[Federal Register Volume 61, Number 252 (Tuesday, December 31, 1996)]
[Rules and Regulations]
[Pages 69295-69297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-32811]
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DEPARTMENT OF DEFENSE
48 CFR Parts 42 and 52
[FAC 90-44; FAR Case 95-018; Item VII]
RIN 9000-AG88
Federal Acquisition Regulation; Final Indirect Cost Rates
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council have agreed on a final rule amending
the Federal Acquisition Regulation (FAR) concerning the procedures
relating to final indirect cost rates to permit, with certain
restrictions, increased interim payments to contractors under certain
circumstances. This regulatory action was not subject to Office of
Management and Budget review under Executive Order 12866, dated
September 30, 1993. This is not a major rule under 5 U.S.C. 804.
EFFECTIVE DATE: March 3, 1997.
FOR FURTHER INFORMATION CONTACT: Ms. Linda Klein at (202) 501-3775 in
reference to this FAR case. For general information, contact the FAR
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-44, FAR case 95-018.
SUPPLEMENTARY INFORMATION:
A. Background
This final rule amends FAR Subpart 42.7 and Part 52 to improve
procedures for providing payments to contractors under cost-type
contracts by (1) permitting, with certain restrictions, contractor use
of billing rates contained in certified final indirect cost rate
proposals; (2) providing for Government release of 75 to 90 percent of
all fee withholds under physically completed contracts, after receipt
of the contractor's certified final indirect cost rate proposal; and
(3) establishing a timeframe for contractor submission of final
invoices or vouchers.
A proposed rule was published in the Federal Register at 61 FR
26766, May 28, 1996. One source submitted comments which were
considered in the development of the final rule.
B. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., because the rule merely
provides for earlier payments to contractors under cost-type contracts.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose recordkeeping or information collection
requirements, or collections of information from offerors, contractors,
or members of the public which require the approval of the Office of
Management and Budget under 44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Parts 42 and 52
Government procurement.
[[Page 69296]]
Dated: December 19, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.
Therefore, 48 CFR Parts 42 and 52 are amended as set forth below:
1. The authority citation for 48 CFR Parts 42 and 52 continues to
read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 42--CONTRACT ADMINISTRATION
2. Section 42.704 is amended by adding paragraph (e) to read as
follows:
42.704 Billing rates.
* * * * *
(e) When the contractor provides to the cognizant contracting
officer the certified final indirect cost rate proposal in accordance
with 42.705-(b) or 42.705-(b), the contractor and the Government may
mutually agree to revise billing rates to reflect the proposed indirect
cost rates, as approved by the Government to reflect historically
disallowed amounts from prior years' audits, until the proposal has
been audited and settled. The historical decrement will be determined
by either the cognizant contracting officer (42.705-1(b)) or the
cognizant auditor (42.705-2(b)).
3. Section 42.705 is revised to read as follows:
42.705 Final indirect cost rates.
(a) Final indirect cost rates shall be established on the basis
of--
(1) Contracting officer determination procedure (see 42.705-1) or
(2) Auditor determination procedure (see 42.705-2).
(b) Within 120 days after settlement of the final indirect cost
rates (or longer, if approved in writing by the contracting officer),
the contractor shall submit a completion invoice or voucher reflecting
the settled amounts and rates on all contracts physically completed in
the year covered by the proposal.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
4. Section 52.216-7 is amended by revising the clause date;
redesignating paragraph (d)(4) as (d)(5) and adding a new (d)(4); and
by revising paragraph (h)(1) to read as follows:
52.216-7 Allowable Cost and Payment.
* * * * *
Allowable Cost and Payment (Feb 1997)
* * * * *
(d) * * *
(4) Within 120 days after settlement of the final indirect cost
rates covering the year in which this contract is physically
complete (or longer, if approved in writing by the Contracting
Officer), the Contractor shall submit a completion invoice or
voucher to reflect the settled amounts and rates.
* * * * *
(h) Final payment. (1) Upon approval of a completion invoice or
voucher submitted by the Contractor in accordance with paragraph
(d)(4) of this clause, and upon the Contractor's compliance with all
terms of this contract, the Government shall promptly pay any
balance of allowable costs and that part of the fee (if any) not
previously paid.
* * * * *
5. Section 52.216-8 is amended by revising the clause date and
paragraph (b) to read as follows:
52.216-8 Fixed Fee.
* * * * *
Fixed Fee (Feb 1997)
* * * * *
(b) Payment of the fixed fee shall be made as specified in the
Schedule; provided that after payment of 85 percent of the fixed
fee, the Contracting Officer may withhold further payment of fee
until a reserve is set aside in an amount that the Contracting
Officer considers necessary to protect the Government's interest.
This reserve shall not exceed 15 percent of the total fixed fee or
$100,000, whichever is less. The Contracting Officer shall release
75 percent of all fee withholds under this contract after receipt of
the certified final indirect cost rate proposal covering the year of
physical completion of this contract, provided the Contractor has
satisfied all other contract terms and conditions, including the
submission of the final patent and royalty reports, and is not
delinquent in submitting final vouchers on prior years' settlements.
The Contracting Officer may release up to 90 percent of the fee
withholds under this contract based on the Contractor's past
performance related to the submission and settlement of final
indirect cost rate proposals.
(End of clause)
6. Section 52.216-9 is amended by revising the clause date and
paragraph (c) to read as follows:
52.216-9 Fixed Fee--Construction.
* * * * *
Fixed Fee--Construction (Feb 1997)
* * * * *
(c) After the payment of 85 percent of the fixed fee, the
Contracting Officer may withhold further payment of fee until a
reserve is set aside in an amount that the Contracting Officer
considers necessary to protect the Government's interest. This
reserve shall not exceed 15 percent of the total fixed fee or
$100,000, whichever is less. The Contracting Officer shall release
75 percent of all fee withholds under this contract after receipt of
the certified final indirect cost rate proposal covering the year of
physical completion of this contract, provided the Contractor has
satisifed all other contract terms and conditions, including the
submission of the final patent and royalty reports, and is not
delinquent in submitting final vouchers on prior years' settlements.
The Contracting Officer may release up to 90 percent of the fee
withholds under this contract based on the Contractor's past
performance related to the submission and settlement of final
indirect cost rate proposals.
(End of clause)
7. Section 52.216-10 is amended by revising the clause date and
paragraph (c) to read as follows:
52.216-10 Incentive Fee.
* * * * *
Incentive Fee (Feb. 1997)
* * * * *
(c) Withholding of payment. Normally, the Government shall pay
the fee to the Contractor as specified in the Schedule. However,
when the Contracting Officer considers that performance or cost
indicates that the Contractor will not achieve target, the
Government shall pay on the basis of an appropriate lesser fee. When
the Contractor demonstrates that performance or cost clearly
indicates that the Contractor will earn a fee significantly above
the target fee, the Government may, at the sole discretion of the
Contracting Officer, pay on the basis of an appropriate higher fee.
After payment of 85 percent of the applicable fee, the Contracting
Officer may withhold further payment of fee until a reserve is set
aside in an amount that the Contracting Officer considers necessary
to protect the Government's interest. This reserve shall not exceed
15 percent of the applicable fee or $100,000, whichever is less. The
Contracting Officer shall release 75 percent of all fee withholds
under this contract after receipt of the certified final indirect
cost rate proposal covering the year of physical completion of this
contract, provided the Contractor has satisfied all other contract
terms and conditions, including the submission of the final patent
and royalty reports, and is not delinquent in submitting final
vouchers on prior years' settlements. The Contracting Officer may
release up to 90 percent of the fee withholds under this contract
based on the Contractor's past performance related to the submission
and settlement of final indirect cost rate proposals.
* * * * *
8. Section 52.216-13 is amended by revising the clause date,
redesignating paragraph (c)(4) as (c)(5) and adding a new paragraph
(c)(4); and by revising the date and paragraph (h) of Alternate I to
read as follows:
* * * * *
52.216-13 Allowable Cost and Payment--Facilities.
* * * * *
Allowable Cost and Payment--Facilities (Feb 1997)
* * * * *
(c) * * *
(4) Within 120 days after settlement of the final indirect cost
rates covering the year in
[[Page 69297]]
which this contract is physically complete (or longer, if approved
in writing by the Contracting Officer), the Contractor shall submit
a completion invoice or voucher to reflect the settled amounts and
rates.
* * * * *
Alternate I (Feb 1997). * * *
* * * * *
(h) Final Payment. Upon approval of a completion invoice or
voucher submitted by the Contractor in accordance with paragraph
(c)(4) of this clause, and upon the Contractor's compliance with all
terms of this contract, the Government shall promptly pay any
balance of allowable costs not previously paid.
[FR Doc. 96-32811 Filed 12-30-96; 8:45 am]
BILLING CODE 6820-EP-M
