18914 Federal Register / Vol. 61, No. 83 / Monday, April 29, 1996 / Rules and Regulations

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Federal Acquisition Circular 9038]

Federal Acquisition Regulation; Introduction of Miscellaneous Amendments

AGENCIES: Department of Defense (DOD), General Services Administration (GSA),and National Aeronautics and Space Administration (NASA).

ACTION: Summary presentation of rules.

SUMMARY: This document serves to introduce the rules which follow and which comprise Federal Acquisition Circular (FAC) 90-38. The Federal Acquisition Regulatory Council has agreed to issue FAC 90-38 to amend the Federal Acquisition Regulation (FAR).

DATES: For effective dates, see individual documents following this one.

FOR FURTHER INFORMATION CONTACT: The individual whose name appears in relation to each FAR case or subject area. For general information, contact the FAR Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90 38 and FAR case number(s).

SUPPLEMENTARY INFORMATION: Federal Acquisition Circular 90-38 amends the Federal Acquisition Regulation (FAR) as specified below:

Item Subject FAR case Contact point

I .. Modification of Existing ...... 94 723 Al Winston,

Contracts (703) 602 2119.

II..Application of Cost Accounting . 95 002 Jeremy Olson,

Standards Board Regulations to (202) 501 3221

Educational Institutions.

III..Assignment of Claims Presidential 94 767 John Galbraith,

Delegation (703) 697 6710.

IV ..Interest Clause Revisions 92 045 Jeremy Olson, (202) 501 3221.

Case Summaries

For the actual revisions and/or amendments to these FAR cases, refer to the specific item number and subject set forth in the documents following these item summaries.

Item I Modification of Existing Contracts (FAR Case 94 723)

This interim rule amends FAR 43.102 to implement section 10002 of the Federal Acquisition Streamlining Act of 1994, Public Law 103 355 (FASA). Section 10002 states that final regulations implementing FASA may provide for modification of existing contracts without consideration, upon request of the contractor, to incorporate changes authorized by FASA. Section 10002 also states that nothing in FASA requires therenegotiation or modification of existing contracts to incorporate changes authorized by FASA. The interim rule adopts the policy of encouraging, but not requiring, appropriate modifications without consideration, upon the request of the contractor. If the contracting officer determines that modification of an existing contract is appropriate to incorporate changes authorized by FASA, the modification should insert the current version of the applicable FAR clauses.

Item II Application of Cost Accounting Standards Board Regulations to Educational Institutions (FAR Case 95 002) This final rule amends FAR Parts 1, 30, 42, and 52 to implement changes made to the Cost Accounting Standards. The Office of Federal Procurement Policy, Cost Accounting Standards Board (CASB), has amended the regulatory provisions contained in Chapter 99 of Title 48 of the Code of Federal Regulations (FAR Appendix B). The amendments apply to educational institutions receiving a negotiated Federal contract or subcontract award in excess of $500,000 (excluding contracts awarded for the operation of Federally Funded Research and Development Centers (FFRDCs) which are already subject to CASB regulations) and require that such educational institutions comply with certain specified CASB rules, regulations, and Cost Accounting Standards. The amendments to the CASB regulations became effective on January 9, 1995. (The entire FAR Appendix B will be issued in the loose-leaf pages of FAC 90 38.)

Item III Assignment of Claims-Presidential Delegation (FAR Case 94 767)

This final rule amends FAR Subpart 32.8 to reflect the Presidential delegation of authority to make determinations of need for contractual no-setoff commitments, and to provide guidance for determinations of need made in accordance with the Presidential delegation dated October 3, 1995.

Item IV Interest Clause Revisions (FAR Case 92 045)

This final rule amends FAR Subpart 32.6 and the clause at 52.232 17 to clarify that certain cost accounting standards clauses provide for the use of differing interest rates under differing circumstances.

Dated: April 18, 1996. Edward C. Loeb, Director, Federal Acquisition Policy Division.

Federal Acquisition Circular Number 90 38

Federal Acquisition Circular (FAC) 90 38 is issued under the authority of the Secretary of Defense, the Administrator of General Services, and the Administrator for the National Aeronautics and Space Administration.

FAR Cases 94 723 and 95 002 are effective April 29, 1996; and FAR Cases 94 767 and 92 045 are effective June 28, 1996.

Dated: April 17, 1996. Eleanor R. Spector, Director, Defense Procurement.

Dated: April 16, 1996. Ida M. Ustad, Deputy Associate Administrator, Office of Acquisition Policy, GSA.

Dated: April 18, 1996. Deidre A. Lee, Associate Administrator for Procurement, National Aeronautics and Space Administration. [FR Doc. 96 10427 Filed 4 26 96; 8:45 am]

48 CFR Part 43

[FAC 90 38; FAR Case 94 723; Item I]

Federal Acquisition Regulation; Modification of Existing Contracts

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

SUMMARY: This interim rule is issued pursuant to the Federal Acquisition Streamlining Act of 1994 (FASA) (Public Law 103 355) to amend the Federal Acquisition Regulation (FAR). It implements Section 10002 of FASA which authorizes regulations to provide for modification of existing contracts without requiring consideration, upon request of the contractor, to incorporate changes authorized by FASA. This regulatory action was subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. It is not a major rule under 5 U.S.C. 804.

DATES: Effective Date: April 29, 1996. Comment Date: Comments should be submitted to the FAR Secretariat at the address shown below on or before June 28, 1996 to be considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: General Services Administration, FAR Secretariat (VRS), 18th & F Streets NW., Room 4037, Attn: Ms. Beverly Fayson, Washington, DC 20405. Please cite FAC 90 38, FAR case 94 723, in all correspondence related to this case.

FOR FURTHER INFORMATION CONTACT: Mr. Al Winston at (703) 602 2119 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 38, FAR case 94 723.

SUPPLEMENTARY INFORMATION:

A. Background

Section 10002 of FASA states that regulations implementing FASA may provide for modification of existing contracts without consideration, upon request of the contractor, to incorporate changes authorized by FASA. Section 10002 also states that nothing in FASA requires the renegotiation or modification of existing contracts to incorporate changes authorized by FASA. The interim rule adopts the policy of encouraging, but not requiring, appropriate modifications without consideration, upon the request of the contractor. If the contracting officer determines that modification of an existing contract is appropriate to incorporate changes authorized by FASA, the modification should insert the current version of the applicable FAR clauses.

B. Regulatory Flexibility Act

The changes may 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 it will require contractors seeking to amend existing contracts to so notify the contracting officer. An Initial Regulatory Flexibility Analysis (IRFA) has been prepared. A copy of the IRFA may be obtained from the FAR Secretariat. Comments are invited. Comments from small entities concerning the affected FAR subparts will be considered in accordance with 5 U.S.C. 610. Such comments must be submitted separately and cite 5 U.S.C. 601, et seq. (FAC 90 38, FAR case 94 723), in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to the FAR do not impose record keeping 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. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary of Defense (DOD), the Administrator of General Services (GSA), and the Administrator of the National Aeronautics and Space Administration (NASA) that compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. This action is necessary because immediate implementation as an interim rule will provide significant benefits to industry and the Government. Section 10002 of FASA, authorizes contracting officers, if requested by the prime contractor to modify contracts without requiring consideration, to incorporate changes authorized by FASA. The regulatory implementation of FASA has been a success for both industry and the Government. Implementation of FASA Section 10002 as an interim rule will enable industry and the Government to gain immediate benefits, including the potential reduction of procurement costs. The interim rule authorizes the adoption of any of the FASA rules that will benefit the contracting parties. The interim rule should involve no substantial risk to industry, since contractors must affirmatively request adoption of the FASA rules to an existing contract. It has been through the process of the consideration and adoption of the FAR rules to implement FASA, that the potential benefits from this interim rule became apparent. However, pursuant to Public Law 98 577 and FAR 1.501, public comments received in response to this interim rule will be considered in the formulation of the final rule.

List of Subjects in 48 CFR Part 43

Government procurement. Dated: April 18, 1996. Edward C. Loeb, Deputy Project Manager for Implementation of the Federal Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Part 43 is amended as set forth below:

PART 43 CONTRACT MODIFICATIONS

1. The authority citation for 48 CFR Part 43 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).

2. Section 43.102 is amended by adding paragraph to read as follows:

43.102 Policy.

* * * * *

The Federal Acquisition Streamlining Act of 1994, Public Law 103 355 (FASA), authorizes, but does not require, contracting officers, if requested by the prime contractor,modify contracts without requiring consideration to incorporate changes authorized by FASA amendments into existing contracts. Contracting officers are encouraged, if appropriate, to modify contracts without requiring consideration to incorporate these new policies. The contract modification should be accomplished by inserting into the contract, as a minimum, the current version of the applicable FAR clauses.

48 CFR Parts 1, 30, 42, and 52

[FAC 90 38; FAR Case 95 002; Item II]

Federal Acquisition Regulation; Application of Cost Accounting Standards Board Regulations to Educational Institutions

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have agreed on a final rule to amend the Federal Acquisition Regulation (FAR) to implement changes made to the Cost Accounting Standards (CAS). The final rule applies to educational institutions receiving a negotiated Federal contract or subcontract award in excess of $500,000 (excluding contracts awarded for the operation of Federally Funded Research and Development Centers (FFRDCs) which are already subject to CAS Board regulations), and requires that such educational institutions comply with certain specified CAS Board rules, regulations and standards. The revisions to the FAR are based on the CAS Board s amendments to 48 CFR Chapter 99. This regulatory action was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. It is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: April 29, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501 3221 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 38, FAR case 95 002.

SUPPLEMENTARY INFORMATION:

A. Background

The Office of Federal Procurement Policy, Cost Accounting Standards Board (CASB), has amended the regulatory provisions contained at 48 CFR Chapter 99. The amendments apply to educational institutions receiving a negotiated Federal contract or subcontract award in excess of $500,000 (excluding contracts awarded for the operation of Federally Funded Research and Development Centers (FFRDCs) which are already subject to CASB regulations) and require that such educational institutions comply with certain specified CASB rules, regulations, and Cost Accounting Standards (CAS). The CAS final rule was published in the Federal Register on November 8, 1994, at 59 FR 55746, and became effective on January 9, 1995, and is authorized pursuant to section 26 of the Office of Federal Procurement Policy Act. The Board has taken action on this topic in order to promote uniformity and consistency in educational institutions cost accounting practices.

B. Regulatory Flexibility Act

The final rule does not constitute a significant FAR revision within the meaning of FAR 1.501 and Public Law 98 577 and publication for public comment is not required because the requirements for the regulation were published by the CASB and codified at 48 CFR Chapter 99. Therefore, the Regulatory Flexibility Act does not apply. However, comments from small entities concerning the affected FAR subparts will be considered in accordance with Section 610 of the Act. Such comments must be submitted separately and cite 5 U.S.C. 601, et seq., (FAC 90 38, FAR Case 95 002).

C. Paperwork Reduction Act

The information collection aspects of this rule have been approved by the Office of Management and Budgetand assigned Control Number 0348 0055.

D. Public Comments

Public comments are not necessary because the policies and procedures contained in this regulation have already been publicized in the Federal Register by the Office of Federal Procurement Policy Cost Accounting Standards Board s Notice of Proposed Rulemaking made available for public comment in the Federal Register, at 57 FR 60503, on December 21, 1992.List of Subjects in 48 CFR Parts 1, 30, 42, and 52

Government procurement.

Dated: April 18, 1996. Edward C. Loeb, Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 1, 30, 42, and 52 are amended as set forth below:

PART 1 FEDERAL ACQUISITION REGULATIONS SYSTEM

1. The authority citation for 48 CFR Parts 1, 30, 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).

1.106 [Amended]

2. Section 1.106 is amended in the FAR segment column by removing 52.230 5 and inserting 52.230 6 in its place.

PART 30 COST ACCOUNTING STANDARDS ADMINISTRATION

30.000 [Amended]

3. Section 30.000 is amended by removing (appendix B, FAR loose-leaf edition)) and inserting (FAR appendix B) in its place, and by removing (see 48 CFR chapter 99 (appendix B, FAR loose-leaf edition), Subpart 9903.201 1(b), and inserting (see 48 CFR 9903.201 1(b) (FAR appendix B) in its place.

30.201 [Amended]

4. Section 30.201 is amended in the first sentence by removing 48 CFR chapter 99 (appendix B, FAR loose-leaf edition), Subpart 9903.201 1, and inserting 48 CFR 9903.201 1 (FAR appendix B) in its place, in the second sentence by removing subpart and inserting 48 CFR in its place, and in the last sentence by removing 48 CFR chapter 99 (appendix B, FAR loose-leaf edition), Subpart 9903.201 2. and inserting 48 CFR 9903.201 2 (FAR appendix B). in its place. 5. Section 30.201 1 is revised to read as follows:

30.201 1 CAS applicability.

See 48 CFR 9903.201 1 (FAR appendix B). 6. Section 30.201 2 is revised to read as follows:

30.201 2 Types of CAS coverage.

See 48 CFR 9903.201 2 (FAR appendix B). 7. Section 30.201 3 is revised to read as follows:

30.201 3 Solicitation provisions.

(a) The contracting officer shall insert the provision at 52.230 1, Cost Accounting Standards Notices and Certification, in solicitations for proposed contracts subject to CAS as specified in 48 CFR 9903.201 (FAR appendix B).

(b) If an award to an educational institution is contemplated prior to July 1, 1997, the contracting officer shallinsert the basic provision set forth at 52.230 1 with its Alternate I, unless the contract is to be performed by a Federally Funded Research and Development Center (FFRDC) (see 48 CFR 9903.201 2(c)(5) (FAR appendix B)), or the provision at 48 CFR 9903.201 2(c)(6) (FAR appendix B) applies. 8. Section 30.201 4 is revised to read as follows:

30.201 4 Contract clauses.

(a) Cost Accounting Standards. (1) The contracting officer shall insert the clause at FAR 52.230 2, Cost Accounting Standards, in negotiated contracts, unless the contract is exempted (see 48 CFR 9903.201 1 (FAR appendix B)), the contract is subject to modified coverage (see 48 CFR 9903.201 2 (FAR appendix B)), or the clause prescribed in paragraph of this subsection is used.

(2) The clause at FAR 52.230 2 requires the contractor to comply with all CAS specified in 48 CFR part 9904 (FAR appendix B), to disclose actual cost accounting practices (applicable to CAS-covered contracts only), and to follow disclosed and established cost accounting practices consistently.

(b) Disclosure and Consistency of Cost Accounting Practices. (1) The contracting officer shall insert the clause at FAR 52.230 3, Disclosure and Consistency of Cost Accounting Practices, in negotiated contracts when the contract amount is over $500,000, but less than $25 million, and the offeror certifies it is eligible for and elects to use modified CAS coverage (see 48 CFR 9903.201 2 (FAR appendix B), unless the clause prescribed in paragraph of this subsection is used).

(2) The clause at FAR 52.230 3 requires the contractor to comply with 48 CFR 9904.401, 9904.402, 9904.405, and 9904.406 (FAR appendix B) to disclose (if it meets certain requirements) actual cost accounting practices, and to follow consistently its established cost accounting practices.

Consistency in Cost Accounting Practices. The contracting officer shall insert the clause at FAR 52.230 4, Consistency in Cost Accounting Practices, in negotiated contracts that are exempt from CAS requirements solely on the basis of the fact that the contract is to be awarded to a United Kingdom contractor and is to be performed substantially in the United Kingdom (see 48 CFR 9903.201 1(b)(12) (FAR appendix B)).

(d) Administration of Cost Accounting Standards. (1) The contracting officer shall insert the clause at FAR 52.230 6, Administration of Cost Accounting Standards, in contracts containing any of the clauses prescribed in paragraphs (a), (b), or

(e) of this subsection. (2) The clause at FAR 52.230 6 specifies rules for administering CAS requirements and procedures to be followed in cases of failure to comply. (e) Cost Accounting Standards Educational Institutions. (1) The contracting officer shall insert the clause at FAR 52.230 5, Cost Accounting Standards Educational Institution, in negotiated contracts awarded to educational institutions, unless the contract is exempted (see 48 CFR 9903.201 1 (FAR appendix B)), the contract is to be performed by an FFRDC (see 48 CFR 9903.201 2(c)(5) (FAR appendix B)), or the provision at 48 CFR 9903.201 2(c)(6) (FAR appendix B) applies.

(2) The clause at FAR 52.230 5 requires the educational institution to comply with all CAS specified in 48 CFR part 9905 (FAR appendix B), to disclose actual cost accounting practices as required by 48 CFR 9903.202 1(f) (FAR appendix B), and to follow disclosed and established cost accounting practices consistently.

9. Section 30.201 5 is revised to read as follows:

30.201 5 Waiver.

In some instances, contractors or subcontractors may refuse to accept all or part of the requirements of the CAS clauses (FAR 52.230 2, Cost Accounting Standards, FAR 52.230 3, Disclosure and Consistency of CostAccounting Practices, and FAR 52.230 5, Cost Accounting Standards Educational Institution). If the contracting officer determines that it is impractical to obtain the materials, supplies, or services from any other source, the contracting officer shall prepare a request for waiver in accordance with 48 CFR 9903.201 5 (FAR appendix B).

10. Sections 30.201 6 and 30.201 7 are added to read as follows:

30.201 6 Findings.

See 48 CFR 9903.201 6 (FAR appendix B).

30.201 7 Cognizant Federal agency responsibilities.

See 48 CFR 9903.201 7 (FAR appendix B). 11. Section 30.202 1 is revised to read as follows:

30.202 1 General requirements.

See 48 CFR 9903.202 1 (FAR appendix B). 12. Section 30.202 2 is revised to read as follows:

30.202 2 Impracticality of submission.

See 48 CFR 9903.202 2 (FAR appendix B). 13. Section 30.202 3 is revised to read as follows:

30.202 3 Amendments and revisions.

See 48 CFR 9903.202 3 (FAR appendix B). 14. Section 30.202 4 is revised to read as follows:

30.202 4 Privileged and confidential information.

See 48 CFR 9903.202 4 (FAR appendix B). 15. Section 52.202 5 is revised to read as follows:

30.202 5 Filing Disclosure Statements.

See 48 CFR 9903.202 5 (FAR appendix B).

30.202 6 [Amended]

16. Section 30.202 6(a) is amended by removing 48 CFR chapter 99 (appendix B, FAR loose-leaf edition), Subparts 9903.201 3 and 9903.202. and inserting 48 CFR 9903.201 3 and 9903.202 (FAR appendix B). in its place.

17. Section 30.202 7 is amended in paragraph (a) by revising the first and third sentences; and in the first sentence of (b) by inserting the word cognizant before the word auditor , and removing the word determine and inserting ascertain in its place. The revised text reads as follows:

30.202 7 Determinations.

(a) Adequacy determination. As prescribed by 48 CFR 9903.202 6 (FAR appendix B), the cognizant auditor shall conduct a review of the Disclosure Statement to ascertain whether it is current, accurate, and complete and shall report the results to the cognizant ACO, who shall determine whether or not it adequately describes the offeror s cost accounting practices. * * * If the Disclosure Statement is adequate, the ACO shall notify the offeror in writing, with copies to the cognizant auditor and contracting officer.

* * *

* * * * *

18. Section 30.202 8 is amended in the second sentence of paragraph (a) by removing ACO s and inserting in its place The ACO ; and by revising (b) to read as follows:

30.202 8 Subcontractor Disclosure Statements.

* * * * *

(b) Any determination that it is impractical to secure a subcontractor s Disclosure Statement must be made in accordance with 48 CFR 9903.202 2 (FAR appendix B). 19. Subpart 30.3 is revised to read as follows:

Subpart 30.3 CAS Rules and Regulations [Reserved]

Note: See 48 CFR 9903.3 (FAR appendix B).

20. Subpart 30.4 is revised to read as follows:

Subpart 30.4 Cost Accounting Standards [Reserved]

Note: See 48 CFR part 9904 (FAR appendix B).

21. Subpart 30.5 is revised to read as follows:

Subpart 30.5 Cost Accounting Standards for Educational Institutions [Reserved]

Note: See 48 CFR part 9905 (FAR appendix B).

30.602 [Amended]

22. Section 30.602 is amended in the introductory text by removing 48 CFR chapter 99 (appendix B, FAR loose-leaf edition), subpart 9903.305. and inserting 48 CFR 9903.305 (FAR appendix B). in its place.

30.602 1 [Amended]

23. Section 30.602 1 is amended in the first sentence of paragraph (a)(2) by inserting after the word Standards, the phrase or FAR 52.230 5, Cost Accounting Standards Educational Institution, ; in the third sentence of (a)(2) by inserting after 52.230 2 the phrase or 52.230 5 ; in paragraph (b)(1) by revising the citation 52.230 5 to read FAR 52.230 6 ; in the first sentence of (b)(2) by inserting after the word ACO the phrase , with the assistance of the auditor, .

30.602 2 [Amended]

24. Section 30.602 2 is amended as follows:

a. In paragraph (a)(1) and the first sentence of paragraph (d)(1) by inserting the word cognizant before the word auditor the first time it appears;

b. In paragraphs (a)(3), (b)(1), and (c)(1), by revising the citation 52.230 5 to read FAR 52.230 6 ;

c. In the second sentence of paragraph (c)(2) by inserting after the word Standards, the phrase or FAR 52.230 5, Cost Accounting Standards Educational Institution, ; and

d. In paragraph (d)(3) by inserting after the word Standards, the phrase 52.230 5, Cost Accounting Standards Educational Institution, .

30.602 3 [Amended]

25. Section 30.602 3 is amended in paragraph (b)(1) by revising the citation 52.230 5 to read FAR 52.230 6 ; in the first sentence of (b)(2) by adding after the word ACO the phrase , with the assistance of the cognizant auditor, ; and in the first sentence of (d)(1) by adding before the word auditor the word cognizant .

30.603 [Amended]

26. Section 30.603 is amended in the first sentence by removing the word his and inserting the in its place; and in the second sentence by removing ACO s and inserting The ACOs in its place.

PART 42 CONTRACT ADMINISTRATION

42.302 [Amended]

27. Section 42.302 is amended in paragraph (a)(11) by removing 48 CFR chapter 99) and inserting 48 CFR chapter 99 (FAR appendix B)) in its place, and in (a)(11)(iv) by removing and 52.230 5 and inserting in its place 52.230 5 and 52.230 6.

PART 52 SOLICITATION PROVISIONS AND CONTRACT CLAUSES

28. Section 52.230 1 is amended by:

(a) Revising the clause date;

(b) Adding a third paragraph following the NOTE under the clause heading;

Removing from paragraph (a)(2) the phrase 48 CFR parts 9903 and 9904 and inserting the Cost Accounting Standards Board (48 CFR Chapter 99) in its place, and removing the phrase 48 CFR, Subpart and inserting 48 CFR in its place;

(d) Removing in the first sentence of paragraph (b) the phrase , parts 9903 and 9904 and inserting Chapter 99 in its place, and removing the phrase 48 CFR, Subpart and inserting 48 CFR in its place; and in the second sentence by removing The and inserting When required, the in its place;

(e) Capitalizing all letters in the word Caution: in the CAUTION paragraph following paragraphs (b), (c)(4), and in Part II;

(f) Revising paragraphs (1) and (2);

(g) Removing in paragraph (c)(4)(ii) under Part I the phrase 48 CFR, Subpart and inserting 48 CFR in its place;

(h) Removing in the first sentences of the first and second paragraphs in Part II the phrase 48 CFR subpart and inserting 48 CFR in its place; and

(I) Adding Alternate I. The added and revised text reads as follows:

52.230 1 Cost Accounting Standards Notices and Certification.

* * * * *

COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION (APR 1996)

* * * * *

Note: * * *

If the offeror is an educational institution, Part II does not apply unless the contemplated contract will be subject to full or modified CAS coverage pursuant to 48 CFR 9903.201 2(c)(5) or 9903.201 2(c)(6), respectively.

I. DISCLOSURE STATEMENT-COST ACCOUNTING PRACTICES AND CERTIFICATION

* * * * *

* * *

(1) Certificate of Concurrent Submission of Disclosure Statement.

The offeror hereby certifies that, as a part of the offer, copies of the Disclosure Statement have been submittedas follows: (I) original and one copy to the cognizant Administrative Contracting Officer (ACO) or cognizant Federal agency official authorized to act in that capacity (Federal official), as applicable, and (ii) one copy to the cognizant Federal auditor.

(Disclosure must be on Form No. CASB DS 1 or CASB DS 2, as applicable. Forms may be obtained from the cognizant ACO or Federal official and/or from the loose-leaf version of the Federal Acquisition Regulation.)

Date of Disclosure Statement:

Name and Address of Cognizant ACO or Federal Official Where Filed:

The offeror further certifies that the practices used in estimating costs in pricing this proposal are consistent with the cost accounting practices disclosed in the Disclosure Statement.

(2) Certificate of Previously Submitted Disclosure Statement.

The offeror hereby certifies that the required Disclosure Statement was filed as follows:

Date of Disclosure Statement:

Name and Address of Cognizant ACO or Federal Official Where Filed:

The offeror further certifies that the practices used in estimating costs in pricing this proposal are consistent with the accounting practices disclosed in the applicable Disclosure Statement.

* * * * *

(End of provision)

Alternate I (APR 1996). As prescribed in 30.201 3(b), add the following subparagraph (c)(5) to Part I of the basic provision:

[](5) Certificate of Disclosure Statement Due Date by Educational Institution. If the offeror is an educational institution that, under the transition provisions of 48 CFR 9903.202 1(f), is or will be required to submit a Disclosure Statement after receipt of this award, the offeror hereby certifies that (check one and complete):

[] (I) A Disclosure Statement Filing Due Date of has been established with the cognizant Federal agency. (ii) The Disclosure Statement will be submitted within the 6-month period ending months after receipt of this award.

Name and Address of Cognizant ACO or Federal Official Where Disclosure Statement is to be Filed:

52.230 2 [Amended]

29. Section 52.230 2 is amended by revising the clause date to read (Apr 1996) , and by removing in paragraph (a) in the introductory text the phrase 48 CFR subparts and inserting 48 CFR in its place; in(a)(1) removing the phrase 48 CFR subpart and inserting 48 CFR in its place, in (a)(3) removing the phrase 48 CFR part 9904, (appendix B, FAR loose-leaf edition), and inserting 48 CFR Part 9904, in its place, and in (d)(2) removing the phrase 48 CFR subpart and inserting 48 CFR in its place.

30. Section 52.230 3 is amended by:

(a) Revising the clause date and paragraph (a)(1);

(b) Removing in paragraph (a)(2) the phrase 48 CFR subparts and inserting 48 CFR in its place; and

Removing in paragraphs (a)(3)(ii), (d)(1) and (d)(3) the phrase 48 CFR subpart and inserting 48 CFR in its place. The revised text reads as follows:

52.230 3 Disclosure and Consistency of Cost Accounting Practices.

* * * * *

DISCLOSURE AND CONSISTENCY OF COST ACCOUNTING PRACTICES (APR 1996)

(a) * * *

(1) Comply with the requirements of 48 CFR 9904.401, Consistency in Estimating, Accumulating, and Reporting Costs; 48 CFR 9904.402, Consistency in Allocating Costs Incurred for the Same Purpose; 48 CFR 9904.405, Accounting for Unallowable Costs; and 48 CFR 9904.406, Cost Accounting Standard-Cost Accounting Period, in effect on the date of award of this contract as indicated in 48 CFR Part 9904.

* * * * *

52.230 5 [Redesignated as 52.230 6]

31. Section 52.230 5 is redesignated as 52.230 6 and a new section 52.230 5 is added to read as follows:

52.230 5 Cost Accounting Standards Educational Institution.

As prescribed in 30.201 4(e), insert the following clause:

COST ACCOUNTING STANDARDS EDUCATIONAL INSTITUTION (APR 1996)

(a) Unless the contract is exempt under 48 CFR 9903.201 1 and 9903.201 2, the provisions of 48 CFR Part 9903 are incorporated herein by reference and the Contractor, in connection with this contract, shall

(1) (CAS-covered contracts only). If a business unit of an educational institution required to submit a Disclosure Statement, disclose in writing the Contractor s cost accounting practices as required by 48 CFR 9903.202 1 through 9903.202 5, including methods of distinguishing direct costs from indirect costs and the basis used for accumulating and allocating indirect costs. The practices disclosed for this contract shall be the same as the practices currently disclosed and applied on all other contracts and subcontracts being performed by the Contractor and which contain a Cost Accounting Standards (CAS) clause. If the Contractor has notified the Contracting Officer that the Disclosure Statement contains trade secrets, and commercial or financial information which is privileged and confidential, the Disclosure Statement shall be protected and shall not be released outside of the Government.

(2) Follow consistently the Contractor s cost accounting practices in accumulating and reporting contract performance cost data concerning this contract. If any change in cost accounting practices is made for the purposes of any contract or subcontract subject to CAS requirements, the change must be applied prospectively to this contract and the Disclosure Statement, if required, must be amended accordingly. If anaccounting principle change mandated under Office of Management and Budget (OMB) Circular A 21, Cost Principles for Educational Institutions, requires that a change in the Contractor s cost accounting practices be made after the date of this contract award, the change must be applied prospectively to this contract and the Disclosure Statement, if required, must be amended accordingly. If the contract price or cost allowance of this contract is affected by such changes, adjustment shall be made in accordance with subparagraph (a)(4) or (a)(5) of this clause, as appropriate.

(3) Comply with all CAS, including any modifications and interpretations indicated thereto contained in 48 CFR Part 9905 in effect on the date of award of this contract or, if the Contractor has submitted cost or pricing data, on the date of final agreement on price as shown on the Contractor s signed certificate of current cost or pricing data. The Contractor shall also comply with any CAS (or modifications to CAS) which hereafter become applicable to a contract or subcontract of the Contractor. Such compliance shall be required prospectively from the date of applicability to such contract or subcontract.

(4) (I) Agree to an equitable adjustment as provided in the Changes clause of this contract if the contract cost is affected by a change which, pursuant to subparagraph (a)(3) of this clause, the Contractor is required to make to the Contractor s established cost accounting practices.

(ii) Negotiate with the Contracting Officer to determine the terms and conditions under which a change may be made to a cost accounting practice, other than a change made under other provisions of subparagraph (a)(4) of this clause; provided that no agreement may be made under this provision that will increase costs paid by the United States.

(iii) When the parties agree to a change to a cost accounting practice, other than a change under subdivision (a)(4)(I) or (a)(4)(iv) of this clause, negotiate an equitable adjustment as provided in the Changes clause of this contract.

(iv) Agree to an equitable adjustment as provided in the Changes clause of this contract, if the contract cost is materially affected by an OMB Circular A 21 accounting principle amendment which, on becoming effective after the date of contract award, requires the Contractor to make a change to the Contractor s established cost accounting practices.

(5) Agree to an adjustment of the contract price or cost allowance, as appropriate, if the Contractor or a subcontractor fails to comply with an applicable Cost Accounting Standard, or to follow any cost accounting practice consistently and such failure results in any increased costs paid by the United States. Such adjustment shall provide for recovery of the increased costs to the United States, together with interest thereon computed at the annual rate established under section 6621 of the Internal Revenue Code of 1986 (26 U.S.C. 6621) for such period, from the time the payment by the United States was made to the time the adjustment is effected. In no case shall the Government recover costs greater than the increased cost to the Government, in the aggregate, on the relevant contracts subject to the price adjustment, unless the Contractor made a change in its cost accounting practices of which it was aware or should have been aware at the time of price negotiations and which it failed to disclose to the Government.

(b) If the parties fail to agree whether the Contractor or a subcontractor has complied with an applicable CAS or a CAS rule or regulation in 48 CFR Part 9903, and as to any cost adjustment demanded by the United States, such failure to agree will constitute a dispute under the Contract Disputes Act (41 U.S.C. 601).

The Contractor shall permit any authorized representatives of the Government to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause.

(d) The Contractor shall include in all negotiated subcontracts which the Contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all applicable CAS in effect on the subcontractor s award date or, if the subcontractor has submitted cost or pricing data, on the date of final agreement on price as shown on the subcontractor s signed Certificate of Current Cost or Pricing Data, except that

(1) If the subcontract is awarded to a business unit which pursuant to 48 CFR 9903.201 2 is subject to other types of CAS coverage, the substance of the applicable clause set forth in 48 CFR 9903.201 4 shall be inserted; and

(2) This requirement shall apply only to negotiated subcontracts in excess of $500,000 where the price negotiated is not based on

(I) Established catalog or market prices of commercial items sold in substantial quantities to the general public; or

(ii) Prices set by law or regulation, and except that the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in 48 CFR 9903.201 1.

(End of clause)

32. Newly designated section 52.230 6 is amended:

(a) By revising the date of the clause to read (APR 1996) ;

(b) In paragraph (a)(1) by removing the phrase to comply with a new or modified CAS ; and removing the comma after the word Standards and inserting in its place ; or subparagraph (a)(3) and subdivisions (a)(4)(I) or (a)(4)(iv) of the clause at FAR 52.230 5, Cost Accounting Standards-Educational Institution; ;

In paragraph (a)(2) by adding an s to the end of the word clause the first time it appears; and adding after the word Standards, the phrase and FAR 52.230 5, Cost Accounting Standards-Educational Institution; ;

(d) In paragraph (a)(3) by adding after the word Standards, the phrase and FAR 52.230 5, Cost Accounting Standards-Educational Institution; ;

(e) In the introductory text of paragraph (b) by adding after the word ACO the phrase , or cognizant Federal agency official, ;

(f) By revising paragraphs (b)(1) and (b)(2);

(g) In paragraph (b)(3) by adding an s at the end of the word clause the first time it appears; and adding after the word Standards, the phrase and FAR 52.230 5, Cost Accounting Standards-Educational Institution;

(h) In paragraph (d) by removing CAS clause and inserting clauses in its place; and adding after the citation 52.230 2, the phrase and 52.230 5; ;

(I) By revising the introductory text of paragraph (e) and the first sentence of paragraph (e)(2)(iv); and

(j) In paragraph (g) by removing CAS clause, and inserting in its place clauses at FAR 52.230 2 or 52.230 5, . The revised text reads as follows:

52.230 6 Administration of Cost Accounting Standards.

* * * * *

ADMINISTRATION OF COST ACCOUNTING STANDARDS (APR 1996)

* * * * *

(b) * * *

(1) Cost impact proposals submitted for changes in cost accounting practices required in accordance with subparagraph (a)(3) and subdivision (a)(4)(I) of the clause at FAR 52.230 2, Cost Accounting Standards; or subparagraph (a)(3) and subdivisions (a)(4)(I) or (a)(4)(iv) of the clause at FAR 52.230 5, Cost Accounting Standards-Educational Institution; shall identify the applicable standard or cost principle and all contracts and subcontracts containing the clauses entitled Cost Accounting Standards or Cost Accounting Standards-Educational Institution, which have an award date before the effective date of that standard or cost principle.

(2) Cost impact proposals submitted for any change in cost accounting practices proposed in accordance with subdivisions (a)(4) (ii) or (iii) of the clauses at FAR 52.230 2, Cost Accounting Standards, and FAR 52.230 5, Cost Accounting Standards-Educational Institution; or with subparagraph (a)(3) of the clause at FAR 52.230 3, Disclosure and Consistency of Cost Accounting Practices; shall identify all contracts and subcontracts containing the clauses at FAR 52.230 2, Cost Accounting Standards, FAR 52.230 5, Cost Accounting Standards-Educational Institution, and FAR 52.230 3, Disclosure and Consistency of Cost Accounting Practices.

* * * * *

(e) For all subcontracts subject to the clauses at FAR 52.230 2, 52.230 3, or 52.230 5

* * * * *

(2) * * *

(iv) Any changes the subcontractor has made or proposes to make to cost accounting practices that affect prime contracts or subcontracts containing the clauses at FAR 52.230 2, 52.230 3, or 52.230 5, unless these changes have already been reported.

* * * * *

48 CFR Part 32

[FAC 90 38; FAR Case 94 767; Item III]

Federal Acquisition Regulation; Assignment of Claims; Presidential Delegation

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 (Public Law 103 355) (FASA) to reflect the Presidential delegation of authority to make determinations of need and to provide guidance for determinations of need made in accordance with the Presidential delegation dated October 3, 1995. This regulatory action was subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. It is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: June 28, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. John Galbraith, Finance/Payment Team Leader, at (703) 697 6710, in reference to this case. For general information, contact the FAR Secretariat, Room 4037, 18th & F Streets NW., Washington, DC 20405, (202) 501 4755. Please cite FAC 90 38, FAR Case 94 767 in all correspondence related to this case.

SUPPLEMENTARY INFORMATION:

A. Background

The statutes authorizing assignments of claims under Federal contracts provide authority for the Government to make no-setoff commitments under certain conditions. FASA established a requirement for a determination of need by the President. Implementation was published in the Federal Register, at 60 FR 49729, on September 26, 1995, as FAR Case 94 761. The President, on October 3, 1995, delegated the authority to make determinations of need to the Secretaries of Defense and Energy, the Administrator of General Services, and the heads of all other departments or agencies, subject to such additional guidance as provided by the Administrator of the Office of Federal Procurement Policy. The Administrator of Procurement Policy, in with the President s delegation, has provided guidance for exercise of the authority delegated by the President to make determinations of need to make no-setoff commitments under contracts containing assignment of claims clauses. Because this guidance is administrative in nature and has no significant impact upon the public, it is being published as a final rule.

B. Regulatory Flexibility Act

As noted above, this rule implements a change in authority for existing policy and procedures in the FAR. This change in authority to be cited does not change the usage of the procedure (the no-setoff commitment) or the impact upon small entities. Thus, this final rule does not constitute a significant FAR revision within the meaning of FAR 1.501 and Public Law 98 577, and publication for public comments is not required. Therefore, the Regulatory Flexibility Act does not apply. However, comments from small entities concerning the affected FAR subpart will be considered in accordance with Section 610 of the Act. Such comments must be submitted separately and cite 5 U.S.C. 601 et seq., (FAC 90 38, FAR Case 94 767) in correspondence.

C. Paperwork Reduction Act The Paperwork Reduction Act does not apply because the changes to the FAR do not impose record keeping 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 Part 32 Government procurement.

Dated: April 18, 1996. Edward C. Loeb, Deputy Project Manager for the Implementation of the Federal Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Part 32 is amended as set forth below:

PART 32 CONTRACT FINANCING

1. The authority citation for 48 CFR Part 32 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).

2. Section 32.803 is amended by revising paragraph (d) to read as follows:

32.803 Policies.

* * * * *

(d) Any contract of a designated agency (see FAR 32.801), except a contract under which full payment has been made, may include a no-setoff commitment only when a determination of need is made by the head of the agency, in accordance with the Presidential delegation of authority dated October 3, 1995, and after such determination has been published in the Federal Register. The Presidential delegation makes such determinations of need subject to further guidance issued by the Office of Federal Procurement Policy. The following guidance has been provided: Use of the no-setoff provision may be appropriate to facilitate the national defense; in the event of a national emergency or natural disaster; or when the use of the no-setoff provision may facilitate private financing of contract performance. However, in the event an offeror is significantly indebted to the United States, the contracting officer should consider whether the inclusion of the no-setoff commitment in a particular contract is in the best interests of the United States. In such an event, the contracting officer should consult with the Government officer(s) responsible for collecting the debt(s).

* * * * *

Section 32.806 is amended by revising paragraph (a)(2) to read as follows:

32.806 Contract clause.

(a) * * *

(2) If a no-setoff commitment has been authorized (see FAR 32.803(d)), the contracting officer shall use the clause with its Alternate I.

* * * * *

48 CFR Parts 32 and 52

[FAC 90 38; FAR Case 92 045; Item IV]

Federal Acquisition Regulation; Interest Clause; Revisions

AGENCIES:

Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

SUMMARY: The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council have agreed on a final rule amending the Federal Acquisition Regulation (FAR) to clarify that certain Cost Accounting Standards (CAS) clauses provide for the use of differing interest rates under differing circumstances. This regulatory action was not subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993. It is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: June 28, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy F. Olson at (202) 501 3221 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 38, FAR case 92 045.

SUPPLEMENTARY INFORMATION:

A. Background

Under the CAS clauses at 52.230 2, Cost Accounting Standards, 52.230 3, Disclosure and Consistency of Cost Accounting Practices, and 52.230 4, Consistency in Cost Accounting Practices, interest charges associated with contract price adjustments resulting from CAS noncompliance are computed at the annual interest rate established under section 6621 of the Internal Revenue Code of 1986 (26 U.S.C. 6621), as required by subsection 5(h)(4) of the Office of Federal Procurement Policy Act Amendments of 1988 (Public Law 100 679). The clauses at 52.230 2 and 52.230 3 also specify that disputes are subject to the Contract Disputes Act which, in contrast, uses the semiannual interest rate established by the Secretary of the Treasury for the Renegotiation Board pursuant to Public Law 92 41. This rule revises FAR 32.610(b)(2), 32.613(h)(3), 32.614 1(c), and the clause at 52.232 17 to clarify that the CAS clauses at 52.230 2 and 52.230 3 provide for the use of differing interest rates under differing circumstances.

B. Regulatory Flexibility Act

The final rule does not constitute a significant FAR revision within the meaning of FAR 1.501 and Public Law 98 577, and publication for public comments is not required. Therefore, the Regulatory Flexibility Act does not apply. However, comments from small entities concerning the affected FAR subparts will be considered in accordance with 5 U.S.C. 610. Such comments must be submitted separately and cite 5 U.S.C. 601 et seq. (FAC 90 38, FAR case 92 045), in correspondence.18922 Federal Register / Vol. 61, No. 83 / Monday, April 29, 1996 / Rules and Regulations

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to the FAR do not impose record keeping 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 32 and 52

Government procurement.

Dated: April 19, 1996. Edward C. Loeb, Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 32 and 52 are amended as set forth below:

PART 32 CONTRACT FINANCING

1. The authority citation for 48 CFR Parts 32 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).

2. Section 32.610 is amended by revising paragraph (b)(2) to read as follows:

32.610 Demand for payment of contract debt.

* * * * *

(b) * * *

2) Notification that any amounts not paid within 30 days from the date of the demand will bear interest from the date of the demand, or from any earlier date specified in the contract, and that the interest rate shall be the rate established by the Secretary of the Treasury, for the period affected, under Public Law 92 41. In the case of a debt arising from a price reduction for defective pricing, or as specifically set forth in a Cost Accounting Standards (CAS) clause in the contract, that interest will run from the date of overpayment by the Government until repayment by the contractor at the underpayment rate established by the Secretary of the Treasury, for the periods affected, under 26 U.S.C. 6621(a)(2).

* * * * *

3. Section 32.613 is amended by revising paragraph (h)(3) to read as follows:

32.613 Deferment of collection.

* * * * *

(h) * * *

(3) Notice of an interest charge, in conformity with FAR 32.614 and the clause at FAR 52.232 17, Interest; or, in the case of a debt arising from a defective pricing or a CAS noncompliance overpayment, interest, as prescribed by the applicable Price Reduction for Defective Cost or Pricing Data or CAS clause.

* * * * *

4. Section 32.614 1 is amended by revising the first sentence of paragraph introductory text to read as follows:

32.614 1 Interest charges.

* * * * *

Unless specified otherwise in the clause at FAR 52.232 17, the interest charge shall be at the rate established by the Secretary of the Treasury under Public Law 92 41 for the period in which the amount becomes due.

* * *

* * * * *

PART 52 SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 52.232 17 is amended by revising the date of the clause and the first sentence of paragraph (a) to read as follows:

52.232 17 Interest.

* * * * *

INTEREST (JUNE 1996)

(a) Except as otherwise provided in this contract under a Price Reduction for Defective Cost or Pricing Data clause or a Cost Accounting Standards clause, all amounts that become payable by the Contractor to the Government under this contract (net of any applicable tax credit under the Internal Revenue Code (26 U.S.C. 1481)) shall bear simple interest from the date due until paid unless paid within 30 days of becoming due.

* * *

* * * * *

End of FAC 90-38

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