[Federal Register Volume 62, Number 161 (Wednesday, August 20, 1997)]
[Proposed Rules]
[Pages 44249-44250]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-21891]


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

DEPARTMENT OF DEFENSE

48 CFR Part 242

[DFARS Case 97-D012]


Defense Federal Acquisition Regulation Supplement; Contractor 
Insurance/Pension Reviews

AGENCY: Department of Defense (DoD).

ACTION: Proposed rule with request for comments.

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

SUMMARY: The Director of Defense Procurement is proposing to amend the 
Defense Federal Acquisition Regulation Supplement (DFARS) to revise 
guidance pertaining to the conduct of Contractor/Insurance Pension 
Reviews (CIPRs).

DATES: Comments on the proposed rule should be submitted in writing to 
the address shown below on or before October 20, 1997 to be considered 
in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Mr. R. G. Layser, PDUSD 
(A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 20301-
3062. Telefax number (703) 602-0350. Please cite DFARS Case 97-D012 in 
all correspondence related to this issue.

FOR FURTHER INFORMATION CONTACT:
Rick Layser, (703) 602-0131.

SUPPLEMENTARY INFORMATION: 

A. Background

    This proposed rule amends DFARS Subpart 242.73 to more clearly 
define requirements for conducting CIPRs; to eliminate the requirement 
for conducting a CIPR every 2 years; and to require the performance of 
special CIPRs under certain circumstances.

B. Regulatory Flexibility Act

    The 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 
rule applies only to contractors whose annual qualifying sales to the 
Government exceed $40 million, and no small entities are known to meet 
this criteria. An initial regulatory flexibility analysis has, 
therefore, not been performed. Comments are invited from small 
businesses and other interested parties. Comments from small entities 
concerning the affected DFARS subpart also will be considered in 
accordance with 5 U.S.C. 610. Such comments should be submitted 
separately and should cite DFARS Case 97-D012 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
rule imposes no information collection requirements that require Office 
of Management and Budget approval under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 242

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Part 242 is proposed to be amended as follows:
    1. The authority citation for 48 CFR Part 242 continues to read as 
follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 242--CONTRACT ADMINISTRATION

    2. Sections 242.7301 through 242.2703 are revised to read as 
follows:


242.7301  General.

    (a) The administrative contracting officer (ACO) is responsible for 
determining the allowability of

[[Page 44250]]

insurance/pension costs in Government contracts. Insurance/pension 
specialists and the Defense Contract Audit Agency (DCAA) assist ACOs in 
making these determinations by conducting CIPRs.
    (b) CIPRs can take the following forms:
    (1) Initial CIPR. A comprehensive review of the contractor's 
insurance program, pension plan, and other deferred compensation plan. 
Includes a detailed review of the contractor's policies, procedures, 
and practices to determine whether the programs and plans in compliance 
with FAR and Cost Accounting Standards (CAS).
    (2) Special CIPR. A review of the contractor's insurance program, 
pension plan, or other deferred compensation plan where the review 
concentrates on specific significant areas.
    (3) Incurred cost CIPR. A review of costs incurred for insurance, 
pension, or other deferred compensation to determine allowability and 
compliance with FAR, CAS, and contract clauses.
    (4) Forward pricing CIPR. A review of costs proposed for insurance, 
pension, or other deferred compensation to determine allowability and 
compliance with FAR and CAS.
    (c) As the DoD Executive Agency, the Defense Logistics Agency 
provides program management and participates with DCAA in the 
performance of all CIPRs meeting the criteria in 242.7302.
    (d) When special reviews of the contractor's insurance/pension 
program are desired, forward a request to the ACO. The review should be 
performed as part of an ACO-initiated special CIPR or, if possible, as 
part of the incurred cost or forward pricing CIPR if one is scheduled 
to be conducted in the near future.


242.7302  Requirements.

    (a) An initial CIPR shall be conducted within 2 years after a 
contractor first exceeds $40 million of annual qualifying sales to the 
Government. Qualifying sales are sales for which certified cost or 
pricing data were required under 10 U.S.C. 2306a, as implemented in FAR 
15.804, or which are contracts other than firm-fixed-price or fixed-
price with economic price adjustment. Sales include prime contracts, 
subcontracts, and modifications to such contracts and subcontracts.
    (b) A special CIPR shall be performed for all contractors 
(including, but not limited to, those meeting the requirements in 
paragraph (a) of this section), when any of the following circumstances 
exists and it is anticipated that there may be a significant impact on 
Government contract costs:
    (1) Information reveals a deficiency in the contractor's insurance/
pension program.
    (2) The contractor proposes or implements changes in the insurance, 
pension, or deferred compensation plans.
    (3) The contractor is involved in a merger, acquisition, or 
divestiture.
    (4) Follow-up on contractor implementation of prior CIPR 
recommendations is needed.
    (5) Verification of Government recovery of credits is needed.
    (c) Incurred cost and forward pricing CIPRs shall be performed when 
it is determined that participation of an insurance/pension specialist 
is essential to determine cost allowability.


242.7303  Responsibilities.

    (a) The administrative contracting officer is responsible for--
    (1) Determining the need for a CIPR under 242.7302;
    (2) Requesting and scheduling the reviews with the appropriate 
Defense Logistics Agency activity;
    (3) Notifying the contractor of the proposed date and purpose of 
the review, and obtaining any preliminary data needed by the insurance/
pension specialist and DCAA;
    (4) Reviewing the CIPR report, advising the contractor of the 
results, and asking the contractor to submit any significant changes in 
insurance/pension plans for review and acceptance prior to making the 
change;
    (5) Providing other interested contracting officers copies of 
documents related to the CIPR;
    (6) Ensuring adequate follow-up on all CIPR recommendations; and
    (7) Performing contract administration responsibilities related to 
Cost Accounting Standards administration as delineated in FAR subparts 
30.2 and 30.6.
    (b) The insurance/pension specialist responsible for--
    (1) Preparing and maintaining the schedule of CIPRs to be performed 
during the next 12 months and providing the military departments and 
DCAA a copy of the schedule;
    (2) Heading the team that conducts the review (the team leader). 
Another party may be designated as the team leader when agreed to by 
both the insurance/pension specialist and that party. The team leader 
is responsible for--
    (i) Maintaining complete documentation for CIPR reports;
    (ii) To the extent possible, resolving discrepancies between adult 
reports and CIPR draft reports prior to releasing the final CIPR 
report;
    (iii) Preparing and distributing the final CIPR report;
    (iv) Providing the final audit report and/or the insurance/pension 
specialist's report as an attachment to the CIPR report; and
    (v) Preparing a draft letter for the administrative contracting 
officer's use in notifying the contractor of CIPR results; and
    (3) When requested, advising administrative contracting officers 
and other Government representatives concerning contractor insurance/
pension matters.
    (c) DCAA is responsible for--
    (1) Participating as a member of the CIPR team;
    (2) Submitting information and advice to the team based on analysis 
of the contractor's books, accounting records, and other related data;
    (3) Issuing an audit report to the insurance/pension specialist for 
incorporation into the final CIPR report; and
    (4) Performing contract audit responsibilities related to Cost 
Accounting Standards administration as delineated in FAR subparts 30.2 
and 30.6.

[FR Doc. 97-21891 Filed 8-19-97; 8:45 am]
BILLING CODE 5000-04-M