FAR 29.401-3

(a) Except as provided in paragraph (b) of this section, insert the clause at 52.229-3 , Federal, State, and Local Taxes, in solicitations and contracts if- (1) The contract is to be performed wholly or partly in the United States or its outlying areas; (2) A fixed-price contract is contemplated; and (3) The contract is expected to exceed the simplified acquisition threshold. (b) In a noncompetitive contract that meets all the conditions in paragraph (a) of this section, the contracting officer may insert the clause at 52.229-4 , Federal, State, and Local Taxes (State and Local Adjustments), instead of the clause at 52.229-3 , if the price would otherwise include an inappropriate contingency for potential postaward change(s) in State or local taxes.

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