[Federal Register Volume 71, Number 191 (Tuesday, October 3, 2006)]
[Proposed Rules]
[Pages 58336-58338]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-8425]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 30

[FAR Case 2005-027; Docket 2006-0020; Sequence 9]
RIN 9000-AK60


Federal Acquisition Regulation; FAR Case 2005-027, FAR Part 30--
CAS Administration

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 (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to implement recommendations to 
change the regulations related to the

[[Page 58337]]

administration of the Cost Accounting Standards (CAS).

DATES: Interested parties should submit written comments to the FAR 
Secretariat on or before December 4, 2006 to be considered in the 
formulation of a final rule.

ADDRESSES: Submit comments identified by FAR case 2005-027 by any of 
the following methods:
     Federal eRulemaking Portal:
    http://www.regulations.gov. Search for any document by first 
selecting the proper document types and selecting ``Federal Acquisition 
Regulation'' as the agency of choice. At the ``Keyword'' prompt, type 
in the FAR case number (for example, FAR Case 2006-001) and click on 
the ``Submit'' button. You may also search for any document by clicking 
on the ``Advanced search/document search'' tab at the top of the 
screen, selecting from the agency field ``Federal Acquisition 
Regulation'', and typing the FAR case number in the keyword field. 
Select the ``Submit'' button.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (VIR), 1800 F Street, NW, Room 4035, ATTN: Laurieann 
Duarte, Washington, DC 20405.
    Instructions: Please submit comments only and cite FAR case 2005-
027 in all correspondence related to this case. All comments received 
will be posted without change to http://www.regulations.gov, including 
any personal and/or business confidential information provided.

FOR FURTHER INFORMATION CONTACT For clarification of content, contact 
Mr. Jeremy Olson, at (202) 501-3221. For information pertaining to 
status or publication schedules, contact the FAR Secretariat at (202) 
501-4755. Please cite FAR case 2005-027.

SUPPLEMENTARY INFORMATION:

A. Background

    On March 9, 2005, the Councils issued a final rule (FAR case 1999-
025) revising FAR Part 30, ``CAS Administration'' which significantly 
streamlined the process for submitting, negotiating, and resolving cost 
impacts resulting from a change in cost accounting practice or 
noncompliance with stated practices. Subsequent to this, a number of 
recommended changes to FAR Part 30 have been submitted by both 
government and industry representatives. These recommendations have 
been evaluated and, where warranted, changes are being proposed herein.

B. Discussion

    The Councils are proposing to revise the following FAR provisions:
    1. FAR 30.001 includes minor changes to the definitions of a number 
of terms. Related changes are made to the FAR clause at 52.230-6(a). 
These changes are made to ensure that each term is consistently defined 
in both locations.
    2. FAR 30.601(c) is added to require that the cognizant Federal 
agency official (CFAO) request and consider the advice of the auditor, 
as appropriate, when administering the Cost Accounting Standards. As a 
result, the phrase ``with the assistance of the auditor'' is deleted 
from several other sections of FAR Part 30.
    3. FAR 30.602(d) is revised to include references to FAR 30.603, 
30.604, and 30.605.
    4. FAR 30.604(g) and 30.605(f) are revised to specify that the CFAO 
must evaluate the Detailed Cost Impact (DCI) proposal for cost 
accounting practice changes or noncompliances when a contractor is 
required to submit a DCI.
    5. FAR 30.604(h)(4) is revised to indicate that the Changes clause 
is to be used to negotiate equitable adjustments related to required or 
desirable changes.
    6. 30.605(h)(6) is added (and the current (h)(6) is redesignated as 
(h)(7)) to specify that the cost impact of a noncompliance that affects 
both cost estimating and cost accumulation shall be determined by 
combining the separate cost impacts of both the cost estimating and 
cost accumulation noncompliances.
    Two other related issues were considered by the Councils no changes 
will be made in response to those recommendations. These include the 
following:
    Issue: The Councils were informed of a concern about precluding 
contract awards when a contractor has submitted a revised Disclosure 
Statement, but that Disclosure Statement has not yet been determined 
adequate by the contracting officer.
    Councils' Position: The Councils believe that the regulations 
currently provide adequate flexibility to address any such 
circumstances that may arise, including the waiver authority contained 
in the CAS/FAR. Furthermore, to date the Councils are unaware of any 
instances in which awards have been delayed pending determinations 
about the adequacy and/or compliance of revised Disclosure Statements.
    Issue: Currently, FAR 30.606(a) prohibits combining the cost 
impacts of two unilateral accounting changes unless they both result in 
increased costs. The Councils were informed that such a rule may reduce 
contracting officer flexibility and may be contrary to established 
practices.
    Councils' Position: FAR 30.606(a) is consistent with current 
statutory requirements which do not permit the combining of cost 
impacts for two or more unilateral changes. The Councils note that the 
contracting officer in such cases should separately determine whether 
each change is desirable, based on the criteria in FAR Part 30. Should 
the contracting officer determine that certain of the changes are 
desirable, the contracting officer would then have the authority to 
combine the cost impacts of those changes in determining the amount of 
the equitable adjustment resulting from the desirable changes.
    This is not a significant regulatory action and, therefore, was not 
subject to review under Section 6(b) of Executive Order 12866, 
Regulatory Planning and Review, dated September 30, 1993. This rule is 
not a major rule under 5 U.S.C. 804.

C. Regulatory Flexibility Act

    The Councils do not expect this proposed rule 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 contracts and subcontracts awarded to small businesses are 
exempt from the Cost Accounting Standards. An Initial Regulatory 
Flexibility Analysis has, therefore, not been performed. We invite 
comments from small businesses and other interested parties. The 
Councils will consider comments from small entities concerning the 
affected FAR Part 30 in accordance with 5 U.S.C. 610. Interested 
parties must submit such comments separately and should cite 5 U.S.C. 
601, et seq. (FAR case 2005-027), in correspondence.

D. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the proposed 
changes to the FAR do not impose information collection requirements 
that require the approval of the Office of Management and Budget under 
44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 30

    Government procurement.

    Dated: September 22, 2006.
Ralph De Stefano,
Director, Contract Policy Division.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR part 30 as 
set forth below:

[[Page 58338]]

PART 30--COST ACCOUNTING STANDARDS ADMINISTRATION

    1. The authority citation for 48 CFR part 30 continues to read as 
follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).
    2. Amend section 30.001 by--
    a. Adding to the definition ``Cognizant Federal agency official 
(CFAO)'' ``the '' following ``administer'';
    b. Removing from the definition ``Desirable change'' ``unilateral'' 
and adding ``compliant'' in its place; and
    c. Revising paragraph (1) of the definition ``Required change'' to 
read as follows:


30.001   Definitions.

* * * * *
    Required change means--
    (1) A change in cost accounting practice that a contractor is 
required to make in order to comply with applicable Standards, 
modifications or interpretations thereto, that subsequently becomes 
applicable to an existing CAS-covered contract or subcontract due to 
the receipt of another CAS-covered contract or subcontract; or
* * * * *
    3. Amend section 30.601 by removing from paragraph (b) ``52.230-
6(b)'' and adding ``52.230-6(l)'' in its place; and by adding paragraph 
(c) to read as follows:


30.601   Responsibility.

* * * * *
    (c) In performing CAS administration, the CFAO shall request and 
consider the advice of the auditor as appropriate (see also 1.602-2).
    4. Amend section 30.602 by revising paragraph (d) to read as 
follows:


30.602   Materiality.

* * * * *
    (d) For required, unilateral, and desirable changes, and CAS 
noncompliances, when the amount involved is material, the CFAO shall 
follow the applicable provisions in 30.603, 30.604, 30.605, and 30.606.
    5. Amend section 30.604 by--
    a. Removing from the introductory text of paragraphs (b) and (f) 
``, with the assistance of the auditor,'';
    b. Revising the introductory text of paragraph (g);
    c. Revising the introductory text of paragraph (h)(4) and removing 
paragraphs (h)(4)(i) and (h)(4)(ii); and
    d. Removing from paragraph (i)(1) ``With the assistance of the 
auditor, estimate'' and adding ``Estimate'' in its place.
    The revised text reads as follows:


30.604   Processing changes to disclosed or established cost accounting 
practices.

* * * * *
    (g) Detailed cost-impact proposal. If the contractor is required to 
submit a DCI proposal, the CFAO shall promptly evaluate the DCI 
proposal and follow the procedures at 30.606 to negotiate and resolve 
the cost impact. The DCI proposal--
* * * * *
    (h) * * *
    (4) For required or desirable changes, negotiate an equitable 
adjustment as provided in the Changes clause of the contract.
* * * * *
    6. Amend section 30.605 by--
    a. Removing from the introductory text of paragraph (c)(2) ``, with 
the assistance of the auditor,'';
    b. Revising the introductory text of paragraph (f); and
    c. Redesignating paragraph (h)(6) as (h)(7) and adding a newly 
designated paragraph (h)(6).
    The revised text reads as follows:


30.605   Processing noncompliances.

* * * * *
    (f) Detailed cost-impact proposal. If the contractor is required to 
submit a DCI proposal, the CFAO shall promptly evaluate the DCI 
proposal and follow the procedures at 30.606 to negotiate and resolve 
the cost impact. The DCI proposal--
* * * * *
    (h) * * *
    (6) The cost impact of each noncompliance that affects both cost 
estimating and cost accumulation shall be determined by combining the 
cost impacts in paragraphs (h)(3), (h)(4), and (h)(5) of this section; 
and
* * * * *

PART 52--SOLICITATIONS PROVISIONS AND CONTRACT CLAUSES

    7. Amend section 52.230-6 by--
    a. Revising the date of the clause;
    b. Removing from the definition ``Fixed-price contracts and 
subcontracts'' the word ``FAR'' each time it appears (4 times);
    c. Amending the definition ``Flexibly-priced contracts and 
subcontracts'' by revising paragraph (1); and by removing from 
paragraphs (2) through (5) the word ``FAR''; and
    d. Revising paragraph (1) of the definition ``required change''.
    The revised text reads as follows:


52.230-6   Administration of Cost Accounting Standards.

* * * * *

ADMINISTRATION OF COST ACCOUNTING STANDARDS (DATE)

* * * * *
    (a) * * *
    Flexibly-priced contracts and subcontracts means--
    (1) Fixed-price contracts and subcontracts described at 16.203-
1(a)(2), 16.204, 16.205, and 16.206;
* * * * *
    Required change means--
    (1) A change in cost accounting practice that a Contractor is 
required to make in order to comply with applicable Standards, 
modifications or interpretations thereto, that subsequently become 
applicable to existing CAS-covered contracts or subcontracts due to the 
receipt of another CAS-covered contract or subcontract; or
* * * * *
    (End of clause)
[FR Doc. 06-8425 Filed 10-2-06; 8:45 am]
BILLING CODE 6820-EP-S