[Federal Register Volume 63, Number 35 (Monday, February 23, 1998)]
[Rules and Regulations]
[Pages 9061-9065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-4303]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 31, 32, 42, 46, 47, and 52

[FAC 97-04; FAR Case 95-022; Item XII]
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: Final rule.

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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 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, and is 
not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: April 24, 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 97-04, FAR case 95-022.

SUPPLEMENTARY INFORMATION:

A. Background

    In February 1994, the Office of Federal Procurement Policy formed a 
Contract Audit Committee. This final rule implements recommendations of 
the committee pertaining to civilian agencies' contract administration 
and audit practices. The rule amends FAR Parts 31, 32, 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 costs rates. A proposed rule was published in the 
Federal Register on December 11, 1996 (61 FR 65306). Forty-two comments 
were received from 19 respondents. All comments were considered in the 
development of this 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 the rule primarily 
pertains to internal Government procedures for performing contract 
administration functions.

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 31, 32, 42, 46, 47, and 52

    Government procurement.

    Dated: February 13, 1998.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Parts 31, 32, 42, 46, 47, and 52 are amended as 
set forth below:
    1. The authority citation for 48 CFR Parts 31, 32, 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 31--CONTRACT COST PRINCIPLES AND PROCEDURES


31.109   [Amended]

    2. Section 31.109 is amended in paragraph (f)(3) by removing the 
word ``cognizant'' and adding ``responsible'' in its place.

PART 32--CONTRACT FINANCING


32.503-3   [Amended]

    3. Section 32.503-3 is amended in paragraph (b)(2) by removing 
``cognizant independent'' and adding ``responsible'' in its place.


32.503-12   [Amended]

    4. Section 32.503-12 is amended in paragraph (c) by removing 
``cognizant independent'' and adding ``responsible'' in its place.

[[Page 9062]]

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

    5. The heading for Part 42 is revised as set forth above.
    6. Section 42.000 and Subparts 42.1 and 42.2 are revised to read as 
follows:
Sec.
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 contract audit services.
42.103  Contract 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.

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


42.000  Scope of part.

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


42.001  Definitions.

    As used in this part--
    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.
    Responsible audit agency means the agency that is responsible for 
performing all required contract audit services at a business unit (as 
defined in 48 CFR 31.001).


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).
    (b) Subject to the fiscal regulations of the agencies and 
applicable interagency agreements, the requesting agency shall 
reimburse the servicing agency for rendered services in accordance with 
the Economy Act (31 U.S.C. 1535).
    (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) For contractors other than educational institutions and 
nonprofit organizations, the cognizant Federal agency normally will be 
the agency with the largest dollar amount of negotiated contracts, 
including options. For educational institutions and nonprofit 
organizations, the cognizant Federal agency is established according to 
Subsection G.11 of OMB Circular A-21, Cost Principles for Educational 
Institutions, and Attachment A, Subsection E.2, of OMB Circular A-122, 
Cost Principles for Nonprofit Organizations, respectively.
    (b) Once a Federal agency assumes cognizance for a contractor, it 
should remain cognizant for at least 5 years to ensure continuity and 
ease of administration. If, at the end of the 5-year period, another 
agency has the largest dollar amount of negotiated contracts, including 
options, the two agencies shall coordinate and determine which will 
assume cognizance. However, if circumstances warrant it and the 
affected agencies agree, cognizance may transfer prior to the 
expiration of the 5-year period.

Subpart 42.1--Contract Audit Services


42.101  Contract audit responsibilities.

    (a) The auditor is responsible for--
    (1) 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;
    (2) Reviewing the financial and accounting aspects of the 
contractor's cost control systems; and
    (3) Performing other analyses and reviews that require access to 
the contractor's financial and accounting records supporting proposed 
and incurred costs.
    (b) Normally, for contractors other than educational institutions 
and nonprofit organizations, the Defense Contract Audit Agency (DCAA) 
is the responsible Government audit agency. However, there may be 
instances where an agency other than DCAA desires cognizance of a 
particular contractor. In those instances, the two agencies shall agree 
on the most efficient and economical approach to meet contract audit 
requirements. For educational institutions and nonprofit organizations, 
audit cognizance will be determined according to the provisions of OMB 
Circular A-133, Audits of Institutions of Higher Education and Other 
Non-Profit Institutions.


42.102  Assignment of contract audit services.

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


42.103  Contract 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 shall be provided to DCAA so that the directory can be 
updated.
    (b) Agencies may obtain a copy of the directory or 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, VA 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 48 CFR 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, Fort Belvoir, Virginia, and other agencies offer a wide 
variety of contract administration and support services.


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

[[Page 9063]]

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 also shall be entered in the 
contract);
    (2) Any special instructions, including any functions withheld or 
any specific authorization to perform functions listed in 42.302(b);
    (3) A copy of the contract to be administered; and
    (4) 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. As necessary, the contracting officer 
also shall advise the contractor (and other activities as appropriate) 
of any functions withheld from or additional functions delegated to the 
CAO.
    (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 at the requesting 
agency may rescind or recall a delegation to administer a contract or 
perform a contract administration function, except for functions 
pertaining to cost accounting standards and negotiation of forward 
pricing rates and indirect cost rates (also see 42.003). The requesting 
agency must coordinate with the CAO to establish a reasonable 
transition period prior to rescinding or recalling the delegation.
    (e) Secondary delegations of contract administration. (1) A CAO 
that has been delegated administration of a contract under paragraph 
(a) or (c) of this section, or a contracting office retaining contract 
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 
evaluating the prime contractor's management of the subcontracts (see 
Part 44). Therefore, supporting contract administration shall not be 
used for subcontracts unless--
    (i) The Government otherwise would 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 regulation.
    (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 requesting 
that the cognizant CAO 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. Declinations shall be in writing.


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 names and telephone numbers of 
those DCMC and other agency offices that offer contract administration 
services within designated geographic areas and at specified contractor 
plants. Federal agencies may obtain a free copy of the directory on 
disk by writing to--HQ Defense Logistics Agency, ATTN: DCMC-AQBF, 8725 
John J. Kingman Road, Fort Belvoir, VA 22060, or access it on the 
Internet at http://www.dcmc.dcrb.dla.mil.
    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 48 CFR Chapter I, 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)(11) introductory text, (a)(11)(iv), (a)(13), 
(a)(20), (a)(32), (a)(61), and (a)(63) 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), (a)(9), and (a)(11) of 
this section, unless the contracting officer has been designated to 
perform these functions by the cognizant Federal agency (see 42.001).
* * * * *
    (11) In connection with Cost Accounting Standards (see 48 CFR 
30.601 and 48 CFR Chapter 99 (FAR Appendix))--
* * * * *
    (iv) Negotiate price adjustments and execute supplemental 
agreements under the Cost Accounting Standards clauses at 48 CFR 
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).
* * * * *
    (32) Perform preaward surveys (see Subpart 9.1).
* * * * *
    (61) Obtain contractor proposals for any contract price adjustments 
resulting from amended shipping instructions. Review all amended 
shipping instructions on a periodic, consolidated basis to ensure that 
adjustments are timely made. Except when the ACO has settlement 
authority, the ACO shall forward the proposal to the contracting 
officer for contract modification. The ACO 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.
* * * * *

[[Page 9064]]

    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, including options, of affected contracts). In 
such cases, agencies may also consider geographic location.
    (d) The directory of contract administration services components 
referenced in 42.203 includes a listing of CACO's and the contractors 
for which they are assigned responsibility.


42.603  [Amended]

    10. Section 42.603 is amended in the introductory text of paragraph 
(a) by removing the parenthetical ``(see subpart 42.3)''; and in the 
introductory text of paragraph (b)(1) by removing the word 
``cognizant'' and adding ``responsible'' in its place.
    11. Section 42.701 is amended by revising the definitions for 
``Business unit'' and ``Indirect cost'', and by adding, in alphabetical 
order, the definition for ``Forward pricing rate agreement'' to read as 
follows:


42.701  Definitions.

* * * * *
    Business unit is defined at 31.001.
* * * * *
    Forward pricing rate agreement is defined at 48 CFR 15.401.
    Indirect cost is defined at 48 CFR 31.203.
* * * * *
    12. Section 42.703-1 is amended by revising the first sentence of 
paragraph (a), and paragraph (c) to read as follows:


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. * * *
* * * * *
    (c) To ensure compliance with 10 U.S.C. 2324(a) and 41 U.S.C. 
256(a)--
    (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
    (2) Established final indirect cost rates shall be used in 
negotiating the final price of fixed-price incentive and fixed-price 
redeterminable contracts and in other situations requiring that 
indirect costs be settled before contract prices are established, 
unless the quick-closeout procedure in 42.708 is used.


42.703-2  [Amended]

    13. Section 42.703-2(d) is amended by removing the word 
``contractor'' and adding ``contractor's'' in its place.
    14. 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 also shall 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 the billing 
rates 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).
* * * * *
    15. Section 42.705-1 is amended by revising paragraphs (a) 
introductory text, (a)(3), (a)(4), (b)(1), (b)(2), and (b)(3) 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:
* * * * *
    (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 48 CFR 52.216-7 or 52.216-13, the contractor shall 
submit to the contracting officer (or cognizant Federal agency 
official) 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 (or cognizant Federal 
agency official) 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/
chap5.html;
    (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
    (iv) Writing to--Headquarters DCAA, ATTN: CMO, Publications 
Officer, 8725 John J. Kingman Road, Suite 2135, Fort Belvoir, VA 22060-
6219.
    (2) The auditor shall submit to the contracting officer (or 
cognizant Federal agency official) an advisory audit report identifying 
any relevant advance agreements or restrictive terms of specific 
contracts.

[[Page 9065]]

    (3) The contracting officer (or cognizant Federal agency official) 
shall head the Government negotiating team, which includes the 
cognizant auditor and technical or functional personnel as required. 
Contracting offices having significant dollar interest shall be invited 
to participate in the negotiation and in the preliminary discussion of 
critical issues. Individuals or offices that have provided a 
significant input to the Government position should be invited to 
attend.
* * * * *
    15. Section 42.705-2 is amended by revising paragraphs (a)(2) 
introductory text, (a)(2)(iv), and (b) 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) The contractor shall submit to the cognizant 
contracting officer (or cognizant Federal agency official) and auditor 
a final indirect cost rate proposal in accordance with 42.705-1(b)(1).
    (2) Upon receipt of a 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;
    (iii) 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
    (iv) Distribute resulting documents in accordance with 42.706.
    16. Section 42.705-3 is amended by revising paragraph (a)(2) to 
read as follows:


42.705-3  Educational institutions.

    (a) * * *
    (2) OMB Circular No. A-21, Cost Principles for Educational 
Institutions, assigns each educational institution to a single 
Government agency for the negotiation of indirect cost rates and 
provides that those rates shall be accepted by all Federal agencies. 
Cognizant Government agencies and educational institutions are listed 
in the Directory of Federal Contract Audit Offices (see 42.103).
* * * * *

PART 46--QUALITY ASSURANCE

    17. 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
* * * * *
    18. 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)).
    19. 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.

PART 47--TRANSPORTATION


47.301-3  [Amended]

    20. Section 47.301-3 is amended in the introductory text of 
paragraph (c) by removing ``42.202(d)'' and adding ``42.202(a)'' in its 
place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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


52.216-7  Allowable Cost and Payment.

* * * * *

Allowable Cost and Payment (Apr 1998)

* * * * *
    (d) Final indirect cost rates. (1) * * *
    (2)(i) The Contractor shall submit an adequate final indirect 
cost rate proposal to the Contracting Officer (or cognizant Federal 
agency official) and auditor within the 6-month period following the 
expiration of each of its fiscal years. * * *
* * * * *

(End of clause)

    22. Section 52.216-13 is amended by revising the clause date and 
the first sentence of paragraph (c)(2)(i) to read as follows:


52.216-13  Allowable Cost and Payment--Facilities.

* * * * *

Allowable Cost and Payment--Facilities (Apr 1998)

* * * * *
    (c) Negotiated Indirect Costs. (1) * * *
    (2)(i) The Contractor shall submit an adequate final indirect 
cost rate proposal to the Contracting Officer (or cognizant Federal 
agency official) and auditor within the 6-month period following the 
expiration of each of its fiscal years. * * *
* * * * *

(End of clause)

    23. Section 52.216-15 is amended by revising the clause date and 
the first sentence of paragraph (b)(1); by revising the second sentence 
of paragraph (d); and revising paragraph (e) to read as follows:


52.216-15  Predetermined Indirect Cost Rates.

* * * * *

Predetermined Indirect Cost Rates (APR 1998)

* * * * *
    (b)(1) The Contractor shall submit an adequate final indirect 
cost rate proposal to the Contracting Officer (or cognizant Federal 
agency official) and auditor within the 6-month period following the 
expiration of each of its fiscal years. * * *
* * * * *
    (d)* * * The Contracting Officer (or cognizant Federal agency 
official) and Contractor shall negotiate rates for subsequent 
periods and execute a written indirect cost rate agreement setting 
forth the results. * * *
    (e) Pending establishment of predetermined indirect cost rates 
for any fiscal year (or other period agreed to by the parties), the 
Contractor shall be reimbursed either at the rates fixed for the 
previous fiscal year (or other period) or at billing rates 
acceptable to the Contracting Officer (or cognizant Federal agency 
official), subject to appropriate adjustment when the final rates 
for that period are established.
* * * * *

(End of clause)

[FR Doc. 98-4303 Filed 2-20-98; 8:45 am]
BILLING CODE 6820-EP-P