[Federal Register Volume 59, Number 209 (Monday, October 31, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26787]


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[Federal Register: October 31, 1994]


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DEPARTMENT OF ENERGY

48 CFR Parts 915, 931, 942, 951, 952, and 970

RIN 1991-AB12

 

Revisions to Independent Research and Development and Bid and 
Proposal Costs Policy, Travel Policy, and Technical Changes

AGENCY: Department of Energy.

ACTION: Proposed rule.

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SUMMARY: The Department of Energy (DOE) proposes to amend its 
Acquisition Regulation to effect changes to Independent Research and 
Development (IR&D) and Bid and Proposal Costs (B&P); reflect Federal 
Acquisition Regulation (FAR) changes to the Cost Accounting Standards 
(CAS); and incorporate travel policy revisions resulting from Public 
Law and FAR changes. Additionally, there are technical changes updating 
references, correcting editorial errors, and clarifying language.

DATES: Written comments must be submitted no later than December 30, 
1994.

ADDRESSES: Comments should be addressed to: Terrence D. Sheppard, 
Business and Financial Policy Division (HR-521.2), Office of 
Procurement and Assistance Management, Department of Energy, 1000 
Independence Avenue SW., Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT: Terrence D. Sheppard, (202) 586-8174.

SUPPLEMENTARY INFORMATION:

I. Background
II. Public Comments
III. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Executive Order 12778
    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

    Pursuant to section 644 of the Department of Energy Organization 
Act, Public Law 95-91 (42 U.S.C. 7254), the Secretary of Energy is 
authorized to prescribe such procedural rules and regulations as may be 
deemed necessary or appropriate to accomplish the functions vested in 
the Secretary. In accordance with this authority, the Department of 
Energy Acquisition Regulation (DEAR), 48 CFR chapter 9, was promulgated 
with an effective date of April 1, 1984 (49 FR 11922, March 28, 1984).
    The purpose of this rule is to amend the DEAR to formally establish 
policies, procedures, and contract provisions that reflect the DOE 
position relative to the allowability of IR&D/B&P costs and IR&D/B&P 
advance agreements and travel costs. Additionally, it reflects the 
recodification of the CAS into 48 CFR chapter 99, and its incorporation 
into FAR, Appendix B. Concomitant with these changes, there are several 
revisions which delete references to outdated policies or activities.
    A detailed list of changes follows:
    1. The authority citation for parts 915, 931, 942, 951, and 952 is 
restated.
    2. Subsection 915.805-5 is amended to delete the requirement in 
paragraph (c)(1) that a copy of the audit request be sent to the DOE 
Inspector General (IG). Pursuant to interagency agreements, the DOE 
contract audit agency is the Defense Contract Audit Agency (DCAA); the 
Department of Health and Human Services (HHS) has audit cognizance for 
most educational institutions.
    3. Subparagraph 915.970-8(d)(1) is revised to add a reference to 
the relocation of the CAS to FAR Appendix B (Federal Acquisition 
Circular (FAC) 90-12, August 31, 1992).
    4. Subsection 931.205-18 is revised to add the acronyms ``IR&D'' 
and ``B&P'' to the title. The DEAR reference to the FAR is changed from 
(c)(3) to (c)(2), because the FAR amendment (FAC 90-13, September 24, 
1992) deleted FAR (c)(3). Paragraph (c)(4) is deleted in its entirety, 
except for a portion of the first sentence of (c)(4) which was moved to 
(c)(2). Also, FAC 90-13 replaced the requirement for separate advance 
agreements with temporary limits (for a 3-year period) on allowable 
IR&D/B&P costs. DOE has chosen not to institute the temporary limits, 
but rather to allow for full recovery, immediately. Thus, the text was 
amended to reflect the DOE policy that generally IR&D costs are 
allowable if reasonable, allocable, and they have a potential benefit 
or relationship to the DOE program. B&P costs are generally allowable 
if they are reasonable and allocable.
    5. Section 942.003, paragraph (a) is revised to delete references 
to the Department of Defense (DOD) services; the services no longer 
have individual plant residencies. This revision reflects the current 
DOD structure for contract administration.
    6. Section 942.101 is amended by deleting the reference to the Air 
Force Contract Management Division (AFCMD) and the DOE IG in paragraphs 
(a)(2) and (c), respectively. The AFCMD no longer exists and the Office 
of Procurement and Assistance Management now negotiates the interagency 
agreements with DCAA and HHS. Paragraph (a)(3) is redesignated as 
(a)(2) to accommodate the deletion of AFCMD.
    7. Subsection 942.705-1 is revised at paragraph (a)(3) by deleting 
the statement that a listing of business units, for which DOE has final 
indirect cost rate negotiation responsibility, is published in the DOE 
Order System. The listing is no longer published in the DOE Order 
System. The revised paragraph (b)(1) clarifies the proscription that 
contractors shall neither be required nor directed to submit final 
indirect cost rate proposals to the auditor.
    8. Subsection 942.705-3 is revised to correct the statement that 
negotiated rates are ``centrally maintained'' when, in fact, they are 
only ``distributed'' by the Office of Policy.
    9. Subsection 942.705-4 is revised to correct the statement that 
negotiated rates are maintained by the Office of Policy, when, in fact, 
they are only distributed by the Office.
    10. Subsection 942.705-5 is revised to correct the statement that 
negotiated rates are maintained by the Office of Policy, when, in fact, 
they are only distributed by the Office.
    11. Subpart 942.10 is removed as a result of concomitant changes to 
the IR&D/B&P advance agreements (see item 4, foregoing). There is no 
longer a requirement to negotiate advance agreements; thus, the 
coverage is removed in its entirety.
    12. Subsection 942.7003-6 is revised to add the word 
``Administration'' to the title of FAR Part 30, which was changed as a 
result of FAC 90-12, August 31, 1992. Additionally, the reference to 
Public Law 91-379, which established the CAS, is deleted due to the 
subsequent incorporation of the CAS in FAR Appendix B and their 
application to civilian agencies pursuant to Public Law 100-679.
    13. Subsection 942.7004 is revised at paragraph (a) to incorporate 
the results of the interagency agreements between the Office of 
Procurement and Assistance Management and DCAA and HHS. References to 
the DOE IG are deleted. Paragraphs (b), (c), and (d) are deleted as 
they describe internal operating procedures that, in large part, are no 
longer valid.
    14. Subsection 951.7000 is revised to delete the reference to 
outdated General Services Administration (GSA) Bulletin A-95. The 
reference to the Federal Property Management Regulations (FPMRs) is 
sufficient.
    15. Subsection 951.7001 is revised to delete the reference to 
outdated GSA Bulletin A-95 in the introductory paragraph. Paragraphs 
(a), (b), and (c) are deleted as they duplicate information contained 
in clause 952.251-70.
    16. Subsection 952.251-70 is amended to correct a referenced 
citation at paragraph (a) from ``Property Management Regulation (FPMR), 
Temporary Regulation A-30'' to ``Travel Regulation (FTR), Part 301-15, 
Travel Management Programs.''
    17. The authority citation for part 970 is restated.
    18. Subsection 970.3001-1 is revised to reflect the relocation of 
the CAS, within the FAR, from part 30 to appendix B.
    19. Subsection 970.3001-2 is revised to correct the cross reference 
from ``970.3102-10'' to ``970.3102-3.''
    20. Subsection 970.3102-17 is amended by revising paragraph 
(c)(2)(i) and adding new paragraphs (c)(6) and (c)(7). In (c)(2)(i), 
line 1, the letter ``s'' is deleted from the word ``Regulations'' to 
reflect the new title. New subparagraph (c)(6) is added to reflect 
changes in FAR 31.205-46, ``Travel costs'' as a result of FAC 90-7 
which provided for downward adjustments to the maximum per diem rates 
when no lodging costs are incurred or on partial travel days. A new 
paragraph (c)(7) is added which refers to the incorporation of the 
Public Law 100-679 requirements in 970.5204-13 and 970.5204-14. Public 
Law 100-679, which amended the Office of Federal Procurement Policy 
Act, states that, for State and nonprofit institutions performing 
federally sponsored research, travel costs shall be considered 
reasonable and allowable only to the extent that such costs do not 
exceed charges normally allowed by the respective institution in its 
regular operations as a result of an institutional policy. In the 
absence of institutional policies, rates and amounts shall be 
determined by either subchapter I of chapter 57 of title 5, United 
States Code, or by the General Services Administration, or the 
President, or his designee.
    21. Subsection 970.5204-13 is amended by revising paragraph (e)(35) 
to add a ``NOTE'' directing the Contracting Officer to use the 
alternate clause for contracts with State and nonprofit institutions. 
The ``NOTE'' reflects that, pursuant to Public Law 100-679, which 
amended the Office of Federal Procurement Policy Act, travel costs of 
State and nonprofit institutions performing federally sponsored 
research shall be considered reasonable and allowable only to the 
extent that such costs do not exceed charges normally allowed by the 
respective institution in its regular operations as a result of an 
institutional policy. In the absence of institutional policies, rates 
and amounts shall be determined by either subchapter I of chapter 57 of 
title 5, United States Code, or by the General Services Administration, 
or the President, or his designee.
    22. Subsection 970.5204-14 is amended by revising paragraph (e)(33) 
to add a ``NOTE'' directing the Contracting Officer to use the 
alternate clause for contracts with State and nonprofit institutions. 
The ``Note'' reflects that, pursuant to Public Law 100-679, which 
amended the Office of Federal Procurement Policy Act, travel costs of 
State and nonprofit institutions performing federally sponsored 
research shall be considered reasonable and allowable only to the 
extent that such costs do not exceed charges normally allowed by the 
respective institution in its regular operations as a result of an 
institutional policy. In the absence of institutional policies, rates 
and amounts shall be determined by either subchapter I of Chapter 57 of 
Title 5, United States Code, or by the General Services Administration, 
or the President, or his designee.
    23. Subsection 970.7104-33 is revised to reflect the relocation of 
the Cost Accounting Standards, within the FAR, from part 30 to appendix 
B.

II. 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 1E-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.

III. 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 12778

    Section 2 of Executive Order 12778 instructs agencies to adhere to 
certain requirements in promulgating new regulations and reviewing 
existing regulations. These requirements, set forth in Sections 2(a) 
and (b), include eliminating drafting errors and needless ambiguity, 
drafting the regulations to minimize litigation, providing clear and 
certain legal standards for affected conduct, and promoting 
simplification and burden reduction. Agencies are also instructed to 
make every reasonable effort to ensure that the regulation: Specifies 
clearly any preemptive effect; describes any administrative proceedings 
to be available prior to judicial review and any provisions for the 
exhaustion of such administrative proceedings; and defines key terms. 
DOE certifies that today's proposal meets the requirements of sections 
2(a) and (b) of Executive Order 12778.

C. Review Under the Regulatory Flexibility Act

    This proposed rule was reviewed under the Regulatory Flexibility 
Act of 1980, Public Law 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, subpart D) implementing the National 
Environmental Policy Act (NEPA) of 1969 (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 915, 931, 942, 951, 952, and 970

    Government Procurement.

    Issued in Washington, D.C. on June 22, 1994.
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 Parts 915, 931, 942, and 951 
continues to read as follows:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).

PART 915--CONTRACTING BY NEGOTIATION

    2. Subsection 915.805-5 is amended by revising paragraph (c)(1) to 
read as set forth below:


915.805-5  Field pricing support.

* * * * *
    (c)(1) When an audit is required pursuant to 915.805-70, ``Audit as 
an aid in proposal analysis,'' the request for audit shall be sent 
directly to the Federal audit office assigned cognizance of the offeror 
or prospective contractor. When the cognizant agency is other than the 
Defense Contract Audit Agency or the Department of Health and Human 
Services, and an appropriate interagency agreement has not been 
established, the need for audit assistance shall be coordinated with 
the Office of Policy, within the Headquarters procurement organization.
* * * * *
    3. Subsection 915.970-8 is amended by revising the introductory 
text to paragraph (d)(1) to read as set forth below:


915.970-8  Weighted guidelines application considerations.

* * * * *
    (d) Capital investment (facilities). (1) This element relates to 
the consideration to be given in the profit objective in recognition of 
the investment risk associated with the facilities employed by the 
contractor. Measurement of the amount of facilities capital employed is 
discussed in 48 CFR 9904.414 (FAR Appendix B, 9904.414). Five to twenty 
percent of the net book value of facilities capital allocated to the 
contract is the normal range of weight for this profit factor. The key 
factors that the negotiating official shall consider in evaluating this 
factor are:
* * * * *

PART 931--CONTRACT COST PRINCIPLES AND PROCEDURES

    4. Subsection 931.205-18 is revised to read as follows: 931.205-18 
Independent research and development (IR&D) and bid and proposal (B&P) 
costs.
    (c)(2) IR&D costs are recoverable under DOE contracts to the extent 
they are reasonable, allocable, not otherwise unallowable, and have 
potential benefit or relationship to the DOE program. The term ``DOE 
program'' encompasses the DOE total mission and its objectives. B&P 
costs are recoverable under DOE contracts to the extent they are 
reasonable, allocable, and not otherwise unallowable.

PART 942--CONTRACT ADMINISTRATION

    5. Section 942.003 is amended by revising paragraph (a) as set 
forth below:


942.003  Organizational structure.

    (a) The Department of Defense has initiated a formal system of 
independent organizations responsible for performance of post-award 
management functions. A field structure of Contract Administration 
Offices (CAO) responsible for contract management and administration of 
contracts for major defense contractors has been established. DOD has 
organized plant residencies of contract management specialists for 
specific DOD contractors and their various business units. The Defense 
Logistics Agency performs contract management functions both at onsite 
residencies of contractors and on a mobile basis from centrally located 
management areas for other defense contractors. A complete listing of 
the DOD contract administration service components is contained in the 
Defense Directory cited in (FAR) 48 CFR 42.102.
* * * * *
    6. Section 942.101 is amended by removing paragraph (a)(2); 
redesignating paragraph (a)(3) as (a)(2); and revising paragraph (c) to 
read as follows:


942.101  Policy.

* * * * *
    (c) The Department of Energy has executed memoranda of 
understanding with the Defense Contract Audit Agency and the Office of 
Audit of the Department of Health and Human Services to provide audit 
support service to the DOE in support of its procurement mission. 
Procedures for acquiring these services are discussed in 942.70.
    7. Subsection 942.705-1 is revised to read as follows:


942.705-1  Contracting officer determination procedure.

    (a)(3) The Department of Energy shall use the contracting officer 
determination procedure for all business units for which it shall be 
required to negotiate final indirect cost rates. A listing of such 
business units is maintained by the Office of Policy, within the 
Headquarters procurement organization.
    (b)(1) Pursuant to FAR 52.216-7, Allowable Cost and Payment, 
contractors shall be requested to submit their final indirect cost rate 
proposals reflecting actual cost experience during the covered periods 
to the cognizant contracting officers responsible for negotiating their 
final indirect rates. The DOE negotiating official shall request all 
needed audit service in accordance with the procedures in 942.70, Audit 
Services.
    8. Subsection 942.705-3 is revised to read as follows:


942.705-3  Educational institutions.

    (a)(2) The negotiated rates established for the institutions cited 
in OMB Circular No. A-88 are distributed, to the Cognizant DOE Office 
(CDO) assigned lead office responsibility for all DOE indirect cost 
matters relating to a particular contractor, by the Office of Policy, 
within the Headquarters procurement organization.
    9. Subsection 942.705-4 is revised to read as follows:


942.705-4  State and local governments.

    A list of cognizant agencies for State/local government 
organizations is periodically published in the Federal Register by the 
Office of Management and Budget (OMB). The responsible agencies are 
notified of such assignments. The current negotiated rates for State/
local government activities are distributed to each CDO by the Office 
of Policy, within the Headquarters procurement organization.
    10. Subsection 942.705-5 is revised to read as follows:


942.705-5  Nonprofit organizations other than educational and state and 
local governments.

    OMB Circular A-122 establishes the rules for assigning cognizant 
agencies for the negotiation and approval of indirect cost rates. The 
Federal agency with the largest dollar value of awards (contracts plus 
Federal financial assistance dollars) will be designated as the 
cognizant agency. There is no published listing of assigned agencies. 
The Office of Policy, within the Headquarters procurement organization, 
distributes to each CDO the rates established by the cognizant agency.

Subpart 942.10  [Removed]

    11. Subpart 942.10 (including 942.1004 and 942.1008) is removed.
    12. Subsection 942.7003-6 is revised to read as follows:


942.7003-6  CAS disclosure statements.

    The audit activity is available and, in accordance with (FAR) 48 
CFR Part 30, Cost Accounting Standards Administration, is responsible 
for making recommendations to the contracting officer as to whether the 
CAS disclosure statement, submitted by the contractor as a condition of 
the contract, adequately describes the actual or proposed cost 
accounting practices and is in compliance with the Cost Accounting 
Standards required under the terms of the contract. The contracting 
officer shall request the auditor to review all Disclosure Statements 
submitted by a contractor or potential contractor.
    13. Section 942.7004 is revised to read as follows:


942.7004  Procedures.

    The Department of Energy Headquarters procurement organization has 
established formal interagency arrangements with the Defense Contract 
Audit Agency (DCAA) and the Department of Health and Human Services, 
Office of Inspector General. Audits are available to contracting 
officers pursuant to terms of these arrangements. DCAA, as the DOE 
cognizant auditor, is responsible for performing audits, when 
requested, for all DOE prime contractors and DOE Management and 
Operating contractors' subcontractors, except where another agency has 
cognizance of a contractor. HHS, for example, has contract audit 
cognizance for most educational institutions.

PART 951--USE OF GOVERNMENT SOURCES BY CONTRACTORS

    14. Section 951.7000 is revised to read as follows:


951.7000  Scope of subpart.

    The General Services Administration (GSA) and, in some cases, the 
Department of Defense (DOD) Military Traffic Management Command 
negotiate agreements with commercial organizations to provide certain 
discounts to contractors traveling under Government cost-reimbursable 
contracts. In the case of discount air fares and hotel/motel room 
rates, the GSA has established agreements with certain airlines and 
thousands of hotels/motels to extend discounts which were previously 
only available to Federal employees on official travel status. DOD has 
negotiated agreements with car rental companies for special rates with 
unlimited mileage which were also to be used by only Federal employees 
on official Government business. GSA Federal Property Management 
Regulations (FPMRs) make these three travel discounts available to 
Government cost-reimbursable contractors at the option of the vendor.
    15. Section 951.7001 is revised to read as follows:


951.7001  General policy.

    Contracting officers will encourage DOE cost-reimbursable 
contractors (CRCs) to use Government travel discounts to the maximum 
extent practicable in accordance with contractual terms and conditions. 
Vendors providing the service may require that Government contractor 
employees furnish a letter of identification signed by the authorizing 
contracting officer. Contracting officers shall provide CRCs with a 
``Standard Letter of Identification'' when appropriate to do so. An 
example of a ``Standard Letter of Identification'' is at 952.251-70(e).

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    16. Subsection 952.251-70 is amended by revising paragraph (a) of 
the clause to read as follows:


952.251-70  Contractor employee travel discounts.

* * * * *
    (a) Contracted airlines. Airlines participating in travel 
discounts are listed in the Federal Travel Directory (FTD), 
published monthly by the General Services Administration (GSA). 
Regulations governing the use of contracted airlines are contained 
in the Federal Travel Regulation (FTR), 41 CFR Part 301-15, Travel 
Management Programs. It stipulates that cost-reimbursable contractor 
employees may obtain discount air fares by use of a Government 
Transportation Request (GTR), Standard Form 1169, cash or personal 
credit cards. When the GTR is used, contracting officers may issue a 
blanket GTR for a period of not less than two weeks nor more than 
one month. In unusual circumstances, such as prolonged or 
international travel, the contracting officer may extend the period 
for which a blanket GTR is effective to a maximum of three months. 
Contractors will ensure that their employees traveling under GTR 
provide the GTR number to the contracted airlines for entry on 
individual tickets and on month-end billings to the contractor.
* * * * *

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    17. 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), sec. 201 of the Federal Civilian 
Employee and Contractor Travel Expenses Act of 1985 (41 U.S.C. 420) 
and sec. 1534 of the Department of Defense Authorization Act, 1986, 
Public Law 99-145 (42 U.S.C. 7256a), as amended.

    18. Subsection 970.3001-1 is revised to read as follows:


970.3001-1  Applicability.

    The provisions of FAR Part 30 and 48 CFR Chapter 99 (FAR Appendix 
B) shall be followed for management and operating contracts.
    19. Subsection 970.3001-2 is revised to read as follows:


970.3001-2  Limitations.

    Cost of money as an element of the cost of facilities capital (CAS 
414) and as an element of the cost of capital assets under construction 
(CAS 417) is not recognized as an allowable cost under contracts 
subject to 48 CFR Part 970 (See 970.3102-3).
    20. Subsection 970.3102-17 is amended by revising paragraph 
(c)(2)(i) and by adding paragraphs (c)(6) and (c)(7) to read as 
follows:


970.3102-17  Travel costs.

* * * * *
    (c) * * *
    (2) * * *
    (i) Federal Travel Regulation prescribed by the General Services 
Administration, for travel in the conterminous 48 United States.
* * * * *
    (6) The maximum per diem rates referenced in paragraph (c)(2) of 
this section generally would not constitute a reasonable daily charge: 
(i) when no lodging costs are incurred; and/or (ii) on partial travel 
days (e.g., same day of departure and return). Appropriate downward 
adjustments from the maximum per diem rates would normally be required 
under these circumstances. While these adjustments need not be 
calculated pursuant to the Federal Travel Regulation, Joint Travel 
Regulations, or Standardized Regulations, they must result in a 
reasonable charge.
    (7) For contracts with State and nonprofit institutions which 
conduct federally sponsored research and related activities, costs 
incurred for lodging, other subsistence, and incidental expenses, are 
subject to the provisions of 970.5204-13(e)(35) NOTE and 970.5204-
14(e)(33) NOTE.
    21. Subsection 970.5204-13 is amended by revising paragraph (e)(35) 
of the clause to read as follows:


970.5204-13  Allowable costs and fixed-fee (Management and Operating 
contracts)

* * * * *
    (e) * * *

    (35) Contractor employee travel costs incurred for lodging, 
meals and incidental expenses which exceed on a daily basis the 
applicable maximum per diem rates in effect for Federal civilian 
employees at the time of travel. When the applicable maximum per 
diem rate is inadequate due to special or unusual situations, the 
contractor may pay employees for actual expenses in excess of such 
per diem rate limitations. To be allowable, however, such payments 
must be properly authorized by an officer or appropriate official of 
the contractor and shall not exceed the higher amounts that may be 
authorized for Federal civilian employees in a similar situation.

    Note: For contracts with State and nonprofit institutions which 
conduct federally sponsored research and related activities, use the 
following clause:

    Contractor employee travel costs incurred for lodging, other 
subsistence, and incidental expenses shall be considered reasonable 
and allowable, to the extent such costs do not exceed charges 
normally allowed by the institution in its regular operations 
pursuant to a disclosed or established institutional policy and the 
amounts claimed are otherwise reasonable and allocable. In the 
absence of an acceptable institutional policy regarding travel 
costs, the rates and amounts established under subchapter I of 
Chapter 57 of Title 5, United States Code, or by the General 
Services Administration, or the President (or his designee) pursuant 
to any provisions of such subchapter shall apply to the agreements 
(41 U.S.C. 420(b)).
* * * * *
    22. Subsection 970.5204-14 is amended by revising paragraph (e)(33) 
of the clause to read as follows:


970.5204-14  Allowable costs and fixed-fee (support contracts).

* * * * *
    (e) * * *

    (33) Contractor employee travel costs incurred for lodging, 
meals and incidental expenses which exceed on a daily basis the 
applicable maximum per diem rates in effect for Federal civilian 
employees at the time of travel. When the applicable maximum per 
diem rate is inadequate due to special or unusual situations, the 
contractor may pay employees for actual expenses in excess of such 
per diem rate limitation. To be allowable, however, such payments 
must be properly authorized by an officer or appropriate official of 
the contractor and shall not exceed the higher amounts that may be 
authorized for Federal civilian employees in a similar situation.

    Note: For contracts with State and nonprofit institutions which 
conduct federally sponsored research and related activities, use the 
following clause:

    Contractor employee travel costs incurred for lodging, other 
subsistence, and incidental expenses shall be considered reasonable 
and allowable, to the extent such costs do not exceed charges 
normally allowed by the institution in its regular operations 
pursuant to a disclosed or established institutional policy and the 
amounts claimed are otherwise reasonable and allocable. In the 
absence of an acceptable institutional policy regarding travel 
costs, the rates and amounts established under subchapter I of 
Chapter 57 of Title 5, United States Code, or by the General 
Services Administration, or the President (or his designee) pursuant 
to any provisions of such subchapter shall apply to the agreements 
(41 U.S.C. 420(b)).
* * * * *
    23. Subsection 970.7104-33 is revised to read as follows:


970.7104-33  Cost Accounting Standards.

    The provisions of (FAR) 48 CFR Part 30 and 48 CFR Chapter 99 (FAR 
Appendix B) shall apply to purchases by management and operating 
contractors.

[FR Doc. 94-26787 Filed 10-28-94; 8:45 am]
BILLING CODE 6450-01-P