[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Proposed Rules]
[Page 31790]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14839]




[[Page 31789]]


_______________________________________________________________________

Part VI

Department of the Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Part 31



Federal Acquisition Regulation; Costs Related to Legal/Other 
Proceedings; Proposed Rule

  Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / 
Proposed Rules  

[[Page 31790]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAR Case 95-020]
RIN 9000-AH05


Federal Acquisition Regulation; Costs Related to Legal/Other 
Proceedings

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

ACTION: Proposed rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council are proposing to amend the Federal 
Acquisition Regulation (FAR) to clarify the allowability of costs 
incurred for qui tam suits in which the Government does not intervene. 
The rule also clarifies, in FAR 31.205-47(e)(3), that the maximum 
reimbursement contractors can receive for legal costs in connection 
with agreements reached under paragraph (c) of FAR 31.205-47 is 80 
percent of otherwise allowable and allocable incurred costs.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 August 19, 1996 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: --
General Services Administration, FAR Secretariat (MVRS), 18th & F 
Streets, NW, Room 4037, Washington, DC 20405.
    Please cite FAR Case 95-020 in all correspondence related to this 
case.

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 FAR case 95-020.

SUPPLEMENTARY INFORMATION:

A. Background

    This case was initiated to clarify the proper interpretation of 
cost principle FAR 31.205-47 as it relates to qui tam suits not joined 
in by the Government.

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 entities are awarded on a competitive fixed-
price basis, and the cost principles do not apply. 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 95-020) 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 Part 31

    Government procurement.

    Dated: June 6, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, it is proposed that 48 CFR Part 31 be amended as set 
forth below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    1. The authority citation for 48 CFR Part 31 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 31.205-47 is amended by revising paragraph (b) 
introductory text, (c) and (e)(3) to read as follows:


31.205-47  Costs related to legal and other proceedings.

* * * * *
    (b) Costs incurred in connection with any proceeding brought by a 
Federal, State, local or foreign government for violation of, or a 
failure to comply with, law or regulation by the contractor (including 
its agents or employees) or costs incurred in connection with any 
proceeding brought by a third party in the name of the United States 
under the False Claims Act, 31 U.S.C. 3730, are unallowable if the 
result is--
* * * * *
    (c) (1) To the extent that they are not otherwise unallowable, 
costs incurred in connection with any proceeding under paragraph (b) of 
this subsection commenced by the United States that is resolved by 
consent or compromise pursuant to an agreement entered into between the 
contractor and the United States, and which are unallowable solely 
because of paragraph (b) of this subsection, may be allowed to the 
extent specifically provided in such agreement.
    (2) In the event of a settlement of any proceeding brought by a 
third party under the False Claims Act in which the United States did 
not intervene, reasonable costs incurred by the contractor in 
connection with such a proceeding that are not otherwise unallowable by 
regulation or by separate agreement with the United States, may be 
allowed if the contracting officer, in consultation with his or her 
legal advisor, determines that there was very little likelihood that 
the third party would have been successful on the merits.
* * * * *
    (e) * * *
    (3) The percentage of costs allowed does not exceed the percentage 
determined to be appropriate considering the complexity of procurement 
litigation, generally accepted principles governing the award of legal 
fees in civil actions involving the United States as a party, and such 
other factors as may be appropriate. Such percentage shall not exceed 
80 percent. Agreements reached under paragraph (c) of this subsection 
shall be subject to this limitation. If, however, an agreement 
described in subparagraph (c)(1) explicitly states the amount of 
otherwise allowable incurred legal fees and limits the allowable 
recovery to 80 percent or less of the stated legal fees, no additional 
limitation need be applied. The amount of reimbursement allowed for 
legal costs in connection with any proceeding described in subparagraph 
(c)(2) shall be determined by the cognizant contracting officer, but 
shall not exceed 80 percent of otherwise allowable legal costs 
incurred.
* * * * *
[FR Doc. 96-14839 Filed 6-19-96; 8:45 am]
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