[Federal Register Volume 61, Number 221 (Thursday, November 14, 1996)]
[Proposed Rules]
[Page 58452]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-29111]



[[Page 58451]]

_______________________________________________________________________

Part IV

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 31 and 42



Federal Acquisition Regulation; Independent Research and Development/
Bid and Proposal Costs for Fiscal Year 1996 and Beyond; Proposed Rule

  Federal Register / Vol. 61, No. 221 / Thursday, November 14, 1996 / 
Proposed Rules  

[[Page 58452]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 31 and 42

[FAR Case 95-032]
RIN 9000-AH37


Federal Acquisition Regulation; Independent Research and 
Development/Bid and Proposal Costs for Fiscal Year 1996 and Beyond

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 revise the Federal 
Acquisition Regulation (FAR) allowable cost criteria for Independent 
Research and Development (IR&D)/Bid and Proposal (B&P) costs for Fiscal 
Year (FY) 1996 and beyond, by removing the requirements to calculate or 
negotiate a ceiling for IR&D/B&P costs. In addition, the proposed rule 
clarifies that costs in pursuit of certain cooperative arrangements are 
allowable, to the extent they are allocable, reasonable, and not 
otherwise unallowable. 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 January 13, 1997 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 95-032 in all correspondence related to this 
case.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-0692 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 95-032.

SUPPLEMENTARY INFORMATION:

A. Background

    The current FAR IR&D/B&P cost principle covers the limited 
allowability of IR&D/B&P costs for major contractors through a 3-year 
transition period (FY93-95) based on the requirements of Section 802 of 
the FY92-93 National Defense Authorization Act (Pub. L. 102-190). 
Section 802 does not address the allowability of IR&D/B&P costs after 
FY95. The proposed rule removes, for FY96 and beyond, requirements to 
calculate or negotiate a ceiling for IR&D/B&P costs and relies on 
normal allowability, allocability and reasonableness standards.
    The rule deletes certain definitions at FAR 31.205-18(a), major 
portions of 31.205-18(c), and the entire FAR Subpart 42.10, since (1) 
there is no requirement for advance agreement negotiations or formal 
IR&D technical reviews and evaluations after completion of the 
contractors' FY92, and (2) the transition period of limited 
allowability for FY93 through FY95 has ended.
    In addition, the rule amends FAR 31.205-18(e) to clarify that costs 
incurred in pursuit of certain cooperative arrangements are allowable 
to the extent they are allocable, reasonable, and not otherwise 
unallowable.

B. Regulatory Flexibility Act

    The proposed changes to FAR Parts 31 and 42 are 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 use 
simplified acquisition procedures or are awarded on a competitive 
fixed-price basis, and do not require application of the FAR cost 
principles. In addition, this proposed rule applies to only those 
entities that incur IR&D/B&P costs. It removes certain restrictions, 
and relies instead on normal allowability, allocability and 
reasonableness standards. An Initial Regulatory Flexibility Analysis 
has, therefore, not been performed. Comments are invited from small 
businesses and interested parties. Comments from small entities 
concerning the affected FAR subparts also will be considered in 
accordance with Section 610 of the Act. Such comments must be submitted 
separately and should cite 5 U.S.C. 601, et seq. (FAR case 95-032), 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 31 and 42

    Government procurement.

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

    Therefore, it is proposed that 48 CFR Parts 31 and 42 be amended as 
set forth below:
    1. The authority citation for 48 CFR Parts 31 and 42 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).

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

    2. Section 31.205-18 is amended in paragraph (a) by removing 
definitions for ``Contractor'', ``Covered contract'', ``Covered 
segment'', and ``Major contractor''; by revising paragraph (c); and 
adding at the end of paragraph (e) a sentence to read as follows:


31.205-18  Independent research and development and bid and proposal 
costs.

* * * * *
    (c) Allowability. Except as provided in paragraphs (d) and (e) of 
this subsection, or as provided in agency regulations, costs for IR&D 
and B&P are allowable as indirect expenses on contracts to the extent 
that those costs are allocable and reasonable.
* * * * *
    (e) Cooperative arrangements: * * * Costs incurred in pursuit of 
cooperative arrangements are allowable to the extent they are 
allocable, reasonable, and not otherwise unallowable.

PART 42--CONTRACT ADMINISTRATION

Subpart 42.10 [Reserved]

    3. Subpart 42.10 is removed and reserved.

[FR Doc. 96-29111 Filed 11-13-96; 8:45 am]
BILLING CODE 6820-EPD-P