[Federal Register Volume 75, Number 115 (Wednesday, June 16, 2010)]
[Rules and Regulations]
[Pages 34283-34285]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-14175]


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

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 30 and 52

[FAC 2005-42; FAR Case 2009-025; Item IX; Docket 2010-0087, Sequence 1]
RIN 9000-AL58


Federal Acquisition Regulation; FAR Case 2009-025, Disclosure and 
Consistency of Cost Accounting Practices for Contracts Awarded to 
Foreign Concerns

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

ACTION: Interim rule with request for comments.

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

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are issuing an interim rule 
amending the Federal Acquisition Regulation (FAR) to align the FAR with 
the revised Cost Accounting Standards (CAS) Board clause, Disclosure 
and Consistency of Cost Accounting Practices-Foreign Concerns.

DATES: Effective Date: June 16, 2010.
    Comment Date: Interested parties should submit written comments to 
the Regulatory Secretariat on or before August 16, 2010 to be 
considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-42, FAR Case 2009-
025, by any of the following methods:
    * Regulations.gov: http://www.regulations.gov.
    Submit comments via the Federal eRulemaking portal by inputting 
``FAR Case 2009-025'' under the heading ``Enter Keyword or ID'' and 
selecting ``Search''. Select the link ``Submit a Comment'' that 
corresponds with ``FAR Case 2009-025''. Follow the instructions 
provided at the ``Submit a Comment'' screen. Please include your name, 
company name (if any), and ``FAR Case 2009-025'' on your attached 
document.
    * Fax: 202-501-4067.
    * Mail: General Services Administration, Regulatory Secretariat 
(MVCB), 1800 F Street, NW., Room 4041, ATTN: Hada Flowers, Washington, 
DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-42, FAR 
Case 2009-025, 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: Mr. Edward N. Chambers, Procurement 
Analyst, at (202) 501-3221 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
Regulatory Secretariat at (202) 501-4755. Please cite FAC 2005-42, FAR 
Case 2009-025.

SUPPLEMENTARY INFORMATION:

A. Background

    On March 26, 2008, the CAS Board published a final rule in the 
Federal Register at 73 FR 15939 to utilize the clause, Disclosure and 
Consistency of Cost Accounting Practices-Foreign Concerns, in CAS-
covered contracts and subcontracts awarded to foreign concerns.
    In order to maintain consistency between CAS and FAR in matters 
relating to the administration of CAS, the Councils are amending the 
FAR as follows:
    1. FAR 30.201-4(c)(1) and (2), the prescription for use of FAR 
clause 52.230-4 is revised to reflect the amendments promulgated by the 
CAS Board on March 26, 2008.
    2. FAR 30.201-4(d) is revised to include use of FAR clause 52.230-
6, Administration of Cost Accounting Standards, in all contracts 
containing FAR clause 52.230-4 which is necessary based upon changes 
promulgated by the CAS Board on March 26, 2008.
    3. FAR clause 52.230-4 is replaced in its entirety and re-titled 
``Disclosure and Consistency of Cost Accounting Practices--Foreign 
Concerns'' to reflect the amendments promulgated by the CAS Board on 
March 26, 2008.
    4. FAR clause 52.230-6, Administration of Cost Accounting 
Standards, is revised to include reference to FAR clause 52.230-4 based 
on changes promulgated by the CAS Board on March 26, 2008.
    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.

[[Page 34284]]

B. Regulatory Flexibility Act

    The Councils do not expect this interim 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 with small businesses are exempt 
from the application of the Cost Accounting Standards. Therefore, an 
Initial Regulatory Flexibility Analysis has not been performed. The 
Councils invite comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    The Councils will also consider comments from small entities 
concerning the existing regulations in parts affected by this rule in 
accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAC 2005-42, FAR Case 
2009-025) in all correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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. 
chapter 35, et seq.

D. Determination to Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense, the Administrator of General Services, and the 
Administrator of the National Aeronautics and Space Administration that 
urgent and compelling reasons exist to promulgate this interim rule 
without prior opportunity for public comment. This action is necessary 
because this rule implements a final rule promulgated by the CAS Board 
which went into effect on April 25, 2008. Further, the CAS Board rule 
already went through the public rulemaking process. However, pursuant 
to Public Law 98-577 and FAR 1.501-3(b), the Councils will consider 
public comments received in response to this interim rule in the 
formation of the final rule.

List of Subjects in 48 CFR Parts 30 and 52

    Government procurement.

    Dated: June 2, 2010.
Edward Loeb,
Acting Director, Acquisition Policy Division.

0
Therefore, DoD, GSA, and NASA amend 48 CFR parts 30 and 52 as set forth 
below:
0
1. The authority citation for 48 CFR parts 30 and 52 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).

PART 30--COST ACCOUNTING STANDARDS ADMINISTRATION

0
2. Amend section 30.201-4 by revising paragraph (c), and removing from 
paragraph (d)(1) ``(b), or (e)'' and adding ``(b), (c), or (e)'' in its 
place. The revised text to read as follows:


30.201-4  Contract clauses.

* * * * *
    (c) Disclosure and Consistency of Cost Accounting Practices--
Foreign Concerns. (1) The contracting officer shall insert the clause 
at 52.230-4, Disclosure and Consistency of Cost Accounting Practices--
Foreign Concerns, in negotiated contracts with foreign concerns, unless 
the contract is otherwise exempt from CAS (see 48 CFR 9903.201-1). 
Foreign concerns do not include foreign governments or their agents or 
instrumentalities.
    (2) The clause at 52.230-4 requires the contractor to comply with 
48 CFR 9904.401 and 48 CFR 9904.402 to disclose (if it meets certain 
requirements) actual cost accounting practices, and to follow 
consistently its disclosed and established cost accounting practices.
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
3. Revise section 52.230-4 to read as follows:


52.230-4  Disclosure and Consistency of Cost Accounting Practices--
Foreign Concerns.

    As prescribed in 30.201-4(c), insert the following clause:
    DISCLOSURE AND CONSISTENCY OF COST ACCOUNTING PRACTICES--FOREIGN 
CONCERNS (JUN 2010)
    (a) The Contractor, in connection with this contract, shall--
    (1) Comply with the requirements of 48 CFR 9904.401, Consistency in 
Estimating, Accumulating, and Reporting Costs; and 48 CFR 9904.402, 
Consistency in Allocating Costs Incurred for the Same Purpose, in 
effect on the date of award of this contract, as indicated in 48 CFR 
9904.
    (2) (Cost Accounting Standard (CAS)-covered Contracts Only). If it 
is a business unit of a company required to submit a Disclosure 
Statement, disclose in writing its cost accounting practices as 
required by 48 CFR 9903.202-1 through 48 CFR 9903.202-5. If the 
Contractor has notified the Contracting Officer that the Disclosure 
Statement contains trade secrets and commercial or financial 
information which is privileged and confidential, the Disclosure 
Statement shall be protected and shall not be released outside of the 
U.S. Government.
    (3)(i) Follow consistently the Contractor's cost accounting 
practices. A change to such practices may be proposed, however, by 
either the U.S. Government or the Contractor, and the Contractor agrees 
to negotiate with the Contracting Officer the terms and conditions 
under which a change may be made. After the terms and conditions under 
which the change is to be made have been agreed to, the change must be 
applied prospectively to this contract, and the Disclosure Statement, 
if affected, must be amended accordingly.
    (ii) The Contractor shall, when the parties agree to a change to a 
cost accounting practice and the Contracting Officer has made the 
finding required in 48 CFR 9903.201-6(c) that the change is desirable 
and not detrimental to the interests of the U.S. Government, negotiate 
an equitable adjustment as provided in the Changes clause of this 
contract. In the absence of the required finding, no agreement may be 
made under this contract clause that will increase costs paid by the 
U.S. Government.
    (4) Agree to an adjustment of the contract price or cost allowance, 
as appropriate, if the Contractor or a subcontractor fails to comply 
with the applicable CAS or to follow any cost accounting practice, and 
such failure results in any increased costs paid by the U.S. 
Government. Such adjustment shall provide for recovery of the increased 
costs to the U.S. Government, together with interest thereon computed 
at the annual rate established under section 6621(a)(2) of the Internal 
Revenue Code of 1986 (26 U.S.C. 6621(a)(2)) for such period, from the 
time the payment by the U.S. Government was made to the time the 
adjustment is effected.
    (b) If the parties fail to agree whether the Contractor has 
complied with an applicable CAS rule, or regulation as specified in 48 
CFR 9903 and 48 CFR 9904 and as to any cost adjustment demanded by the 
U.S. Government, such failure to agree will constitute a dispute under 
the Contract Disputes Act (41 U.S.C. 601).
    (c) The Contractor shall permit any authorized representatives of 
the U.S. Government to examine and make copies of any documents, 
papers, and records relating to compliance with the requirements of 
this clause.

[[Page 34285]]

    (d) The Contractor shall include in all negotiated subcontracts, 
which the Contractor enters into, the substance of this clause, except 
paragraph (b), and shall require such inclusion in all other 
subcontracts of any tier, except that--
    (1) If the subcontract is awarded to a business unit which pursuant 
to 48 CFR 9903.201-2 is subject to other types of CAS coverage, the 
substance of the applicable clause prescribed in FAR 30.201-4 shall be 
inserted.
    (2) This requirement shall apply only to negotiated subcontracts in 
excess of $650,000.
    (3) The requirement shall not apply to negotiated subcontracts 
otherwise exempt from the requirement to include a CAS clause as 
specified in 48 CFR 9903.201-1.
    (End of clause)
0
4. Amend section 52.230-6 by revising the date of the clause; the 
second sentence of the introductory text of paragraph (b); the first 
sentence of paragraph (b)(3); the introductory text of paragraph 
(b)(4); paragraph (k)(1); the introductory text of paragraph (l); and 
paragraph (n) to read as follows:


  52.230-6 Administration of Cost Accounting Standards.

* * * * *
    ADMINISTRATION OF COST ACCOUNTING STANDARDS (JUN 2010)
* * * * *
    (b) * * * If a change in cost accounting practice is implemented 
without submitting the notice required by this paragraph, the CFAO may 
determine the change to be a failure to follow paragraph (a)(2) of the 
clause at FAR 52.230-2, Cost Accounting Standards; paragraph (a)(4) of 
the clause at FAR 52.230-3, Disclosure and Consistency of Cost 
Accounting Practices; paragraph (a)(4) of the clause at FAR 52.230-4, 
Disclosure and Consistency of Cost Accounting Practices--Foreign 
Concerns; or paragraph (a)(2) of the clause at FAR 52.230-5, Cost 
Accounting Standards--Educational Institution.
* * * * *
    (3) For any change in cost accounting practices proposed in 
accordance with paragraph (a)(4)(ii) or (iii) of the clauses at FAR 
52.230-2 and FAR 52.230-5; or with paragraph (a)(3) of the clauses at 
FAR 52.230-3 and FAR 52.230-4, submit a description of the change not 
less than 60 days (or such other date as may be mutually agreed to by 
the CFAO and the Contractor) before implementation of the change. * * *
    (4) Submit a description of the change necessary to correct a 
failure to comply with an applicable CAS or to follow a disclosed 
practice (as contemplated by paragraph (a)(5) of the clause at FAR 
52.230-2 and FAR 52.230-5; or by paragraph (a)(4) of the clauses at FAR 
52.230-3 and FAR 52.230-4)--
* * * * *
    (k) * * *
    (1) Contract modifications to reflect adjustments required in 
accordance with paragraph (a)(4)(ii) or (a)(5) of the clauses at FAR 
52.230-2 and 52.230-5; or with paragraph (a)(3)(i) or (a)(4) of the 
clauses at FAR 52.230-3 and FAR 52.230-4; and
* * * * *
    (l) For all subcontracts subject to the clauses at FAR 52.230-2, 
52.230-3, 52.230-4, or 52.230-5--
* * * * *
    (n) For subcontracts containing the clause or substance of the 
clause at FAR 52.230-2, FAR 52.230-3, FAR 52.230-4, or FAR 52.230-5, 
require the subcontractor to comply with all Standards in effect on the 
date of award or of final agreement on price, as shown on the 
subcontractor's signed Certificate of Current Cost or Pricing Data, 
whichever is earlier.

[FR Doc. 2010-14175 Filed 6-15-10; 8:45 am]
BILLING CODE 6820-EP-S