[Federal Register Volume 62, Number 107 (Wednesday, June 4, 1997)]
[Proposed Rules]
[Pages 30558-30563]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-14289]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF ENERGY
48 CFR Parts 932 and 970
RIN 1991-AB29
Acquisition Regulation: Contract Financing; Management and
Operating Contracts
AGENCY: Department of Energy.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Department of Energy (DOE) proposes to amend its
Acquisition Regulation to incorporate coverage required by the Federal
Acquisition Streamlining Act of 1994. These amendments will clarify the
allowability of costs reimbursed under Department of Energy contracts
and establishes the responsibilities of the remedy coordination
official within the Department.
DATES: Written comments must be submitted no later than August 4, 1997.
ADDRESSES: Comments should be addressed to: Terrence D. Sheppard,
Office of Policy (HR-51), Office of Procurement and Assistance
Management, Department of Energy, 1000 Independence Avenue S.W.,
Washington, D.C. 20585.
FOR FURTHER INFORMATION CONTACT: Terrence D. Sheppard (202) 586-8193.
SUPPLEMENTARY INFORMATION:
I. Background
II. Section by Section Analysis
III. Public Comments
IV. Procedural Requirements
A. Review Under Executive Order 12866
B. Review Under Executive Order 12988
C. Review Under the Regulatory Flexibility Act
D. Review Under the Paperwork Reduction Act
E. Review Under the National Environmental Policy Act
F. Review Under Executive Order 12612
I. Background
This notice proposes to amend the Department of Energy Acquisition
Regulation based on provisions in Sections 2051, 2151, and 2192 of the
Federal Acquisition Streamlining Act of 1994 (the Act). These
amendments establish: certification of cost submissions and assessment
of penalties on unallowable costs; a remedy coordination official for
payment requests suspected to be based on substantial evidence of
fraud; parameters for resolution of questioned costs; guidance for
application of cost principles; general prohibitions on severance
payments to foreign nationals and compensation costs associated with a
change in management control or ownership; clarification of employee
morale, recreation, entertainment, executive branch lobbying, company
furnished automobiles, and insurance costs which protect the contractor
against defects in material or workmanship.
This rulemaking is intended to make only these specific changes.
Additional rulemakings will address other aspects of the Act. On June
24, 1996, the Department of Energy published in the Federal Register
(61 FR 32588) a notice of proposed rulemaking which also proposed
changes to sections 970.3101-3, 970.5204-13, and 970.5204-14. Nothing
in this proposed rulemaking conflicts with the proposed rulemaking of
June 24, 1996.
II. Section by Section Analysis
1. The authority for Part 932 is restated.
2. Section 932.006-4, Procedures, is added which identifies the
procedures the remedy coordination official within DOE shall follow.
3. The authority for Part 970 is restated.
4. Section 970.25 is added which provides the criteria under which
the Head of the Contracting Activity (HCA) may waive the severance
payment prohibitions at 970.3102-2(i)(2)(iv) and (v) and further
directs the contracting officer to include a new solicitation provision
970.5204-XX addressing waiver of the restrictions which apply to
foreign nationals' severance payments.
5. Section 970.3101-3 is amended by adding new paragraphs (b), (c),
and (d). These new paragraphs establish requirements for the
contracting officer to address the resolution of questioned costs; the
documentation of questioned costs; and the attendance of the
Department's auditor at negotiations, respectively.
6. Section 970.3101-7 is added to state the requirements for
contractor certification of submissions for settlement of costs,
penalties associated therewith, waiver provisions, and the prescribed
contract clause.
7. Section 970.3102 is amended by designating the existing
paragraph as (a) and adding a new paragraph (b) which provides guidance
on applicability of the various cost principles.
8. Section 970.3102-2 is amended in paragraphs (i)(2) by adding a
sentence at the end of the existing text to refer to new paragraphs
(2)(iv) and (v); new paragraphs (2)(iv) and (v) are added which address
severance payment for foreign nationals; new paragraph (vi) is added
which refers the reader to 970.25 for the waiver criteria; and new
paragraph (p) is added which makes unallowable those compensation costs
associated with a change in management control or ownership.
9. Section 970.3102-5, Employee morale, health, welfare, food
service, and dormitory costs, is amended in paragraph (a) to add
wellness/fitness centers and delete the word ``recreation''; a new
paragraph (b) is added which addresses the allowability of recreation
costs; existing paragraphs (b), (c), (d), and (e) are relabeled as (c),
(d), (e), and (f), respectively; and cross references are revised.
10. 970.3102-7, Legislative lobbying costs, is retitled as
Political activity costs. The existing paragraph is rewritten and a
paragraph has been added to also make unallowable the costs associated
with executive branch lobbying.
11. 970.3102-17(b) is retitled as ``Government-owned, commercial
rental, and company-furnished vehicles'' and a new paragraph (3) is
added which reflects the addition of
[[Page 30559]]
coverage addressing the allowability of company-furnished automobiles.
12. 970.3103 is amended in paragraph (b) to reflect the new title
of 970.3102-7.
13. Section 970.3272, Reduction or suspension of advance, partial,
or progress payments, is added which prescribes the DOE policies and
procedures to be followed upon finding substantial evidence of fraud.
14. Section 970.5204-13 is amended as follows: paragraph (d)(8)(iv)
is revised by adding ``wellness/fitness centers'' at the end of the
sentence; paragraph (e)(11) is revised by removing the coverage on
recreation costs which is moved to a new paragraph (38); paragraph
(e)(31) is revised to reflect the addition of executive branch lobbying
costs as unallowable; new paragraph (e)(37) is added which adds gifts
to the list of unallowables and states that employee achievement and
recognition costs are not gifts; and paragraph (e)(38) is added to
address the allowability of recreation costs.
15. Section 970.5204-14 is amended as follows: paragraph (d)(8)(iv)
is revised by adding ``wellness/fitness centers'' at the end of the
sentence; paragraph (e)(9) is revised by removing the coverage on
recreation costs which is moved to a new paragraph (e)(36); paragraph
(e)(29) is revised to make executive branch lobbying costs unallowable;
new paragraph (e)(35) adds gifts to the list of unallowables and states
that employee achievement and recognition costs are not gifts; and new
paragraph (e)(36) is added to address the allowability of recreation
costs.
16. Section 970.5204-16 is amended to state the requirement for
contractor certification of submissions for settlement of costs; NOTES
3 and 4 are deleted; and the existing paragraph (e) is redesignated as
(e)(i) for integrated management and operating contractors and a new
(e)(ii) is created for nonintegrated contractors.
17. Section 970.5204-17 is amended by retitling as Political
activity costs. A new paragraph (6) is added which makes unallowable
the costs associated with attempts to influence executive branch
actions.
18. A new solicitation provision and contract clause are added at
970.5204-XX. The solicitation provision states that the HCA has waived
the restrictions on foreign nationals' severance payments. The
alternate 1, contract clause, states that the HCA will consider waiving
the restrictions on foreign nationals' severance payments.
19. A new clause 970.5204-YY, Reduction or suspension of advance,
partial, or progress payments, is added which prescribes the DOE
policies and procedures to be followed upon finding substantial
evidence of fraud.
III. Public Comments
Interested persons are invited to participate by submitting data,
views, or arguments with respect to the proposed Department of Energy
Acquisition Regulation amendments set forth in this notice. Three
copies of written comments should be submitted to the address indicated
in the ADDRESSES section of this notice. All comments received will be
available for public inspection in the DOE Reading Room, Room lE-190,
Forrestal Building, 1000 Independence Avenue, SW., Washington, D.C.
20585, between the hours of 9 a.m. and 4 p.m., Monday through Friday,
except Federal holidays. All written comments received by the date
indicated in the DATES section of this notice and all other relevant
information in the record will be carefully assessed and fully
considered prior to publication of the final rule. Any information
considered to be confidential must be so identified and submitted in
writing, one copy only. DOE reserves the right to determine the
confidential status of the information and to treat it according to our
determination (See 10 CFR 1004. 11).
The Department has concluded that this proposed rule does not
involve a substantial issue of fact or law and that the proposed rule
should not have substantial impact on the nation's economy or a large
number of individuals or businesses. Therefore, pursuant to Public Law
95-91, the DOE Organization Act, and the Administrative Procedure Act
(5 U.S.C. 553), the Department does not plan to hold a public hearing
on this proposed rule.
IV. Procedural Requirements
A. Review Under Executive Order 12866
Today's regulatory action has been determined not to be a
``significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993).
Accordingly, this action was not subject to review under that Executive
Order by the Office of Information and Regulatory Affairs of the Office
of Management and Budget (OMB).
B. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity: (2) write
regulations to minimize litigation: and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction:
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftmenship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. The Department of Energy
has completed the required review and determined that, to the extent
permitted by law, the regulations meet the relevant standards of
Executive Order 12988.
C. Review Under the Regulatory Flexibility Act
This proposed rule was reviewed under the Regulatory Flexibility
Act of 1980 (Pub. L. 96-354) which requires preparation of a regulatory
flexibility analysis for any rule which is likely to have significant
economic impact on a substantial number of small entities. DOE
certifies that this rule will not have a significant economic impact on
a substantial number of small entities, and, therefore, no regulatory
flexibility analysis has been prepared.
D. Review Under the Paperwork Reduction Act
No new information or recordkeeping requirements are imposed by
this rulemaking. Accordingly, no OMB clearance is required under the
Paperwork Reduction Act of 1980 (44 U.S.C. 3501 et seq.).
E. Review Under the National Environmental Policy Act
DOE has concluded that promulgation of this rule falls into a class
of actions which would not individually or cumulatively have
significant impact on the human environment, as determined by DOE's
regulations (10 CFR part 1021,
[[Page 30560]]
subpart D) implementing the National Environmental Policy Act of 1969
(NEPA) (42 U.S.C. 4321 et seq.). Specifically, this rule is
categorically excluded from NEPA review because the proposed amendments
to the DEAR do not change the environmental effect of the rule being
amended (categorical exclusion A5). Therefore, this rule does not
require an environmental impact statement or environmental assessment
pursuant to NEPA.
F. Review Under Executive Order 12612
Executive Order 12612 (52 FR 41685, October 30, 1987) requires that
regulations, rules, legislation, and any other policy actions be
reviewed for any substantial direct effects on States, on the
relationship between the National Government and the States, or in the
distribution of power and responsibilities among the various levels of
Government. If there are sufficient substantial direct effects, then
the Executive Order requires the preparation of a federalism assessment
to be used in all decisions involved in promulgating and implementing a
policy action. This proposed rule, when finalized, will revise certain
policy and procedural requirements. States which contract with DOE will
be subject to this rule. However, DOE has determined that this rule
will not have a substantial direct effect on the institutional
interests or traditional functions of the States.
List of Subjects in 48 CFR Parts 932 and 970
Government procurement.
Issued in Washington, D.C. on May 27, 1997.
Richard H. Hopf,
Deputy Assistant Secretary for Procurement and Assistance Management.
For the reasons set out in the preamble, Chapter 9 of Title 48 of
the Code of Federal Regulations is proposed to be amended as set forth
below.
1. The authority citation for Part 932 continues to read as
follows:
Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).
PART 932--CONTRACT FINANCING
2. Section 932.006-4 is added before Subpart 932.1 to read as
follows:
932.006-4 Procedures.
(a) The remedy coordination official shall follow the procedures
identified in FAR 32.006-4.
(b) [Reserved]
3. The authority citation for Part 970 continues to read as
follows:
Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C.
2201), sec 644 of the Department of Energy Organization Act, Public
Law 95-91 (42 U.S.C. 7254).
PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS
4. Subpart 970.25 is added to read as follows:
970.25 Foreign acquisition.
Subpart 970.2501--Severance payments for foreign nationals.
970.2501 Severance payments for foreign nationals.
(a) The Head of the Contracting Activity may waive the application
of the provisions of 48 CFR 970.3102-2(i)(2) (iv) and (v) in accordance
with 41 U.S.C. 256(e)(2) if:
(1) The application of the provisions would adversely affect the
continuation of a program, project, or activity that provides
significant support services for Department of Energy employees posted
outside the United States;
(2) The contractor has taken, or plans to take, appropriate actions
within its control to minimize the amount and number of incidents of
payment of severance pay to employees under the contract who are
foreign nationals; and
(3) The payment of severance pay under the contract is necessary to
comply with a law that is generally applicable to a significant number
of businesses in the country in which the foreign national receiving
the payment performed services or is necessary to comply with a
collective bargaining agreement.
(b) Solicitation provision and contract clause. The solicitation
provision at 970.5204-XX, Waiver of Limitations on Severance Payments
to Foreign Nationals, shall be included in solicitations and resulting
contracts involving support services for Department of Energy
operations outside of the United States expected to exceed $500,000,
when, prior to the solicitation, the limitations on severance to
foreign nationals has been waived. Use the Alternate 1 contract clause
in solicitations and resulting contracts, when the Head of the
Contracting Activity may waive the limitations on severance to foreign
nationals after contract award.
5. Section 970.3101-3 is amended by adding paragraphs (b), (c), and
(d) to read as follows:
970.3101-3 General basis for reimbursement of costs.
* * * * *
(b) A contracting officer shall not resolve any questioned costs
until the contracting officer has obtained:
(1) Adequate documentation with respect to such costs; and
(2) The opinion of the Department of Energy's auditor on the
allowability of such costs.
(c) The contracting officer shall ensure that the documentation
supporting the final settlement addresses the amount of the questioned
costs and the subsequent disposition of such questioned costs.
(d) The contracting officer shall ensure, to the maximum extent
practicable, that the Department of Energy's auditor is afforded an
opportunity to attend any negotiation or meeting with the contractor
regarding a determination of allowability.
6. Section 970.3101-7 is added to read as follows:
970.3101-7 Cost submission, certification, penalties, and waivers.
(a) The contracting officer shall require that management and
operating contractors provide a submission for settlement of costs
incurred during the period stipulated on the submission and a
certification that the costs included in the submission are allowable.
The contracting officer shall assess a penalty if unallowable costs are
included in the submission. Unallowable costs are either expressly
unallowable or determined unallowable.
(1) An expressly unallowable cost is a particular item or type of
cost which, under the express provisions of an applicable law,
regulation, or contract, is specifically named and stated to be
unallowable.
(2) A cost determined unallowable is one which, for that contractor
(i) Was subject to a contracting officer's final decision and not
appealed;
(ii) The Department's Board of Contract Appeals or a court has
previously ruled as unallowable; or
(iii) Was mutually agreed to be unallowable.
(b) If, during the review of the submission, the contracting
officer determines that the submission contains an expressly
unallowable cost or a cost determined to be unallowable prior to the
submission, the contracting officer shall assess a penalty.
(c) If the contracting officer determines that a cost submitted by
the contractor in its submission for settlement is
(1) Expressly unallowable, then the contracting officer shall
assess a penalty in an amount equal to the disallowed cost allocated to
the contract plus
[[Page 30561]]
interest on the paid portion of the disallowed cost. Interest shall be
computed from the date of overpayment to the date of repayment using
the interest rate specified by the Secretary of the Treasury pursuant
to Pub. L. 92-41 (85 Stat. 97).
(2) Determined unallowable, then the contracting officer shall
assess a penalty in an amount equal to two times the amount of the
disallowed cost allocated to this contract.
(d) The contracting officer may waive the penalty provisions when
(1) The contractor withdraws the submission before the formal
initiation of an audit of the submission and submits a revised
submission;
(2) The amount of the unallowable costs allocated to covered
contracts is $10,000 or less; or
(3) The contractor demonstrates to the contracting officer's
satisfaction that:
(i) It has established appropriate policies, personnel training,
and an internal control and review system that provides assurances that
unallowable costs subject to penalties are precluded from the
contractor's submission for settlement of costs; and
(ii) The unallowable costs subject to the penalty were
inadvertently incorporated into the submission.
(e) The Head of the Contracting Activity may waive the
certification when--
(1) It is determined that it would be in the best interest to waive
such certification; and
(2) It states in writing the reasons for that determination and
makes such determination available to the public.
7. Section 970.3102 is amended by removing the last sentence of the
existing paragraph, designating the existing paragraph as (a) and
adding a new paragraph (b) to read as follows.
970.3102 Application of cost principles.
* * * * *
(b) This section does not cover every element of cost. Failure to
include any item of cost does not imply that it is either allowable or
unallowable. The determination of allowability shall be based on the
principles and standards in this subpart and the treatment of similar
or related selected items. When more than one paragraph in this section
is relevant to a contractor cost, the cost shall be apportioned among
the applicable subsections, and the determination of allowability of
each portion shall be based on the guidance contained in the applicable
subsection. As an example, the cost of meals while in a travel status
would normally be allowable if reasonable. However, the cost of
alcoholic beverages associated with a meal would be unallowable. In no
case shall costs made specifically unallowable under one cost principle
be made allowable under another cost principle.
8. Section 970.3102-2 is amended by adding a sentence at the end of
paragraph (i)(2) introductory text and adding new paragraphs (i)(2)
(iv), (v), (vi), and (p) to read as follows:
970.3102-2 Compensation for personal services.
* * * * *
(i) * * *
(2) * * * In addition, paragraphs (i)(2)(iv) and (v) of this
section apply if the severance cost is for foreign nationals employed
outside the United States.
* * * * *
(iv) Notwithstanding the provision of paragraph (c) of this
section, which references geographic area, under 41 U.S.C.
256(e)(1)(M), the costs of severance payments to foreign nationals
employed under a service contract performed outside the United States
are unallowable to the extent that such payments exceed amounts
typically paid to employees providing similar services in the same
industry in the United States.
(v) Further, under 41 U.S.C. 256(e)(1)(N), the costs of severance
payments referred to in paragraph (i)(2)(iv) of this section are
unallowable if the termination of employment is the result of the
closing of, or curtailment of, activities at a United States facility
in that country at the request of the government of that country.
(vi) The Head of the Contracting Activity may waive the application
of the provisions of (i)(2)(iv) and (v) of this section under the
conditions specified in 48 CFR 970.25.
* * * * *
(p) Special compensation. The following costs are unallowable:
(1) Special compensation to employees pursuant to agreements which
permit payments in excess of the contractor's normal severance pay
practices, if their employment terminates following a change in the
management control over, or ownership of, the contractor or a
substantial portion of its assets.
(2) Special compensation to employees pursuant to agreements which
permit payments resulting from a change, whether actual or prospective,
in the management control over, or ownership of, the contractor or a
portion of its assets which is contingent upon the employee remaining
with the contractor for a stated period of time.
9. Section 970.3102-5 is revised to read as follows:
970.3102-5 Employee morale, health, welfare, food service, and
dormitory costs.
(a) Employee morale, health, and welfare activities are those
services or benefits provided by the contractor to its employees to
improve working conditions, employer-employee relations, employee
morale, and employee performance. These activities include such items
as house or employee publications, health or first-aid clinics,
wellness/fitness centers, employee counseling services, awards for
performance or awards made in recognition of employee achievements
pursuant to an established contractor plan or policy, and, for the
purpose of this section, food service and dormitory costs. However,
these activities do not include, and should be differentiated from
compensation for personal services as defined in 970.3102-2. Food and
dormitory services include operating or furnishing facilities for
cafeterias, dining rooms, canteens, lunch wagons, vending machines,
living accommodations, or similar types of services for the
contractor's employees at or near the contractor's facilities or site
of the contract work.
(b) Costs of recreation, registration fees of employees
participating in competitive fitness promotions, team activities, and
sporting events are unallowable, except for the costs of employees'
participation in company sponsored intramural sports teams or employee'
organizations designed to improve company loyalty, team work, or
physical fitness.
(c) Except as limited by paragraph (d) of this section, the
aggregate of costs incurred on account of all activities mentioned in
paragraph (a) of this section, less income generated by all such
activities, is allowable to the extent that the net aggregate cost of
all such activities, as well as the net cost of each individual
activity, is reasonable and allocable to the contract work.
Additionally, advance understandings with respect to the costs
mentioned in paragraph (a) of this section are to be reached prior to
the incurrence of these costs as required in 48 CFR 970.3101-6.
(d) Losses from the operation of food or dormitory services may be
included as costs incurred under paragraph (c) of this section only if
the contractor's objective is to operate such services at least on a
break-even basis. Losses sustained because food services or lodging
accommodations are furnished without charge or at prices or rates which
obviously would not be
[[Page 30562]]
conducive to accomplishment of this objective are not allowable, except
in those instances where the contractor can demonstrate that unusual
circumstances exist, such that, even with efficient management,
operation of the services on a break-even basis would require charging
inordinately high prices, or prices or rates higher than those charged
by commercial establishments offering the same services in the same
geographical areas. Typical examples of such unusual circumstances are:
(1) Where the contractor must provide food or dormitory services at
remote locations where adequate commercial facilities are not
reasonably available, or
(2) Where it is necessary to operate a facility at a lower volume
than the facility could economically support. Cost of food and
dormitory services shall include an allocable share of indirect
expenses pertaining to these activities.
(e) In those situations where the contractor has an arrangement
authorizing an employee association to provide or operate a service
such as vending machines in the contractor's plant, and retain the
profits derived therefrom, such profits shall be treated in the same
manner as if the contractor were providing the service, except as
provided in paragraph (f) of this section.
(f) Contributions by the contractor to an employee organization,
including funds set over from vending machines receipts or similar
sources, may be included as cost incurred under paragraph (c) of this
section, only to the extent that the contractor demonstrates that an
equivalent amount of the costs incurred by the employee organization
would be allowable, if incurred by the contractor directly.
10. Section 970.3102-7 is revised to read as follows:
970.3102-7 Political activity costs.
The following costs are unallowable, except for costs associated
with providing information pursuant to 970.5204-17, unless approved by
the contracting officer: Contractor costs incurred to influence either
directly or indirectly--
(a) Legislative action on any matter pending before Congress, a
State legislature, or a legislative body of a political subdivision of
a State; or
(b) Federal, State, or local executive branch action on regulatory
and contract matters, including costs incurred in regard to contract
proposals.
11. Section 970.3102-17 Travel costs, is amended by revising the
paragraph heading for (b) and by adding paragraph (b)(3) to read as
follows:
970.3102-17 Travel costs.
* * * * *
(b) Government-owned, commercial rental, and company-furnished
vehicles.* * *
(3) The costs of contractor-owned or -leased vehicles include the
costs of lease, operation, maintenance, depreciation, insurance, and
other similar costs. These costs are unallowable except as approved by
the contracting officer. Except, no cost shall be allowed for the cost
of company-furnished vehicles that are authorized for personal use by
the employees.
* * * * *
12. Section 970.3103 is amended by revising paragraph (b) to read
as follows:
970.3103 Contract clauses.
* * * * *
(b) The political activity cost prohibition clause at 48 CFR
970.5204-17 shall be included in all M&O contracts.
* * * * *
13. Section 970.3272 is added to subpart 970.32 to read as follows:
970.3272 Reduction or suspension of advance, partial, or progress
payments.
(a) The procedures prescribed at FAR 32.006 shall be followed.
(b) The agency head has delegated their responsibilities under this
section to the Senior Procurement Executive.
(c) The remedy coordination official is responsible for receiving,
assessing, and making recommendations to the Senior Procurement
Executive.
(d) The contracting officer shall insert the clause at 48 CFR
970.5204-XX, Reduction or suspension of contract payments, in
management and operating contracts.
14. Section 970.5204-13, Allowable costs and fixed-fee (Management
and Operating contracts), is amended by revising clause paragraphs
(d)(8)(iv), (e)(11), (e)(31); and adding new paragraphs (e) (37) and
(38) to read as follows:
970.5204-13 Allowable costs and fixed-fee (management and operating
contracts).
* * * * *
(d) * * *
(8) * * *
(iv) Employee relations, welfare, morale, etc.; programs
including incentive or suggestion awards; employee counseling
services, health or first-aid clinics; house or employee
publications; and wellness/fitness centers;
* * * * *
(e) * * *
(11) Entertainment, including costs of amusement, diversion,
social activities; and directly associated costs such as tickets to
shows or sports events, meals, lodging, rentals, transportation, and
gratuities; costs of membership in any social, dining or country
club or organization.
* * * * *
(31) Contractor costs incurred to influence either directly or
indirectly--
(i) Legislative action on any matter pending before Congress, a
State legislature, or a legislative body of a political subdivision
of a State; or
(ii) Federal, State, or local executive branch action on
regulatory and contract matters, including costs incurred in regard
to contract proposals, as described in the ``Political Activity Cost
Prohibition'' clause of this contract.
* * * * *
(37) Costs of gifts; however, gifts do not include awards for
performance or awards made in recognition of employee achievements
pursuant to an established contractor plan or policy.
(38) The costs of recreation, registration fees of employees
participating in competitive fitness promotions, team activities,
and sporting events except for the costs of employees' participation
in company sponsored intramural sports teams or employee
organizations designed to improve company loyalty, team work, or
physical fitness.
15. Section 970.5204-14 is amended by revising clause paragraphs
(d)(8)(iv), (e)(9), (e)(29); and adding new paragraphs (e)(35) and
(e)(36) to read as follows:
970.5204-14 Allowable costs and fixed-fee (support contracts).
* * * * *
(d) * * *
(8) * * *
(iv) Employee relations, welfare, morale, etc.; programs
including incentive or suggestion awards; employee counseling
services, health or first-aid clinics; and house or employee
publications; and wellness/fitness centers;
* * * * *
(e) * * *
(9) Entertainment, including costs of amusement, diversion,
social activities; and directly associated costs such as tickets to
shows or sports events, meals, lodging, rentals, transportation, and
gratuities; costs of membership in any social, dining or country
club or organization.
* * * * *
(29) Contractor costs incurred to influence either directly or
indirectly--
(i) Legislative action on any matter pending before Congress, a
State legislature, or a legislative body of a political subdivision
of a State; or
(ii) Federal, State, or local executive branch action on
regulatory and contract matters, including costs incurred in regard
to contract proposals are not allowable contract costs and shall not
be reimbursed by DOE.
* * * * *
(35) Costs of gifts; however, gifts do not include awards for
performance or awards made in recognition of employee
[[Page 30563]]
achievements pursuant to an established contractor plan or policy.
(36) The costs of recreation, registration fees of employees
participating in competitive fitness promotions, team activities,
and sporting events except for the costs of employees' participation
in company sponsored intramural sports teams or employee
organizations designed to improve company loyalty, team work, or
physical fitness.
16. Section 970.5204-16 is amended in the clause by removing Notes
3 and 4 and revising paragraph (e) to read as follows:
970.5204-16 Payments and advances.
* * * * *
(e)(i) Review and approval of costs incurred. The contractor
shall prepare and submit annually as of September 30, a voucher for
the total of net expenditures accrued (i.e., net costs incurred) for
the period covered by the voucher. The contractor shall certify the
voucher subject to the penalty provisions for unallowable costs as
stated in sections 306(b) and (h) of the Federal Property and
Administrative Services of 1949 (41 U.S.C. 256), as amended. DOE,
after audit and appropriate adjustment, will approve such voucher.
This approval by DOE will constitute an acknowledgment by DOE that
the net costs incurred are allowable under the contract and that
they have been recorded in the accounts maintained by the contractor
in accordance with DOE accounting policies, but will not relieve the
contractor of responsibility for DOE's assets in its care, for
appropriate subsequent adjustments, or for errors later becoming
known to DOE.
(ii) Nonintegrated contractors shall prepare and submit a
voucher for the total of net expenditures incurred for the period
covered by the voucher. It is anticipated that this will be an
annual submission unless otherwise agreed to by the contracting
officer. The contractor shall certify the voucher subject to the
penalty provisions for unallowable costs as stated in sections 306
(b) and (h) of the Federal Property and Administrative Services of
1949 (41 U.S.C. 256), as amended.
* * * * *
17. Section 970.5204-17 is amended by revising the section heading
and clause heading and adding clause paragraph (a)(6) to read as
follows:
970.5204-17 Political activity cost prohibition.
* * * * *
Political Activity Cost Prohibition (XXX 199X)
(a)* * *
(6) Contractor costs incurred to influence (directly or
indirectly) Federal, State, or local executive branch action on
regulatory and contract matters, including costs incurred in regard
to contract proposals.
* * * * *
18. Section 970.5204-XX is added to read as follows:
970.5204-XX Waiver of limitations on severance payments to foreign
nationals.
As prescribed in 48 CFR 970.25, insert the following solicitation
provision, or its alternate 1, clause:
Waiver of Limitations on Severance Payments to Foreign Nationals
(XXXX 199X) Pursuant to Department of Energy Acquisition Regulation
(DEAR) 48 CFR 970.25, the cost allowability limitations in (DEAR) 48
CFR 970.3102-2(i), (iv) and (v) are waived for this contract.
Alternate 1 (XXXX 199X). Substitute the following paragraph for
the foregoing solicitation provision when the waiver of limitations
to severance payments for foreign nationals has not been
predetermined by the Department.
Pursuant to Department of Energy Acquisition Regulation (DEAR)
48 CFR 970.25, the Department will consider waiving the cost
allowability limitations in (DEAR) 48 CFR 970.3102-2(i), (iv) and
(v) for this contract.
19. Section 970.5204-YY is added to read as follows:
970.5204-YY Reduction or suspension of advance, partial, or progress
payments upon finding of substantial evidence of fraud.
As prescribed in 48 CFR 970.3272, insert the following clause:
Reduction or Suspension of Advance, Partial, or Progress Payments
(XXXX-199X)
(a) The contracting officer may reduce or suspend further
advance, partial, or progress payments to the contractor upon a
written determination by the Secretary that substantial evidence
exists that the contractor's request for advance, partial, or
progress payment is based on fraud.
(b) The contractor shall be afforded a reasonable opportunity to
respond in writing.
[End of Clause]
[FR Doc. 97-14289 Filed 6-3-97; 8:45 am]
BILLING CODE 6450-01-P
