[Federal Register Volume 61, Number 154 (Thursday, August 8, 1996)]
[Rules and Regulations]
[Pages 41476-41477]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-20192]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAC 90-41; FAR Case 93-010; Item V]
RIN 9000-AG65


Federal Acquisition Regulation; Legal Proceedings Costs

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

ACTION: Final rule.

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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 make the costs of pre- or 
post-award protests unallowable. An exception to this requirement is 
made for costs incurred to defend against a protest, if the costs are 
incurred pursuant to a written request from the contracting officer. 
This regulatory action was not subject to Office of Management and 
Budget review under Executive Order 12866, dated September 30, 1993, 
and is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: October 7, 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 90-41, FAR case 93-010.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule adds another category of unallowable costs to the 
list at 31.205-47(f). The rule disallows costs in connection with 
protests or the defense against protests of solicitations or contract 
awards, unless the costs of defending against a protest are incurred 
pursuant to a written request from the contracting officer. A proposed 
rule was published in the Federal Register on October 26, 1995, at 60 
FR 54918. Twelve sources submitted public comments. All comments were 
considered in developing the final rule.

[[Page 41477]]

B. Regulatory Flexibility Act

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies to 
this final rule and a Final Regulatory Flexibility Analysis (FRFA) has 
been performed. Although a number of respondents took exception to the 
statement in the Federal Register that the proposed rule ``is not 
expected to have a significant economic impact on a substantial number 
of small entities * * * because most contracts awarded to small 
entities are awarded on a competitive, fixed-price basis and the cost 
principles do not apply'', they added that (1) many contracts awarded 
to small entities are cost-reimbursable and cost principles apply; (2) 
cost principles apply when small entities negotiate annual overhead 
rates; and (3) cost principles apply whenever a cost analysis is 
performed. We agree that cost principles apply in these cases, but the 
analysis concluded that a substantial number of small businesses are 
not involved. In addition, this rule only applies to those small 
entities (1) whose contracts are governed by cost principles; and (2) 
who file a protest, or are defending against a protest. Based on the 
data available, the analysis concludes that the percentage of small 
entities who meet this second criterion is well below 5 percent. A copy 
of the FRFA may be obtained from the FAR Secretariat.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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: August 2, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Part 31 is 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 adding paragraph (f)(8) to read 
as follows:


31.205-47  Costs related to legal and other proceedings.

* * * * *
    (f) * * *
    (8) Protests of Federal Government solicitations or contract 
awards, or the defense against protests of such solicitations or 
contract awards, unless the costs of defending against a protest are 
incurred pursuant to a written request from the cognizant contracting 
officer.
* * * * *
[FR Doc. 96-20192 Filed 8-7-96; 8:45 am]
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