[Federal Register Volume 60, Number 158 (Wednesday, August 16, 1995)]
[Rules and Regulations]
[Pages 42663-42664]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19863]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
48 CFR Parts 42 and 52
[FAC 90-31; FAR Case 94-752; Item VI]
RIN 9000-AG29
Federal Acquisition Regulation; Contractor Overhead Certification
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This final rule is issued pursuant to the Federal Acquisition
Streamlining Act of 1994 (the Act) to implement the requirements for
contractor certification of indirect costs (see proposed rule published
at 59 FR 65464, December 19, 1994). Section 2151 of the Act amended
Section 306 of the Federal Property and Administrative Services Act of
1949 (41 U.S.C. 256). This provision extended to the civilian agencies
the same certificate of indirect costs which is currently applicable to
Department of Defense (DOD) contracts, pursuant to 10 U.S.C. 2324(h).
This regulatory action was subject to Office of Management and Budget
review under Executive Order 12866, dated September 30, 1993.
EFFECTIVE DATE: October 1, 1995.
FOR FURTHER INFORMATION CONTACT: Mr. Clarence Belton, Cost Principles
Team Leader, at (703) 602-2357, 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 90-31,
FAR case 94-752.
SUPPLEMENTARY INFORMATION:
A. Background
The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355
(the Act), provides authorities that streamline the acquisition process
and minimize burdensome Government-unique requirements. Major changes
that can be expected in the acquisition process as a result of the
Act's implementation include changes in the areas of Commercial Item
Acquisition, the Truth in Negotiations Act, and introduction of the
Federal Acquisition Computer Network (FACNET).
Section 2151 of the Act amends Section 306 of the Federal Property
and Administrative Services of 1949 (41 U.S.C. 256). It extends
requirements for contractor certification of indirect costs to the
civilian agencies. Pursuant to 10 U.S.C. 2324(h), the Department of
Defense already determines or negotiates contractor indirect cost rates
on the basis of a certified proposal.
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 most contracts awarded
to small businesses are awarded competitively on a firm-fixed-price
basis and, therefore, do not require submission of indirect cost rate
proposals.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose additional 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.
D. Public Comments
Seven public comments were received in response to the proposed
rule published in the Federal Register on December 19, 1994 (59 FR
65464). These comments were considered in the formulation of this final
rule.
[[Page 42664]]
List of Subjects in 48 CFR Parts 42 and 52
Government procurement.
Dated: August 7, 1995.
Edward C. Loeb,
Deputy Project Manager for the Implementation of the Federal
Acquisition Streamlining Act of 1994.
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
42.703 General.
2. Section 42.703 is redesignated as 42.703-1 and a new section
42.703 is added as a heading to read as set forth above.
3. Section 42.703-2 is added to read as follows:
42.703-2 Certificate of indirect costs.
(a) General. In accordance with 10 U.S.C. 2324(h) and 41 U.S.C.
256(h), a proposal shall not be accepted and no agreement shall be made
to establish billing rates or final indirect cost rates unless the
costs have been certified by the contractor.
(b) Waiver of certification. (1) The agency head, or designee, may
waive the certification requirement when--
(i) It is determined to be in the interest of the United States;
and
(ii) The reasons for the determination are put in writing and made
available to the public.
(2) A waiver may be appropriate for a contract with--
(i) A foreign government or international organization, such as a
subsidiary body of the North Atlantic Treaty Organization;
(ii) A state or local government subject to OMB Circular A-87;
(iii) An educational institution subject to OMB Circular A-21; and
(iv) A nonprofit organization subject to OMB Circular A-122.
(c) Failure to certify. (1) If the contractor has not certified its
proposal for billing rates or indirect costs rates and a waiver is not
appropriate, the contracting officer shall unilaterally establish the
rates if they are necessary for continuation of the contract.
(2) Rates established unilaterally should be--
(i) Based on audited historical data or other available data as
long as unallowable costs are excluded; and
(ii) Set low enough to ensure that potentially unallowable costs
will not be reimbursed.
(d) False certification. The contracting officer should consult
with legal counsel to determine appropriate action when a contractor
certificate of indirect costs is thought to be false.
(e) Penalties for unallowable costs. 10 U.S.C. 2324(a) through (d)
and 41 U.S.C. 256 (a) through (d) prescribe penalties for submission of
unallowable costs in final indirect cost rate proposals (see 42.709 for
penalties and contracting officer responsibilities).
(f) Contract clause. (1) Except as provided in paragraph (f)(2) of
this subsection, the clause at 52.242-4, Certification of Indirect
Costs, shall be incorporated into all solicitations and contracts which
provide for--
(i) Interim reimbursement of indirect costs;
(ii) Establishment of final indirect costs rates; or
(iii) Contract financing that includes interim payment of indirect
costs, e.g., progress payments based on cost (Subpart 32.5) or progress
payments based on percentage or stage of completion.
(2) The Department of Energy may provide an alternate clause in its
agency supplement for its Management and Operating contracts.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
4. Section 52.242-4 is added to read as follows:
52.242-4 Certification of Indirect Costs.
As prescribed in 42.703-2(f), insert the following clause:
Certification of Indirect Costs (Oct 1995)
(a) The Contractor shall--
(1) Certify any proposal to establish or modify billing rates or
to establish final indirect cost rates;
(2) Use the format in paragraph (c) of this clause to certify;
and
(3) Have the certificate signed by an individual of the
Contractor's organization at a level no lower than a vice president
or chief financial officer of the business segment of the Contractor
that submits the proposal.
(b) Failure by the Contractor to submit a signed certificate, as
described in this clause, shall result in payment of indirect costs
at rates unilaterally established by the Government.
(c) The certificate of indirect costs shall read as follows:
Certificate of Indirect Costs
This is to certify that to the best of my knowledge and belief:
1. I have reviewed this indirect cost proposal;
2. All costs included in this proposal (identify proposal and
date) to establish billing or final indirect costs rates for
(identify period covered by rate) are allowable in accordance with
the requirements of contracts to which they apply and with the cost
principles of the Federal Acquisition Regulation (FAR) and its
supplements applicable to those contracts;
3. This proposal does not include any costs which are
unallowable under applicable cost principles of the FAR or its
supplements, including, but not limited to: advertising and public
relations costs, contributions and donations, entertainment costs,
fines and penalties, lobbying costs, defense of fraud proceedings,
and goodwill; and
4. All costs included in this proposal are properly allocable to
Government contracts on the basis of a beneficial or causal
relationship between the expenses incurred and the contracts to
which they are allocated in accordance with applicable acquisition
regulations.
I declare under penalty of perjury that the foregoing is true
and correct.
Firm:------------------------------------------------------------------
Signature:-------------------------------------------------------------
Name of Certifying Official:-------------------------------------------
Title:-----------------------------------------------------------------
Date of Execution:-----------------------------------------------------
(End of clause)
[FR Doc. 95-19863 Filed 8-15-95; 8:45 am]
BILLING CODE 6820-EP-M
