12,116

 

Customer advances

 

3,605

 

7,519

 

Other current liabilities

 

6,261

 

6,408

 

Total current liabilities

 

33,309

 

42,187

 

Deferred rent

 

614

 

771

 

Liability for uncertain tax positions

 

5,211

 

5,321

 

Commitments and contingencies

 

 

 

 

 

Stockholders’ equity:

 

 

 

 

 

Preferred stock, $0.0001 par value:

 

 

 

 

 

Authorized shares — 10,000,000; none issued or outstanding

 

 

 

Common stock, $0.0001 par value:

 

 

 

 

 

Authorized shares — 100,000,000

 

 

 

 

 

Issued and outstanding shares — 22,704,189 at October 26, 2013 and 22,614,315 at April 30, 2013

 

2

 

2

 

Additional paid-in capital

 

132,549

 

130,527

 

Accumulated other comprehensive loss

 

(676

)

(705

)

Retained earnings

 

179,807

 

185,362

 

Total stockholders’ equity

 

311,682

 

315,186

 

Total liabilities and stockholders’ equity

 

$

350,816

 

$

363,465

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

3



Table of Contents

 

AeroVironment, Inc.

Consolidated Statements of Operations (Unaudited)

(In thousands except share and per share data)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 26,

 

October 27,

 

October 26,

 

October 27,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

Product sales

 

$

51,537

 

$

52,415

 

$

78,711

 

$

81,105

 

Contract services

 

13,330

 

27,863

 

30,273

 

57,850

 

 

 

64,867

 

80,278

 

108,984

 

138,955

 

Cost of sales:

 

 

 

 

 

 

 

 

 

Product sales

 

32,143

 

28,215

 

52,698

 

48,774

 

Contract services

 

8,846

 

16,427

 

19,863

 

35,040

 

 

 

40,989

 

44,642

 

72,561

 

83,814

 

Gross margin

 

23,878

 

35,636

 

36,423

 

55,141

 

Selling, general and administrative

 

13,084

 

13,176

 

25,543

 

26,797

 

Research and development

 

6,861

 

9,386

 

14,051

 

17,522

 

Income (loss) from operations

 

3,933

 

13,074

 

(3,171

)

10,822

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

195

 

162

 

400

 

334

 

Other expense

 

(2,307

)

 

(5,701

)

 

Income (loss) before income taxes

 

1,821

 

13,236

 

(8,472

)

11,156

 

Provision (benefit) for income taxes

 

166

 

4,498

 

(2,917

)

3,804

 

Net income (loss)

 

$

1,655

 

$

8,738

 

$

(5,555

)

$

7,352

 

Earnings (loss) per share data:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

$

0.40

 

$

(0.25

)

$

0.33

 

Diluted

 

$

0.07

 

$

0.39

 

$

(0.25

)

$

0.33

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic

 

22,273,629

 

22,030,330

 

22,256,292

 

21,980,453

 

Diluted

 

22,697,590

 

22,383,791

 

22,256,292

 

22,353,434

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

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Table of Contents

 

AeroVironment, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(In thousands)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 26,

 

October 27,

 

October 26,

 

October 27,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

1,655

 

$

8,738

 

$

(5,555

)

$

7,352

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

Unrealized gain (loss) on investments, net of tax

 

77

 

(10

)

29

 

27

 

Total comprehensive income (loss)

 

$

1,732

 

$

8,728

 

$

(5,526

)

$

7,379

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

5



Table of Contents

 

AeroVironment, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

 

 

 

Six Months Ended

 

 

 

October 26,
2013

 

October 27,
2012

 

Operating activities

 

 

 

 

 

Net (loss) income

 

$

(5,555

)

$

7,352

 

Adjustments to reconcile net (loss) income to cash (used in) provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

4,504

 

5,937

 

Provision for doubtful accounts

 

309

 

566

 

Deferred income taxes

 

(233

)

(130

)

Stock-based compensation

 

1,840

 

1,642

 

Change in fair value of conversion feature of convertible bonds

 

5,711

 

 

Tax benefit from exercise of stock options

 

151

 

1,529

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

(16,777

)

7,521

 

Unbilled receivables and retentions

 

4,048

 

5,970

 

Inventories

 

1,932

 

(1,208

)

Income tax receivable

 

3,657

 

 

Other assets

 

9

 

(836

)

Accounts payable

 

(4,370

)

(4,783

)

Other liabilities

 

(4,899

)

(18,772

)

Net cash (used in) provided by operating activities

 

(9,673

)

4,788

 

Investing activities

 

 

 

 

 

Acquisitions of property and equipment

 

(6,047

)

(4,559

)

Acquisitions of distribution and licensing rights

 

(750

)

 

Net redemptions of held-to-maturity investments

 

6,934

 

5,911

 

Net sales of available-for-sale investments

 

175

 

250

 

Net cash provided by investing activities

 

312

 

1,602

 

Financing activities

 

 

 

 

 

Exercise of stock options

 

155

 

160

 

Net cash provided by financing activities

 

155

 

160

 

Net (decrease) increase in cash and cash equivalents

 

(9,206

)

6,550

 

Cash and cash equivalents at beginning of period

 

75,332

 

64,220

 

Cash and cash equivalents at end of period

 

$

66,126

 

$

70,770

 

 

 

 

 

 

 

Supplemental disclosure:

 

 

 

 

 

Unrealized gain on long-term investments recorded in other comprehensive income (loss), net of deferred taxes of $18 and $17, respectively

 

$

29

 

$

27

 

Reclassification from share-based liability compensation to equity

 

$

 

$

401

 

 

See accompanying notes to consolidated financial statements (unaudited).

 

6



Table of Contents

 

AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

1. Organization and Significant Accounting Policies

 

Organization

 

AeroVironment, Inc., a Delaware corporation (the “Company”), is engaged in the design, development, production, support and operation of unmanned aircraft systems and efficient energy systems for various industries and governmental agencies.

 

Basis of Presentation

 

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair presentation with respect to the interim financial statements have been included. The results of operations for the three and six months ended October 26, 2013 are not necessarily indicative of the results for the full year ending April 30, 2014. For further information, refer to the consolidated financial statements and footnotes thereto for the year ended April 30, 2013, included in the Company’s Annual Report on Form 10-K.

 

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions, including estimates of anticipated contract costs and revenue utilized in the revenue recognition process, that affect the reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

 

The Company’s consolidated financial statements include the assets, liabilities and operating results of wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated.

 

Segments

 

The Company’s products are sold and divided among two reportable segments to reflect the Company’s strategic goals. Operating segments are defined as components of an enterprise from which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer, who reviews the revenue and gross margin results for each of these segments in order to make resource allocation decisions, including the focus of research and development (“R&D”) activities and performance assessment. The Company’s reportable segments are business units that offer different products and services and are managed separately.

 

Investments

 

The Company’s investments are accounted for as held-to-maturity and available-for-sale and reported at amortized cost and fair value, respectively.

 

Fair Values of Financial Instruments

 

Fair values of cash and cash equivalents, accounts receivable, unbilled receivables, retentions and accounts payable approximate cost due to the short period of time to maturity.

 

Government Contracts

 

Payments to the Company on government cost reimbursable contracts are based on provisional, or estimated indirect rates, which are subject to an annual audit by the Defense Contract Audit Agency (“DCAA”). The cost audits result in the negotiation and determination of the final indirect cost rates that the Company may use for the period(s) audited. The final rates, if different from the provisional billing rates, may create an additional receivable or liability for the Company.

 

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Table of Contents

 

AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

For example, during the course of its audits, the DCAA may question the Company’s incurred project costs, and if the DCAA believes the Company has accounted for such costs in a manner inconsistent with the requirements under Federal Acquisition Regulations, the DCAA auditor may recommend to the Company’s administrative contracting officer to disallow such costs. The Company can provide no assurance that the DCAA or other government audits will not result in material disallowances for incurred costs in the future.

 

Earnings (Loss) Per Share

 

Basic earnings (loss) per share is computed using the weighted-average number of common shares outstanding, excluding shares of unvested restricted stock. The dilutive effect of potential common shares outstanding is included in diluted earnings per share and excludes any anti-dilutive effects of options, shares of unvested restricted stock and restricted stock units.

 

The reconciliation of basic to diluted shares is as follows:

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 26,
2013

 

October 27,
2012

 

October 26,
2013

 

October 27,
2012

 

Denominator for basic earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding, excluding unvested restricted stock

 

22,273,629

 

22,030,330

 

22,256,292

 

21,980,453

 

Dilutive effect of employee stock options, unvested restricted stock and restricted stock units

 

423,961

 

353,461

 

 

372,981

 

Denominator for diluted earnings (loss) per share

 

22,697,590

 

22,383,791

 

22,256,292

 

22,353,434

 

 

During the three months ended October 26, 2013 and October 27, 2012, and the six months ended October 27, 2012, certain shares reserved for issuance upon exercise of stock options, shares of unvested restricted stock and restricted stock units were not included in the computation of diluted earnings per share because their inclusion would have been anti-dilutive. The number of shares reserved for issuance upon exercise of stock options, shares of unvested restricted stock and restricted stock units that met this anti-dilutive criterion for the three months ended October 26, 2013 and October 27, 2012 was approximately 29,000 and 10,000, respectively. The number of shares reserved for issuance upon exercise of stock options, shares of unvested restricted stock and restricted stock units that met this anti-dilutive criterion for the six months ended October 27, 2012 was approximately 5,000.  Due to the net loss for the six months ended October 26, 2013, no shares reserved for issuance upon exercise of stock options, shares of unvested restricted stock or restricted stock units were included in the computation of diluted loss per share as their inclusion would have been anti-dilutive.

 

Recently Issued Accounting Standards

 

On May 1, 2013, the Company adopted changes in accordance with guidance issued by the Financial Accounting Standards Board (“FASB”), which requires additional disclosures for the reclassification of significant amounts from accumulated comprehensive income to net income. This guidance requires that certain significant amounts be presented either on the face of the consolidated statements of income or in a single note. For other amounts, the Company is required to cross-reference disclosures that provide additional detail about such amounts.  The adoption of these changes did not have a material impact on the Company’s consolidated financial statements.

 

In July 2013, the FASB issued guidance regarding the classification of an unrecognized tax benefit as a reduction of a deferred tax asset when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists.  This guidance is effective prospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption and retrospective application is permitted. The Company is evaluating the potential impact of this adoption on its consolidated financial statements.

 

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Table of Contents

 

AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

2. Investments

 

Investments consist of the following (in thousands):

 

 

 

October 26,
2013

 

April 30,
2013

 

Short-term investments:

 

 

 

 

 

Held-to-maturity securities:

 

 

 

 

 

Municipal securities

 

$

77,677

 

$

73,241

 

Total short-term investments

 

$

77,677

 

$

73,241

 

Long-term investments:

 

 

 

 

 

Held-to-maturity securities:

 

 

 

 

 

Municipal securities

 

$

38,898

 

$

54,158

 

Certificates of deposit

 

3,891

 

 

Total held-to-maturity investments

 

42,789

 

54,158

 

Available-for-sale securities:

 

 

 

 

 

Auction rate securities

 

5,467

 

5,687

 

Convertible bonds

 

3,451

 

9,071

 

Total available-for-sale investments

 

8,918

 

14,758

 

Total long-term investments

 

$

51,707

 

$

68,916

 

 

Held-To-Maturity Securities

 

At October 26, 2013 and April 30, 2013, the balance of held-to-maturity securities consisted of state and local government municipal securities and certificates of deposit. Interest earned from these investments is recorded in interest income.

 

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of October 26, 2013, were as follows (in thousands):

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Municipal securities

 

$

116,575

 

$

75

 

$

(11

)

$

116,639

 

Certificates of deposit

 

3,891

 

 

 

3,891

 

Total held-to-maturity investments

 

$

120,466

 

$

75

 

$

(11

)

$

120,530

 

 

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the held-to-maturity investments as of April 30, 2013, were as follows (in thousands):

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Municipal securities

 

$

127,399

 

$

49

 

$

(23

)

$

127,425

 

Total held-to-maturity investments

 

$

127,399

 

$

49

 

$

(23

)

$

127,425

 

 

The amortized cost and fair value of the held-to-maturity securities by contractual maturity at October 26, 2013, were as follows (in thousands):

 

 

 

Cost

 

Fair Value

 

 

 

 

 

 

 

Due within one year

 

$

77,677

 

$

77,711

 

Due after one year through three years

 

42,789

 

42,819

 

Total

 

$

120,466

 

$

120,530

 

 

Available-For-Sale Securities

 

Auction Rate Securities

 

As of October 26, 2013, the entire balance of available-for-sale auction rate securities consisted of three investment grade auction rate municipal bonds with maturities ranging from 6 to 21 years. These investments have characteristics similar to short-term investments, because at pre-determined intervals, generally ranging from 30 to 35 days, there is a new auction process at which the interest rates for these securities are reset to current interest rates. At the end of such period, the Company chooses to roll-over its holdings or redeem

 

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AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

the investments for cash. A market maker facilitates the redemption of the securities and the underlying issuers are not required to redeem the investment within 365 days. Interest earned from these investments is recorded in interest income.

 

During the fourth quarter of the fiscal year ended April 30, 2008, the Company began experiencing failed auctions on some of its auction rate securities. A failed auction occurs when a buyer for the securities cannot be obtained and the market maker does not buy the security for its own account. The Company continues to earn interest on the investments that failed to settle at auction, at the maximum contractual rate until the next auction occurs. In the event the Company needs to access funds invested in these auction rate securities, the Company may not be able to liquidate these securities at the fair value recorded on October 26, 2013 until a future auction of these securities is successful or a buyer is found outside of the auction process.

 

As a result of the failed auctions, the fair values of these securities are estimated utilizing a discounted cash flow analysis as of October 26, 2013. The analysis considers, among other items, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected future cash flows, and the estimated date upon which the security is expected to have a successful auction.

 

Based on the Company’s ability to access its cash and cash equivalents, expected operating cash flows, and other sources of cash, the Company does not anticipate the current lack of liquidity of these investments will affect its ability to operate the business in the ordinary course. The Company believes the current lack of liquidity of these investments is temporary and expects that the securities will be redeemed or refinanced at some point in the future. The Company will continue to monitor the value of its auction rate securities at each reporting period for a possible impairment if a further decline in fair value occurs. The auction rate securities have been in an unrealized loss position for more than 12 months. The Company has the ability and the intent to hold these investments until a recovery of fair value, which may be at maturity and as of October 26, 2013, the Company did not consider these investments to be other-than-temporarily impaired.

 

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale investments as of October 26, 2013, were as follows (in thousands):

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Auction rate securities

 

$

6,575

 

$

 

$

(1,108

)

$

5,467

 

Total available-for-sale investments

 

$

6,575

 

$

 

$

(1,108

)

$

5,467

 

 

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale investments as of April 30, 2013, were as follows (in thousands):

 

 

`

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Auction rate securities

 

$

6,750

 

$

 

$

(1,063

)

$

5,687

 

Total available-for-sale investments

 

$

6,750

 

$

 

$

(1,063

)

$

5,687

 

 

The amortized cost and fair value of the auction rate securities by contractual maturity at October 26, 2013, were as follows (in thousands):

 

 

 

Cost

 

Fair Value

 

 

 

 

 

 

 

Due after five through 10 years

 

$

1,300

 

$

1,203

 

Due after 10 years

 

5,275

 

4,264

 

Total

 

$

6,575

 

$

5,467

 

 

Convertible Bonds

 

As of October 26, 2013, the entire balance of available-for-sale convertible bonds consisted of two convertible bonds. The two convertible bonds were issued by CybAero AB (“CybAero”), a publicly traded company in Sweden that develops and manufactures unmanned aerial vehicles. Each bond is in the amount of 10 million Swedish Kronor (“SEK”) and is convertible into 1 million CybAero shares at the conversion price of 10 SEK per share. The maturity date of each of the bonds is November 30, 2017 and each bond bears an annual interest rate of 5%.

 

The Company can exercise its conversion right at any time through October 31, 2017.  CybAero can prepay the bonds with three months’ notice to the Company and the Company may exercise its conversion rights during such three-month period. If certain

 

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Table of Contents

 

AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

conditions are satisfied after November 30, 2015, CybAero can require the Company to convert the two bonds in their entirety into CybAero shares.

 

The convertible bonds each contain an embedded conversion feature which is bifurcated from the bond. The changes in the fair value of the embedded conversion feature are recorded in other income (expense) in the statement of operations. Unrealized gains and losses associated with the bonds are excluded from earnings and reported as a separate component of stockholders’ equity, net of deferred income taxes.

 

On May 14, 2013, CybAero effected a reverse stock split whereby every ten shares of CybAero were converted into one share. All amounts discussed as of October 26, 2013 reflect this reverse stock split.

 

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale convertible bonds as of October 26, 2013, were as follows (in thousands):

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Convertible bonds

 

$

3,037

 

$

461

 

$

(47

)

$

3,451

 

Total available-for-sale investments

 

$

3,037

 

$

461

 

$

(47

)

$

3,451

 

 

The amortized cost, gross unrealized gains, gross unrealized losses, and estimated fair value of the available-for-sale convertible bonds as of April 30, 2013, were as follows (in thousands):

 

 

 

 

 

Gross

 

Gross

 

 

 

 

 

Amortized

 

Unrealized

 

Unrealized

 

 

 

 

 

Cost

 

Gains

 

Losses

 

Fair Value

 

Convertible bonds

 

$

3,037

 

$

6,173

 

$

(139

)

$

9,071

 

Total available-for-sale investments

 

$

3,037

 

$

6,173

 

$

(139

)

$

9,071

 

 

The amortized cost and fair value of the convertible bonds by contractual maturity at October 26, 2013, were as follows (in thousands):

 

 

 

Cost

 

Fair Value

 

 

 

 

 

 

 

Due within five years

 

$

3,037

 

$

3,451

 

Total

 

$

3,037

 

$

3,451

 

 

3. Fair Value Measurements

 

Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy contains three levels as follows:

 

·                 Level 1 — Inputs to the valuation based upon quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.

 

·             Level 2 — Inputs to the valuation include quoted prices in either markets that are not active, or in active markets for similar assets or liabilities, inputs other than quoted prices that are observable, and inputs that are derived principally from or corroborated by observable market data.

 

·                 Level 3 — Inputs to the valuation that are unobservable inputs for the asset or liability.

 

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AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

The Company’s financial assets measured at fair value on a recurring basis at October 26, 2013, were as follows (in thousands):

 

 

 

Fair Value Measurement Using

 

Description

 

Quoted prices in
active markets for
identical assets
(Level 1)

 

Significant
other
observable
inputs
(Level 2)

 

Significant
unobservable
inputs
(Level 3)

 

Total

 

Auction rate securities

 

$

 

$

 

$

5,467

 

$

5,467

 

Convertible bonds

 

 

461

 

2,990

 

3,451

 

Total

 

$

 

$

461

 

$

8,457

 

$

8,918

 

 

Due to the auction failures of the Company’s auction rate securities that began in the fourth quarter of fiscal 2008, there are still no quoted prices in active markets for identical assets as of October 26, 2013.  Therefore, the Company has classified its auction rate securities as Level 3 financial assets.  The following table provides a reconciliation between the beginning and ending balances of items measured at fair value on a recurring basis in the table above that used significant unobservable inputs (Level 3) (in thousands):

 

 

 

Fair Value
Measurements Using
Significant
Unobservable Inputs
(Level 3)

 

Description

 

Auction Rate Securities

 

Balance at April 30, 2013

 

$

8,585

 

Transfers to Level 3

 

 

Total gains (realized or unrealized)

 

 

 

Included in earnings

 

 

Included in other comprehensive income (loss)

 

47

 

Purchases, issuances and settlements, net

 

(175

)

Balance at October 26, 2013

 

$

8,457

 

The amount of total gains or (losses) for the period included in earnings (or change in net assets) attributable to the change in unrealized gains or losses relating to assets still held at October 26, 2013

 

$

 

 

The auction rate securities are valued using a discounted cash flow model.  The analysis considers, among other items, the collateralization underlying the security investments, the creditworthiness of the counterparty, the timing of expected future cash flows, and the estimated date upon which the security is expected to have a successful auction.  As of October 26, 2013, the inputs used in the Company’s discounted cash flow analysis included current coupon rates ranging from 0.1% to 0.3%, estimated redemption periods of 6 to 21 years and discount rates of 7.8% to 20.0%. The discount rates were based on market rates for municipal bond securities, as adjusted for a risk premium to reflect the lack of liquidity of these investments.

 

The bond components of the convertible bonds are considered level 3 assets and are valued using a discounted cash flow model. The analysis considers, among other items, the creditworthiness of the counterparty, the timing of expected future cash flows, and the maturity of the bonds. As of October 26, 2013, the inputs used in the Company’s discounted cash flow analysis included a coupon rate of 5.0%, estimated redemption period of approximately four years and a discount rate of 6.5%.

 

The embedded conversion features of the convertible bonds are considered level 2 assets and are valued using a binomial option pricing model, which uses inputs such as CybAero’s stock price, conversion price, volatility and risk-free interest rate.

 

4. Inventories, net

 

Inventories consist of the following (in thousands):

 

 

 

October 26,
2013

 

April 30,
2013

 

Raw materials

 

$

14,722

 

$

12,845

 

Work in process

 

11,530

 

16,745

 

Finished goods

 

37,536

 

36,842

 

Inventories, gross

 

63,788

 

66,432

 

Reserve for inventory obsolescence

 

(3,159

)

(3,871

)

Inventories, net

 

$

60,629

 

$

62,561

 

 

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AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

5. Warranty Reserves

 

The Company accrues an estimate of its exposure to warranty claims based upon both current and historical product sales data and warranty costs incurred.  The warranty reserve is included in other current liabilities. The related expense is included in cost of sales.  Warranty reserve activity is summarized as follows for the three and six months ended October 26, 2013 and October 27, 2012 (in thousands):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 26,

 

October 27,

 

October 26,

 

October 27,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

1,691

 

$

2,633

 

$

1,515

 

$

2,872

 

Warranty expense

 

332

 

678

 

818

 

1,208

 

Warranty claims settled

 

(383

)

(2,052

)

(693

)

(2,821

)

Ending balance

 

$

1,640

 

$

1,259

 

$

1,640

 

$

1,259

 

 

6. Accumulated Other Comprehensive Loss

 

The components of accumulated other comprehensive loss are as follows (in thousands):

 

 

 

Available-for-sale
securities

 

Accumulated Other
Comprehensive Loss

 

Balance as of April 30, 2013

 

$

(705

)

$

(705

)

Unrealized income

 

47

 

47

 

Income taxes

 

(18

)

(18

)

Balance as of October 26, 2013

 

$

(676

)

$

(676

)

 

7. Customer-Funded Research & Development

 

Customer-funded R&D costs are incurred pursuant to contracts (revenue arrangements) to perform R&D activities according to customer specifications. These costs are direct contract costs and are expensed to cost of sales when the corresponding revenue is recognized, which is generally as the R&D services are performed. Revenue from customer-funded R&D was approximately $6.6 million and $16.9 million for the three and six months ended October 26, 2013, respectively. Revenue from customer-funded R&D was approximately $10.4 million and $17.0 million for the three and six months ended October 27, 2012, respectively.

 

8. Income Taxes

 

For the three and six months ended October 26, 2013, the Company recorded a provision (benefit) for income taxes of $0.2 million and $(2.9) million, respectively, yielding an effective tax rate of 9.1% and 34.4%, respectively.  For the three and six months ended October 27, 2012, the Company recorded a provision for income taxes of $4.5 million and $3.8 million, respectively, yielding an effective tax rate of 34.0% and 34.1%, respectively. The variance from statutory tax rates for the three months ended October 26, 2013 was primarily due to federal research and development tax credits.

 

9. Segment Data

 

The Company’s product segments are as follows:

 

·                                           Unmanned Aircraft Systems (“UAS”) — The UAS segment focuses primarily on the design, development, production, support and operation of innovative UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects to increase the security and effectiveness of the operations of the Company’s customers.

 

·                                           Efficient Energy Systems (“EES”) — The EES segment focuses primarily on the design, development, production, marketing, support and operation of innovative efficient electric energy systems that address the growing demand for electric transportation solutions.

 

The accounting policies of the segments are the same as those described in Note 1, “Organization and Significant Accounting Policies.” The operating segments do not make sales to each other. Depreciation and amortization related to the manufacturing of goods is included in gross margin for the segments. The Company does not discretely allocate assets to its operating segments, nor does the CODM evaluate operating segments using discrete asset information. Consequently, the Company operates its financial systems as a single segment for accounting and control purposes, maintains a single indirect rate structure across all segments, has no

 

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Table of Contents

 

AeroVironment, Inc.

Notes to Consolidated Financial Statements (Unaudited)

 

inter-segment sales or corporate elimination transactions, and maintains limited financial statement information by segment. The segment results are as follows (in thousands):

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

October 26,

 

October 27,

 

October 26,

 

October 27,

 

 

 

2013

 

2012

 

2013

 

2012

 

Revenue:

 

 

 

 

 

 

 

 

 

UAS

 

$

56,079

 

$

65,433

 

$

91,290

 

$

114,239

 

EES

 

8,788

 

14,845

 

17,694

 

24,716

 

Total

 

64,867

 

80,278

 

108,984

 

138,955

 

Cost of sales:

 

 

 

 

 

 

 

 

 

UAS

 

35,280

 

35,279

 

59,879

 

68,035

 

EES

 

5,709

 

9,363

 

12,682

 

15,779

 

Total

 

40,989

 

44,642

 

72,561

 

83,814

 

Gross margin:

 

 

 

 

 

 

 

 

 

UAS

 

20,799

 

30,154

 

31,411

 

46,204

 

EES

 

3,079

 

5,482

 

5,012

 

8,937

 

Total

 

23,878

 

35,636

 

36,423

 

55,141

 

Selling, general and administrative

 

13,084

 

13,176

 

25,543

 

26,797

 

Research and development

 

6,861

 

9,386

 

14,051

 

17,522

 

Income (loss) from operations

 

3,933

 

13,074

 

(3,171

)

10,822

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income

 

195

 

162

 

400

 

334

 

Other expense

 

(2,307

)

 

(5,701

)

 

Income (loss) before income taxes

 

$

1,821

 

$

13,236

 

$

(8,472

)

$

11,156

 

 

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Table of Contents

 

ITEM 2.                 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

This section and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties. In some cases, forward-looking statements can be identified by words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “projects,” “should,” “will,” “would” or similar expressions. Such forward-looking statements are based on current expectations, estimates and projections about our industry, our management’s beliefs and assumptions made by our management. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part II, Item 1A, “Risk Factors.”

 

Unless required by law, we expressly disclaim any obligation to update publicly any forward-looking statements, whether as result of new information, future events or otherwise.

 

Critical Accounting Policies and Estimates

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations discusses our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. When we prepare these consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Some of our accounting policies require that we make subjective judgments, including estimates that involve matters that are inherently uncertain. Our most critical estimates include those related to revenue recognition, inventories and reserves for excess and obsolescence, self-insured liabilities, accounting for stock-based awards, and income taxes. We base our estimates and judgments on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for our judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ from these estimates under different assumptions or conditions.

 

There have been no material changes made to the critical accounting estimates during the periods presented in the consolidated financial statements from those disclosed in the Form 10-K for the fiscal year ended April 30, 2013.

 

Fiscal Periods

 

Due to our fixed year end date of April 30, our first and fourth quarters each consist of approximately 13 weeks. The second and third quarters each consist of exactly 13 weeks. Our first three quarters end on a Saturday.  Our 2014 fiscal year ends on April 30, 2014 and our fiscal quarters end on July 27, 2013, October 26, 2013 and January 25, 2014.

 

Results of Operations

 

Our operating segments are Unmanned Aircraft Systems, or UAS, and Efficient Energy Systems, or EES. The accounting policies for each of these segments are the same. In addition, a significant portion of our research and development, or R&D, selling, general and administrative, or SG&A, and general overhead resources are shared across our segments.

 

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Table of Contents

 

The following table sets forth our revenue and gross margin generated by each operating segment for the periods indicated (in thousands):

 

Three Months Ended October 26, 2013 Compared to Three Months Ended October 27, 2012

 

 

 

Three Months Ended

 

 

 

October 26,

 

October 27,

 

 

 

2013

 

2012

 

Revenue:

 

 

 

 

 

UAS

 

$

56,079

 

$

65,433

 

EES

 

8,788

 

14,845

 

Total

 

64,867

 

80,278

 

Cost of sales:

 

 

 

 

 

UAS

 

35,280

 

35,279

 

EES

 

5,709

 

9,363

 

Total

 

40,989

 

44,642

 

Gross margin:

 

 

 

 

 

UAS

 

20,799

 

30,154

 

EES

 

3,079

 

5,482

 

Total

 

23,878

 

35,636

 

Selling, general and administrative

 

13,084

 

13,176

 

Research and development

 

6,861

 

9,386

 

Income from operations

 

3,933

 

13,074

 

Other income (expense):

 

 

 

 

 

Interest income

 

195

 

162

 

Other expense

 

(2,307

)

 

Income before income taxes

 

$

1,821

 

$

13,236

 

 

Revenue. Revenue for the three months ended October 26, 2013 was $64.9 million, as compared to $80.3 million for the three months ended October 27, 2012, representing a decrease of $15.4 million, or 19%.  UAS revenue decreased by $9.4 million, or 14%, to $56.1 million for the three months ended October 26, 2013, primarily due to lower service revenue of $10.1 million and lower customer-funded R&D revenue of $4.5 million, offset by higher product deliveries of $5.2 million. The decrease in service revenue was primarily due to reduced logistic services of our small UAS systems.  The decrease in customer-funded R&D revenue was primarily due to the transition of the Switchblade program from a developmental program into low-rate production.  The increase in product deliveries was primarily due to higher deliveries of our Puma spares.  EES revenue decreased by $6.1 million, or 41%, to $8.8 million for the three months ended October 26, 2013.  The decrease in EES revenue was primarily due to decreased deliveries of electric vehicle test systems, industrial fast charge systems, and passenger electric vehicle charging systems.

 

Cost of Sales. Cost of sales for the three months ended October 26, 2013 was $41.0 million, as compared to $44.6 million for the three months ended October 27, 2012, representing a decrease of $3.7 million, or 8%. As a percentage of revenue, cost of sales increased from 56% to 63%. UAS cost of sales remained unchanged at $35.3 million for the three months ended October 26, 2013.  As a percentage of revenue, cost of sales for UAS increased from 54% to 63% due to lower absorption of manufacturing and engineering overhead support costs, which included severance costs associated with our organizational realignment.  EES cost of sales decreased $3.7 million, or 39%, to $5.7 million for the three months ended October 26, 2013.  As a percentage of revenue, cost of sales for EES increased from 63% to 65%, primarily due to lower absorption of manufacturing and engineering overhead support costs.

 

Gross Margin. Gross margin for the three months ended October 26, 2013 was $23.9 million, as compared to $35.6 million for the three months ended October 27, 2012, representing a decrease of $11.7 million, or 33%. UAS gross margin decreased $9.4 million, or 31%, to $20.8 million for the three months ended October 26, 2013, primarily due to lower sales volume and lower absorption of manufacturing and engineering overhead support costs.  As a percentage of revenue, gross margin for UAS decreased from 46% to 37%, due to lower absorption of manufacturing and engineering overhead support costs, which included severance costs associated with our organizational realignment.  EES gross margin decreased $2.4 million, or 44%, to $3.1 million for the three months ended October 26, 2013, primarily due to lower sales volume.  As a percentage of revenue, EES gross margin decreased from 37% to 35%, primarily due to lower absorption of manufacturing and engineering overhead support costs.

 

Selling, General and Administrative .   SG&A expense for the three months ended October 26, 2013 was $13.1 million, or 20% of revenue, compared to SG&A expense of $13.2 million, or 16% of revenue, for the three months ended October 27, 2012.

 

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Table of Contents

 

Research and Development. R&D expense for the three months ended October 26, 2013 was $6.9 million, or 11% of revenue, compared to R&D expense of $9.4 million, or 12% of revenue, for the three months ended October 27, 2012.  The decrease was primarily due to lower spending on R&D initiatives.

 

Interest Income. Interest income was $0.2 million for both the three months ended October 26, 2013 and the three months ended October 27, 2012.

 

Other Expense.  Other expense for the three months ended October 26, 2013 was $2.3 million, as compared to $0 for the three months ended October 27, 2012. The increase was primarily due to a $2.3 million reduction in fair value of the embedded conversion feature of each of the convertible bonds that we have invested in.

 

Income Tax Expense. Our effective tax rate was 9.1% for the three months ended October 26, 2013, as compared to an effective tax rate of 34.0% for the three months ended October 27, 2012.  The decrease was primarily due to lower income for the three months ended October 26, 2013.

 

Six Months Ended October 26, 2013 Compared to Six Months Ended October 27, 2012

 

 

 

Six Months Ended

 

 

 

October 26,

 

October 27,

 

 

 

2013

 

2012

 

Revenue:

 

 

 

 

 

UAS

 

$

91,290

 

$

114,239

 

EES

 

17,694

 

24,716

 

Total

 

108,984

 

138,955

 

Cost of sales:

 

 

 

 

 

UAS

 

59,879

 

68,035

 

EES

 

12,682

 

15,779

 

Total

 

72,561

 

83,814

 

Gross margin:

 

 

 

 

 

UAS

 

31,411

 

46,204

 

EES

 

5,012

 

8,937

 

Total

 

36,423

 

55,141

 

Selling, general and administrative

 

25,543

 

26,797

 

Research and development

 

14,051

 

17,522

 

(Loss) income from operations

 

(3,171

)

10,822

 

Other income (expense):

 

 

 

 

 

Interest income

 

400

 

334

 

Other expense

 

(5,701

)

 

(Loss) income before income taxes

 

$

(8,472

)

$

11,156

 

 

Revenue. Revenue for the six months ended October 26, 2013 was $109.0 million, as compared to $139.0 million for the six months ended October 27, 2012, representing a decrease of $30.0 million, or 22%.  UAS revenue decreased by $22.9 million, or 20%, to $91.3 million for the six months ended October 26, 2013, primarily due to lower service revenue of $26.0 million and lower customer-funded R&D revenue of $0.6 million, offset by higher product deliveries of $3.6 million. The decrease in service revenue was primarily due to reduced logistic services for our small UAS systems.  The decrease in customer-funded R&D revenue was primarily due to the transition of the Switchblade program from a developmental program into low-rate production.  The increase in product deliveries was primarily due to higher deliveries of our Puma AE systems.  EES revenue decreased by $7.0 million, or 28%, to $17.7 million for the six months ended October 26, 2013.  The decrease in EES revenue was primarily due to decreased deliveries of electric vehicle test systems, industrial fast charge systems, and passenger electric vehicle charging systems.

 

Cost of Sales. Cost of sales for the six months ended October 26, 2013 was $72.6 million, as compared to $83.8 million for the six months ended October 27, 2012, representing a decrease of $11.2 million, or 13%. As a percentage of revenue, cost of sales increased from 60% to 67%. UAS cost of sales decreased $8.2 million, or 12%, to $59.9 million for the six months ended October 26, 2013, primarily due to lower sales volume.  As a percentage of revenue, cost of sales for UAS increased from 60% to 66% due to lower absorption of manufacturing and engineering overhead support costs, which included severance costs associated with our organizational realignment.  EES cost of sales decreased $3.1 million, or 20%, to $12.7 million for the six months ended October 26, 2013.  As a percentage of revenue, cost of sales for EES increased from 64% to 72%, primarily due to lower absorption of manufacturing and engineering overhead support costs, which included severance costs associated with our organizational realignment.

 

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Table of Contents

 

Gross Margin. Gross margin for the six months ended October 26, 2013 was $36.4 million, as compared to $55.1 million for the six months ended October 27, 2012, representing a decrease of $18.7 million, or 34%. UAS gross margin decreased $14.8 million, or 32%, to $31.4 million for the six months ended October 26, 2013, primarily due to lower sales volume.  As a percentage of revenue, gross margin for UAS decreased from 40% to 34%, due to lower absorption of manufacturing and engineering overhead support costs, which included severance costs associated with our organizational realignment.  EES gross margin decreased $3.9 million, or 44%, to $5.0 million for the six months ended October 26, 2013, primarily due to lower sales volume.  As a percentage of revenue, EES gross margin decreased from 36% to 28%, primarily due to lower absorption of manufacturing and engineering overhead support costs, which included severance costs associated with our organizational realignment.

 

Selling, General and Administrative .   SG&A expense for the six months ended October 26, 2013 was $25.5 million, or 23% of revenue, compared to SG&A expense of $26.8 million, or 19% of revenue, for the six months ended October 27, 2012.  SG&A expense decreased by $1.3 million primarily due to decreased selling and marketing expenses.

 

Research and Development. R&D expense for the six months ended October 26, 2013 was $14.1 million, or 13% of revenue, compared to R&D expense of $17.5 million, or 13% of revenue, for the six months ended October 27, 2012.  The decrease was primarily due to lower spending on R&D initiatives.

 

Interest Income. Interest income was $0.4 million for the six months ended October 26, 2013, compared to interest income of $0.3 million for the six months ended October 27, 2012.

 

Other Expense.  Other expense for the six months ended October 26, 2013 was $5.7 million, as compared to $0 for the six months ended October 27, 2012. The increase was primarily due to a $5.7 million reduction in fair value of the embedded conversion feature of each of the convertible bonds that we have invested in.

 

Income Tax Benefit. Our effective tax rate was 34.4% for the six months ended October 26, 2013, as compared to our effective tax rate of 34.1% for the six months ended October 27, 2012.

 

Backlog .   We define funded backlog as unfilled firm orders for products and services for which funding currently is appropriated to us under the contract by the customer. As of October 26, 2013 and April 30, 2013, our funded backlog was approximately $133.8 million and $59.4 million, respectively.

 

In addition to our funded backlog, we also had unfunded backlog of $72.3 million and $76.6 million as of October 26, 2013 and April 30, 2013, respectively.  We define unfunded backlog as the total remaining potential order amounts under sole-source cost reimbursable and fixed price contracts with multiple one-year options, and indefinite delivery indefinite quantity, or IDIQ, contracts. Unfunded backlog does not obligate the U.S. government to purchase goods or services. There can be no assurance that unfunded backlog will result in any orders in any particular period, if at all. Management believes that unfunded backlog does not provide a reliable measure of future estimated revenue under our contracts.

 

Because of possible future changes in delivery schedules and/or cancellations of orders, backlog at any particular date is not necessarily representative of actual sales to be expected for any succeeding period, and actual sales for the year may not meet or exceed the backlog represented. Our backlog is typically subject to large variations from quarter to quarter as existing contracts expire or are renewed, or new contracts are awarded. A majority of our contracts, specifically our IDIQ contracts, do not currently obligate the U.S. government to purchase any goods or services. Additionally, all U.S. government contracts included in backlog, whether or not funded, may be terminated at the convenience of the U.S. government.

 

Liquidity and Capital Resources

 

We currently have no material cash commitments, except for normal recurring trade payables, accrued expenses and ongoing research and development costs, all of which we anticipate funding through our existing working capital and funds provided by operating activities. The majority of our purchase obligations are pursuant to funded contractual arrangements with our customers. In addition, we do not currently anticipate significant investment in property, plant and equipment, and we believe that our existing cash, cash equivalents, cash provided by operating activities and other financing sources will be sufficient to meet our anticipated working capital, capital expenditure and debt service requirements, if any, during the next twelve months. There can be no assurance, however, that our business will continue to generate cash flow at current levels. The current challenging economic environment continues to create volatility and disruption in the capital markets, diminished liquidity and credit availability, and increased counterparty risk. Nevertheless, we anticipate that existing sources of liquidity and cash flows from operations will be sufficient to satisfy our cash needs for the foreseeable future.

 

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Our primary liquidity needs are for financing working capital, investing in capital expenditures, supporting product development efforts, introducing new products and enhancing existing products and services, and marketing acceptance and adoption of our products and services. Our future capital requirements, to a certain extent, are also subject to general conditions in or affecting the defense and electric vehicle industries and are subject to general economic, political, financial, competitive, legislative and regulatory factors that are beyond our control. Moreover, to the extent that existing cash, cash equivalents, cash from operations, and cash from short-term borrowing are insufficient to fund our future activities, we may need to raise additional funds through public or private equity or debt financing. To the extent we require additional funding, we cannot be certain that such funding will be available to us on acceptable terms, or at all.  Although we are currently not a party to any material agreement or letter of intent with respect to potential investment in, or acquisitions of, businesses, services or technologies, we may enter into these types of arrangements in the future, which could also require us to seek additional equity or debt financing.

 

Our working capital requirements vary by contract type. On cost-plus-fee programs, we typically bill our incurred costs and fees monthly as work progresses, and therefore working capital investment is minimal. On fixed-price contracts, we typically are paid as we deliver products, and working capital is needed to fund labor and expenses incurred during the lead time from contract award until contract deliveries begin.

 

Cash Flows

 

The following table provides our cash flow data for the six months ended October 26, 2013 and October 27, 2012 (in thousands):

 

 

 

Six Months Ended

 

 

 

October 26,
2013

 

October 27,
2012

 

 

 

(Unaudited)

 

Net cash (used in) provided by operating activities

 

$

(9,673

)

$

4,788

 

Net cash provided by investing activities

 

$

312

 

$

1,602

 

Net cash provided by financing activities

 

$

155

 

$

160

 

 

Cash (Used in) Provided by Operating Activities. Net cash used in operating activities for the six months ended October 26, 2013 increased by $14.5 million to $9.7 million, compared to net cash provided by operating activities of $4.8 million for the six months ended October 27, 2012. This increase in net cash used in operating activities was primarily due to lower net income of $12.9 million, higher working capital needs of $4.3 million, lower depreciation and amortization of $1.4 million, and lower tax benefits from stock option exercises of $1.4 million, partially offset by the reduction in fair value of the embedded conversion feature of each of the convertible bonds that we have invested in of $5.7 million.

 

Cash Provided by Investing Activities. Net cash provided by investing activities decreased by $1.3 million to $0.3 million for the six months ended October 26, 2013, compared to net cash provided by investing activities of $1.6 million for the six months ended October 27, 2012. The decrease in net cash provided by investing activities was primarily due to higher acquisitions of property and equipment of $1.5 million.

 

Cash Provided by Financing Activities. Net cash provided by financing activities was $0.2 million for the six months ended October 26, 2013 and October 27, 2012.

 

Off-Balance Sheet Arrangements

 

During the second quarter, there were no material changes in our off-balance sheet arrangements or contractual obligations and commercial commitments from those disclosed in the Form 10-K for the fiscal year ended April 30, 2013.

 

Inflation

 

Our operations have not been, and we do not expect them to be, materially affected by inflation. Historically, we have been successful in adjusting prices to our customers to reflect changes in our material and labor costs.

 

New Accounting Standards

 

Please refer to Note 1 “Organization and Significant Accounting Policies” to our unaudited consolidated financial statements in Part I, Item 1 of this quarterly report for a discussion of new accounting pronouncements.

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

In the ordinary course of business, we are exposed to various market risk factors, including fluctuations in interest rates, changes in general economic conditions, domestic and foreign competition, and foreign currency exchange rates.

 

Interest Rate Risk

 

It is our policy not to enter into interest rate derivative financial instruments. We do not currently have any significant interest rate exposure.

 

Foreign Currency Exchange Rate Risk

 

Since a significant part of our sales and expenses are denominated in U.S. dollars, we have not experienced significant foreign exchange gains or losses to date, and do not expect to incur significant foreign exchange gains or losses in the future. We occasionally engage in forward contracts in foreign currencies to limit our exposure on non-U.S. dollar transactions.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Controls and Procedures

 

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

 

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

 

As required by Rule 13a-15(b) under the Exchange Act, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

 

Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective and were operating at a reasonable assurance level.

 

Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting or in other factors identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended October 26, 2013, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

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PART II. OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

We are not currently a party to any material legal proceedings. We are, however, subject to lawsuits from time to time in the ordinary course of business.

 

ITEM 1A. RISK FACTORS

 

There have been no material changes to the risk factors disclosed under Part I, Item 1A, “Risk Factors,” in our Annual Report on Form 10-K for the fiscal year ended April 30, 2013.  Please refer to that section for disclosures regarding the risks and uncertainties related to our business.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

None.

 

ITEM 5. OTHER INFORMATION

 

None.

 

ITEM 6. EXHIBITS

 

Exhibit
Number

 

Description

10. 1†

 

Contract modification P00015 dated September 5, 2013 under the base contract with the US Army Contracting Command — Redstone Arsenal (Missile) dated August 30, 2012

31.1

 

Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2

 

Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32

 

Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS

 

XBRL Instance Document.

101.SCH

 

XBRL Taxonomy Extension Schema Document.

101.CAL

 

XBRL Taxonomy Calculation Linkbase Document.

101.DEF

 

XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB

 

XBRL Taxonomy Label Linkbase Document.

101.PRE

 

XBRL Taxonomy Presentation Linkbase Document.

 


                 Confidential treatment has been requested for portions of this exhibit. These portions have been omitted and filed separately with the Securities and Exchange Commission.

 

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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.

 

Date: November 26, 2013

 

 

AEROVIRONMENT, INC.

 

 

 

 

 

 

By:

/s/ Timothy E. Conver

 

 

 

Timothy E. Conver

 

 

 

Chairman, Chief Executive Officer and President

 

 

 

(Principal Executive Officer)

 

 

 

 

 

 

 

/s/ Jikun Kim

 

 

 

Jikun Kim

 

 

 

Senior Vice President and Chief Financial Officer

 

 

 

(Principal Financial and Accounting Officer)

 

22


Exhibit 10.1

 

SD\1364062.1 CERTAIN MATERIAL (INDICATED BY AN ASTERISK [***]) HAS BEEN OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE OMITTED MATERIAL HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. AWARD/CONTRACT 1. This Contract Is A Rated Order Under DPAS (15 CFR 700) Rating DOA2 Page Of Pages 1 72 2. Contract (Proc. Inst. Ident.) No. W31P4Q-12-C-0263 3. Effective Date 30 AUG 2012 4. Requisition/Purchase Request/Project No. SEE SCHEDULE 5. Issued By Code W31P4Q 6. Administered By (If Other Than Item 5) Code S0512A ARMT CONTRACTING COMMAMD-REDSTONE CCAM-TM-C WILFREDO RODRIGUEZ (256) 955-9409 REDSTONE ARSENAL AL 35890-5200 WS: TCM 2 DCMA LOS ANGELES 16111 FLOWER STREET BUILDING: 10; FLOOR: 2 SEPULVEDA CA 91343 e-mail address: WLFREDO.RODRIGUEZ@US.ARMY.MIL SCD B PAS NONE ADP PT HQ0339 7. Name And Address Of Contractor (No., Street, City, County, State and Zip Code) 8. Delivery FOB Origin Other (See Below) 9. Discount For Prompt Payment AEROVIRONMENT, INC. 181 W HUNTINGTON DR STE 202 MONROVIA, CA 91016-1456 TYPE BUSINESS: Other Small Business Performing in U.S. Code 60107 Facility Code 10. Submit Invoices (4 Copies Unless Otherwise Specified) To The Address Shown In: Item 12 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 43218-2301 13. Authority For Using Other Than Full And Open Competition: 10 U.S.C. 2304(c)(1 ) 41 U.S.C. 253(c)( ) 14. Accounting And Appropriation Data See Section G 15A. Item No. 15B. Supplies/Services 15C. Quantity 15D. Unit 15E. Unit Price 15F. Amount SEE SCHEULE CONTRACT TYPE: Firm-Fixed-Price Cost-Plus-Fixed-Fee Contract Expiration Date: 2014SEP20 15G. Total Amount Of Contract $5,832,507.00 16. Table Of Contents (X) Sec. Description Page(s) (X) Sec. Description Page(s) Part I – The Schedule Part II – Contract Clauses X A Solicitation/Contract Form 1 X I Contract Clauses 52 X B Supplies or Services and Prices/Costs 2 Part III – List of Documents, Exhibits, And Other Attachments X C Description/Specs./Work Statement 29 X J List of Attachments 72 X D Packaging and Marking 36 Part IV – Representations And Instructions X E Inspection and Acceptance 37 X F Deliveries or Performance 38 K Representations, Certifications, and Other Statements of Offerors X G Contract Administration Data 42 L Instrs., Conds., and Notices to Offerors X H Special Contract Requirements 45 M Evaluation Factors for Award Contracting Officer Will Complete Item 17 (Sealed-Bid or Negotiated Procurement) Or 18 (Sealed-Bid Procurement) As Applicable 17. Contractor’s Negotiated Agreement (Contractor Is required to sign this document and return 2 signed 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. (Block 18 should be checked only when awarding a sealed-bid contract.) 19A. Name And Title Of Signer (Type Or Print) [***] CONTRACT DIRECTOR, TAS 20A. Name Of Contracting Officer COLLEEN RODRIGUEZ COLLEEN.RODRIGUEZ.ARMY.MIL (256) 8942-6110 19B. Name of Contractor By: [***] (Signature of person authorized to sign) 19C. Date Signed 8/30/12 20B. United States Of America By: /SIGNED/________________________ (Signature of Contracting Officer) 20C. Date Signed 30 Aug 2012 AUTHORIZED FOR LOCAL REPRODUCTION Preview edition is NOT usable Standard Form 26 (Rev.4/2008) Prescribed by GSA – FAR (48 CFR) 53.21 4(a) KIND OF CONTRACT: Other [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions.

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 2 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT SECTION B - SUPPLIES OR SERVICES AND PRICES/COSTS 0001 PART NO. 62883 NSN: 9999-99-999-9999 0001AA BLOCK 10 AUR 2/LAUNCHER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 62883 PRON: CW1LRD0151 PRON AMD: 03 ACRN: AA AMS CD: 27380278J5L PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E203 FB4497 J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (FB4497) FB4497 436 LRS LGRSP CP 302 677 5002 639 EVREUX ST DOVER AFB, DE, 19902-5139 0001AB BLOCK 10 AUR W/LAUNCHER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 62883 PRON: CW1LRDO251 PRON AMD: 03 ACRN: AA AMS CD: 27380278J5L PSC: 1410 Packing and Marking

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 3 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E204 FB4497 J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (FB4497) FB4497 436 LRS LGRSP CP 302 677 5002 639 EVREUX ST DOVER AFB, DE, 19902-5139 0001AC GCU W/TOUGHBOOK/FALCON VIEW SOFTWARE [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68125 PRON: CW1LRD0351 PRON AMD: 03 ACRN: AA AMS CD: 27380278J5L PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E205 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 4 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0001AD BLOCK 10 TRAINING SIMULATOR (SPARE) [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68129 PRON: CW1LRD0451 PRON AMD: 02 ACRN: AA AMS CD: 27380278J5L PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E206 WSJ9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AMCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0001AE CATCH NET [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68017 PRON: CW1LRD0551 PRON AMD: 02 ACRN: AA AMS CD: 27380278J5L PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E207 WSJ9KB J 2 DEL REL CD QUANTITY DEL DATE

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 5 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0001AF PROGRAM MANAGEMENT – SYSTEM TESTING [***] LO $ [***] CLIN CONTRACT TYPE: Cost-Plus-Fixed-Fee NOUN: Program Management PRON: CW1LRD0651 PRON AMD: 03 ACRN: AA AMS CD: 27380278J5L PSC: 1410 $ [***] = COST [***] = FEE $ [***] = TOTAL CPFF ONE LOT CONSISTS OF PROGRAM MANAGEMENT AND REPORTING TASKS REQUIRED TO SUCCESSFULLY EXECUTE SYSTEM TESTING. (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DLVR SCH PERF COMPL REL CD QUANTITY DATE 001 [***] [***] $ [***] 0002 PART NO. 66024 NSN: 9999-99-999-9999 0002AA BLOCK 10 INSERT TRAINING VEHICLE W/LAUNCHER [***] EA $ [***] $ [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 6 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 66024 PRON: CW2LPA0251 PRON AMD: 03 ACRN: AB PSC: 1410 CUSTOMER ORDER NO: MIPRPR10143931 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E215 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0002AB BLOCK 10 SOFT TACTICAL LAUNCHER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68014 PRON: CW2LPA0351 PRON AMD: 03 ACRN: AB PSC: 1410 CUSTOMER ORDER NO: MIPRPR10143931 Packing and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E216 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 7 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0002AC CATCH NET [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68017 PRON: CW2LPA0151 PRON AMD: 02 ACRN: AB PSC: 1410 CUSTOMER ORDER NO: MIPRPR10143931 Packing and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E208 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0002AD PROGRAM MANAGEMENT – TRAINING & FIELDING [***] LO $ [***] CLIN CONTRACT TYPE: Cost-Plus- Fixed-Fee NOUN: Program Management PRON: CW2LPA0951 PRON AMD: 02 ACRN: AB PSC: 1410 CUSTOMER ORDER NO: MIPRPR10143931 $ [***] = COST

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 8 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT [***] = FEE $ [***] = TOTAL CPFF [***] (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DLVR SCH PERF COMPL REL CD QUANTITY DATE 001 [***] [***] $ [***] 0003 PART NO. 68125 NSN: 9999-99-999-9999 0003AA GCU W/TOUGHBOOK/FALCON VIEW SOFTWARE (SPARE) [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 628125 PRON: CW2LOM0251 PRON AMD: 02 ACRN: AC AMS CD: 11406300000 PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E209 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 9 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0003AB BLOCK 10 TRAINING SIMULATOR (SPARE) [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68129 PRON: CW2LOM0351 PRON AMD: 02 ACRN: AC AMS CD: 11406300000 PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E210 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0003AC CATCH NET (SPARE) [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68017 PRON: CW2LOM0451 PRON AMD: 02 ACRN: AC AMS CD: 11406300000 PSC: 1410 Packaging and Marking Inspection and Acceptance

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 10 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E211 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0003AD BLOCK 10 REFURB TEST/ALIGNMENT KIT (SPARE) [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68018 PRON: CW2LOM0551 PRON AMD: 02 ACRN: AC AMS CD: 11406300000 PSC: 1410 Packing and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E212 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 11 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0003AE SWITCHBLADE REFURBISHMENT PARTS KIT [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 68019 PRON: CW2LOM0651 PRON AMD: 02 ACRN: AD AMS CD: 11406300000 PSC: 1410 Packing and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E213 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0003AF BLOCK 10 REFURBISHMENT PROCEDURES MANUAL [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: IAW ATTACHMENT 0001 PRON: CW2LOM0751 PRON AMD: 02 ACRN: AC AMS CD: 11406300000 PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2127E214 WSJ9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 12 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0003AG FSR SUPPORT [***] EA $ [***] CLIN CONTRACT TYPE: Cost-Plus-Fixed-Fee NOUN: SWITCHBLADE FSR SUPP PRON: CW2LOM80851 PRON AMD: 03 ACRN: AC AMS CD: 11406300000 PSC: 1410 [***] NOTE: CONTRACTOR IS NOT AUTHORIZED TO PROCEED TO PHASE II WITHOUT PRIOR WRITTEN DIRECTION FROM THE CONTRACTING OFFICER (End of narrative B002) PHASE I FUNDING $ [***] = COST [***] = FEE $ [***] = TOTAL CPFF PHASE II FUNDING $ [***] = COST [***] = FEE $ [***] = TOTAL CPFF (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 13 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT DLVR SCH PERF COMPL REL CD QUANTITY DATE 001 [***] [***] $ [***] 0003AH BLOCK 10 REFURB TEST/ALIGNMENT KIT (SPARE) [***] EA $ [***] $ [***] NOUN: PART NO. 68018 PSC: 1410 Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 3 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0003AJ PROGRAM MANAGEMENT – THEATER LOGISTICS SUPPT [***] LO $ [***] CLIN CONTRACT TYPE: Cost-Plus-Fixed-Fee NOUN: Program Management PRON: CW2LOM1251 PRON AMD: 02 ACRN: AC AMS CD: 11406300000 PSC: 1410 $ [***] = COST [***] = FEE $ [***] = TOTAL CPFF [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 14 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DLVR SCH PERF COMPL REL CD QUANTITY DATE 001 [***] [***] $ [***] 0004 PART NO. 66024 NSN: 9999-99-999-9999 0004AA OPTION - BLK 10 INERT TRNG VEHI W/LAUNCHER [***] EA $ [***] $ [***] NOUN: PART NO. 66024 PSC: 1410 THIS IS A FFP OPTION FOR [***] EACH BLOCK 10 INERT TRAINING VEHICLE W/LAUNCHER. THIS IS AN INFORMATIONAL SLIN ONLY. (End of narrative B001) Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 15 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0004AB BLOCK 10 INERT TRAINING VEHICLE W/LAUNCHER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 66024 PRON: CW1LPA1351 PRON AMD: 01 ACRN: AE PSC: 1410 CUSTOMER ORDER NO: 10230604 THIS IS A PARTIAL OPTION EXERCISE THERE [***] EACH OPTIONS REMAINING (End of narrative B001) Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2060E204 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0004AC BLOCK 10 INERT TRAINING VEHICLE W/LAUNCHER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 66024 PRON: CW0LPA1151 PRON AMD: 01 ACRN: AF

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 16 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT AMS CD: 53900017186 PSC: 1410 CUSTOMER ORDER NO: MIPR2LRFOJ9554 THIS IS A PARTIAL OPTION EXERCISE. THERE [***] EACH OPTIONS REMAINING. (End of narrative B001) Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2060E202 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0004AD BLOCK 10 INERT TRAINING VEHICLE W/LAUNCHER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 66024 PRON: CW2LPA1251 PRON AMD: 03 ACRN: AG PSC: 1410 CUSTOMER ORDER NO: 10230603 THIS IS A PARTIAL OPTION EXERCISE. THERE [***] EACH OPTIONS REMAINING. (End of narrative B001) Packing and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 17 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 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 W80FLT2060E203 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022 REDSTONE ARSENAL, AL, 35898-5000 0004AE BLOCK 10 INERT TRAINING VEHICLE W/LAUNDER [***] EA $ [***] $ [***] CLIN CONTRACT TYPE: Firm-Fixed-Price NOUN: PART NO. 66024 PRON: CW0LPA1051 PRON AMD: 01 ACRN: AF AMS CD: 53900017184 PSC: 1410 CUSTOMER ORDER NO: MIPR2LRF0J9555 THIS IS A PARTIAL OPTION EXERCISE THERE [***] EACH OPTIONS REMAINING (End of narrative B001) Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 W80FLT2060E201 W5J9KB J 2 DEL REL CD QUANTITY DEL DATE 001 [***] [***] FOB POINT: Destination SHIP TO: (W5J9KB) SR WOWF USAG REDSTONE ARSENAL AWCF SARSS1 COTTONWOOD ROAD BLDG 8022

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 18 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT REDSTONE ARSENAL, AL, 35898-5000 0005 OPTION I - INERT TRAINING VEHICLE W/LAUNCHER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 66024 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0006 OPTION I – BLOCK 10 AUR W/LAUNCHER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 62883 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 19 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 001 FOB POINT: Destination 0007 OPTION I – GUC W/TOUGHBOOK/FALCON VIEW See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68125 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0008 OPTION I – BLOCK 10 TRAINING SIMULATOR See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68129 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 20 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT FOB POINT: Destination 0009 OPTION I – BLOCK 10 SOFT TACTICAL LAUNCHER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68014 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0010 OPTION I – CATCH NET See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68017 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 21 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT FOB POINT: Destination 0011 OPTION I – BATTERY CHARGER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68022 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0012 OPTION I – PER SUPPORT [***] LO $ [***] NOT TO EXCEED $ [***] NOUN: IAW ATTACHMENT 0001/PARA 3.2 PSC: 1410 PSC: 1410 [***] (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 22 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0013 OPTION I – TRAINING & REFURBISHMENT [***] LO $ [***] NOT TO EXCEED $ [***] NOUN: IAW ATTACHMENT 0001/PARA 3.4.2 PSC: 1410 PSC: 1410 [***] (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***] 0014 OPTION I – FLIGHT TEST SUPPORT [***] LO $ [***] NOT TO EXCEED $ [***] NOUN: IAW ATTACHMENT 0001/PARA 3.3 PSC: 1410 PSC: 1410 [***] (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 23 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT 0015 OPTION I – TRAINING & REFURBISHMENT [***] LO $ [***] NOT TO EXCEED $ [***] NOUN: IAW ATTACHMENT 0001/PARA 5.0 PSC: 1410 PSC: 1410 ONE LOT CONSISTS OF FAILURE ANALYSIS PERFORMED ON HARDWARE FAILURE FOR ALL ITEMS IN THE CONTRACT. (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***] 0016 OPTION II – BLOCK 10 AUR W/LAUNCHER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 62883 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0017 OPTION II – GCU W/THOUGHBOOK/FALCON VIEW See Range Pricing $ [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 24 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NOT TO EXCEED $ [***] NOUN: PART NO. 68125 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0018 OPTION II – BLK 10 INSERT TRNG VECH W/LAUNCHER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 66024 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0019 OPTION II – BLOCK 10 TRAINING SIMULATOR See Range Pricing $ [***] NOT TO EXCEED $ [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 25 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NOUN: PART NO. 68129 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0020 OPTION II – BLK 10 SOFT TACTICAL LAUNCHER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68014 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: Origin ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0021 OPTION II – CATCH NET See Range Pricing $ [***] NOT TO EXCEED $ [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 26 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NOUN: PART NO. 68017 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: ORIGIN ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0022 OPTION II – BATTERY CHARGER See Range Pricing $ [***] NOT TO EXCEED $ [***] NOUN: PART NO. 68022 PSC: 1410 PSC: 1410 Range Quantifies FROM TO UNIT PRICE [***] [***] $ Packaging and Marking Inspection and Acceptance INSPECTION: Origin ACCEPTANCE: Origin Deliveries or Performance DOC SUPPL REL CD MILSTRIP ADDR SIG CD MARK FOR TP CD 001 FOB POINT: Destination 0023 OPTION II – TRAINING & REFURBISHMENT 1 LO $ [***] NOT TO EXCEED $ [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 27 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT NOUN: IAW ATTACHMENT 0001/PARA 3.4.3 PSC: 1410 PSC: 1410 [***] (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***] 0024 OPTION II – FLIGHT TEST SUPPORT [***] LO $ [***] NOT TO EXCEED $ [***] NOUN: IAW ATTACHMENT 0001/PARA 3.3 PSC: 1410 PSC: 1410 [***] (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***] 0025 OPTION II – FAILURE ANALYSIS [***] LO $ [***] NOT TO EXCEED $ [***] NOUN: IAW ATTACHMENT 0001/PARA 5.0

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 28 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 ITEM NO SUPPLIES/SERVICES QUANTITY UNIT UNIT PRICE AMOUNT PSC: 1410 PSC: 1410 ONE LOT CONSISTS OF FAILURE ANALYSIS PERFORMED ON HARDWARE FAILURES FOR ALL ITEMS IN THE CONTRACT. (End of narrative B001) Inspection and Acceptance INSPECTION: Certificate of Conformance ACCEPTANCE: Destination Deliveries or Performance DEL REL CD QUANTITY DATE AFTER AWARD 001 [***] [***] 0026 DATA ITEM [***] LO $ [***] $ [***] NOUN: IAW DD FORM 1423 Inspection and Acceptance INSPECTION: Destination ACCEPTANCE: Destination

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 29 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. SECTION C - DESCRIPTION/SPECIFICATIONS/WORK STATEMENT Regulatory Cite Title Date C-1 952-222-0001 PROHIBITION AGAINST HUMAN TRAFFICKING, INHUMANE LIVING CONDITIONS, AUG/2011 (C3) AND WITHHOLDING OF EMPLOYEE PASSPORTS (a) All contractors (contractors refers to both prime contractors and all subcontractors at all tiers) are reminded of the prohibition contained in Title 18, United States Code, Section 1592, against knowingly destroying, concealing, removing, confiscating, or processing any actual or purported passport or other immigration document, or any other actual or purported government identification document, of another person, to prevent or restrict or to attempt to prevent or restrict, without lawful authority, the persons liberty to move or travel, in order to maintain the labor or services of that person. (b) Contractors are also required to comply with the following provisions: (1) Contractors shall only hold employee passports and other identification documents discussed above for the shortest period of time reasonable for administrative processing purposes. (2) Contractors shall provide all employees with a signed copy of their employment contract, in English as well as the employees native language, that defines the terms of their employment/compensation. (3) Contractors shall not utilize unlicensed recruiting firms or firms that charge illegal recruiting fees. (4) Contractors shall be required to provide adequate living conditions (sanitation, health, safety, living space) for their employees. Fifty square feet is the minimum acceptable square footage of personal living space per employee. Upon contractors written request, Contracting Officers may grant a waiver in writing in cases where the existing square footage is within 20% of the minimum, and the overall conditions are determined by the Contracting Officer to be acceptable. A copy of the waiver approval shall be maintained at the respective life support area. (5) Contractors shall incorporate checks of life support areas to ensure compliance with the requirements of this Trafficking in Persons Prohibition into their Quality Control program, which will be reviewed within the Governments Quality Assurance process. (6) Contractors shall comply with International and Host Nation laws regarding transit/exit/entry procedures and the requirements for visas and work permits. (c) Contractors have an affirmative duty to advise the Contracting Officer if they learn of their employees violating the human trafficking and inhuman living conditions provisions contained herein. Contractors are advised that Contracting Officers and/or their representatives will conduct random checks to ensure contractors and subcontractors at all tiers are adhering to the law on human trafficking, humane living conditions and withholding of passports. (d) The contractor agrees to incorporate the substance of this clause, including this paragraph, in all subcontracts under his contract. (End of clause) C-2 952.223-0001 REPORTING KIDNAPPINGS, SERIOUS INJURIES, AND DEATHS JUL/2010 (C3) Contractors shall notify the Contracting Officer, as soon as practicable, whenever employee kidnappings, serious injuries or deaths occur. Report the following information: Contract Number Contract Description & Location Company Name Reporting party: Name Phone number e-mail address Victim: Name Gender (Male/Female)

 


 CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 30 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. Age Nationality Country of permanent residence Incident: Description Location Date and time Other Pertinent Information (End of clause) C-3 952-225-0001 ARMING REQUIREMENTS AND PROCEDURES FOR PERSONAL SECURITY SERVICES DEC/2011 (C3) CONTRACTORS AND FOR REQUESTS FOR PERSONAL PROTECTION (a) General, Contractor and its subcontractors at all tiers that require arming under this contract agree to obey all laws, regulations orders, and directives applicable to the use of private security personnel in Iraq and Afghanistan, including U.S. CENTCOM, Office of Security Cooperation-Iraq (OSC-I) and United States Forces - Afghanistan (USFOR-A) Commander orders, instructions, polices and directives. Contractors will ensure that all employees, including employees at any tier of subcontracting relationships armed under the provisions of this contract, comply with the contents of this clause and with the requirements set forth in the following: (1) DODI 3020.50, Private Security Contractors (PSC-) Operating in Contingency Operations; (2) DODI 3020.41, Operational Contract Support (3) DODI 5210.56, Carrying of Firearms and the Use of Force by DoD Personnel Engaged in Security, Law and Order, or Counterintelligence Activities; (4) DFARS 252.225-7039, Contractors Performing Private Security Functions; (5) DFARS 252.225-7040, Contractor Personnel Authorized to Accompany U.S Armed Forces Deployed Outside the United States; (6) Class Deviation 2011 -00004. Contractor Personnel in the United States Central Command Area of Responsibility (DFARS 252.225-7995); (7) USFOR-A, FRAGO 11-128, Outlines Management of Armed Contractors and Private Security Companies Operating in the Combined Joint Operations Area — Afghanistan (CJOA-A); (8) OSC-I OPORD 11-01 , Annex C, Appendix 20; (9) U.S. CENTCOM Policy and Delegation of Authority for Personal Protection and Contract Security Service Arming of DoD Civilian Personnel, dated 18 Jan 2011; (10) Office of Security Cooperation-Iraq (OSC-I) Policy Memorandum #14 — Civilian Arming Program (CAP), dated 23 November 2011; (b) Required Contractor Documentation. Contractors and their subcontractors at all tiers that require arming approval shall provide to the arming approval authority via the COR consistent documentation (signed and dated by the employee and employer as applicable) for each of their employees who will seek authorization to be armed under the contract as follows: (1) Weapons Qualification/Familiarization. All employees must meet the weapons qualification requirements on the requested weapon (s) established by any DoD or other U.S. government agency. Law of Armed Conflict (LOAC); Rules for the Use of Force (RUF), as defined in the U.S. CENTCOM Policy, dated 23 December 2005; and distinction between the above-prescribed RUF and the Rules of Engagement (ROE), which are applicable only to military forces. (2) Completed DD Form 2760 (or equivalent documentation) for each armed employee, indicating that the employee is not otherwise prohibited under U.S. law from possessing the required weapon or ammunition. (3) Written acknowledgement by the individual of the fulfillment of training responsibilities and the conditions for the authorization to carry firearms. This document includes the acknowledgement of the distinctions between the ROE applicable to military forces and RUF that control the use of weapons by DoD civilians, DoD contractors and PSCs. (4) Written acknowledgement signed by both the armed employee and by a representative of the employing company that use of weapons could subject both the individual and company to U.S. and host nation prosecution and civil liability. (5) A copy of the contract between the contractor’s company and the U.S. Government that verifies the individual’s employment and addresses the need to be armed. (6) One (1) copy of a business license from the Iraqi or Afghani Ministry of Trade or Interior. (7) One (1) copy of a license to operate as a PSC (or a temporary operating license) from the Ministry of Interior. (c) Communication Plan. The contractor will submit to the COR a communications plan that, at a minimum, sets forth the following: (1) The contractor’s method of notifying the OSC-I Base Defense Operations Center (BDOC) (Iraq) and military forces (Afghanistan) requesting assistance where hostilities arise, combat action is needed, or serious incidents have been observed. (2) How relevant threat information will be shared between contractor security personnel and U.S. military forces. (3) How the contractor will coordinate transportation with appropriate OSC-I or USFOR-A authorities.

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 31 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. (d) Plan for Accomplishing Employee Vetting. The contractor will submit to the COR an acceptable plan for vetting all contractor and subcontractor local national and third country national employees. The contractor shall, at a minimum, perform the following (which will be specifically addressed in its plan): (1) Local Nationals: Perform Local and National Agency Background Checks in accordance with Host Nation Government Policies and Protocols. (2) Use one or more of the following sources when conducting the background checks on Third Country Nationals: Interpol, FBI, Country of Origin Criminal Records, Country of Origin U.S. Embassy Information Request, or CIA records. (3) All local nationals and third country nationals will voluntarily submit to full biometric enrollment in accordance with theater biometric policies prior to submitting arming requests. All local nationals and third country nationals will voluntarily submit to routine biometric screening in accordance with local installation policies and procedures. The contractor will immediately notify the COR, local installation Force Protection agency, and the theater arming approval authority of any individuals who are revealed as potential security risks during biometric processing. (4) The Contractor shall provide to the COR official written certification of candidate(s) suitability for employment. This certification may address multiple employees on a single certification but must clearly state each employee was vetted in accordance with the Contractor’s plan for accomplishing employee vetting. (e) Penalties for Non-Compliance. Failure of contractor or subcontractor employee(s) to comply with the laws, regulations, orders, and rules (including those specified herein) governing the use of force, training, arming authorization, and incident reporting requirements may result in the revocation of weapons authorization for such employee(s). Where appropriate, such failure may also result in the total revocation of weapons authorization for the contractor (or subcontractor) and sanctions under the contract, including termination. (f) Criminal and Civil Liability. Arming of contractor or subcontractor employees under this contract may subject the contractor, its subcontractors, and persons employed by the same to the Civil and criminal jurisdiction of the U.S. and Host Nation. “Host Nation” refers to the nation or nations where services under this contract are performed. Additionally, the arming authority’s authorization letter is valid for a maximum of twelve (12) months from the date of the prior letter (unless authorization is earlier invalidated by a lapse in training). (Afghanistan only) (g) Lapses in Training or Authorization. Failure to successfully retrain an employee who has been properly authorized to be armed under this contract within twelve (12) months of the last training date will constitute a lapse in the employee’s authorization to possess and carry the weapon. All unauthorized employees will immediately surrender their weapon and authorization letter to the contractor and will remain unarmed until such time as they are retrained and newly approved by the arming authority. (h) Authorized Weapon & Ammunition Types. Unless the BDOC for Iraq or the Deputy Commander of USCENTCOM (DCDRUSCENTCOM) (or a designes) for Afghanistan expressly provides otherwise, all arming requests and authorizations for contractor or subcontractor employees under this contract shall be limited to U. S. Government-approved weapons and ammunition. Notwithstanding Host Nation laws or regulations that would allow use of heavier weapons by contract security/PSC, all DoD security service / PSC contractors must have weapons approved by the RSO or DCDRUSCENTCOM (or a designee) before use. This restriction applies to all weapons in the possession of contractor employees, even if such weapons are required for personal protection. The following weapons and ammunition are currently authorized by the arming authority for use in Iraq and Afghanistan: (1) The M9, M4, M16, or equivalent (equivalency determination by the appropriate arming authority). (2) The M9 or equivalent sidearm will be the standard personal protection weapon unless other weapons are specifically requested and approved. (3) Standard authorized weapons are selectable fire semi-automatic weapons only. All Non U.S. and Non-standard weapons must be submitted to the theater arming authority for review and approval. Non-standard weapons are classified as any machine gun, belt — fed or crew served weapon or any weapon utilizing ammunition greater than 7.62mm X 51mm NATO. Contractors must also provide scorecards and criteria for qualification appropriate to the Non-standard weapon’s Caliber. (4) U.S. government Ball ammunition is the standard approved ammunition. (i) Requirements for Individuals Weapons Possession. All employees of the contractor and its subcontractors at all tiers who are authorized to be armed under this contract must: (1) Possess only those U.S. Government-approved weapons and ammunition for which they are qualified under the training requirements of section (b) and subsequently authorized to carry. (2) Carry weapons only when on duty or at a specific post (according to their authorization). (3) Not conceal any weapons, unless specifically authorized. (4)Carry proof of authorization to be armed. Employees no possessing such proof will be deemed unauthorized and must surrender their weapons to their employer. (5) IAW USCENTCOM G.O. #1, Consumption of alcohol or use of any intoxicating substances which may impair judgment, medication or otherwise in Afghanistan is prohibited. (6) Employees shall not consume any alcoholic beverage while armed or within eight (8) hours of the next work period when they will be armed. There are no circumstances under which a person will be authorized to consume any alcoholic beverage or use any judgment impairing substance when armed for personal protection. SD/1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 32 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. (j) Weapons/Equipment Restrictions and Responsibilities. Unless otherwise provided, the U.S. Government will not provide any weapons or ammunition to contractors, their subcontractors, or any employees of the same. The Contractor will provide all weapons and ammunition to those employees that will be armed under the contract. The contractor and its subcontractors at all tiers will also provide interceptor body armor, ballistic helmets, and the Nuclear, Biological, and Chemical (NBC) protective masks to those employees that require such equipment in the performance of their duties. (k) Rules for the Use of Force (RUF). In addition to the RUF and ROE training referenced in paragraph (b), the contractor and its subcontractors at all tiers will monitor and report all activities of its armed employees that may violate the RUF and/or otherwise trigger reporting requirements as serious incidents. Prompt reporting demonstrates a desire by the contractor and its subcontractors to minimize the impact of any violations and, therefore, will be given favorable consideration. Violations of the RUF include, though are not limited to: (1) Failing to cooperate with Coalition and Host Nation forces. (2) Using deadly force, other than in self-defense where there is a reasonable belief of imminent risk of death or serious bodily harm. (3) Failing to use a graduated force approach. (4) Failing to treat the local civilians with humanity or respect. (5) Detaining local civilians, other than in self-defense or as reflected in the contract terms. (l) Retention and Review of Records. The Contractor and all subcontractors at all tiers shall maintain records on weapons training, LOAC, RUF and the screening of employees for at least six (6) months following the expiration (or termination) of the contract. The contractor and its subcontractors at all tiers shall make these records available to the Contracting Officer or designated representative, at no additional cost to the government, within 72 hours of a request. (m) Contractor Vehicles. Vehicles used by contractor and subcontractor personnel in the course of their security duties shall not be painted or marked to resemble U.S./Coalition or host nation military and police force vehicles. (n) Monthly Reporting. The prime contractor will report monthly arming status to the Contracting officer responsible for this contract, and any other organization designed by the Contracting Officer in accordance with theater policy and the time lines defined in the Performance Work Statement. (End of clause) C-4 952.225-0002 ARMED PERSONNEL INCIDENT REPORTS DEC/2011 (C3) (a) All contractors and subcontractors in the Iraq or United States Forces-Afghanistan (USFOR-A) theater of operations shall comply with and shall ensure that their personnel supporting the offices of security Cooperation-Iraq (OSC-I) or USFOR-A personnel or forces are familiar with and comply with all applicable orders, directives, and instructions issued by the respective OSC-I or US FOR-A Commanders relating to force protection and safety. (b) IRAQ: Contractors shall provide an initial report of all weapons firing incidents or any other serious incidents they or their contractors are involved in to nearest OSC-I Base Defense Operations Center (BDOC) (listed below) as soon as practical, but not later than 4 hours after the incident. The contractor and its subcontractors at all tiers shall submit a written report to the BDOC, the Contracting officer (XO) within 96 hours of the incident. Interim reports shall be submitted between the initial and final report should also be sent to the OSC-I: DLOSC-ICHOPS@iraq.cent.com.mil or SVOIP 708-243-2483. Umm Qaar 708-241-5490 Beamaya 708-242-0012/0014 Taji 708-242-6775/6205 Union III 708-243-2377 Tikrit 709-242-1002 Kirkuk 708-242-2203 (C) AFGHANISTAN: In the event a weapon firing incident or any other serious incident, contractors shall prepare and submit an initial incident report as soon as feasible, but not later than 4 hours from the beginning of the incident, to the Contracting officer (KO), Contracting officer’s Representative (COR), USFOR-A ACOD, and USFOR-A J3 situational Awareness Room (SAR). Additionally, the contractor and its subcontractors at all tiers shall submit a written report to the above personnel within 96 hours of the incident. Information shall include: the name of the company, where the incident occurred, time when the incident occurred, a brief description of the events leading up to the incident, and a point of contact for the company. Contractors and anyone retransmitting the report shall make reasonable efforts to transmit incident reports via secured means (SIPRnet or CENTRIX) when the incident report includes operationally sensitive information. (d) Contractors shall provide first aid and request MEDEVAC of injured persons, and remain available for U.S. or Coalition response

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 33 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. forces, based upon the situation. In the event contractor personnel are detained by U.S. or Coalition Forces, prolonged detention due to lack of proper identification can be alleviated by contractor personnel possessing on their person information that includes the contractor’s name, the contract number, a contractor management POC, and the phone number of the CONOC/SAR Watch. Contractor and subconractor personnel shall carry their Letter of Authorization {LOA} on their person at all times. {End of clause} C-5 952.225-0003 FITNESS FOR DUTY AND MEDICAL/DENTAL CARE LIMITATIONS (AFGHANISTAN) DEC/2011 {C3} (a) The contractor shall perform the requirements of this contract notwithstanding the fitness for duty of deployed employees, the provisions for care offered under this section, and redeployment of individuals determined to be unfit. Contractor personnel who deploy for multiple tours, for more than 12 months total must be re-evaluated for fitness to deploy. An examination will remain valid for 15 months from the date of the physical. The contractor bears the responsibility for ensuring all employees are aware of the conditions and medical treatment available at the performance location. The contractor shall include this information and requirement in all subcontracts with performance in the theater of operations. (b) The contractor shall not deploy an individual with any of the following conditions unless approved by the appropriate CENTCOM Service Component {i.e. ARCENT,AFCENT, etc.} Surgeon: Conditions which prevent the wear of the personal protective equipment, including protective mask, ballistic helmet, body armor, and chemical/biological protective garments; conditions which prohibit required theater immunizations or medications; conditions or current medical treatment or medications that contraindicate or preclude the use of chemical and biological protective’s and antidotes; diabetes mellitus, Type I or II, on pharmacological therapy; symptomatic coronary artery disease, or with myocardial infarction within one year prior to deployment, or within six months of coronary artery bypass graft, coronary artery angioplasty, or stunting; morbid obesity (EMI >/= 40%); dysrhythmias or arrhythmias, either symptomatic or requiring medical or electrophysiological control; uncontrolled hypernation, current treatment, or recently diagnosed/treated and requiring therapeutic anticoagulation; Malignancy, newly diagnosed or under current treatment, or recently diagonsed/treated and requiring frequent subspecialist surveillance, examination, and/or laboratory testing; dental or oral conditions requiring or likely to require urgent dental care within six months’ time, active orthodontic care, conditions requiring prosthodontic care, conditions with immediate restorative dentistry needs, conditions with a current requirement for oral-maxillofacial surgery; new onse (< 1 year) seizure disorder, or seizure wihin one year prior to deployment; history of heat stroke; Meniere’s Disease or other vertiginous/motion sickness disorder, unless well controlled on medications available in theater; recurrent syncope, ataxias, new diagnosis (< 1 year) of mood disorder, thought disorder, anxiety, somatoform, or dissociative disorder, or personality disorder with mood or thought manifestations; unrepaired hernia; tracheostomy or aphonia; remalithiasis, current; active tuberculosis; pregnancy; unclosed surgical defect, such as external fixate placement; requirement for ,edical devices using AC power; HIV antibody positivity; psychotic and bipolar disorders.(Reference: Mod 10 to USCENTCO Individual Protection and Individual Protection and Individual/Unit Deployment Policy, Tab A: Amplification of the Minimal Standards of Fitness for Deployment to the CENTCOM AOR). (c) In accordance with military directives (DoD 3020.41, DodI 6000.11, CFC Prago 09-1038, DoD Federal Acquisition Regulation Supplement (DFARS) POI 225.74), resuacitative care, stabilization, hospitalization a Level III (emergeny) military treatment facilities and assistance with patient movement in emergencies where loss of life, limb or eyesight could occur will be provided. Hospitalization will be limited to emergency stabilization and short-term medical treatment with an emphasis on return to duty or placement in the patient movement system. Subject to availability at the time of need, a medical treatment facility may provide reimbursable treatment for emergency medical or dental care such as broken bones, lacerations, broken teeth or lost fillings. (d) Routine and primary medical care is not authorized. Pharmaceutical services are not authorized for routine or known, routine prescription drug needs of the individual. Routine dental care, examinations and cleanings are not authorized. (e) Notwithstanding any other provision of the contract, the contractor shall be liable for any and all medically-related services or transportation rendered. To view reimbursement rates that will be changed for services a all DoD deployed medical facilities please got to the following website: http://comptrller.defence.gov/rates fy2011.html (change fiscal year as applicable). {End of clause} C-6 952.225-0005 MONTHLY CONTRACTOR CENSUS REPORTING AUG/2011 {C3} Contractor shall provide monthly employee census information to the Contracting Officer, by province, for this contract. Information shall be submitted either electronically by hard-copy. Information shall be current as of the 25th day of each month and received by the Contracting Officer on later than the first day of the following month. The following information shall be provided for each province in which work was performed: (1) The total number (prime and subcontractors at all tiers) employees. (2) The total number (prime and subcontractors at all tiers) of U.S. citizens.

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIINN W31P4Q-12-C-0263 MOD/AMD Page 34 of 72 Name of Offeror or Contractor: AEROVIRNMENT, INC. (3) The total number (prime and subcontractors at all tiers) of local nationals (LN). (4) The total number (prime and subcontractors at all tiers) of third-country nationals (TCN). (5) Name of province in which the work was performed. (6)The names of all company employees who enter and update employee data in the Synchronized Pre-deployment & Operational Tracker(SPOT) IAW DFARS 252.225-7040 or DFARS DOD class devotion 2011-00004. (End of Clause) C-7 952.225-0009 MEDICAL SCREENING AND VACCINATION REQUIREMENTS FOR LOCALLY HIRED DEC/2011 (C3) EMPLOYEES (a) Contractors and subcontractors at any tier shall ensure and provide satisfactory evidence that all locally hired employees, including Local National (LN), Third Country National (TCN), and U.S. employees, working on bases have been screened for and do not currently have active tuberculosis (TB). (1) Contractors may initially utilize a testing method of either a chest X-ray or TB skin test (TST), depending on the originating country of a contracted employee. (i) Chest X-rays (CXR’s), symptom survey, and Body Mass Index (BMI) shall be taken, and TSTs administrated within 12 months prior to the start of deployment/employment. Contractors are required to bring in a physical copy of the pre-employment CXR film as it is the only way to verify interval changes should an active case of TB occur. (A) Third Country Nationals (TCNs) and Local Nationals (LNs) cannot be screened with the TST. They need the pre-employment screening with a quality CXR, BMI and symptom survey. (B) Small-Risk Nationals (SRNs), those with less than 25 TB cases per 100,000 persons annually (mostly expats from Europe and US), can be screened via the TST. (ii) Annual re-screening for TCNs, and LNs will be performed with a CXR conducted by the Contractors medical provider or local economy provider who will look for interval changes from prior CXRs and review any changes in the symptom survey. (iii) SRNs do not require annual TB re-screening. However, for a TB contact investigation, a TST or Interferon Games Release Assay (IGRA) is required. (iv) For a contact investigation, all personnel with a positive TST or IGRA will be evaluated for potential active TB with a symptom screen, exposure history, BMI, and CR. All cases of suspected or confirmed active TB must be reported to the theater Preventive Medicine (PM) physician and/or TB Consultant as soon as possible. TB reporting is required within 24 hours to the PM POC. Contact tracing, and medical coding have specific requirements. All Small-Risk National (SRN) contract personnel are required to be MEDEVACd out of theater, at the contractors expense, for treatment of active TB, after consultation with the Theater PM or TB Consultant. For SRN personnel, the contractor is responsible for management and compliance with all prescribed public health actions. (v) Screening may be performed either by a licensed medical provider from the local economy or by the contractors licensed medical staffs. Contractors shall maintain medical screening documentation and make it available to the Contracting Officer upon request. (2) TB screening and documentation is a requirement prior to receiving badges to work in the CENTCOM Area of Operations. A copy of the TB screening documentation shall be provided to the responsible Base Operations Center prior to issuance of base access badges. (b) Contractor employees, including subcontractors at any tier, who work in food service positions and/or water and ice production facilities, shall have current Typhoid and Hepatitis A (full series) immunizations in accordance with the Centers for Disease Control and Prevention guidelines (e.g. typhoid vaccination booster is required every 2 years), in addition to the required TB tests. The contractor medical provider must complete a pre-placement examination to include a stool sample test for ova and parasites, and annual medical screening form or equivalent for food service, ice and water production workers. (c) Proof of individual employee vaccinations shall be provided to the Contracting Officer and COR showing that their employees and their subcontractor employees at any tier have received the above vaccinations. The contractor shall maintain their employees vaccination records for examination by the Contracting Officer. The contractor shall ensure that their subcontracting at any tier maintain their respective employees vaccination records for examination by the Contracting Officer. (d) The contractor is responsible for management and compliance with all prescribed public health actions regarding TS in the contracted personnel. The contractor also bears the responsibility of ensuring that adequate health management for TS (screening/diagnosis/treatment/isolation) is available at the contractors chosen health care provider for their contracted and subcontracted personnel. NOTE: Contractors are reminded of the requirement to comply with their contract and all regulatory guidance (DoD SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 35 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. Instructions/Regulations, Federal Acquisition Regulation as Supplemented, and FRAGOs) as applicable regarding Medical Screening and Vaccination Requirements. (End of Clause) C-8 952.225-0022 INBOUND/OUTBOUND CARGO AND CONTRACTOR EQUIPMENT CENSUS (AFGHANISTAN) (C3) APR/2012 a. Movement and coordination of inbound and outbound cargo in Afghanistan is critical to ensuring an effective drawdown. The contractor shall provide visibility of their inbound cargo and equipment via the Synchronized Pre-deployment Operational Tracker (SPOT) census for their contract. This requirement includes the prime’s, and subcontractor’s at all tiers, cargo and equipment. The contractor shall report any individual piece of equipment valued at $50,000 or more. Incoming cargo and equipment census data shall be input 30 days prior to start of performance or delivery of supplies and quarterly thereafter for inbound and outbound equipment. b. b. This reporting is required on Rolling Stock (RS), Non Rolling Stock (RNRS), and Twenty foot Equivalent Units (TEU). The following definitions apply to these equipment/cargo categories: (1) Rolling Stock (RS) : All equipment with wheels or tracks that is self-propelled, or is un-powered and can be towed by a vehicle on a roadway. Also includes standard trailer mounted equipment such as generators, water purification equipment, and other support equipment with permanent wheels. Specific examples of RS include Wheeled Armored Vehicles (WAVS), Mine-Resistant Ambush-Protected (MRAP) family of vehicles (FOVS), and Highly Mobile Multipurpose wheeled Vehicles (HMMWVS). (2) Non Rolling Stock (RNRS): All equipment that is not classified as Rolling Stock. Includes equipment that is not trailer-mounted or originally designed to be driven or towed over a roadway. (3) Twenty foot Equivalent Units (TEU) : Standard unit for describing a ship’s cargo capacity, or a shipping terminal’s cargo handling capacity. One TEU represents the cargo capacity of a standard intermodal shipping container, 20 feet long, 8 feet wide, and 8.5 feet high. one TEU is equivalent to 4 QUADCONS and 3 TRICONS. One TEU has an internal volume of 1,166 cubic feet. c. b. This data will be used by United States Forces-Afghanistan (USFOR-A) to assist in tracking the drawdown of Afghanistan. The contractor is responsible for movement of their own cargo and equipment. The data provided by contractors is for informational purposes only in order to plan and coordinate the drawdown effort. The Government assumes no responsibility for contractor demobilization except as stated in individual contract terms and conditions. (End) SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 36 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. SECTION D — PACKAGING AND MARKING Regulatory Cite Title Date D-1 52.208-4701 WOOD PACKING MATERIALS REQUIREMENTS JUL/2007 A. Wood packaging material (WPM) means wood pallets, skids, load boards, pallet collars, wooden boxes, reels, dunnage, crates, frame and cleats. The definition excludes materials that have undergone a manufacturing process, such as corrugated fiberboard, plywood, particleboard, veneer, and oriented strand board (OSD). B. All wood Packaging Material (WPM) acquired by DOD must meet requirements of International Standards for Phytosanitary Measures (ISPM) 15, “Guidelines for Regulating Wood Packaging Materials International Trade.” DOD shipments inside and outside of the United States must meet ISPM 15 whenever WPM is used to ship DOD cargo. (1) All WPM shall comply with the official quality control program for heat treatment (HT) or kiln dried heat treatment (KDHT) in accordance with American Lumber Standard Committee, incorporated (ALSC) wood packaging Material Program and WPM Enforcement Regulations (see http://www.alac.org/). (2) All WPM shall include certification/quality markings in accordance with the ALSC standard. Marking shall be placed in an unobstructed area that will be readily visible to inspectors. Pallet markings shall be applied to the stringer or block on diagonally opposite sides of the pallet and be contrasting and clearly visible. All containers shall be marked on a side other than the top or bottom, contrasting and clearly visible. All dunnage used in configuring and/or securing the load shall also comply with ISPM 15 and be marked with an ALSC approved DUNNAGE stamp. C. Failure to comply with the requirements of this restriction may result in refusal, destruction, or treatment at entry. The Agency reserves the right to recoup from the Contractor any remediation costs incurred by the Government. D. Replacement Preservative for pentachlorophenol If packaging requirements of this contract specify the use of wood products and a preservative is required, pentachlorophenol commonly referred to as “Penta” or “PCP” is prohibited. Replacement preservatives are 2 percent copper naphthenate, 3 percent zinc naphthenate or 1.8 percent copper 8 quinolinolate. (1) Heat Treatment: Boxes/pallets and any wood used as inner packaging made of non-manufactured wood shall be heat-treated. All non-manufactured wood used in packaging shall be heat treated to a core temperature of 56 degrees Celsius for a minimum of 30 minutes. The box/pallet manufacturer and the manufacturer of wood used as inner packaging shall be affiliated with an inspection agency accredited by the board of review of the American Lumber Standard Committee. The box/paller manufacturer and the manufacturer of wood used as inner packaging shall ensure traceability to the original source of heat treatment. (2) Marking: Each box/pallet shall be marked to show the conformance to the International Plant Protection Convention Standard. The quality mark shall be placed on both ends of the outer packaging, between the end cleats or end battens: on two sides of the pallet. Foreign manufacturers shall have the heat treatment of non-manufactured wood used as dunnage for blocking and bracing shall be ordered with ALSC certified marking for dunnage or the markings may be applied locally at two foot intervals. (End of Clause) D-2 Unique Identification Marking (UID) Instructions. The contractor shall apply UID Markings for the All-Up-Round (Part Number 62883) Delivered under CLIN(s) 0001AA, 0001AB, 0006, and 0016 (oconus Deliveries). The contractor shall attach one (1) UID Number via a tag and lanyard to the outer dry bag. Furthermore, the Contractor shall attach the identical UID number via an adhesive label to the tactical launcher. No other UID Marking is required for the contract. *** END OF NARRATIVE D0001 ***

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 37 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. SECTION E — INSPECTION AND ACCEPTANCE This document 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. Also, the full text of a clause may be accessed electronically at these addresses: http://farsite.hill.af.mil/VFFARA.HTM or http://farsite.hill.af.mil/VFDFARA.HTM or http://farsite.hill.af.mil/VFAFARa.HTM If the clause requires additional or unique information, then that information is provided immediately after the clause title. Regulatory Cite Title Date E-1 52.246-2 INSPECTION OF SUPPLIES- -FIXED-PRICE AUG/1996 E-2 52.246-3 INSPECTION OF SUPPLIES- -COST-REIMBURSEMENT MAY/2001 E-3 52.246-4 INSPECTION OF SERVICES- -FIXED-PRICE AUG/1996 E-4 52.246-5 INSPECTION OF SERVICES- -COST-REIMBURSEMENT APR/1984 E-5 52.246-16 RESPONSIBILITY FOR SUPPLIES APR/1984

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 38 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. SECTION F — DELIVERIES OR PERFORMANCE This document incorporates one or more clauses by reference, with the same force and affect as if they were given in full text. Upon request, the Contracting Officer will make their full text available. Also, the full text of a clause may be accessed electronically at these addresses: http://farsite.hill.af.mil/VFFARA/HTM or http://farsite.hill.af.mil/VFDARA/HTM or http://farsite.hill.af.mil/VFAFARu.HTM If the clause requires additional or unique information, then that information is provided immediately after the clause title. Regulatory Cite Title Date F-1 52.242-15 STOP-WORK ORDER AUG/1989 F-2 52.242-17 GOVERNMENT DELAY OF WORK APR/1984 F-3 52.247-29 F. O. B ORIGIN FEB/2006 F-4 252.211-7003 ITEM IDENTIFICATION AND VALUATION JUN/2011 (a) Definitions. As used in this clause “Automatic identification device” means a device, such as a reader or interrogator, used to retrieve data encoded on machine-readable media. “Concatenated unique item identifier” means (1) For items that are serialized within the enterprise identifier, the linking together of the unique identifier data elements in order of the issuing agency code, enterprise identifier, and unique serial number within the enterprise identifier; or (2) For items that are serialized within the original part, lot, or batch number, the linking together of the unique identifier data elements in order of the issuing agency code; enterprise identifier; original part, lot, or batch number; and serial number within the original part, lot, or batch number. “Data qualifier” means a specified character (or string of characters) that immediately precedes a data field that defines the general category or intended use of the data that follows. “DoD recognized unique identification equivalent” means a unique identification method that is in commercial use and has been recognized by DoD. All DoD recognized unique identification equivalents are listed at http://www.acq.osd.nil/dpap/pdi/uid/iuid_equivalents.html. “DoD unique item identification” means a system of marking items delivered to DoD with unique item identifiers that have machine-readable data elements to distinguish an item from all other like and unlike items. For items that are serialized within the enterprise identifier, the unique item identifier shall include the data elements of the enterprise identifier and a unique serial number. For items that are serialized within the part, lot, or batch number within the enterprise identifier, the unique item identifier shall include the data elements of the enterprise identifier, the original part, lot, or batch number; and the serial number. “Enterprise” means the entity (e.g., a manufacturer or vendor) responsible for assigning unique item identifiers to items. “Enterprise identifier” means a code that is uniquely assigned to an enterprise by an issuing agency. “Governments unit acquisition cost” means (1)For fixed-price type line, subline, or exhibit line items, the unit price identified in the contract at the time of delivery; (2) For cost-type or undefinitized line, subline, or exhibit line items, the Contractors estimated fully burdened unit cost to the Government at the time of delivery; and (3) For items produced under a time-and-materials contract, the Contractors estimated fully burdened unit cost to the Government at the time of delivery. “Issuing agency” means an organization responsible for assigning a globally unique identifier to an enterprise (e.g., Dun & Bradstreet’s Data Universal Numbering System (DUNS) Number, GSI Company Prefix, Allied Committee 135 NATO Commercial and Government Entity (NCAGE) /Commercial and Government Entity (CAGE Code), or the Coded Representation of the North American Telecommunications Industry Manufacturers, Suppliers, and Related Service Companies (ATIS-0322000) Number), European Health Industry Business Communication Council (EHIBCC) and Health Industry Business Communication Council (HIBCC)), as indicated in the Register of Issuing Agency Codes for SD\1364062.1 13-24083-1 C2.1 P38 AUG/1989 APR/1984 FEB/2006

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 39 of 72 Name of Offeror or Contractor : AEROVIRONMENT, INC ISO/IEC 15459, located at http://www.nen.nl/web/Normen-ontwikkelen/ISOIEC-15459-Issuing-Agency-Codes.htm. “Issuing agency code” means a code that designates the registration (or controlling) authority for the enterprise identifier. “Item” means a single hardware article or a single unit formed by a grouping of subassemblies, components, or constituent parts. “Lot or batch number” means an identifying number assigned by the enterprise to a designated group of items, usually referred to as either a lot or a batch, all of which were manufactured under identical conditions. “Machine-readable” means an automatic identification of number or letters assigned by the enterprise at item creation to a class of items with the same form, fit, function, and interface. “Parent item” means the item assembly, intermediate component, or subassembly that has an embedded item with a unique item identifier or DoD recognized unique identification equivalent. “Serial number within the enterprise identifier” means a combination of numbers, letters, or symbols assigned by the enterprise to an item that provides for the differentiation of that item from any other like and unlike item and is never used again within the enterprise. “Serial number within the part, lot, or batch number” means a combination of numbers or letters assigned by the enterprise to an item that provides for the differentiation of that item from any other like item within a part, lot, or batch number assignment. “Serialization within the enterprise identifier” means each item produced is assigned a serial number that is unique among all the tangible items produced by the enterprise and is never used again. The enterprise is responsible for ensuring unique serialization within the enterprise identifier. “Serialization within the part, lot, or batch number” means each item of a particular part, lot, or batch number is assigned a unique serial number within that part, lot, or batch number assignment. The enterprise is responsible for ensuring unique serialization within the part, lot, or batch number within the enterprise identifier. “Unique item identifier” means a set of data elements marked on items that is globally unique and unambiguous. The term includes a concatenated unique item identifier or a DoD recognized unique identification equivalent. “Unique item identifier type” means a designator to indicate which method of uniquely identifying a part has been used. The current list of accepted unique item identifier types is maintained at http://www.acq.osd.mil/dpap/pdi/uid/uii_types.html. (b) The Contractor shall deliver all items under a contract line, subline, or exhibit line item. (c) Unique item identifier. (1) The Contractor shall provide a unique item identifier for the following: (i) All delivered items for which the Governments unit acquisition cost is $5,000 or more. (ii) The following items for which the Governments unit acquisition cost is less than $5,000: Contract Line, Subline, or Exhibit Line Item Number Item Description TO BE COMPLETED BY CONTRACTOR (iii) Subassemblies, components, and parts embedded within delivered items as specified in Attachment 0001. (2) The unique item identifier and the component data elements of the DoD unique item identification shall not change over the life of the item. (3) Data syntax and semantics of unique item identifiers. The Contractor shall ensure that (i) The encoded data elements (except issuing agency code) of the unique item identifier are marked on the item using one of the following three types of data qualifiers, as determined by the Contractor: SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 40 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. (A) Application Identifiers (AIs) (Format Indicator 05 of ISO/IEC International Standard 15434), in accordance with ISO/IEC International Standard 15418, Information Technology EAN/UCC Application Identifiers and Fact Data Identifiers and Maintenance and ANSI MH 10.8.2 Data Identifier and Application Identifier Standard. (B) Data Identifiers (DIs) (Format Indicator 06 of ISO/IEC International Standard 15434), in accordance with ISO/IEC International Standard 15418, Information Technology EAN/UCC Application Identifiers and Fact Data Identifiers and Maintenance and ANSI MH 10.8.2 Data Identifier and Application Identifier Standard. (C) Text Element Identifiers (TEIs) (Format Indicator 12 of ISO/IEC International Standard 15434), in accordance with the Air Transport Association Common Support Data Dictionary; and (ii) The encoded data elements of the unique item identifier conform to the transfer structure, syntax, and coding of messages and data formats specified for Format Indicators 05, 06, and 12 in ISO/IEC International Standard 15434, Information Technology Transfer Syntax for High Capacity Automatic Data Capture Media. (4) Unique item identifier. (i) The Contractor shall (A) Determine whether to (1) Serialize wihin the enterprise identifier; (2) Serialize within the part, lot, or batch number; or (3) Use a DoD recognized unique identification equivalent; and (B) Place the data elements of the unique item identifier (enterprise identifier; serial number; DoD recognized unique identification equivalent; and for serialization within the part, lot, or batch number only; original part, lot, or batch number) on items requiring marking by paragraph (c) (1) of this clause, based on the criteria provided in the version of MIL-STD-130, Identification Marking of U.S. Military Property, cited in the contract Schedule. (ii) The issuing agency code (A) Shall not be placed on the items; and (B) Shall be derived from the data qualifier for the enterprise identifier. (d) For each item that requires unique item identification under paragraph (c) (1) (i) or (ii) of this clause, in addition to the information provided as part of the Material Inspection and Receiving Report specified elsewhere in this contract, the Contractor shall report at the time of delivery, either as part of, or associated with, the Material Inspection and Receiving Report, the following information: (1) Unique item identifier. (2) Unique item identifier type. (3) Issuing agency code (if concatenated unique item identifier is used). (4) Enterprise identifier (if concatenated unique item identifier is used). (5) Original part number (if there is serialization within the original part number). (6) Lot or batch number (if there is serialization within the lot or batch number). (7) Current part number (optional and only if not the same as the original part number). (8) Current part number effective date (optional and only if current part number is used). (9) Serial number ( if concatenated unique item identifier is used). (10) Governments unit acquisition cost. (11) Unit of measure. SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 41 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. (e) For embedded subassemblies, components, and parts that require DoD unique item identification under paragraph (c) (1) (iii) of this clause, the Contractor shall report as part of, or associated with, the Material Inspection and Receiving Report specified elsewhere in this contract, the following information: (1) Unique item identifier of the parent item under paragraph (c) (1) of this clause that contains the embedded subassembly, component, or part. (2) Unique item identifier of the embedded subassembly, component, or part. (3) Unique item identifier type.** (4) Issuing agency code (if concatenated unique item identifier is used).** (5) Enterprise identifier (if concatenated unique item identifier is used).** (6) Original part number (if there is serialization within the original part number).** (7) Lot or batch number (if there is serialization within the lot or batch number).** (8) Current part number (optional and only if not the same as the original part number).** (9) Current part number effective date (optional and only if current part number is used).** (10) Serial number (if concatenated unique item identifier is used).** (11) Description. ** Once per item. (f) The Contractor shall submit the information required by paragraphs (d) and (e) of this clause in accordance with the data submission procedures at http://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html. (g) Subcontractors. If the Contractor acquires by subcontract, any item(s) for which unique item identification is required in accordance with paragraph (c) (1) of this clause, the Contractor shall include this clause, including this paragraph (g), in the applicable subcontract(s). (End of clause) F-5 ACCELERATED DELIVERIES An accelerated delivery schedule is acceptable provided it is at no additional cost to the government. In addition, the contractor agrees not to make any claims for equitable adjustment consideration for any production gap or other affect on schedule resulting from the contractor’s voluntary accelerated deliveries. *** END OF NARRATIVE F0001 *** SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 42 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 Section G – Contract Administration Data LINE ITEM PRON/ AMS CD/ MIPR OBLG STAT JO NO/ ACCT ASSIGN ACRN OBLIGATED AMOUNT 0001AA CW1LRD0151 27380278J5L 1 1CWMTI AA $ [***] 0001AB CW1LRD0251 27380278J5L 1 1CWMTH AA $ [***] 0001AC CW1LRD0351 27380278J5L 1 1CWMTI AA $ [***] 0001AD CW1LRD0451 27380278J5L 1 1CWMTI AA $ [***] 0001AE CW1LRD0551 27380278J5L 1 1CWMTI AA $ [***] 0001AF CW1LRD0651 27380278J5L 1 1CWMTI AA $ [***] 0002AA CW2LPA0251 MIPRPR10143931 1 AB $ [***] 0002AB CW2LPA0351 MIPRPR10143931 1 AB $ [***] 0002AC CW2LPA0151 MIPRPR10143931 1 AB $ [***] 0002AD CW2LPA0951 MIPRPR10143931 1 AB $ [***] 0003AA CW2LOM0251 11406300000 1 2CWLOM AC $ [***] 0003AB CW2LOM0351 11406300000 1 2CWLOM AC $ [***] 0003AC CW2LOM0451 11406300000 1 2CWLOM AC $ [***] 0003AD CW2LOM0551 11406300000 1 2CWLOM AC $ [***] 0003AE CW2LOM0651 11406300000 1 2CWLOM AD $ [***] 0003AF CW2LOM0751 11406300000 1 2CWLOM AC $ [***] 0003AG CW2LOM0851 11406300000 1 2CWLOM AC $ [***] 0003AJ CW2LOM1251 11406300000 1 2CWLOM AC $ [***] 0004AB CW1LPA1351 10230604 1 AE $ [***] 0004AC CW0LPA1151 53900017186 MIPR2LRFOJ9554 1 AF $ [***]

 


CONTINUATION SHEET Reference No. of Document Being Continued PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Page 43 of 72 Name of Offeror or Contractor: AEROVIRONMENT, INC. [***] Certain information on this page has been omitted and filed separately with the Securities and Exchange Commission. Confidential treatment has been requested with respect to the omitted portions. SD\1364062.1 LINE ITEM PRON/ AMS CD/ MIPR OBLG STAT JO NO/ ACCT ASSIGN ACRN OBLIGATED AMOUNT 0004AD CW2LPA1251 10230603 1 AG $ [***] 0004AE CW0LPA1051 53900017184 MIPR2LRFOJ9555 1 AF $ [***] TOTAL $ 5,832,507.00 ACRN ACCOUNTING CLASSIFICATION OBLIGATED AMOUNT AA 21 12040000015L5L20P27380231E8 S01021 W31G3H $ [***] AB 021 201220142035 0000 A22AJ M80101AVREF 255O 0010143931 0030001081 021001 $ [***] AC 21 22020000025L5L20P11406331E8 S01021 W31G3H $ [***] AD 21 22020000025L5L20P11406331EM S01021 W31G3H $ [***] AE 021 201120132035 0000 A22AJ M80101AVREF 252G 0010230604 30001081 021001 $ [***] AF 21 0203500000222010539000125FB S23185 $ [***] AG 021 201220142035 0000 A22AJ M80101AVREF 252G 0010230603 30001081 021001 $ [***] LINE ITEM ACRN EDI/SFIS ACCOUNTING CLASSIFICATION 0001AA AA 21 111220400000 W31G3H 15L5L2027380278J5L31E8CW1LRD0151 1CWMTI S01021 0001AB AA 21 111220400000 W31G3H 15L5L2027380278J5L31E8CW1LRD0251 1CWMTH S01021 0001AC AA 21 111220400000 W31G3H 15L5L2027380278J5L31E8CW1LRD0351 1CWMTI S01021 0001AD AA 21 111220400000 W31G3H 15L5L2027380278J5L31E8CW1LRD0451 1CWMTI S01021 0001AE AA 21 111220400000 W31G3H 15L5L2027380278J5L31E8CW1LRD0551 1CWMTI S01021 0001AF AA 21 111220400000 W31G3H 15L5L2027380278J5L31E8CW1LRD0651 1CWMTI S01021 0002AA AB 021 201220142035 0000 A22AJ M80101AVREF 255O 0010143931 0030001081 021001 0002AB AB 021 201220142035 0000 A22AJ M80101AVREF 255O 0010143931 0030001081 021001 0002AC AB 021 201220142035 0000 A22AJ M80101AVREF 255O 0010143931 0030001081 021001 0002AD AB 021 201220142035 0000 A22AJ M80101AVREF 255O 0010143931 0030001081 021001 0003AA AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM0251 2CWLOM S01021 0003AB AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM0351 2CWLOM S01021 0003AC AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM0451 2CWLOM S01021 0003AD AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM0551 2CWLOM S01021 0003AE AD 21 121220200000 W31G3H 25L5L201140630000031EMCW2LOM0651 2CWLOM S01021 0003AF AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM0751 2CWLOM S01021 0003AG AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM0851 2CWLOM S01021 0003AJ AC 21 121220200000 W31G3H 25L5L201140630000031E8CW2LOM1251 2CWLOM S01021 0004AB AE 021 201120132035 0000 A22AJ M80101AVREF 252G 0010230604 30001081 021001 0004AC AF 21 101220350000 S23185 02220105390001718625FBMIPR2LRF0J9554J9PDRAS23185 0004AD AG 021 201220142035 0000 A22AJ M80101AVREF 252G 0010230603 30001081 021001 0004AE AF 21 101220350000 S23185 02220105390001718625FBMIPR2LRF0J9554J9PCRAS23185 Regulatory Cite Title Date G-1 52.232-4003 INVOICING AND PAYMENT (WAWF) INSTRUCTIONS JAN/2010 All requests for payment shall be submitted electronically through Wide Area Workflow - Receipt and Acceptance (WAWF). Payment requests include receiving reports, invoice and vouchers. Hardcopy submission of receiving reports and invoices will no longer be accepted. The contractor shall ensure an Electronic Business point of contact is designated in the Central Contractor Registration at http://www.ccr.gov and register to use WAWF-RA at https://wawf.eb.mil. Vendor training is available at http://www.wawftraining.com. Additional support can be obtained by calling the Army WAWF at 1-877-2-DA-WAWF (1-877-232-9293). Types of WAWF Documents:

 

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 44 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. a. Supplies - The contractor is encouraged to use the Combination Invoice and Receiving Report (COMBO) for submitting invoice for supplies. This eliminates the need to separately process a receiving report and invoice. b. Services (Firm Fixed Price) - Select “2in1” for firm fixed price services. c. services (Cost Type) - Select Cost Voucher If none of the above types apply to this contract, please Call the Army WAWF help desk 1-877-2-DA-WAWF (1-877-232-9293). The following codes will be required to route your receiving reports, invoices and vouchers correctly through WAWF: CONTRACT NUMBER: W31P4Q-12-C-0263 CAGE CODE: 60107 ISSUE BY DODAAC: W31P4Q ADMIN BY DODAAC: S0512A ACCEPTER DODAAC: SO512A SERVICE APPROVER: TBD DCAA OFFICE DODAAC: 4901 Sent Additional Email Notifications. After submitting a document in WAWF, the contractor will be prompted to send additional email notifications. Additional emails are to be sent to the following: connie.vujicadcma.mil SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 45 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. SECTION H - SPECIAL CONTRACT REQUIREMENTS  Regulatory Cite Title Date H-1 252.222-7006 RESTRICTIONS ON THE USE OF MANDATORY ARBITRATION AGREEMENTS DEC/2010 H-2 952.225-0011 GOVERNMENT FURNISHED CONTRACTOR SUPPORT MAY/2012 (C3)  The following is a summary of the type of support the Government will provide the contractor, on an “as-available” basis. In the event of any discrepancy between this summary and the description of services in the Statement of Work, this clause will take precedence. U. S. Citizens X APO/FPO/MPO/DPO/Postal Services** X DFACs X Mil Issue Equip X Authorized Weapon X Excess Baggage X MILAIR X Billeting X Fuel Authorized X MWR X CAAF* X Govt Furnished Meals X Resuscitative Care X Controlled Access Card (CAC) X Military Banking X Transportation X Badge X Military Clothing All X Commissary X Military Exchange None Dependents Authorized Embassy Air*** Embassy Clinic*** Embassy Housing, Meals**** Embassy Clinic – Afghanistan**** Embassy Air**** Third-Country National (TCN) Employees  N/A DFACs Mil Issue Equip Authorized Weapon Excess Baggage MILAIR Billeting Fuel Authorized MWR CAAF* Govt Furnished Meals Resuscitative Care Controlled Access Card (CAC) Military Banking Transportation Badge Military Clothing All Commissary Military Exchange None Dependents Authorized Embassy Air*** Embassy Clinic  Local National (LN) Employees  N/A DFACs Mil Issue Equip Authorized Weapon Excess Baggage MILAIR Billeting Fuel Authorized MWR CAAF* Govt Furnished Meals Resuscitative Care Controlled Access Card (CAC) Military Banking Transportation Badge Military Clothing All Commissary Military Exchange None Dependents Authorized Embassy Air*** Embassy Clinic *CAAF means Contractors Authorized to Accompany Forces. ** Mail to Iraq limited to 21bß *** Applies to Iraq only **** Applies to US Embassy Life Support in Afghanistan only SPECIAL NOTE: The office of Security Cooperation-Iraq (OSC-I) will provide security support to contractor personnel commensurate with the level of security provided to DoD civilians working in Iraq. Security support will include static and mobile security support. Static security is provided at all OSC-I sites to include living and dining facilities, base perimeter and gates. Mobile security support includes Security Eacort Teams (SETs) which provide the necessary security while personnel are transiting to their work site and while at the work location. (End) H-3 952.225-0004 COMPLIANCE WITH LAWS AND REGULATIONS DEC/2011 (C3) (a) The Contractor shall comply with, and shall ensure that its employees and its subcontractors and their employees, at all tiers, are SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 46 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. aware of and obey all U.S. and Host Nation laws, Federal or DoD regulations, and US Central Command orders and directives as applicable to personnel in Iraq and Afghanistan, including but not limited to USCENTCOM, Multi- National Force and Multi-National Corps or Chief of Mission operations and fragmentary orders, instructions, policies and directives. (b) Contractor employees shall particularly note all laws, regulations, policies, and orders restricting authority to carry firearms, rules for the use of force, and prohibiting sexual or aggravated assault. (1) Afghanistan -- Contractor employees are subject to General Orders Number 1, as modified from time to time, including without limitation, their prohibition on privately owned firearms, alcohol, drugs, war souvenirs, pornography and photographing detainees, human casualties or military security measures. (2) Iraq -- Contractor employees are not subject to General Order 1. Contractor employees will follow the policies or directives of the Office of Security Cooperation-Iraq (OSC-I) Installation Managers or Chief of Mission policies and directives regarding consumption of alcohol or any prohibited items for sites that are assigned. (c) Contractor employees may be ordered removed from the US Embassy, Chief of Mission sites, OSC-I sites, secure military installations or the theater of operations by order of the Chief of Mission (Iraq) or senior military commander of the battle space (Afghanistan) for acts that disrupt good order and discipline or violate applicable laws, regulations, orders, instructions, policies, or directives. Contractors shall immediately comply with any such order to remove its contractor employee. (d) Contractor employees performing in Iraq or the USCENTCOM Area of Responsibility (AOR) may be subject to the jurisdiction of overlapping criminal codes, including, but not limited to, the Military Extraterritorial Jurisdiction Act (18 U.S.C. Sec. 3261, et al) ( MEJA), the Uniform Code of Military Justice (10. U.S.C. Sec. 801, et al) (UCMJ), and the laws of the Host Nation. Non-US citizens may also be subject to the laws of their home country while performing in Iraq or the USCENTCOM AOR. Contractor employee status in these overlapping criminal jurisdictions may be modified form time to time by the United States, the Host Nation, or by applicable status of forces agreements. (e) Under MEJA, a person who engages in felony misconduct outside the United States while employed by or accompanying the Armed Forces is subject to arrest, removal and prosecution in United States federal courts. Under the UCMJ, a person serving with or accompanying the Armed Forces in the field during a declared war or contingency operation may be disciplined for a criminal offense, including by referral of charges to a General Court Martial. Contractor employees may be ordered into confinement or placed under conditions that restrict movement in Iraq or within the AOR or administratively attached to a military command pending resolution of a criminal investigation. (f) Contractors shall immediately notify the BDOC (Iraq) or military law enforcement (Afghanistan) and the Contracting Officer if they suspect and employee has committed an offense. Contractors shall take any and all reasonable and necessary measures to secure the presence of an employee suspected of a serious felony offense. Contractors shall not knowingly facilitate the departure of an employee suspected of a serious felony offense or violating the Rules for the Use of Force to depart Iraq or Afghanistan without approval from the Chief of Mission (Iraq) or the senior U.S. commander (Afghanistan). (End of clause) H-4 952.225-0013 CONTRACTOR HEALTH AND SAFETY DEC/2011 (C3) (a) Contractors shall comply with National Electrical Code (NEC) 2008 for repaire and upgrades to existing construction and NEC 2011 standards shall apply for new construction, contract specifications, and MIL Standards/Regulations. All infrastructure to include, but not limited to, living quarters, showers, and restrooms shall be installed and maintained in compliance with these standards and must be properly supported and staffed to ensure perpetual Code compliance, prevent hazards and to quickly correct any hazarda to maximize safety of those who use or work at the infrastructure. (b) For existing employee living quarters the contractor shall provide maintenance, conduct repairs, and perform upgradea in compliance with NEC 2008 standards. For new employee living quarters, the contractor shall provide maintenance, conduct repairs, and make upgrades in compliance with NEC 2011 standards. The government has the authority to enter and inspect contractor employee living quarters at any time to ensure the prime contractor is complying with safety compliance standards. (c) The contractor shall correct all deficiencies within a reasonable amount of time of becoming aware of the deficiency either by notice from the government or a third party, or by self discovery of the deficiency by the contractor. Further guidance can be found on: UFC: http://www.wbdg.org/ccb.browsecat.php?o-29&c-4 NFPA 70: http://www.nfpa.org NESC: http://www.standards.ieee.org/nesc (End of clause) SD\1364062.1

 

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 47 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. H-5 952.225-0016 CONTRACTOR DEMOBILIZATION -- APGHANISTAN AUG/2011 (C3) (a) Full demobilization of contractors and subcontractor(s) in the Afghanistan Combined Joint: Operations Ares (CJOA) is critical to responsible drawdown. The prime contractor is required to submit a demobilization plan to the Contracting Officer a minimum of 120 days prior to the end of the contract performance period or when requested by the Contracting Officer, The demobilization plan shall address, as a minimum, the following procedures detailed below. The procedures outline specific guidance to ensure a timely and responsible exit from theater. Prime contractors are responsible and accountable to ensure their subcontractor(s) at all tiers comply with responsible and timely exit from theater immediately following contract performance completion or termination. (1) Exit from Afghanistan: The prime contractor is responsible to remain cognizant of Afghan laws regarding exit from Afghanistan. Currently, all foreigners traveling out of Afghanistan airports via commercial air transportation must have exit visas. Department of Defense, U.S. Force-Afghanistan, Letters of Authorization (LOAs), and/or Embassy Badges are not accepted means of existing Afghanistan. All U.S. citizens and foreign national contractors exiting via commercial means obtain an Afghanistan exit sticker before departing the country. The exit sticker may be obtained from Ministry of Interior (MOI) office. It is the prime contractors responsibility to ensure that the most recent exit procedures are followed and to ensure that subcontractor(s) at all tiers are in compliance with exit procedures. It is to the responsibility of the contractor to work with Embassy of Afghanistan or Afghanistan MOI as required. (2) Letter of Authorization (LOA): The prime contractor is responsible for demobilizing its workforce, including subcontractor employees at all tiers, and all contractor owned and subcontractor owned equipment out of theatre as part of the prime contractors exit strategy. This exit strategy must include reasonable timeframes starting with the end of the contract performance period and not exceeding 30 days. The Contracting Officer has the authority to extend selected LOAs up to, but not exceeding 30 calendar days after the contract completion date to allow the prime contractor to complete demobilization of its workforce and contractor owned equipment, as well as subcontractors(s) workforce and owned equipment, out of the Afghanistan CJCA. The prime contractor shall notify the Contracting Officer a minimum of 30 days prior to the end of the contract period to request up to a 30-day extension of selected LOAs beyond the contract completion data to complete demobilization. The request shall include at a minimum: (i) the name of each individual requiring a new LOA; (ii) the number of days for the LOA (no more than 30 calendar days); and (iii) justification for the request (e.g., what function the individual(s) will be performing during the demobilization period). The Contracting Officer may request additional information for an LOA extension. Any LOA extension granted beyond the contract completion data shall not exceed 30 days and the contractor is not entitled to additional compensation for this period. It approved by the Contracting Officer, this is a no cost extension of an employees LOA due to demobilization and in no way is an extension of the contract performance period. (3) Badging: The prime contractor is responsible to ensure all employee badges, including subcontractor employees at all tiers, are returned to the local Access Control Badging Office for de-activation and destruction. The prime contractor shall submit a Badge Termination Report to ensure each record is flagged and the batch is revoked. If a prime and/or subcontractor employees badge is not returned, the prime contractor shall submit a Lost, Stolen or Unrecovered Badge Report to the appropriate Access Control Badging Office. Contractor employees in possession of a Common Access Card (CAC) shall be responsible for turning in the CAC upon re-deployment through a CONUS Replacement Center in the U.S. Failure to return employee badges in a timely manner may result in delay of final payment. (4) Contractor Controlled Facility Space: If the prime contractor has entered into a Memorandum of Understanding with the Installation Mayor or Garrison for site space, buildings, facilities, and/or Containerized Housing Units (CHU) to house prime and/or subcontractor employees (at all tiers), the prime contractor is responsible to notify the Installation Mayor or Garrison Commander of intent to vacate at least 90 calendar days prior to the end of the contract performance period. All United States Government (USG) provided property in the prime contractors possession must be returned to the USG in satisfactory condition. The prime contractor is responsible and liable for any and all damages to USG property caused by prime and/or subcontractor employees, and shall be further liable for all cleanup, clearing, and/or environmental remediation expenses incurred by the USG in returning prime contractor and/or subcontractor facilities including surrounding site to a satisfactory condition, including expenses incurred in physical moving property, trash, and refuse from such premises, removing/ remediating hazardous wastes on the premises, and repairing structures, buildings, and facilities used by the prime contractor and/or subcontractor. The prime contractor shall provide notification to the Installation Mayor or Garrison Commander to perform an inspection of all facilities as soon as practicable, but no more than 30 days, after the end of the contract period. If damages are discovered, the prime contractor shall make the necessary repairs. The prime contractor shall notify the Installation Mayor or Garrison Commander for re-inspection of the facilities upon completion of the repairs. If the Installation Mayor or Garrison Commander inspects the property, site space, buildings, facilities, and/or CHUs and finds they have not been properly cleaned, cleared, and/or environmentally remediated, or if the prime contractor fails to repair any damages within 30 calendar days after the end of the contract performance period, the final contract payment shall be reduced by the amount of the specified damages/repairs or the expenses incurred by the USG to properly clean, clear, and/or environmentally remediate the SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 48 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. premises. (5) Government Furnished Equipment/Materials: The prime contractor is responsible to return all USG furnished equipment, as defined in Federal Acquisition Regulation (FAR) part 45, clauses 52.245-1, if included in the contract. Prime contractors who are not in compliance with the FAR, Defense Federal Acquisition Regulation Supplement, Department of Defense Directives and Instructions, policies, or procedures will be responsible and liable for damages to the government property. The prime contractor may apply for a conducted of the equipment by the prime contractor, USG representative, and the Contracting Officer or their representative, within 10 calendar days after the end of the contract performance period. The prime contractor shall report lost, damaged or destroyed property immediately to the Contracting officer, but no later then the joint inventory at the end of the contract period. If the prime contractor fails to report lost, damaged or destroyed equipment or materials during the contract performance period, the prime contractor shall be responsible for the replacement and/or repair of the equipment or materials. The replaced equipment shall be new, of the same quality, and shall perform at the same functional level as the missing piece of equipment. If the prime contractor fails to repair and/or replace damaged or missing equipment, the final payment shall be reduced by the appropriate amount of the specified damaged or cost to replace missing equipment with new. (6) Contractor Personal Property: The contractor is advised that all personal left on the respective installation after the date of departure of said premises, shall be sold or otherwise disposed of in accordance with 10 U.S.C. \’a7 2575. (i) A request for the return of the property will be honored, if feasible, and if received before the expiration of the period of time allowed to vacate the installation. (ii) If abandoned property is left on the respective installation, contractual remedies may be enforced against the contractor, (see paragraph (b) of this clause for potential contractual remedies). Additionally, even if the contractor waives its interest to all abandoned personal property, the contractor may still be liable for all costs incurred by the USG to remove or dispose of the abandoned property. (iii) The contractor hereby authorizes the USG authority to dispose of any and all abandoned personal property in any manner the USG may deem suitable and hereby releases and discharge the USG and its agents from any and all claims and demands whatsoever that could otherwise be asserted because of the disposition of said abandoned personal property. (7) Synchronized Predeployment Operational Tracker (SPOT): The prime contractor is responsible to close out the deployment of personnel, including subcontractor employees at all tiers, at the end of the contract completion period and to release the personnel from the prime contractors company in the SPOT database. The release of employee information must be accomplished no more than 30 calendar days after the end of the contract completion date. (8) Accountability of Prime and Subcontractor Personnel: Whether specifically written into the contract or not, it is the expectation of the USG that for any persons brought into the Afghanistan CJOA for the sole purposes of performing work on USG contracts, contract employers will return employees to their point of origin/home country once the contract is completed or their employment is terminated for any reason. If the prime contractor fails to re-deploy an employee, or subcontractor employee at any tier, the USG shall notify the applicable U.S. Embassy to take appropriate action. Failure by the prime contractor to re-deploy its personnel, including subcontractor personnel at any tier, at the end of the contract completion date, could result in the contractor being placed on the Excluded Parties List System (EPLS) and not be allowed to propose on future U.S. contracts anywhere in the world. (9) Personnel Recovery: Any DoD contractor with unaccounted for employees shall follow the instructions in the Contractor Accountability and Personnel Recovery Clause 952.225-20. The contractor may use the Contracting Fusion Cell as a resource to track or research employees last known location and/or to view LOAs. (b) CENTCOM - Joint Theater Support Contraction Command (C-JTSCC) and external agencies will utilize all available contracting remedies to guarantee compliance with demobilization requirements. Such actions include, but are not limited to withholding payment, issuing a cure notice, issuing a negative Contractor Performance Assessment Reporting System (CPARS) evaluation, reduction of award fee, debarment, reimbursement of U.S. Government expenses, and/or any other legal remedy available to a contracting officer. The USG reserves the right to withhold payment from the prime contractor not in compliance with the above procedures included herein. Additionally, the Contracting Officer shall document all unresolved contractor compliance issues in CPARS, which shall have an adverse past performance affect on future contracts with the USG, anywhere in the world. (End of Clause) H-6 952.225-0020 CONTRACTOR ACCOUNTASILITY AND PERSONNEL RECOVERY (AFGHANISTAN) AUG/2011 (C3) (a) Contract performance may require work in dangerous or austere conditions. Except as otherwise provided in the contract, the contractor accepts the risks associated with required contract performance in such operations. SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 49 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. (1) Unaccounted personnel: It is the expectation of the USG that any contractor brought into Afghanistan for the sole purpose of performance of the work on a USG contract must be accounted for at all times by their respective employers. Additionally, contractors who maintain living quarters on a USG base shall verify the location of each of its employees living quarters a minimum of once a month. If a DoD contracted employee becomes missing and evidence does not indicate foul play, a personnel Recovery (PR) event is NOT automatically triggered. Such an event will be treated as an accountability battle drill by the employers chain of command or civilian equivalent. (2) Contractor Responsibilities: The contractor is responsible to take all necessary steps to locate and investigate the unaccounted for employee (s) whereaboute to the maximum extent practicable. To assist in this process, contractors may use the Contracting Fusion Cell as a resource to track or research employees last known location and/or to view LOAs. All missing personnel will be immediately reported to the installation division Personnel Recovery Officer (PRO), Mayors cell, Military Police Station and/or the criminal Investigative Division, and the Base Defence Operations Center (BDOC). (3) Contractor provided Information: If it is determined that a potential criminal act has occurred, the USD PRO (or USFOR-A Personnel Recovery Division (PRD) with prior coordination) will attempt to validate the missing persons identity through the employer. The contractor shall provide the information to PRD within 12 hours of request. The required information the contractor should keep on file includes but is not limited to: copy of the individuals Letter of Authorization generated by the Synchronized Pre-deployment and Operational Tracker Systems (SPOT), copy of passport and visas, housing information of where the individual resides such as room number and location, DD Form 93, Record of Emergency Data, copy of badging, and contact information for known friends or associates. (b) If USFOR-A PRD determines through investigation that the unaccounted personnel have voluntarily left the installation either seeking employment with another contractor or other non- mission related reasons, PRD will notify the contractor. The contractor shall ensure that all government-related documents such as LOAs, visas, etc. are terminated/reconciled appropriately within 24 hours of notification by PRD in accordance with subparagraph (a) (8) of C-JTSCC Clause 952.225-0016 entitled Contractor Demobilization (Afghanistan). Contractors who fail to account for their personnel or whose employees create PR events will be held in breach of their contract and face all remedies available to the Contracting Officer. (End of Clause) H-7 52.243-4000 ENG CHG PROPOSAL, VALUE ENG CHG PROPOSAL, REQUEST FOR DEVIATION MAR/2011  REQUEST FOR VARIANCE, ENG RELEASE RECORDS, NOTICE OF REVISION, &  SPECIFICATION CHG NOTICE PREPARATION & SUBMISSION INSTRUCTIONS  1. Contractor initiated Engineering Change Proposals (RCPs), Value Engineering Change Proposals (VECPs), Request for Deviations (RFDs). And Request for Variance (RFVs), collectively referred to as *proposals*, shall be prepared, submitted and distributed in accordance with paragraphs 2, 3 and 4 below except as specified in paragraphs 5 below. 2. Format. a. Class I ECPs require the “Long Form Procedure” for documenting the change and describing the effects of the change on the suitability and supportability of the Configuration Item (CI). Class I ECPs should be limited to those that are necessary or offer significant benefit to the Government. Class I ECPs are those that affect the performance, reliability, maintainability, survivability, weight, balance, moment of inertia, interface characteristics, electromagnetic characteristics, or other technical requirements in the specifications and drawings. Class I ECPs also include those changes that affect Government Furnished Equipment, safety, compatibility, retrofit, operation and maintenance manuals, interchangeability, substitutability, replaceability, source control specifications and drawings, costs, guarantees or warranties, deliveries, or schedules, Class II ECPs are those that do not affect form, fit and function, cost, or schedule of the system CI and do not meet the other criteria described above for Class I ECPs. b. Long Form Procedure: Class I changes to the CI require that RDMR Form 523, pages 1 through 7 (as applicable), be prepared. Use of this procedure assures that all affects of the change on the CI are properly addressed and documented to the necessary detail to allow proper evaluation of the proposed change. c. Short Form Procedure: ECPs and VECPs, which meet the requirements of Class II ECPs, shall be prepared using RDMR Form 523 (page 1 only). Supplemental pages may be used with the form as necessary. The responsible Contract Management Office (CMO) will enter the appropriate data in block 5 “Class of ECP”, Block 6 “Justification Codes”, and Block 7 “Priority.” d. The Contractor shall not manufacture items for acceptance by the Government that incorporate a known departure from requirements, unless the Government has approved an RFD. RFDs shall be prepared using RDMR Form 527 or RDMR Form 530 (Type I, see block 5 of the form.) e. The Contractor shall not submit items for acceptance by the Government that include a known departure from the requirements, unless the Government has approved a RFV. RFVs shall be prepared using RDMR Form 528. f. Each ECP, RFD or RFV shall be accompanied by a written and signed evaluation prepared by the responsible Defense SD\1364062.1

 

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 50 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. contract Management Agency (DCMA) technical representative. The DCMA written evaluation shall be considered part of the ECP/RFD/RFV proposal. g. Classification of RFDs/RFVs. (1) Major RFDs/RFVs. RFDs/RFVs written against CIs shall be designated an major when the RFD/RFV consists of acceptance of an item having a nonconformance with contract or configuration documentation involving health; performance; interchangeability; reliability; survivability; maintainability; effective use or operation; weight; appearance (when a factor); or when there is a departure from a requirement classified as major in the contractual documentation. (2) Critical RFDs/RFVs. RFDs/RFVs written against CIs shall be designated as minor when the RFD/RFV consists of acceptance of an item having a nonconformance with contact or configuration documentation involving safety or when there is a departure from a requirement classified as critical in the contractual documentation. (3) Minor RFDs/RFVs. RFDs/RFVs written against CIs shall be designated as minor when the RFD/RFV consists of acceptance of an item having a nonconformance with contract or configuration documentation which does not involve any of the factors listed above in paragraphs g(1) or g(2), or when there is a departure from a requirement classified as minor in the contractual documentation. h. Proposals shall include sufficient technical data to describe all changes from existing contract requirements. i. Proposals shall include sufficient justification for making the change, including a statement of contract impact, if the change is not Authotized. j. Proposals for ECPs shall set forth a “not to exceed” price and delivery adjustment acceptable to the Contractor if the Government subsequently approves the proposal. If approved, the equitable increases shall not exceed this amount. k. Timer allowed for technical decisions for ECP and RFD/RFV proposals will be worked out via mutual agreement between the Contractor and the Government. l. The Contractor shall submit, concurrent with the ECP, a separate AMSAM-RD Form 525. “Specification Change Notice” (SCN), for each specification that would require revision if the ECP were approved. m. Proposals for VECPs shall set forth a “not less than” price and delivery adjustment acceptance to the Contractor if the Government subsequently approves the proposal. If approved, the savings shall not be less than this amount. n. The Contractor shall utilize RDMR Form 526. “Engineering Release Record” (ERR) to release new or revised configuration documentation to the Government for approval. o. The Contractor shall utilize RDMR Form 524, “Notice of Revision” (NOR) to describe the exact change (s) to configuration documentation specified as a data requirement in the contract. The Contractor shall describe the change using subsections entitled “WAS” to describe the current contractual technical requirement and “IS” to describe the proposed new requirement. 3. Submittal. The Contractor shall submit two (2) copies of each proposal to the responsible Administrative Contracting Officer (ACO). One (1) copy of each proposal shall be returned to the Contractor within (5) working days after receipt by the ACO, stating whether or not the proposal is in compliance with this provision. Any unresolved differences between the ACO and the Contractor concerning ECPs, VECPs, RFVs or RFDs will be submitted to the PCO for resolution. Submittals may be made by electronic means by scanning the appropriate completed forms into a computer or preparing the forms electronically. 4. Distribution. a. Electronic Distribution. The preferred method of distribution is through the Internet E-mail System to the PCO. Microsoft Word is required for use with the transmittal letter (E-mail). Required forms will be attached to the E-mail. All forms may be obtained from the Army Contracting Command – Redstone Website (https://wwwproc.redstone.army.mil/acquisition) by clicking on “Forms/Checksheets.” The forms are in both “Adobe Acrobat” and “Form Flow” formats. In order to access and use the forms, the user must have the “Adobe Acrobat” or “Form Flow” software installed on their computer. Drawings may be scanned into the computer and sent as an attachment. In some cases, because of size, drawings may have to be sent as hard copies or sent under special electronic instructions provided by the PCO. Contractors who do not have access to the Army Contracting Command – Redstone website will need to contact the PCO, the appropriate project office Configuration Management office, or the Technical Data Management Division (RDMR-SET) to have the forms sent to their facility. b. Hard Copy Distribution of Class I or II ECPs and RFD/RFVs. For each Class I or II ECP, or each RFD/RFV that the ACO determines to be in compliance with this provision, the Contractor shall submit the original plus five copies to the PCO and one copy to the ACO. Upon receipt of any type of change proposal that is submitted to the PCO, the ACO shall immediately submit DCMA’s written evaluation pertaining to the proposed engineering change action to the PCO. Assistance in preparing any of these proposals SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 51 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. may be obtained from the ACO or AMCOM Change Control Point at : Aviation and Missile Research, Development, and Engineering Center ATTN: RDMR-SET Redstone Arsenal, Al 35898-5000 Telephone: 256-876-1335 c. Hard copy Distribution of VECPs. For each VECP that the ACO determines to be in compliance with this Provision, the Contractor shall submit the original plus copies to the pco and one copy to the ACO. Upon receipt of any VECP that is submitted to the PCO, the ACO shall immediately submit DCMA’s written evaluation to the PCO. The Contractor shall also submit one copy of the VECP to the value Engineering Program Manager (VEPM) whose address is below. Assistance in preparing VECPs may be obtained from the VEPM. Aviation and Missile Research, Development, and Engineering center ATTN: RDMR-SET Redstone Arsenal, A1 35858-5000 Telephone: 256-876-8163 5. Alternate Format, Submittal or Distribution Process. Proposals may be prepared in a different format, submitted using a different submittal process or distributed in a different manner than specified in paragraphs 2, 3 and 4 above, so long as the alternate approach is in accordance with a Government approved configuration management plan governed by this contract or the PCO authorizes the alternate format, submittal, or distribution process. 6. Government Acceptance. Acceptance of a proposal by the Government shall be affected by the issuance of a change order or execution of a supplemental agreement incorporating the proposal into the contract unless the PCO authorizes another method of acceptance. The Government will notify the Contractor in writing if a proposal is determined to be unacceptable. (End of clause) H-8. OPTIONS The Government reserves the right to unilaterally exercise any or all options specified in Section B within the timeframes specified below: CLIN 0004 - Contract Award through 31 December 2012 Option I (CLINS 0005 through 0015) - Date of Definitization through 30 September 2013 Option II (CLINS 0016 through 0025) - 01 October 2013 through 30 September 2014 The Contracting Officer may, by written notice, exercise the above options at any time, one or more times in any amount, as long as the cumulative total number of units identified in the schedule is not exceeded. Any unused units are available for use in any subsequent option period. The price paid for each unit awarded/exercised will be based upon the price applicable at the time of award/exercise. The option exercise period may be extended by mutual agreement of the parties. *** END OF NARRATIVE H0001 *** H-9. IMPORTANT NOTICE - INSTRUCTIONS BY THE CONTRACTING OFFICER A. The contractor shall not accept any instructions issued by any person other than the Contracting Officer or the Contracting Officers Representative (COR) when one is appointed. If a COR is appointed, the appointment will be done by letter to the COR with the scope of the CORs authority set forth in the appointment letter. A copy of the letter will be furnished to the contractor. B. No change in the scope of this contract, which would effect a change in any term or provision of this contract, shall be made except by modification executed by the Contracting Officer. The contractor is responsible to ensure that all contractor personnel are knowledgeable and cognizant of this contract provision. Changes to contract effort accepted and performed by the contractor outside the contract without specific authorization of the Contracting Officer shall be the responsibility of the contractor. *** END OF NARRATIVE H0002 ***  SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 52 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. SECTION I - CONTRACT CLAUSES This document 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. Also, the full text of a clause may be accessed electronically at these addresses: http://farsite.hill.af.mil/VFFARA.HTM or http://farsite.hill.af.nil/VFDFARA.HTM or http://farsite.hill.af.mil/VFAFARa.HTM If the clause requires additional or unique information, then that information is provided immediately after the clause title.  Regulatory Cite Title Date I-1 52.201-1 DEFINITIONS JAN/2012 I-2 52.303-3 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 SEP/2006 I-5 52.203-7 ANTI-KICKBACK PROCEDURES OCT/2010 I-6 52.203-8 CANCELLATION, RESCISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR JAN/1997  IMPROPER ACTIVITY I-7 52.203-10 PRICE OR FEE ADJUSTMENT FOR ILLEGAL OR IMPROPER ACTIVITY JAN/1997 I-8 52.203-12 LIMITATION ON PAYMENTS TO INFLUENCE CERTAIN FEDERAL TRANSACTIONS OCT/2010 I-9 52.204-4 PRINTED OR COPIED DOUBLE-SIDED ON POSTCONSUMER FIBER CONTENT PAPER MAY/2011 I-10 52.204-7 CENTRAL CONTRACTOR REGISTRATION FEB/2012 I-11 52.209-6 PROTECTING THE GOVERNMENT’S INTEREST WHEN SUBCONTRACTING WITH DEC/2010  CONTRACTORS DEBARRED, SUSPENDED, OR PROPOSED FOR DEBARMENT I-12 52.209-9 UPDATES OF PUBLICLY AVAILABLE INFORMATION REGARDING RESPONSIBILITY FEB/2012  MATTERS I-13 52.211-5 MATERIAL REQUIREMENTS ADG/2000 I-14 52.211-15 DEFENSE PRIORITY AND ALLOCATION REQUIREMENTS APR/2008 I-15 52.215-14 INTEGRITY OF UNIT PRICES OCT/2010 I-16 52.215-15 PENSION ADJUSTMENTS AND ASSET REVERSIONS OCT/2010 I-17 52.215-18 REVERSION OR ADJUSTMENT OF PLANS FOR POSTRETIREMENT BENEFITS (PRB) JUL/2005  OTHER THAN PENSIONS I-18 52.216-8 FIXED FEE JUN/2011 I-19 52.219-8 UTILIZATION OF SMALL BUSINESS CONCERNS JAN/2011 I-20 52.222-19 CHILD LABOR--COOPERATION WITH AUTHORITIES AND REMEDIES MAR/2011 I-21 52.222-20 WALSH-HEALEY PUBLIC CONTRACTS ACT OCT/2010 I-22 52.222-21 PROHIBITION OF SEGREGATED FACILITIES FEB/1999 I-23 52.222-26 EQUAL OPPORTUNITY MAR/2007 I-24 52.222-35 EQUAL OPPORTUNITY FOR VETERANS SEP/2010 I-25 52.222-36 AFFIRMATIVE ACTION FOR WORKERS WITH DISABILITIES OCT/2010 I-26 52.222-37 EMPLOYMENT REPORTS ON VETERANS SEP/2010 I-27 52.222-40 NOTIFICATION OF EMPLOYEE RIGHTS UNDER THE NATIONAL LABOR RELATIONS DEC/2010  ACT I-28 52.222-50 COMBATING TRAFFICKING IN PERSONS FEB/2009 I-29 52.222-54 ENPLOYMENT ELIGIBLITY VERIFICATION JUL/2012 I-30 52.223-18 ENCOURAGING CONTRACTOR POLICIES TO BAN TEXT MESSAGING WHILE DRIVING AUG/2011 I-31 52.225-13 RESTRICTIONS ON CERTAIN FOREIGN PURCHASES JUN/2008 I-32 52.227-1 AUTHORIZATION AND CONSENT DEC/2007 I-33 52.227-2 NOTICE AND ASSISTANCE REGARDING PATENT AND COPYRIGHT INFRINGEMENT DEC/2007 I-34 52.228-3 WORKERS’ COMPENSATION INSURANCE (DEFENSE BASE ACT) APR/1984 I-35 52.228-7 INSURANCE--LIABILITY TO THIRD PERSONS MAR/1996 I-36 52.229-3 FEDERAL, STATE, AND LOCAL TAXES APR/2003 I-37 52.232-1 PAYMENTS APR/1984 I-38 52.232-8 DISCOUNTS FOR PROMPT PAYMENT FEB/2002 I-39 52.232-11 EXTRAS APR/1984 I-40 52.232-23 ASSIGNMENT OF CLAIMS (JAN 1986) -- ALTERNATE I (APR 1984) APR/1984 I-41 52.232-25 PROMPT PAYMENT OCT/2008 I-42 52.232-25 PROMPT PAYMENT (OCT 2008) - ALTERNATE I (FEB 2002) FEB/2002 I-43 52.232-1 DISPUTES JUL/2002 I-44 52.232-3 PROTEST AFTER AWARD AUG/1996 I-44 52.232-3 PROTEST AFTER AWARD (AUG 1996) – ALTERNATE I (JUNE 1985) JUN/1985 I-46 52.232-4 APPLICABLE LAW FOR BREACH OF COTRACT CLAIM OCT/2004 I-47 52.232-1 NOTICE OF INTENT OF DISALLOW COSTS APR/1984 SD\1364062.1

 

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 53 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC.  Regulatory Cite Title Date 1-48 52.242-3 PENALTIES FOR UNALLOWABLE COSTS MAY/2001 I-49 52.242-13 BANKRUPTCY JUL/1995 1-50 52.243-1 CHANGES -- FIXED PRICE AUG/1987 I-51 52.243-1 CHANGES -- FIXED PRICE (AUG 1987) -- ALTERNATE I (APR 1984) APR/1984 I-52 52.243-2 CHANGES -- COST-REIMBURSEMENT (AUG 1987) -- ALTERNATE I (APR 1984) APR/1984 I-53 52.243-2 CHANGES – COST REIMBURSEMENT ADG/1987 I-54 52.247-63 PREFERENCE FOR U.S.-FLAG AIR CARRIERS JUN/2003 I-55 52.249-2 TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (FIXED-PRICE) APR/2012 I-56 52.249-6 TERMINATION (COST REIMBURSEMENT) MAY/2004 I-57 52.249-8 DEFAULT (FIXED-PRICE SUPPLY AND SERVICE) APR/1984 I-58 52.249-14 EXCUSABLE DELAYS APR/1984 I-59 52.253-1 COMPUTER GENERATED FORMS JAN/1991 I-60 252.203-7000 REQUIREMENTS RELATING TO COMPENSATION OF FORMER DOD OFFICIALS SEP/2011 I-61 252.203-7001 PROHIBITION ON PERSONS CONVICTED OF FRAUD OR OTHER DEFENSE-CONTRACT - DEC/2008  RELATED FELONIES I-62 252.203-7002 REQUIREMENT TO INFORM EMPLOYEES OF WHISTLE BLOWER RIGHTS JAN/2009 I-63 252.204-7000 DISCLOSURE OF INFORMATION DEC/1991 I-64 252.204-7003 CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT APR/1992 I-65 252.204-7008 EXPORT-CONTROLLED ITEMS APR/2010 I-66 252.205-7000 PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS DEC/1991 I-67 252.209-7004 SUBCONTRACTING WITH FIRMS THAT ARE OWNED OR CONTROLLED BY THE DEC/2006  GOVERNMENT OF A TERRORIST COUNTRY I-68 252.225-7006 QUARTERLY REPORTING OF ACTUAL CONTRACT PERFORMANCE OUTSIDE THE UNITED OCT/2010  STATES I-69 252.226-7001 UTILIZATION OF INDIAN ORGANIZATIONS, INDIAN-OWNED ECONOMIC SEP/2004  ENTERPRISES, AND NATIVE HAWAIIAN SMALL BUSINESS CONCERNS I-70 252.227-7013 RIGHTS IN TECHNICAL DATA--NONCOMMERCIAL ITEMS FEB/2012 I-71 252.227-7014 RIGHTS IN NONCOMMERCIAL COMPUTER SOFTWARE AND NONCOMMERCIAL COMPUTER FEB/2012  SOFTWARE DOCUMENTATION I-72 252.227-7015 TECHNICAL DATA--COMMERCIAL ITEMS DEC/2011 I-73 252.227-7016 RIGHTS IN BID OR PROPOSAL INFORMATION JAN/2011 I-74 252.227-7019 VALIDATION OF ASSERTED RESTRICTIONS--COMPUTER SOFTWARE SEP/2011 I-75 252.227-7025 LIMITATIONS ON THE USE OR DISCLOSURE OF GOVERNMENT-FURNISHED MAR/2011  INFORMATION MARKED WITH RESTRICTIVE LEGENDS I-76 252.227-7027 DEFERRED ORDERING OF TECHNICAL DATA OR COMPUTER SOFTWARE APR/1988 I-77 252.227-7030 TECHNICAL DATA--WITHHOLD1NG OF PAYMENT MAR/2000 I-78 252.227-7037 VALIDATION OF RESTRICTIVE MARKINGS ON TECHNICAL DATA JUN/2012 I-79 252.231-7000 SUPPLEMENTAL COST PRINCIPLES DEC/1991 I-80 252.232-7003 ELECTRONIC SUBMISSION OF PAYMENT REQUESTS AND RECEIVING REPORTS JUN/2012 I-81 252.232-7010 LEVIES ON CONTRACT PAYMENTS DEC/2006 I-82 252.237-7010 PROHIBITION ON INTERROGATION OF DETAINEES BY CONTRACTOR PERSONNEL NOV/2010 I-83 252.243-7001 PRICING OF CONTRACT MODIFICATIONS DEC/1991 I-84 252.243-7002 REQUESTS FOR EQUITABLE ADJUSTMENT MAR/1998 I-85 252.246-7000 MATERIAL INSPECTION AND RECEIVING REPORT MAR/2008 I-86 25.247-7023 TRANSPORTATION OR SUPPLIES BY SEA MAY/2002 I-87 52.216-7 ALLOWABLE COST AND PAYMENT JUN/2011 (a) Invoicing. (1) The Government will make payments to the Contractor when requested as work progresses, but (except for small business concerns) not more often than once every 2 weeks, in amounts determined to be allowable by the Contracting Officer in accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in effect on the date of this contract and the terms of this contract. The Contractor may submit to an authorized representative of the Contracting Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this contract. (2) Contract financing payments are not subject to the interest penalty provisions of the Prompt Payment Act. Interim payments made prior to the final payment under the contract are contract financing payments, except interim payments if this contract contains Alternate I to the clause at 52.232-25. (3) The designated payment office will make interim payments for contract financing on the 30th day after the designated billing office receives a proper payment request. In the event that the Government requires an audit or other review of a specific payment SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 54 of 72 PIN/SIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. request to ensure compliance with the terns and conditions of the contract, the designated payment office is not compelled to make payment by the specified due date. (b) Reimbursing costs. (1) For the purpose of reimbursing allowable costs (except as provided in subparagraph (b) (2) of this clause, with respect to pension, deferred profit sharing, and employee stock ownership plan contributions) , the terms costs includes only -- (i) Those recorded coats that, at the time of the request for reimbursement, the Contractor has paid by cash, check, or other form of actual payment for items or services purchased directly for the contract; (ii) When the Contractor is not delinquent in paying costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid, for -- (A) Supplies and services purchased directly for the contract and associated financing payments to subcontractors, provided payments determined due will be made (1) In accordance with the terms and conditions of a subcontract or invoice; and (2) Ordinarily within 30 days of the submission of the Contractors payment request to the Government; (B) Materials issued from the Contractors inventory and placed in the production process for use on the contract; (C) Direct labor; (D) Direct travel; (E) Other direct in-house costs; and (F) Properly allocable and allowable indirect costs, as shown in the records maintained by the Contractor for purposes of obtaining reimbursement under Government contracts, and (iii) The amount of financing payments that have been paid by cash, check or other form of payment to subcontractor. (2) Accrued costs of Contractor contributions under employee pension plans shall be excluded until actually paid unless (i) The Contractors practice is to make contributions to the retirements fund quarterly or more frequently; and (ii) The contribution does not remain unpaid 30 days after the end of the applicable quarter or payment period (any contribution remaining unpaid shall be excluded from the Contractors indirect costs for payment purposes). (3) Notwithstanding the audit and adjustment of invoices or vouchers under paragraph (g) of this clause, allowable indirect costs under this contract shall be obtained by applying indirect cost rates established in accordance with paragraph (d) of this clause. (4) Any statements in specifications or other document incorporated in this contract by reference designating performance of services or furnishing of materials at the Contractors expense or at no cost to the Government shall be disregarded for purpose of cost-reimbursement under this clause. (c) Small business concerns. A small business concern may receive more frequent payments than 2 weeks. (d) Final indirect cost rates. (1) Final annual indirect cost rates and the appropriate bases shall be established in accordance with subpart 42.7 of the Federal Acquisition Regulation (FAR) in effect for the period covered by the indirect cost rate proposal. (2) (i) The Contractor shall submit an adequate final indirect cost rate proposal to the Contracting Officer (or cognizant Federal agency official) and auditor within the 6-month period following the expiration of each of its fiscal years. Reasonable extensions, for exceptional circumstances only, may be requested in writing by the Contractor and granted in writing by the Contracting Officer. The Contractor shall support its proposal with adequate supporting data. (ii) The proposed rates shall be based on the Contractors actual cost experience for that period. The appropriate Government representative and the Contractor shall established the final indirect cost rates as promptly as practical after receipt of the Contractors proposal. (iii) An adequate indirect cost rate proposal shall include the following data unless otherwise specified by the cognizant Federal SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 55 of 72 PIN/SIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. agency official: (A) Summary of all claimed indirect expense rates, including pool, base, and calculated indirect rate. (B) General and Administrative expenses (final indirect cost pool). Schedule of claimed expenses by element of cost as identified in accounting records (Chart of Accounts). (C) Overhead expenses (final indirect cost pool). Schedule of claimed expenses by element of cost as identified in accounting records (Chart of Accounts) for each final indirect cost pool. (D) Occupancy expenses (intermediate indirect cost pool). Schedule of claimed expenses by element of cost as identified in accounting records (Chart of Accounts) and expense reallocation to final indirect cost pools. (E) Claimed allocation bases, by element of cost, used to distribute indirect costs. (F) Facilities capital cost of money factors computation. (G) Reconciliation of books of account (i.e., General Ledger) and claimed direct costs by major cost element. (H) Schedule of direct costs by contract and subcontract and indirect expense applied at claimed rates, as well as subsidiary schedule Government participation percentages in each of the allocation base amounts. (I) Schedule of cumulative direct and indirect costs claimed and billed by contract and subcontract. (J) Subcontract information. Listing of subcontracts awarded to companies for which the contractor is the prime or upper-tier contractor (include prime and subcontract numbers; subcontract value and award type; amount claimed during the fiscal year; and the subcontractor name, address, and point of contact information). (K) Summary of each time-and-materials and labor-hour contract information, including labor categories, labor rates, hours, and amounts; direct materials; other direct costs; and, indirect expense applied at claimed rates. (L) Reconciliation of total payroll per IRS form 941 to total labor costs distribution. (M) Listing of decisions/agreements/approvals and description of accounting/organizational changes. (N) Certificate of final indirect costs (see 52.242-4, Certification of Final Indirect Costs). (O) Contract closing information for contracts physically completed in this fiscal year (include contract number, period of performance, contract ceiling amounts, contract fee computations, level of effort, and indicate if the contract is ready to close). (iv) The following supplemental information is not required to determine if a proposal is adequate, but may he required during the audit process: (A) Comparative analysis of indirect expense pools detailed by account to prior fiscal year and budgetary data. (B) General Organizational information and Executive compensation for five most highly compensated executives. See 31.205-6(p). Additional salary reference information is available at http://www.whitehouse.gov/omb/procurement index exec comp/. (C) Identification of prime contracts under which the contractor performs as a subcontractor. (D) Description of accounting system (excludes contractors required to submit a CAS Disclosure Statement or contractors where the description of the accounting system has not changed from the previous year’s submission). (E) Procedures for identifying and excluding unallowable costs from the costs claimed and billed (excludes contactors where the procedures have not changed from the previous year’s submission). (F) Certified financial statements and other financial date (e.g., trial balance, compilation, review, etc.). (G) Management letter from outside CPAs concerning any internal control weaknesses. (H) Actions that have been and/or will be implemented to correct the weaknesses described in the management letter from subparagraph (G) of this section. SD\1364062.1

 

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 56 of 72 PIN/SIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. (I) List of all internal audit reports issued since the last disclosure of internal audit reports to the Government. (J) Annual internal audit plan of scheduled audits to be performed in the fiscal year when the final indirect cost rate submission is made. (K) Federal and State income tax returns. (L) Securities and Exchange Commission 10-K annual report. (M) Minutes from board of directors meetings. (N) Listing of delay claims and termination claims submitted which contain costs relating to the subject fiscal year. (O) Contract briefings, which generally include a synopsis of all pertinent contract provisions, such as: Contract type, contract amount, product or service(s) to be provided, contract performance period, rate ceilings, advance approval requirements, pre-contract cost allowability limitations, and billing limitations. (V) The Contractor shall update the billings on all contracts to reflect the final settled rates and update the schedule of cumulative direct and indirect costs claimed and billed, as required in paragraph (d) (2) (iii) (I) of this section, within 60 days after settlement of final indirect cost rates. (3) The Contractor and the appropriate Government representative shall execute a written understanding setting forth the final indirect cost rates. The understanding shall specify (i) the agreed-upon final annual indirect cost rates, (ii) the bases to which the rates apply, (iii) the periods for which the rates apply, (iv) any specific indirect cost items treated as direct costs in the settlement, and (v) the affected contract and/or subcontract, identifying any with advance agreements or special terms and the applicable rates. The understanding shall not change any monetary ceiling, contract obligation, or specific cost allowance or disallowance provided for in this contract. The understanding is incorporated into this contract upon execution. (4) Failure by the parties to agree on a final annual indirect cost rate shall be a dispute within the meaning of the Disputes clause. (5) Within 120 days (or longer period if approved in writing by the Contracting Officer) after settlement of the final annual indirect cost rates for all years of a physically complete contract, Contractor shall submit a completion invoice or voucher to reflect the settled amounts and rates. The completion invoice or voucher shall include settled subcontract amount and rates. The prime contractor is responsible for settling subcontractor amounts and rates included in the completion invoice or voucher and providing status of subcontractor audits to the contracting officer upon request. (6) (i) If the Contractor fails to submit a completion invoice or voucher within the time specified in paragraph (d) (5) of this clause, the Contracting Officer may-- (A) Determine the amounts due to the Contractor under the contract; and (B) Record this determination in a unilateral modification to the contract. (ii) This determination constitutes the final decision of the Contracting Officer in accordance with the Disputes clause. (e) Billing rates. Until final annual indirect cost rates are established for any period, the Government shall reimburse the Contractor at billing rates established by the Contracting Officer or by an authorized representative (the cognizant auditor), subject to adjustment when the final rates are established. These billing rates -- (1) Shall be the anticipated final rates; and (2) May be prospectively or retroactively revised by mutual agreement, at either partys request, to prevent substantial overpayment or underpayment. SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 57 of 72 PIN/SIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. (f) Quick-closeout procedures. Quick-closeout procedures are applicable when the conditions in FAR 42.708(a) are satisfied. (g) Audit. At any time or times or times before final payment, the Contracting Officer may have Contractors invoices or vouchers and statements of cost audited. Any payment may be -- (1) Reduced by amounts found by the Contracting Officer not to constitute allowable costs; or (2) Adjusted for prior overpayments or underpayments. (h) Final payment. (1) Upon approval of a completion invoice or voucher submitted by the Contractor in accordance with paragraph (d) (5) of this clause, and upon the Contractors compliance with terms of this contract, the Government shall promptly pay balance of allowable costs and that part of the fee (if any) not previously paid. (2) The Contractor shall pay to the Government any refunds, rebates, credits, or other amounts (including interest, if any) accruing to or received by the Contractor or any assignee under this contract, to the extent that those amounts are properly allocable to costs for which the Contractor has been reimbursed by the Government. Reasonable expenses incurred by the Contractor for securing refunds, rebates, credits, or other amounts shall be allowable costs if approved by the Contracting Officer. Before final payment under this contract, the Contractor and each assignee whose assignment is effect at the time of final payment shall execute and deliver -- (i) An assignment to the Government, in form and substance satisfactory to the Contracting Officer, of refunds, refunds, credits, or other amounts (including interest, if any) properly allocable to costs which the Contractor has been reimbursed by the Government under this contract; and (ii) A release discharging the Government, its officers, agents, and employees from all liabilities, obligations, and claims arising out or under this contract, except -- (A) Specified claims stated in exact amounts, or in estimated amounts when the exact amount are not known; (B) Claims (including reasonable incidental expenses) based upon liabilities of the Contractor to third parties arising out of the performance of this contract; provided, that the claims are not known to the Contractor on the date of the execution of the release, and that the Contractor gives notice of the claims in writing to the Contracting Officer within 6 years following the release date or final payment date, whichever is earlier; and (C) Claims for reimbursement of costs, including reasonable incidental expenses, incurred by the Contractor under the patent clauses of contract, excluding, however, any expenses arising from the Contractors indemnification of the Government against patent liability. (End of Clause) I-88 52.217-8 OPTION TO EXTEND SERVICES NOV/1999 The Government may require continued performance of any services within the limits and the rates specified in the contract. These rates may be adjusted only as result of revisions to prevailing labor rates provided by the Secretary of Labor. The option provision may be exercised more than once, but the extension of performance hereunder shall not exceed 6 months. The Contracting Officer may exercise the option by written notice to the Contractor within 90 days.. (End of Clause) I-89 52.217-9 OPTION TO EXTEND THE TERM OF THE CONTRACT MAR/2000 (a) The Government may extend the term of this contract by written notice to the Contractor within 90 days; provided that the Government gives the Contractor a preliminary written notice of its intent to extend at least 60 days before the contract expires. The preliminary notice does not commit the Government to an extension. (b) If the Government exercises this option, the exercise contract shall be considered to include this option clause. (c) The total duration of this contract, including the exercise of any options under this clause, shall not exceed 4 years, 6 months. SD\1364062.1

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 58 of 72 PIN/SIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. (End of clause) I-90 52.244-2 SUBCONTRACTS OCT/2010 (a) Definition. As used in this clauses Approved purchasing system means a Contractors purchasing system that has been reviewed and approved in accordance in with Part 44 of the Federal Acquisition Regulation (FAR) Consent to subcontract means the Contracting Officers written consent for the Contractors to enter into a particular subcontract. Subcontract means any contract, as defined in FAR subpart 2.1, entered into by a subcontractor to furnish supplies or services for performance of the prime contract or a subcontract. It includes, but is not limited to, purchase orders, and changes and modifications to purchase orders. (b) When this clauses is included in a fixed-price types contract, consent to subcontract is required only on unpriced contract actions (including unpriced modifications or unpriced delivery order), and only if required in accordance with paragraph (c) or (d) or this clause. (c) If the contractor does not have an approved purchasing system, consent to subcontract is required for any subcontract that-- (1) Is of the cost-reimbursement, time-and-materials, or labor-hour types; or (2) Is fixed-price and exceeds (i) For a contract awarded by the Department of Defense, the Coast Guard, or the national Aeronautics and Space Administration, the greater of the simplified acquisition threshold or 5 percent of the total estimated cost of the contract; or (ii) For contracts awarded by a civilian agency other that the Coast Guard and the National Aeronautics and Space Administration, either the simplified acquisition threshold or 5 percent of the total estimated cost of the contract. (d) If the Contractor has an approved purchasing system, the Contractor nevertheless shall obtain the Contracting Officers written consent before placing the following subcontracts: TBD (e) (i) The Contractor shall notify the Contracting Officer reasonably in advance of placing any subcontract or modification thereof for which consent is required under paragraph (b), (c), or (d) of this clauses, including the following information: (i) A description of the supplies or service to be subcontracted. (ii) Identification of the type of subcontract to be used. (iii) Identification of the proposed subcontractor. (iv) The proposed subcontract price. (v) The subcontractors current, complete, and accurate certified cost or pricing data and Certificate of Current Cost or Pricing Data, if required by other contract provisions. (vi) The subcontractors Disclosure Statement or Certificate relating to Cost Accounting Standards when such data are required by other provisions of this contract. (vii) A negotiation memorandum reflecting -- (A) The principal elements of the subcontract price negotiations; (B) The most significant considerations controlling establishment of initial or revised prices; (C) The reason certified cost or pricing data were or were not required; (D) The extent, if any, to which the Contractor did not rely on the subcontractors certified cost or pricing data in determining the price objective and in negotiating the final price; (E) The extent to which it was recognized in the negotiation that the subcontractors certified cost or pricing data were not accurate, complete, or current; the action taken by the Contractor and the subcontractor; and the effect of any such defective data on SD\1364062.1

 

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 59 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. the total price negotiated; (F) The reasons for any significant difference between the Contractors price objective and the price negotiated; and (G) A complete explanation of the incentive fee or profit plan when incentives are used. The explanation shall identify each critical performance element, management decisions used to quantify each incentive element, reasons for incentives, and a summary of all trade-off possibilities considered. (2) The Contractor is not required to notify the Contracting Officer in advance of entering into my subcontract foe which consent is not required under paragraph (c), (d), or (e) or this clause. (f) Unless the consent or approval specifically provides otherwise, neither consent by the Contracting Officer to any subcontract nor approval of the Contractors purchasing system shall constitute a determination -- (1) Of the acceptability of any subcontract terms or conditions; (2) Of the allowability of any cost under this contract; or (3) To relieve the Contractor of any responsibility for performing this contract. (g) No subcontract or modification thereof placed under this contract shall provide for payment on a cost-plus-a-percentage-of-cost basis, and any fee payable under cost-reimbursement type subcontracts shall not exceed the fee limitations in FAR 15.404-4 (c) (4) (i). (h) The Contractor shall give the Contracting Officer immediate written notices of any action or suit filed and prompt notice of any claim made against the Contractor by any subcontractor or vendor that, in the opinion of Contractor, may result in litigation related in any way to this contract, with respect to which the Contractor may be entitled to reimbursement from the Government. (i) The Government reserves the right to review the Contractors purchasing system as set forth in FAR Subpart 44.3.i (j) Paragraphs (c) and (e) of this clause do not apply to the following subcontractors, which were evaluated during negotiation: N/A I-91 252.27-040 CONTRACTOR PERSONNEL AUTHORIZED TO ACCOMPANY U. S. ARMED FORCES JUN/2011 DEPLOYED OUTSIDE THE UNITED STATES (a) Definitions. As used in this clause “Combatant Commander” means the commander of a unified or specified combatant command established in accordance with 10 U.S.C 161. “Designed operational area” means a geographic area designated by the combatant commander or subordinate joint force commander for the conduct or support of specified military operations. “Law of War” means that part of international law that regulates the conduct of armed hostilities. The law of war encompasses all international law for the conduct of hostilities binding on the United States or its individual citizens, including treaties and international agreements to which the United States is a party, and applicable customary international law. “Subordinate joint force commander” means a sub-unified commander or joint task force commander. (b) General. (1) This clause applies when Contractor personnel are authorized to accompany U.S. Armed Forces deployed outside the United States in (i) Contingency operations; (ii) Humanitarian or peacekeeping operations; or (iii) Other military operations or military exercises, when designated by the Combatant Commander. (2) Contract performance in support of U.S. Armed Forces deployed outside the United States may require work in dangerous or austere conditions. Expect as otherwise provided in the contract, the Contractor accepts the risks associated with required contract performance in such operations. (3) Contractor personnel are civilians accompanying the U.S. Armed Forces.

 


CONTINUATION SHEET Reference No. of Document Being Continued Page 60 of 72 PIIN/SIIN W31P4Q-12-C-0263 MOD/AMD Name of Offeror or Contractor: AEROVIRONMENT, INC. (i) Except as provided in paragraph (b) (3) (ii) of this clause, Contractor personnel are only authorized to use deadly force in self-defense. (ii) Contractor personnel performing security functions are also authorized to use deadly force when such force reasonably appears necessary to execute