[Federal Register Volume 60, Number 79 (Tuesday, April 25, 1995)]
[Proposed Rules]
[Pages 20252-20253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-10071]
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OFFICE OF MANAGEMENT AND BUDGET
Office of Federal Procurement Policy
48 CFR Part 9903
Cost Accounting Standards Board; Changes in Cost Accounting
Practices
AGENCY: Cost Accounting Standards Board, Office of Federal Procurement
Policy, OMB.
ACTION: Advance notice of proposed rulemaking.
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SUMMARY: The Cost Accounting Standards Board (CASB) invites coverage
comments on proposed amendments to the regulatory provisions contained
in Chapter 99 of Title 48. The proposed amendments would revise the
current definitions and illustrations governing changes in cost
accounting practices. Also proposed is the addition of a new Subpart to
clarify the process for determining and resolving the cost impact on
covered contract prices and/or contract costs when a contractor makes a
change to its cost accounting practices, fails to comply with a Cost
Accounting Standard (CAS) or fails to consistently follow its
established cost accounting practices.
DATES: Requests for a copy of the proposed amendments must be in
writing and must be received by June 26, 1995. Comments must be in
writing and must be received by July 10, 1995.
ADDRESSES: Requests for a copy of the proposed amendments or comments
pertaining to this Advance Notice of Proposed Rulemaking (ANPRM) should
be addressed to Mr. Rudolph J. Schuhbauer, Project Director, Cost
Accounting Standards Board, Office of Federal Procurement Policy, 725
17th Street, NW, Room 9001, Washington, DC 20503. Attn: CASB Docket No.
93-01A.
FOR FURTHER INFORMATION CONTACT:
Rudolph J. Schuhbauer, Project Director, Cost Accounting Standards
Board (telephone 202-395-3254).
SUPPLEMENTARY INFORMATION:
A. Regulatory Process
The Cost Accounting Standards Board's rules and regulations are
codified at 48 CFR Chapter 99. Section 26(g)(1) of the Office of
Federal Procurement Policy Act, 41 U.S.C. Sec. 422(g)(1), requires that
the Board, prior to the promulgation of any new or revised Cost
Accounting Standard, complete a prescribed rulemaking process. This
process consists of the following four steps:
1. Consult with interested persons concerning the advantages,
disadvantages and improvements anticipated in the pricing and
administration of government contracts as a result of a proposed
Standard.
2. Promulgate an Advance Notice of Proposed Rulemaking.
3. Promulgate a Notice of Proposed Rulemaking.
4. Promulgate a Final Rule.
This proposal is step two in the four step process.
B. Summary of Proposed Rule
In response to the Cost Accounting Standards Board's solicitation
of agenda items, several commenters identified the Board's regulatory
coverage on ``changes in cost accounting practice'' as a potential
agenda item. The commenters advised the Board that industry and
Government officials are interpreting the regulatory coverage
differently and often disagree on whether a particular change made in a
contractor's organizational structure did or did not result in a change
in cost accounting practice. The Board, after review and extended
discussions of the issues associated with the proposed topic,
identified Organizational Changes and Changes In Cost Accounting
Practices as a topic on which a research project should be started.
On April 9, 1993, the CASB published a notice in the Federal
Register, 58 FR 18428, requesting public comments from interested
parties concerning a Staff Discussion Paper on that topic. The purpose
of the Staff Discussion Paper was to solicit public views concerning
the advantages, disadvantages and improvements anticipated if the Board
were to [[Page 20253]] promulgate more explicit provisions on whether
organizational changes made by contractors do or do not result in cost
accounting practice changes.
After consideration of the public comments received, the Board
concluded that contractors and Federal officials appear to be
interpreting the Board's rules and regulations governing changes in
cost accounting practice under CAS-covered contracts differently.
Furthermore, the contract price and cost adjustment provisions
governing cost accounting practice changes under CAS-covered contracts
do not appear to be clearly understood and, consequently, some
inefficient, uneconomical and possibly inequitable practices may have
evolved as the contracting parties proceeded to comply with the Board's
requirements. Therefore, the Board is proposing to amend Chapter 99 by:
Revising the definitions and illustrations governing cost
accounting practice changes, for purposes of making it explicit that a
change in the manner in which costs are grouped and accumulated
constitutes a change in cost accounting practice and that
organizational changes must be evaluated on a case-by-case basis in
order to determine if a change in cost accounting practice has
occurred.
Adding a new Subpart 9903.4 to delineate the contract price and
cost adjustment process to be applied when a contractor changes a cost
accounting practice, fails to comply with a Standard, or fails to
consistently follow its established cost accounting practices. The
proposed coverage is intended to facilitate the resolution of the cost
impact of such compliant and noncompliant cost accounting practice
changes under the requirements of existing and future CAS-covered
contracts. Accordingly, when issued as a final rule, the proposed
Subpart 9903.4 provisions would apply to all CAS-covered contracts
requiring adjustment, including those CAS-covered contracts awarded
prior to the effective date of the final rule.
The purpose of this ANPRM is to seek broad public comment
concerning the proposed amendments. In particular, the Board is
considering the establishment of certain new requirements that it
believes would clarify and facilitate the overall cost impact process
governing cost accounting practice changes. Accordingly, the Board
invites interested parties to specifically comment on the following
ANPRM provisions:
--Proposed 9903.201-4, in paragraphs (a)(4) of the proposed contract
clauses, includes new provisions requiring a contractor to agree to
price adjustments if its CAS-covered subcontractors make required,
voluntary or desirable changes to their cost accounting practices
pursuant to the subcontracts' terms and conditions.
--Proposed 9903.201-6(b) establishes new criteria for determining when
a voluntary change in cost accounting practice may be treated as a
desirable change.
--Proposed 9903.404(b)(ii)(A) requires CAS-covered contractors to
notify the Government of and fully disclose cost accounting practice
changes required to comply with a new or modified Standard 60 days
prior to the Standard's effective date. This requirement is predicated
on the Board's decision that final rules will generally be issued 120
days prior to the effective date of a new or modified Standard.
--Proposed 9903.404(b)(ii)(B) establishes new notification requirements
for voluntary and desirable changes.
--Proposed 9903.404(b)(vi) provides a new equitable adjustment
provision for contracts negotiated within 60 days after a contractor
notifies the Government of a voluntary change that would otherwise be
subject to a CAS-covered contract's ``no increased cost'' provision.
--Proposed 9903.404(e) provides for the use of a cost impact settlement
proposal that would permit early resolution of the estimated cost
impact in lieu of the use of a detailed cost impact proposal.
Richard C. Loeb,
Executive Secretary, Cost Accounting Standards Board.
[FR Doc. 95-10071 Filed 4-24-95; 8:45 am]
BILLING CODE 3110-01-M
