§ 970.3102-22 - Avoidable costs for profit making contractors.

In determining whether a cost is an “avoidable cost” for profit making contractors as specified in 970.5204-13 (e)(12) and (e)(17)(iv), 970.5204-14 (e)(10) and (e)(15)(iv), 970.5204-21(j) and 970.5204-31, the contracting officer, shall, among other factors, consider:

(a) Whether the contractor's conduct resulted from compliance with written direction from the contracting officer.

(b) Whether the contractor's conduct occurred after specific instances of noncompliance were reported by the contractor to the contracting officer and necessary funding or authorization to correct the conditions were unavailable.

(c) Whether the act or failure to act resulted from a violation of a formal DOE regulation or order. The contracting officer will also assess the completeness, efficiency and effectiveness of the contractor's internal control systems and procedures (e.g., operational, maintenance, security), as well as determine whether, in the case of damage to, destruction of, or loss of Government property, the contractor has faithfully implemented the DOE-approved property management system, whether proper training and instruction were provided to employees, whether all reasonable precautions were taken, whether problems were promptly identified and reported to DOE and whether adequate corrective actions were taken to preclude future occurrences.

(d) Whether the contractor voluntarily informed the contracting officer in a timely good faith manner of the condition or activity which later resulted in the incurrence of avoidable costs. The period of time that the contractor was aware or should have been aware of the problem prior to reporting it is also pertinent.

(e) Whether the contractor was newly selected to manage the facility and whether it had sufficient time to discern the problem and report it prior to the incurrence of avoidable costs.

These considerations will also be used to determine whether all or a portion of the avoidable cost, which would otherwise be totally nonreimbursable, may be reimbursed because of the presence of the mitigating factors described above. This decision will be made by the contracting officer.