[Federal Register Volume 62, Number 236 (Tuesday, December 9, 1997)]
[Rules and Regulations]
[Pages 64915-64916]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-31816]


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

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 42, and 52

[FAC 97-03; FAR Case 95-017; Item III]
RIN 9000-AG87


Federal Acquisition Regulation; Final Overhead Settlement

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

ACTION: Final rule.

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

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule amending 
the Federal Acquisition Regulation (FAR) to improve the process of 
final settlement of contractor overhead rates. 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: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS 
Building, Washington, DC 20405, (202) 501-4755, for information 
pertaining to status or publication schedules. For clarification of 
content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-
3775. Please cite FAC 97-03, FAR case 95-017.

SUPPLEMENTARY INFORMATION:

A. Background

    This final rule amends FAR Parts 4, 42, and 52 to improve the 
process of final settlement of contractor indirect cost rates under 
cost-reimbursement contracts by--
     Extending the time period within which a contractor must 
submit an indirect cost rate proposal from 90 days to 6 months after 
the end of the contractors fiscal year;
     Permitting extensions to the 6-month time period for 
exceptional circumstances only; and
     Providing a specific reference to the Defense Contract 
Audit Agency pamphlet that contains guidance on what generally 
constitutes an adequate final indirect cost rate proposal and 
supporting data.
    A proposed rule was published in the Federal Register on July 29, 
1996 (61 FR 39518). Fourteen sources submitted comments. All comments 
were considered in the development of the final rule.

B. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 
do not require settlement of contractor indirect cost rates.

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 Parts 4, 42, and 52

    Government procurement.

    Dated: December 1, 1997.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Parts 4, 42, and 52 are amended as set forth 
below:
    1. The authority citation for 48 CFR Parts 4, 42, 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 4--ADMINISTRATIVE MATTERS


4.703  [Amended]

    2. Section 4.703 is amended in paragraph (b)(3) by removing ``90-
day'' each time it appears (twice).

PART 42--CONTRACT ADMINISTRATION

    3. Section 42.705-1 is amended by revising paragraph (b)(1) to read 
as follows:


42.705-1  Contracting officer determination procedure.

* * * * *
    (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 and to the cognizant auditor a final indirect 
cost rate proposal. The required content of the proposal and supporting 
data will vary depending on such factors as business type, size, and 
accounting system capabilities. The contractor, contracting officer, 
and auditor must work together to make the proposal, audit, and 
negotiation process as efficient as possible. Accordingly, each 
contractor shall submit an adequate proposal to the contracting officer 
and auditor within the 6-month period following the expiration of each 
of its fiscal years. Reasonable extensions, for exceptional 
circumstances only, may be requested in writing by the contractor and 
granted in writing by the contracting officer. A contractor shall 
support its proposal with adequate supporting data. For guidance on 
what generally constitutes an adequate final indirect cost rate 
proposal and supporting data, contractors should refer to the Model 
Incurred Cost Proposal in Chapter 5 of the Defense Contract Audit 
Agency Pamphlet (DCAAP) No. 7641.90, Information for Contractors. The 
Model can be obtained by--
    (i) Contacting Internet address http://www.dtic.mil/dcaa;
    (ii) Sending a telefax request to Headquarters DCAA, ATTN: CMO, 
Publications Officer, at (703) 767-1061;
    (iii) Sending an E-Mail request to *[email protected]; or

[[Page 64916]]

    (iv) Writing to: Headquarters DCAA, ATTN: CMO, Publications 
Officer, 8725 John J. Kingman Road, Suite 2135, Fort Belvoir, VA 22060-
6219.
* * * * *
    4. Section 42.705-2 is amended by revising paragraph (b)(1) to read 
as follows:


42.705-2  Auditor determination procedures.

* * * * *
    (b) Procedures. (1) The contractor shall submit to the cognizant 
contracting officer and auditor a final indirect cost rate proposal in 
accordance with 42.705-1(b)(1).
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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


52.216-7  Allowable Cost and Payment.

* * * * *
Allowable Cost and Payment (Feb 1998)
* * * * *
    (d) * * *
    (2)(i) The Contractor shall submit an adequate final indirect cost 
rate proposal to the Contracting Officer and auditor within the 6-month 
period following the expiration of each of its fiscal years. Reasonable 
extensions, for exceptional circumstances only, may be requested in 
writing by the Contractor and granted in writing by the Contracting 
Officer. The Contractor shall support its proposal with adequate 
supporting data.
    (ii) The proposed rates shall be based on the Contractor's actual 
cost experience for that 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.
* * * * *
    6. Section 52.216-13 is amended by revising the date of the clause; 
in the introductory text of paragraph (c) by removing the word 
``below'' and inserting ``of this clause''; and by revising paragraph 
(c)(2) to read as follows:


52.216-13  Allowable Cost and Payment--Facilities.

* * * * *
Allowable Cost and Payment Facilities (Feb 1998)
* * * * *
    (c) * * *
    (2)(i) The Contractor shall submit an adequate final indirect cost 
rate proposal to the Contracting Officer and auditor within the 6-month 
period following the expiration of each of its fiscal years. Reasonable 
extensions, for exceptional circumstances only, may be requested in 
writing by the Contractor and granted in writing by the Contracting 
Officer. The Contractor shall support its proposal with adequate 
supporting data.
    (ii) The proposed rates shall be based on the Contractor's actual 
cost experience for that 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.
* * * * *
    7. Section 52.216-15 is amended by revising the date of the clause 
and paragraph (b) to read as follows:


52.216-15  Predetermined Indirect Cost Rates.

* * * * *
Predetermined Indirect Cost Rates (Feb 1998)
* * * * *
    (b)(1) The Contractor shall submit an adequate final indirect cost 
rate proposal to the Contracting Officer and auditor within the 6-month 
period following the expiration of each of its fiscal years. Reasonable 
extensions, for exceptional circumstances only, may be requested in 
writing by the Contractor and granted in writing by the Contracting 
Officer. The Contractor shall support its proposal with adequate 
supporting data.
    (2) The proposed rates shall be based on the Contractor's actual 
cost experience for that 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.
* * * * *
[FR Doc. 97-31816 Filed 12-8-97; 8:45 am]
BILLING CODE 6820-EP-P