94-12161. Defense Federal Acquisition Regulation Supplement; Indirect Costs of Institutions of Higher Education

[Federal Register Volume 59, Number 96 (Thursday, May 19, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-12161]


[[Page Unknown]]

[Federal Register: May 19, 1994]


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DEPARTMENT OF DEFENSE

48 CFR Part 231

 

Defense Federal Acquisition Regulation Supplement; Indirect Costs 
of Institutions of Higher Education

AGENCY: Department of Defense (DOD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement to 
prohibit limitation on reimbursement of otherwise allowable indirect 
costs incurred by an institution of higher learning under DoD 
contracts.

DATES: Effective Date: May 5, 1994.
    Comment Date: Comments on the interim rule should be submitted in 
writing at the address shown below on or before July 18, 1994, to be 
considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, ATTN: Mr. Eric Mens, 
OUSD(A)DP, IMD 3D139,3062 Defense Pentagon, Washington, DC 20301-3062. 
Telefax number [phone]. Please cite DFARS Case 93-D317 in all 
correspondence.

FOR FURTHER INFORMATION CONTACT:
Mr. Eric Mens, [phone].

SUPPLEMENTARY INFORMATION:

A. Background

    Section 481 of the National Defense Authorization Act for Fiscal 
Year 1994 (Pub. L. 103-160) prohibits DoD from placing any limitation 
on the reimbursement of otherwise allowable indirect costs incurred by 
an institution of higher learning. For most such educational 
institutions, contract cost allowability is determined under FAR 31.3 
which imposes Office of Management and Budget (OMB) Circular No. A-21, 
Cost Principles for Educational Institutions. OMB Circular A-21 imposes 
a 26 percent ceiling on indirect administrative costs of educational 
institutions. Section 841 abrogates that limitation for DoD contracts 
unless the institution requests that DoD waive the prohibition in order 
to simplify the institution's management of cost reimbursements for DoD 
contracts.

B. Regulatory Flexibility Act

    The interim rule is not expected to have a significant economic 
impact on a substantial number of small entities under the Regulatory 
Flexibility Act, 5 U.S.C. 601 et seq. The revisions flow directly from 
section 841 of the National Defense Authorization Act for Fiscal Year 
1994 (Pub. L. 103-160), no variation from the statute is allowed, and 
the regulations impose no independent economic impact on small 
entities. An Initial Regulatory Flexibility Analysis (IRFA) has not 
been performed, however, comments from small entities concerning the 
affected DFARS subpart will be considered in accordance with section 
610 of the Act. Such comments must be submitted separately and cite 5 
U.S.C. 610 (DFARS Case 93-D317) in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (Pub. L. 96-511) does not apply because 
the revisions do not impose any new recordkeeping requirements or 
information collection requirements or collection of information from 
offerors, contractors, or members of the public which require the 
approval of OMB under 44 U.S.C. 3501 et seq.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense to issue this rule as an interim rule. Urgent and compelling 
reasons exist to promulgate this rule before affording the public an 
opportunity to comment. The statutory prohibition against the capping 
of otherwise allowable indirect costs of higher institutions under DoD 
contracts was effective upon enactment of the National Defense 
Authorization Act for 1994 (Pub. L. 103-160) on November 30, 1994. 
Therefore, it is essential that guidance be issued as expeditiously as 
possible.

List of Subjects in 48 CFR Part 231

    Government procurement.
Claudia L. Naugle,
Deputy Director, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Part 231 is amended as follows:
    1. The authority citation for 48 CFR part 231 is revised to read as 
follows:

    Authority: 41 U.S.C. 421 and 48 CFR part 1.

PART 231--CONTRACT COST PRINCIPLES AND PROCEDURES

    2. Subpart 231.3 is added to read as follows:

Subpart 231.3--Contracts With Educational Institutions


231.303  Requirements.

    (1) Pursuant to section 841 of the National Defense Authorization 
Act for Fiscal Year 1994 (Pub. L. 103-160), no limitation may be placed 
on the reimbursement of otherwise allowable indirect costs incurred by 
an institution of higher education under a DoD contract awarded on or 
after November 30, 1993, unless that same limitation is applied 
uniformly to all other organizations performing similar work under DoD 
contracts. The 26 percent limitation imposed on administrative indirect 
costs by OMB Circular No. A-21 shall not be applied to DoD contracts 
awarded on or after November 30, 1993, to institutions of higher 
education because the same limitation is not applied to other 
organizations performing similar work.
    (2) The cognizant administrative contracting officer may waive the 
prohibition in 231.303(1) if the governing body of the institution of 
higher education requests the waiver to simplify the institution's 
overall management of DoD cost reimbursements under DoD contracts.

[FR Doc. 94-12161 Filed 5-18-94; 8:45 am]
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