[Federal Register Volume 61, Number 239 (Wednesday, December 11, 1996)]
[Proposed Rules]
[Pages 65306-65310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-31405]



[[Page 65305]]

_______________________________________________________________________

Part V

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Parts 15, 42, 46, 47 and 52



Federal Acquisition Regulation; Changes in Contract Administration and 
Audit Cognizance; Proposed Rule

  Federal Register / Vol. 61, No. 239 / Wednesday, December 11, 1996 /  
Proposed Rules  

[[Page 65306]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 15, 42, 46, 47 and 52

[FAR Case 95-022]
RIN 9000-AH27


Federal Acquisition Regulation; Changes in Contract 
Administration and Audit Cognizance

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 add policies and procedures for 
assigning and performing contract audit services and to clarify the 
policy for assigning or delegating responsibility for establishing 
forward pricing and billing rates, and 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 February 10, 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.
    E-mail comments submitted over Internet should be addressed to: www.arnet.gov">95-
022@www.arnet.gov.
    Please cite FAR case 95-022 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 95-022.

SUPPLEMENTARY INFORMATION:

A. Background

    In February 1994, the Office of Federal Procurement Policy formed a 
Contract Audit Committee. The committee was divided into subcommittees. 
This case implements recommendations of Subcommittee One to address 
civilian agencies' contract administration and audit practices. The 
rule amends FAR Parts 15, 42, 46, 47 and 52 to add policies and 
procedures for assigning and performing contract audit services and to 
clarify the policy for assigning or delegating responsibility for 
establishing forward pricing and billing rates, and final indirect cost 
rates.

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 the 
proposed rule affects primarily internal Government operating 
procedures. An Initial Regulatory Flexibility Analysis has, therefore, 
not been performed. Comments from small entities concerning the 
affected FAR parts 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 95-022), 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 15, 42, 46, 47 and 52

    Government procurement.

    Dated: December 4, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, it is proposed that 48 CFR Parts 15, 42, 46, 47 and 52 
be amended as set forth below:
    1. The authority citation for 48 CFR Parts 15, 42, 46, 47 and 52 
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 15--CONTRACTING BY NEGOTIATION

    2. Section 15.809 is amended by revising the section heading and 
the last sentence in paragraph (a) to read as follows:


15.809  Forward pricing rate agreements.

    (a) * * * The cognizant Federal agency (see 42.003) shall determine 
whether an FPRA will be established.
* * * * *

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    3. Part 42 heading is revised to read as shown above.
    4. Section 42.000 is revised and placed in a new subpart 42.0, 
which is added to read as set forth below, and subparts 42.1 and 42.2 
are revised to read as follows:

Sec.

Subpart 42.0--General

42.000  Scope of part.
42.001  Definitions.
42.002  Interagency agreements.
42.003  Cognizant Federal agency.

Subpart 42.1--Contract Audit Services

42.101  Contract audit responsibilities.
42.102  Assignment of audit services.
42.103  Audit services directory.

Subpart 42.2--Contract Administration Services

42.201  Contract administration responsibilities.
42.202  Assignment of contract administration.
42.203  Contract administration services directory.

Subpart 42.0--General


42.000  Scope of part.

    This part prescribes policy and procedures for assigning and 
performing contract administration and contract audit services.


42.001  Definitions.

    As used in this part--
    Cognizant audit agency means the agency responsible for performing 
all required contract audit services at a business unit (as defined in 
31.001).
    Cognizant Federal agency means the Federal agency that on behalf of 
all Federal agencies is responsible for establishing final indirect 
cost rates and forward pricing rates, if applicable, and administering 
cost accounting standards for all contracts in a business unit.


42.002  Interagency agreements.

    (a) Agencies shall avoid duplicate audits, reviews, inspections, 
and examinations of contractors or subcontractors, by more than one 
agency, through the use of interagency agreements (see OFPP Policy 
Letter 78-4, Field Contract Support Cross-Servicing Program).

[[Page 65307]]

    (b) Subject to the fiscal regulations of the agencies, the 
requesting agency may reimburse the servicing agency for rendered 
services in accordance with the Economy Act of 1932 (31 U.S.C. 1535). 
The hourly rate established under the interagency agreement between the 
Department of Defense and the National Aeronautics and Space 
Administration may be used by other agencies to reimburse the Defense 
Contract Audit Agency for audit services.
    (c) When an interagency agreement is established, the agencies are 
encouraged to consider establishing procedures for the resolution of 
issues that may arise under the agreement.


42.003  Cognizant Federal agency.

    (a) Normally, when a contractor has contracts with more than one 
agency, the agency with the largest dollar amount of negotiated 
contracts should be the cognizant Federal agency.
    (b) Once a Federal agency assumes cognizance for a contractor, it 
shall remain cognizant for at least three years to ensure continuity 
and ease of administration. If, at the end of the three years, another 
agency has the largest dollar amount of negotiated contracts, the two 
agencies shall coordinate and determine which will assume cognizance.

Subpart 42.1-Contract Audit Services


42.101  Contract audit responsibilities.

    (a) The auditor is responsible for submitting information and 
advice to the requesting activity based on the auditor's analysis of 
the contractor's financial and accounting records or other related data 
as to the acceptability of the contractor's incurred and estimated 
costs, as well as for reviewing the financial and accounting aspects of 
the contractor's cost control systems. The auditor is also responsible 
for performing analyses and reviews which require access to the 
contractor's financial and accounting records supporting proposed and 
incurred costs.
    (b) The Defense Contract Audit Agency (DCAA) is designated as the 
Government cognizant audit agency for ``for-profit'' organizations and 
those ``not-for-profit'' organizations identified in Attachment C to 
OMB Circular A-122, Cost Principles for Nonprofit Organizations.


42.102  Assignment of audit services.

    (a) As provided in agency procedures or interagency agreement, 
contracting officers may request audit services directly from the 
cognizant audit agency cited in the Directory of Federal Contract Audit 
Offices. The audit request should include a suspense date and identify 
any information needed by the contracting officer.
    (b) The cognizant audit agency may decline requests for services in 
accordance with interagency agreements on a case-by-case basis if 
resources of the audit agency are inadequate to accomplish the tasks.


42.103  Audit services directory.

    (a) DCAA maintains and distributes the Directory of Federal 
Contract Audit Offices. The directory identifies cognizant audit 
offices and the contractors over which they have cognizance. Changes to 
audit cognizance are to be provided to DCAA for updating the directory.
    (b) Agencies may obtain a copy of the directory or obtain 
information concerning cognizant audit offices by contacting the 
Defense Contract Audit Agency, ATTN: CMO, Publications Officer, 8725 
John J. Kingman Road, Suite 2135, Fort Belvoir, Virginia 22060-6219.

Subpart 42.2--Contract Administration Services


42.201  Contract administration responsibilities.

    (a) For each contract assigned for administration, the contract 
administration office (CAO) (see definition at 2.101) shall----
    (1) Perform the functions listed in 42.302(a) to the extent that 
they apply to the contract, except for the functions specifically 
withheld;
    (2) Perform the functions listed in 42.302(b) only when and to the 
extent specifically authorized by the contracting officer; and
    (3) Request supporting contract administration under 42.202(e), and 
(f) when it is required.
    (b) The Defense Logistics Agency, Defense Contract Management 
Command (DCMC), Fort Belvoir, Virginia, and certain civilian agencies 
offer a wide variety of contract administration and support services to 
other agencies.


42.202  Assignment of contract administration.

    (a) Delegating functions. As provided in agency procedures, 
contracting officers may delegate contract administration or 
specialized support services either through interagency agreements, or 
by direct request to the cognizant CAO listed in the Federal Directory 
of Contract Administration Services Components. The delegation should 
include----
    (1) The name and address of the CAO designated to perform the 
administration (this information is also to be entered in the 
contract);
    (2) Any special instructions, including any specific authorization 
to perform functions listed in 42.302(b);
    (3) A copy of the contract to be administered; copies of all 
contracting agency regulations or directives that are--
    (i) Incorporated into the contract by reference, or
    (ii) Otherwise necessary to administer the contract, unless copies 
have been provided previously.
    (b) Special instructions. The contracting officer shall also advise 
the CAO and the contractor (and other activities as appropriate) of any 
functions withheld or additional functions delegated in the special 
instructions under paragraph (a)(2) of this section.
    (c) Delegating additional functions. For individual contracts or 
groups of contracts, the contracting office may delegate to the CAO 
functions not listed in 42.302; provided that--
    (1) Prior coordination with the CAO ensures the availability of 
required resources;
    (2) In the case of authority to issue orders under provisioning 
procedures in existing contracts and under basic ordering agreements 
for items and services identified in the schedule, the head of the 
contracting activity or designee approves the delegation; and
    (3) The delegation does not require the CAO to undertake new or 
follow-on acquisitions.
    (d) Rescinding functions. The contracting officer of the requesting 
agency may rescind or recall a contract or contract administration 
function delegated to another agency for administration, except for 
cost accounting standards, and negotiation of forward pricing rates and 
indirect cost rates (see 42.003).
    (e) Secondary delegations of contract administration. (1) A CAO 
delegated administration of a contract under 42.202(a) or (c), or a 
contracting office retaining administration, may request supporting 
contract administration from the CAO cognizant of the contractor 
location where performance of specific contract administration 
functions is required. The request shall--
    (i) Be in writing;
    (ii) Clearly state the specific functions to be performed; and
    (iii) Be accompanied by a copy of pertinent contractual and other 
necessary documents.
    (2) The prime contractor is responsible for managing its 
subcontracts. The CAO's review of subcontracts is normally limited to

[[Page 65308]]

evaluating the prime contractor's management of them (see part 44). 
Therefore, supporting contract administration shall not be used for 
subcontracts unless--
    (i) The Government would otherwise incur undue cost;
    (ii) Successful completion of the prime contract is threatened; or
    (iii) It is authorized under paragraph (f) of this section or 
elsewhere in this part.
    (f) Special surveillance. For major system acquisitions (see part 
34), the contracting officer may designate certain high risk or 
critical subsystems or components for special surveillance in addition 
to requesting supporting contract administration. This surveillance 
shall be conducted in a manner consistent with the policy of calling 
upon the cognizant CAO to perform contract administration functions at 
a contractor's facility (see 42.002).
    (g) Refusing delegation of contract administration. An agency may 
decline a request for contract administration services on a case-by-
case basis if resources of the agency are inadequate to accomplish the 
tasks.


42.203  Contract administration services directory.

    The Defense Contract Management Command (DCMC) maintains and 
distributes the Federal Directory of Contract Administration Services 
Components. The Directory lists the name and telephone number of those 
DCMC and civilian agency offices which offer contract administration 
services within designated geographic areas and at specified contractor 
plants. Federal agencies may obtain a free copy of the Directory on CD-
ROM by writing to HQ Defense Logistics Agency, Attn: DLA-DASC-WP, 8725 
John J. Kingman Road, Fort Belvoir, Virginia 22060.
    5.-7. Section 42.301 is revised to read as follows:


42.301  General.

    When a contract is assigned for administration under Subpart 42.2, 
the contract administration office (CAO) shall perform contract 
administration functions in accordance with this part, the contract 
terms and, unless otherwise agreed to in an interagency agreement (see 
42.002), the applicable regulations of the servicing agency.
    8. Section 42.302 is amended by revising paragraphs (a) 
introductory text, (a)(9), (a)(11) introductory text, (a)(11)(iv), 
(a)(13), (a)(20), (a)(29), (a)(61) (a)(63) and (b) introductory text to 
read as follows:


42.302  Contract administration functions.

    (a) The following contract administration functions are normally 
delegated to a CAO. The contracting officer may retain any of these 
functions, except those in paragraphs (a) (5), (9), and (11) that 
cannot be retained by the awarding agency unless it is the cognizant 
Federal agency (see 42.001).
* * * * *
    (9) Establish final indirect cost rates and billing rates for those 
contractors meeting the criteria for contracting officer determination 
in subpart 42.7 (see 42.001).
* * * * *
    (11) In connection with Cost Accounting Standards (see 30.601, 
42.001, and 48 CFR chapter 99 (FAR Appendix B))----
* * * * *
    (iv) Negotiate price adjustments and execute supplemental 
agreements under the Cost Accounting Standards clauses at 52.230-2, 
52.230-3, 52.230-4, 52.230-5, and 52.230-6.
* * * * *
    (13) Make payments on assigned contracts when prescribed in agency 
acquisition regulations.
* * * * *
    (20) For classified contracts, administer those portions of the 
applicable industrial security program delegated to the CAO (see 
subpart 4.4).
* * * * *
    (29) Issue contract modifications requiring the contractor to 
provide packing, crating, and handling services on excess Government 
property. When the CAO determines it to be in the Government's 
interests, the services may be secured from a contractor other than the 
contractor in possession of the property.
* * * * *
    (61) Obtain contractor proposals for any contract price adjustments 
resulting from amended shipping instructions. CAOs shall review all 
amended shipping instructions on a periodic, consolidated basis to 
assure that adjustments are timely made. Except when the CAO has 
settlement authority, the CAO shall forward the proposal to the 
contracting officer for contract modification. The CAO shall not delay 
shipments pending completion and formalization of negotiations of 
revised shipping instructions.
* * * * *
    (63) Cancel unilateral purchase orders when notified of 
nonacceptance by the contractor. The CAO shall notify the contracting 
officer when the purchase order is canceled.
* * * * *
    (b) The CAO shall perform the following functions only when and to 
the extent specifically authorized by the contracting office:
* * * * *
    9. Section 42.602 is amended by revising paragraphs (c)(2) and (d) 
to read as follows:


42.602  Assignment and location.

* * * * *
    (c) * * *
    (2) When the locations are under the contract administration 
cognizance of more than one agency, the agencies concerned shall agree 
on the responsible agency (normally on the basis of the agency with the 
largest dollar balance of affected contracts). In such cases, agencies 
may sometimes also consider geographic location.
    (d) The directory of contract administration components referenced 
in 42.203 includes a listing of CACO's and the contractors for which 
they are assigned responsibility.
    10. Section 42.603(a) is revised to read as follows:


42.603  Responsibilities.

    (a) The CACO shall perform, on a corporate-wide basis, the contract 
administration functions as designated by the responsible agency. 
Typical CACO functions include--
    (1) The determination of final indirect cost rates for cost-
reimbursement contracts,
    (2) Establishment of advance agreements or recommendations on 
corporate/home office expense allocations, and
    (3) Administration of Cost Accounting Standards (CAS) applicable to 
corporate-level and corporate-directed accounting practices.
* * * * *
    11. Section 42.701 is amended by revising definitions for 
``Business unit'' and ``Indirect cost'' and by adding in alphabetical 
order a definition for ``Forward pricing rate agreement''. The revised 
and added text reads as follows:


42.701  Definitions.

* * * * *
    Business unit has the same meaning as defined in 31.001.
* * * * *
    Forward pricing rate agreement has the same meaning as defined in 
15.801.
    Indirect cost has the same meaning as defined in 31.203.
* * * * *
    12. Section 42.703-1 is amended by revising paragraph (a), and by 
removing paragraph (c) introductory text, and revising (c)(1) to read 
as follows:

[[Page 65309]]

42.703-1  Policy.

    (a) A single agency (see 42.705-1) shall be responsible for 
establishing final indirect cost rates for each business unit. These 
rates shall be binding on all agencies and their contracting offices, 
unless otherwise specifically prohibited by statute.
* * * * *
    (c)(1) Final indirect cost rates shall be used for contract 
closeout for a business unit unless the quick-closeout procedure in 
42.708 is used. These final rates shall be binding for all cost-
reimbursement contracts at the business unit, subject to any specific 
limitation in a contract or advance agreement; and
* * * * *
    13. Section 42.704 is amended by revising paragraphs (a), (b), and 
(c) to read as follows:


42.704  Billing rates.

    (a) The contracting officer (or cognizant Federal agency official) 
or auditor responsible under 42.705 for establishing the final indirect 
cost rates ordinarily shall also be responsible for determining the 
billing rates.
    (b) The contracting officer (or cognizant Federal agency official) 
or auditor shall establish billing rates on the basis of information 
resulting from recent review, previous rate audits or experience, or 
similar reliable data or experience of other contracting activities. In 
establishing billing rates, the contracting officer (or cognizant 
Federal agency official) or auditor should ensure that they are as 
close as possible to the final indirect cost rates anticipated for the 
contractor's fiscal period, as adjusted for any unallowable costs. When 
the contracting officer (or cognizant Federal agency official) or 
auditor determines that the dollar value of contracts requiring use of 
billing rates does not warrant submission of a detailed billing rate 
proposal, the billing rates may be established by making appropriate 
adjustments from the prior year's indirect cost experience to eliminate 
unallowable and nonrecurring costs and to reflect new or changed 
conditions.
    (c) Once established, billing rates may be prospectively or 
retroactively revised by mutual agreement of the contracting officer 
(or cognizant Federal agency official) or auditor and the contractor at 
either party's request, to prevent substantial overpayment or 
underpayment. When agreement cannot be reached, the billing rates may 
be unilaterally determined by the contracting officer (or cognizant 
Federal agency official.
* * * * *
    14. Section 42.705-1 is amended by revising paragraphs (a) 
introductory text, (a) (1), (3) and (4) and (b) (1) and (2) to read as 
follows:


42.705-1  Contracting officer determination procedure.

    (a) Applicability and responsibility. Contracting officer 
determination shall be used for the following, with the indicated 
cognizant contracting officer (or cognizant Federal agency official) 
responsible for establishing the final indirect cost rates:
    (1) Business units of a multi-divisional corporation under the 
cognizance of a corporate administrative contracting officer (CACO) 
(see subpart 42.6), with that officer responsible for the 
determination, assisted, as required, by the administrative contracting 
officers, assigned to the individual business units. Negotiations may 
be conducted on a coordinated or centralized basis, depending upon the 
degree of centralization within the contractor's organization.
* * * * *
    (3) For business units not included in paragraph (a)(1) or (a)(2) 
of this subsection, the contracting officer (or cognizant Federal 
agency official) will determine whether the rates will be contracting 
officer or auditor determined.
    (4) Educational institutions (see 42.705-3.).
* * * * *
    (b) Procedures. (1) In accordance with the Allowable Cost and 
Payment clause at 52.216-7 or 52.216-13, the contractor shall submit to 
the contracting officer (or cognizant Federal agency official) and, if 
required by agency procedures, to the cognizant auditor a final 
indirect cost rate proposal reflecting actual cost experience during 
the covered period, together with supporting cost or pricing data.
    (2) The auditor shall submit to the contracting officer an advisory 
audit report--
    (i) Identifying any relevant advance agreement or restrictive terms 
of specific contracts, and
    (ii) Including the information required by 15.805-5(e) (1) and (2).
* * * * *
    15. Section 42.705-2 is amended by revising paragraphs (a)(2) 
introductory teft, (a)(2)(iv), (b)(2) introductory text, and (b)(2) 
(i), (ii), and (iv) to read as follows:


42.705-2  Auditor determination procedure.

    (a) *  *  *
    (2) In addition, auditor determination may be used for business 
units that are covered in 42.705-1(a) when the contracting officer (or 
cognizant Federal agency official) and auditor agree that the indirect 
costs can be settled with little difficulty and any of the following 
circumstances apply:
* * * * *
    (iv) The contracting officer (or cognizant Federal agency official) 
and auditor agree that special circumstances require auditor 
determination.
    (b) Procedures. (1) *  *  *
    (2) Upon receipt of proposal the auditor shall--
    (i) Audit the proposal and seek agreement on indirect costs with 
the contractor;
    (ii) Prepare an indirect cost rate agreement conforming to the 
requirements of the contracts. The agreement shall be signed by the 
contractor and the auditor;
* * * * *
    (iv) If agreement with the contractor is not reached, forward the 
audit report to the contracting officer (or cognizant Federal agency 
official) identified in the Directory of Contract Administration 
Services Components (see 42.203), who will then resolve the 
disagreement; and
* * * * *

PART 46--QUALITY ASSURANCE

    16. Section 46.103 is amended by revising paragraph (d) to read as 
follows:


46.103  Contracting office responsibilities.

* * * * *
    (d) When contract administration is retained (see 42.201), 
verifying that the contractor fulfills the contract quality 
requirements; and
* * * * *
    17. Section 46.104 is amended by revising paragraph (f) to read as 
follows:


46.104  Contract administration office responsibilities.

* * * * *
    (f) Recommend any changes necessary to the contract, 
specifications, instructions, or other requirements that will provide 
more effective operations or eliminate unnecessary costs (see 
46.103(c)).
    18. Section 46.502 is amended by revising the second sentence to 
read as follows:


46.502  Responsibility for acceptance.

    *  *  * When this responsibility is assigned to a cognizant 
contract administration office or to another agency (see 42.202(g)), 
acceptance by that office or agency is binding on the Government.

[[Page 65310]]

47.301-3  Using the Defense Transportation System (DTS)

    19. Section 47.301-3 is amended in paragraph (c) by removing 
``42.202(d)'' and inserting ``42.202(a)''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    20. Section 52.216-7 is amended by revising the clause date and the 
first sentence of paragraph (d)(2) to read as follows:


52.216-7  Allowable Cost and Payment.

* * * * *

Allowable Cost and Payment (Date)

* * * * *
    (d) Final indirect cost rates. (1) *  *  *
    (2) The Contractor shall, within 90 days after the expiration of 
each of its fiscal years, or by a later date approved by the 
Contracting Officer, submit to the cognizant Contracting Officer (or 
cognizant Federal agency official) responsible for negotiating its 
final indirect cost rates and, if required by agency procedures, to 
the cognizant audit activity proposed final indirect cost rates for 
that period and supporting cost data specifying the contract and/or 
subcontract to which the rates apply. *  *  *
* * * * *
(End of clause)

    21. Section 52.216-13 is amended by revising the clause date and 
paragraph (c)(2) to read as follows:


52.216-13  Allowable Cost and Payment--Facilities.

* * * * *

Allowable Cost and Payment--Facilities (Date)

* * * * *
    (c) Negotiated indirect costs. (1) *  *  *
    (2) The Contractor shall, within 90 days after the expiration of 
each of its fiscal years, or by a later date approved by the 
Contracting Officer, submit to the Contracting Officer (or cognizant 
Federal agency official) and to the cognizant audit activity 
proposed final indirect cost rates for that period and supporting 
cost and data specifying the contract and/or subcontract to which 
the rates apply. The proposed rates shall be based on the 
Contractor's actual cost experience for the period. The appropriate 
Government representative and the Contractor shall establish the 
final indirect cost rates as promptly as practical after receipt of 
the Contractor's proposal.
* * * * *
(End of clause)

[FR Doc. 96-31405 Filed 12-10-96; 8:45 am]
BILLING CODE 6820-EP-D