[Federal Register Volume 61, Number 103 (Tuesday, May 28, 1996)]
[Proposed Rules]
[Pages 26766-26767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-13247]



      

[[Page 26765]]


_______________________________________________________________________

Part VI

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 42 and 52



Federal Acquisition Regulation; Final Indirect Cost Rates; Proposed 
Rule

  Federal Register / Vol. 61, No. 103 / Tuesday, May 28, 1996 / 
Proposed Rules  

[[Page 26766]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 42 and 52

[FAR Case 95-018]
RIN 9000-AG88


Federal Acquisition Regulation; Final Indirect Cost Rates

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

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to amend the Federal 
Acquisition Regulation (FAR) to revise the procedures relating to final 
indirect cost rates. This regulatory action was not subject to Office 
of Management and Budget review under Executive Order 12866, dated 
September 30, 1993. This is not a major rule under 5 U.S.C. 804.

DATES: Comments should be submitted on or before July 29, 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, Washington, DC 20405.
    Please cite FAR case 95-018 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: Ms. Linda Klein at (202) 501-3775 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 FAR case 95-018.

SUPPLEMENTARY INFORMATION:

A. Background

    This proposed rule amends FAR Subpart 42.7 to permit, with certain 
restrictions, increased interim payments to contractors under certain 
circumstances. FAR 42.704 is amended to permit, with certain 
restrictions, contractor use of billing rates contained in certified 
final indirect cost rate proposals. The clauses at FAR 52.216-7 and 
52.216-13 are revised to establish a timeframe for contractor 
submission of final vouchers. The clauses at 52.216-8 through 52.216-10 
are revised to require release of 75 percent of all fee withholds under 
physically completed cost-type contracts, and to permit release of 90 
percent of all withholds in certain circumstances.

B. Regulatory Flexibility Act

    This proposed rule is not expected to have a significant economic 
impact on a substantial number of small entities within the meaning of 
the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., because most 
contracts awarded to small business are awarded on the basis of firm-
fixed-price, and settlement of final indirect cost rates is, therefore, 
not an issue. Furthermore, any impact of this rule would be to reduce 
cost and administrative burdens on both contractors and Government. An 
Initial Regulatory Flexibility Analysis has, therefore, not been 
performed. Comments from small entities concerning the affected FAR 
subpart will be considered in accordance with 5 U.S.C. 610 of the Act. 
Such comments must be submitted separately and should cite 5 U.S.C. 601 
et seq. (FAR case 95-018), in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose recordkeeping or information 
collection requirements, or collections of information from offerors, 
contractors, or members of the public which require the approval of the 
Office of Management and Budget under 44 U.S.C. 3501 et seq.

List of Subjects in 48 CFR Parts 42 and 52

    Government procurement.

    Dated: May 21, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, it is proposed that 48 CFR Parts 42 and 52 be amended as 
set forth below:
    1. The authority citation for 48 CFR Parts 42 and 52 continues to 
read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. 2301 to 2331; and 42 
U.S.C. 2473(c).

PART 42--CONTRACTOR ADMINISTRATION

    2. Section 42.704 is amended by adding paragraph (e) to read as 
follows:


42.704  Billing rates.

* * * * *
    (e) When the contractor provides to the cognizant contracting 
officer the certified final indirect cost rate proposal in accordance 
with 42.705-1(b) or 42.705-2(b), the contractor may bill the proposed 
indirect cost rates, as approved by the Government to reflect 
historically disallowed amounts from prior years' audits, until the 
proposal has been audited and settled. The historical decrement will be 
determined by either the cognizant contracting officer (42.705-1(b)) or 
the cognizant auditor (42.705-2(b)).
    3. Section 42.705 is revised to read as follows:


42.705  Final indirect cost rates.

    (a) Final indirect cost rates shall be established on the basis 
of--
    (1) Contracting officer determination procedure (see 42.705-1) or
    (2) Auditor determination procedure (see 42.705-2).
    (b) Within 120 days after settlement of the final indirect cost 
rates, the contractor shall submit a completion invoice or voucher 
reflecting the settled amounts and rates on all contracts physically 
completed in the year covered by the proposal.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    4. Section 52.216-7 is amended by revising the date of the clause; 
redesignating paragraph (d)(4) as (d)(5) and adding a new paragraph 
(d)(4); and revising paragraph (h)(1) to read as follows:


52.216-7  Allowable Cost and Payment.

* * * * *

Allowable Cost and Payment (Date)

    (d) * * *
    (4) Within 120 days after settlement of the final indirect cost 
rates covering the year in which this contract is physically 
complete, the Contractor shall submit a completion invoice or 
voucher to reflect the settled amounts and rates.
* * * * *
    (h) Final payment. (1) Upon approval of a completion invoice or 
voucher submitted by the Contractor in accordance with paragraph 
(d)(4) of this clause, and upon the Contractor's compliance with all 
terms of this contract, the Government shall promptly pay any 
balance of allowable costs and that part of the fee (if any) not 
previously paid.
* * * * *
    5. Section 52.216-8 is amended by revising the date and paragraph 
(b) of the clause to read as follows:


52.216-8  Fixed fee.

* * * * *

Fixed-Fee (Date)

* * * * *
    (b) The Contracting Officer shall release 75 percent of all fee 
withholds under this contract after receipt of the certified final 
indirect cost rate proposal covering the year of physical completion 
of this contract, provided the Contractor has satisfied all other 
contract terms and conditions,

[[Page 26767]]

including the submission of the final patent and royalty reports, 
and is not delinquent in submitting final vouchers on prior years' 
settlements. The Contracting Officer may release up to 90 percent of 
the fee withhold under this contract based on the Contractor's past 
performance related to the submission and settlement of final 
indirect cost rate proposals.

(End of clause)

    6. Section 52.216-9 is amended by revising the date and paragraph 
(c) of the clause to read as follows:


52.216-9  Fixed-Fee--Construction.

* * * * *

Fixed-Fee--Construction (Date)

* * * * *
    (c) The Contracting Officer shall release 75 percent of all fee 
withholds under this contract after receipt of the certified final 
indirect cost rate proposal covering the year of physical completion 
of this contract, provided the Contractor has satisfied all other 
contract terms and conditions, including the submission of the final 
patent and royalty reports, and is not delinquent in submitting 
final vouchers on prior years' settlements. The Contracting Officer 
may release up to 90 percent of the fee withhold under this contract 
based on the Contractor's past performance related to the submission 
and settlement of final indirect cost rate proposals.

    7. Section 52.216-10 is amended by revising the date of the clause; 
and adding two sentences to the end of paragraph (c); to read as 
follows:


52.216-10  Incentive Fee.

* * * * *

Incentive Fee (Date)

* * * * *-
    (c) * * * The Contracting Officer shall release 75 percent of 
all fee withholds under this contract after receipt of the certified 
final indirect cost rate proposal covering the year of physical 
completion of this contract, provided the Contractor has satisfied 
all other contract terms and conditions, including the submission of 
the final patent and royalty reports, and is not delinquent in 
submitting final vouchers on prior years' settlements. The 
Contracting Officer may release up to 90 percent of the fee withhold 
under this contract based on the Contractor's past performance 
related to the submission and settlement of final indirect cost rate 
proposals.
* * * * *

(End of clause)-

    8. Section 52.216-13 is amended by revising the date of the clause; 
redesignating paragraph (c)(4) as (c)(5) and adding a new paragraph 
(c)(4); and by revising the date and paragraph (h) of Alternate I to 
read as follows:


52.216-13  Allowable Cost and Payment--Facilities.

* * * * *

Allowable Cost and Payment--Facilities (Date)

* * * * *-
    (c) * * *-
    (4) Within 120 days after settlement of the final indirect cost 
rate covering the year in which this contract is physically 
complete, the Contractor shall submit a completion invoice or 
voucher to reflect the settled amounts and rates.
* * * * *

(End of clause)-

Alternate I (Date) * * *

* * * * *-
    (h) Final payment. Upon approval of a completion invoice or 
voucher submitted by the Contractor in accordance with paragraph 
(c)(4) of this clause, and upon the Contractor's compliance with all 
terms of this contract, the Government shall promptly pay any 
balance of allowable costs not previously paid.

[FR Doc. 96-13247 Filed 5-24-96; 8:45 am]
BILLING CODE 6820-EP-P