[Federal Register Volume 60, Number 109 (Wednesday, June 7, 1995)]
[Rules and Regulations]
[Pages 30002-30006]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13436]



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DEPARTMENT OF ENERGY

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

RIN 1991-AB12


Independent Research and Development and Bid and Proposal Costs 
Policy

AGENCY: Department of Energy.

ACTION: Final rule.

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

EFFECTIVE DATE: June 7, 1995.

FOR FURTHER INFORMATION CONTACT: Terrence D. Sheppard (202) 586-8174, 
Business and Financial Policy Division (HR-51), Office of Procurement 
and Assistance Management, Department of Energy, 1000 Independence 
Avenue, SW., Washington, D.C., 20585.

SUPPLEMENTARY INFORMATION:

I. Background
II. 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

    DOE published a notice of proposed rulemaking in the Federal 
Register on October 31, 1994. The public comment period closed December 
30, 1994. No public comments were received. However, those portions of 
the proposed rule which addressed reimbursement of contractor travel 
costs (sections 970.3102-17(c)(7), 970.5204-13(e)(35), and 970.5204-
14(e)(33)) have been withdrawn from this final rule, because section 
2191 of the Federal Acquisition Streamlining Act of 1994, Pub. L. 103-
355, repealed the statutory basis for the policy. 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 
[[Page 30003]] 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 a new paragraph (c)(6). 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.
    21. 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. 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 rule meets the requirements of sections 2(a) 
and (b) of Executive Order 12778.

C. Review Under the Regulatory Flexibility Act

    This 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, [[Page 30004]] 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 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 rule revises 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.
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 amended as set forth below.

PART 915--CONTRACTING BY NEGOTIATION

    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).

    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. Section 915.970-8(d) is amended by revising paragraph (d)(1) 
introductory text 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 (FAR Appendix B) 48 CFR 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) 48 CFR 52.216-7, Allowable Cost and 
Payment, [[Page 30005]] 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:


Sec. 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. The authority citation for part 952 continues to read as 
follows:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c); 42 U.S.C. 13524.

    16a. 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).

    [[Page 30006]] 18. Subsection 970.3001-1 is revised to read as 
follows:


970.3001-1  Applicability.

    The provisions of (FAR) 48 CFR part 30 and (FAR Appendix B) 48 CFR 
9904.414 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 paragraph (c)(6) 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)(i) The maximum per diem rates referenced in paragraph (c)(2) of 
this section generally would not constitute a reasonable daily charge:
    (A) When no lodging costs are incurred; and/or
    (B) On partial travel days (e.g., same day of departure and 
return).
    (ii) 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.
    21. Subsection 970.7104-33 is revised to read as follows:


970.7104-33  Cost Accounting Standards.

    The provisions of (FAR) 48 CFR 30 and (FAR Appendix B) 48 CFR 
9904.414 shall apply to purchases by management and operating 
contractors.

[FR Doc. 95-13436 Filed 6-6-95; 8:45 am]
BILLING CODE 6450-01-P