[Federal Register Volume 76, Number 133 (Tuesday, July 12, 2011)]
[Rules and Regulations]
[Pages 40817-40820]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-16846]


=======================================================================
-----------------------------------------------------------------------

OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

48 CFR Parts 9901 and 9903


Cost Accounting Standards: Change to the CAS Applicability 
Threshold for the Inflation Adjustment to the Truth in Negotiations Act 
Threshold

AGENCY: Cost Accounting Standards Board, Office of Federal Procurement 
Policy, Office of Management and Budget (OMB).

ACTION: Interim rule.

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

SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost 
Accounting Standards (CAS) Board (Board), invites public comments 
concerning this interim rule revising the threshold for the application 
of CAS from ``$650,000'' to ``the Truth in Negotiations Act (TINA) 
threshold, as adjusted for inflation.'' The change is being made 
because the CAS applicability threshold is statutorily tied to TINA. 
The TINA threshold for obtaining cost or pricing data was recently 
adjusted for inflation to $700,000 in the Federal Acquisition 
Regulation (FAR), as required by the Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005. Until this interim change, the 
CAS applicability threshold was a stated dollar amount ($650,000) in 
the Code of Federal Regulations. This wording change will effectively 
revise the CAS threshold to $700,000 and cause future changes to the 
CAS applicability threshold to self-execute upon any changes to the 
TINA threshold as they are implemented in the FAR.

DATES: Effective date: August 11, 2011.
    Comment date: Comments must be in writing and must be received by 
September 12, 2011.

ADDRESSES: All comments to this interim rule must be in writing. 
Electronic comments may be submitted in any one of three ways:
    1. Federal eRulemaking Portal: Comments may be directly sent via 
http://www.regulations.gov--a Federal E-Government Web site that allows 
the public to find, review, and submit comments on documents that 
agencies have published in the Federal Register and that are open for 
comment. Simply type ``CAS-TINA Threshold'' (without quotation marks) 
in the Comment or Submission search box, click Go, and follow the 
instructions for submitting comments;
    2. E-mail: Comments may be included in an e-mail message sent to 
[email protected]. The comments may be submitted in the text of the e-
mail message or as an attachment;
    3. Facsimile: Comments may also be submitted via facsimile to (202) 
395-5105; or
    4. Mail: If you choose to submit your responses via regular mail, 
please mail them to: Office of Federal Procurement Policy, 725 17th 
Street, NW., Room 9013, Washington, DC 20503, ATTN: Raymond J. M. Wong. 
Due to delays caused by the screening and processing of mail, 
respondents are strongly encouraged to submit responses electronically.
    Be sure to include your name, title, organization, postal address, 
telephone number, and e-mail address in the text of your public comment 
and reference ``CAS-TINA Threshold'' in the subject line irrespective 
of how you submit your comments. Comments received by the date 
specified above will be included as part of the official record. 
Comments delayed due to use of regular mail may not be considered.
    Please note that all public comments received will be available in 
their entirety at http://www.whitehouse.gov/omb/casb_index_public_comments/ and http://www.regulations.gov after the close of the comment 
period. Do not include any information whose disclosure you would 
object to.

[[Page 40818]]


FOR FURTHER INFORMATION CONTACT: Raymond J. M. Wong, Director, Cost 
Accounting Standards Board (telephone: 202-395-6805; e-mail: [email protected]).

SUPPLEMENTARY INFORMATION:

A. Regulatory Process

    Rules, Regulations and Standards issued by the Cost Accounting 
Standards Board (Board) are codified at 48 CFR chapter 99. The Office 
of Federal Procurement Policy (OFPP) Act, at 41 U.S.C. 1502(c) 
[formerly, 41 U.S.C. 422(g)], requires that the Board, prior to the 
establishment of any new or revised Cost Accounting Standard (CAS or 
Standard), complete a prescribed rulemaking process. The process 
generally consists of the following four steps:
    1. Consult with interested persons concerning the advantages, 
disadvantages and improvements anticipated in the pricing and 
administration of Government contracts as a result of the adoption of a 
proposed Standard.
    2. Promulgate an Advance Notice of Proposed Rulemaking (ANPRM).
    3. Promulgate a Notice of Proposed Rulemaking (NPRM).
    4. Promulgate a Final Rule.
    The Board notes that the CAS applicability threshold in 48 CFR 
Chapter 99 (at 48 CFR 9901.306; 9903.201-1, .201-2, 201-3, and 201-4; 
and 9903.202-1) is not subject to the four-step process required by 41 
U.S.C. 1502(c) [formerly, 41 U.S.C. 422(g)(1)] because it is not a Cost 
Accounting Standard. However, the Board elects to follow some of those 
requirements in the OFPP Act, at 41 U.S.C. 1502(c) [formerly, 41 U.S.C. 
422(g)(1)], i.e., to consult with interested persons concerning the 
advantages, disadvantages, and improvements anticipated in the pricing 
and administration of Government contracts as a result of the adoption 
of any new or revised rule on the CAS applicability threshold, prior to 
its promulgation.

B. Background and Summary

    The Office of Federal Procurement Policy (OFPP), Cost Accounting 
Standards Board (Board), is today releasing this interim rule to revise 
the Cost Accounting Standards (CAS) applicability threshold in 48 CFR 
chapter 99 from ``$650,000'' to ``the Truth in Negotiations Act (TINA) 
threshold, as adjusted for inflation (41 U.S.C. 1908) and (41 U.S.C. 
1502(b)(1)(B))'', because of a revision to the Truth in Negotiations 
Act (TINA) threshold for the submission of cost or pricing data as 
adjusted for inflation by section 807 of the Ronald W. Reagan National 
Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375) as 
incorporated into Federal Acquisition Regulation (FAR) 15.403-4(a)(1) 
by the Civilian Agency Acquisition Council and the Defense Acquisition 
Regulations Council on August 30, 2010 (at 75 FR 53129). By revising 
the CAS applicability threshold so that it directly references the FAR 
TINA threshold for the submission of cost or pricing data (rather than 
referencing a stated dollar amount), any future changes to the FAR TINA 
threshold will automatically apply to the CAS applicability threshold 
(thereby eliminating the need to revise this regulation to specify a 
different dollar amount).

Statutory Requirement for Inflation Adjustment of TINA Thresholds

    Section 807 of the Ronald W. Reagan National Defense Authorization 
Act for Fiscal Year 2005 (Pub. L. 108-375) requires a periodic 
adjustment for inflation every five years to the acquisition related 
thresholds using the Consumer Price Index (CPI) for all urban 
consumers, except for the Davis-Bacon Act, Service Contract Act, and 
trade agreement thresholds. The threshold in TINA (10 U.S.C. 
2306a(a)(1)(A)(i)) for the submission of cost or pricing data is one of 
the acquisition related thresholds adjusted for inflation by section 
807. The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) published a final rule in 
the Federal Register on August 30, 2010 (75 FR 53129) amending the FAR 
to implement section 807, including the TINA threshold at FAR 15.403-4, 
Requiring cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. 3502 
[formerly, 41 U.S.C. 254b]). This FAR final rule was effective October 
1, 2010, and revised the TINA threshold from $650,000 to $700,000.

Statutory Requirement for Threshold for CAS Applicability

    Section 26(f)(2(A) of the OFPP Act (41 U.S.C. 1502(b)(1)(B) 
[formerly, 41 U.S.C. 422(f)(2)(A)]) addresses the CAS applicability 
threshold. Section 822 of the 2006 National Defense Authorization Act 
(Pub. L. 109-163) amended 41 U.S.C. 1502(b)(1)(B) [formerly, 41 U.S.C. 
422(f)(2)(A)] to tie the statutory CAS threshold to the threshold for 
compliance with the TINA requirement to submit cost or pricing data, as 
set forth in section 2306a(a)(1)(A)(i) of title 10, United States Code. 
The recent changes to the TINA threshold described above require 
identical changes to the CAS applicability threshold (i.e., from 
$650,000 to $700,000). To date, the CAS applicability threshold has 
been identified in the CAS Board rules as a stated dollar amount. To 
avoid repeated rulemakings in the future that would update the stated 
dollar amount, in order to keep the CAS applicability threshold tied to 
the TINA threshold, the Board is revising the CAS applicability 
threshold from a stated dollar amount (which has been ``$650,000'') to 
``the Truth in Negotiations Act (TINA) threshold, as adjusted for 
inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)).'' This revision 
makes any future changes to the CAS applicability threshold self-
executing upon any changes that the FAR makes to the TINA threshold. 
Thus, because the FAR's TINA threshold is now $700,000, the CAS 
applicability threshold under this interim rule will be $700,000.

C. Paperwork Reduction Act

    The Paperwork Reduction Act (44 U.S.C. chapter 35, Subtitle I) does 
not apply to this rulemaking because this rule imposes no additional 
paperwork burden on offerors, affected contractors and subcontractors, 
or members of the public which requires the approval of OMB under 44 
U.S.C. 3501, et seq. The records required by this interim rule are 
those normally maintained by contractors and subcontractors who claim 
reimbursement of costs under government contracts.

D. Executive Order 12866, the Congressional Review Act, and the 
Regulatory Flexibility Act

    Because the affected contractors and subcontractors are those who 
are already subject to CAS but for the increase in the CAS 
applicability threshold, the economic impact of this interim rule on 
contractors and subcontractors is expected to be minor. As a result, 
the Board has determined that this interim rule will not result in the 
promulgation of an ``economically significant rule'' under the 
provisions of Executive Order 12866, and that a regulatory impact 
analysis will not be required. For the same reason, the Administrator 
of the Office of Information and Regulatory Affairs has determined that 
this interim rule is not a ``major rule'' under the Congressional 
Review Act, 5 U.S.C. Chapter 8. Finally, this interim rule does not 
have a significant effect on a substantial number of small entities 
because small businesses are exempt from the application of the Cost 
Accounting Standards. Therefore, this interim rule

[[Page 40819]]

does not require a regulatory flexibility analysis under the Regulatory 
Flexibility Act of 1980, 5 U.S.C. chapter 6.

E. Public Comments to This Interim Rulemaking

    Interested persons are invited to provide input to this interim 
rule to revise the CAS applicability threshold from ``$650,000'' to 
``the Truth in Negotiations Act (TINA) threshold, as adjusted for 
inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B))'' as a result of 
the periodic statutory adjustment of the TINA threshold for inflation. 
Respondents are encouraged to identify, comment and provide information 
on any issues that they believe are important to the subject. All 
comments must be in writing, and submitted via facsimile, by e-mail, or 
by any other means as instructed in the ADDRESSES section.

List of Subjects in 48 CFR Parts 9901 and 9903

    Government procurement, cost accounting standards.

Daniel I. Gordon,
Chair, Cost Accounting Standards Boards.

    For the reasons set forth in this preamble, Chapter 99 of Title 48 
of the Code of Federal Regulations is amended as set forth below:

PART 9901--RULES AND PROCEDURES

0
1. The authority citation for Part 9901 continues to read as follows:

    Authority: Pub. L. 111-350, 124 Stat. 3677, 41 U.S.C. 1502.

0
2. Revise section 9901.306 to read as follows:


9901.306  Standards applicability.

    Cost Accounting Standards promulgated by the Board shall be 
mandatory for use by all executive agencies and by contractors and 
subcontractors in estimating, accumulating, and reporting costs in 
connection with pricing and administration of, and settlement of 
disputes concerning, all negotiated prime contract and subcontract 
procurements with the United States Government in excess of the Truth 
in Negotiations Act (TINA) threshold, as adjusted for inflation (41 
U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)), other than contracts or 
subcontracts that have been exempted by the Board's regulations.

PART 9903--CONTRACT COVERAGE

0
3. The authority citation for Part 9903 continues to read as follows:

    Authority: Pub. L. 111-350, 124 Stat. 3677, 41 U.S.C. 1502.

Subpart 9903.2--CAS Program Requirements

0
4. Section 9903.201-1 is amended by revising paragraph (b)(2) to read 
as follows:


9903.201-1  CAS applicability.

* * * * *
    (b) * * *
    (2) Negotiated contracts and subcontracts not in excess of the 
Truth in Negotiations Act (TINA) threshold, as adjusted for inflation 
(41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)). For purposes of this 
paragraph (b)(2), an order issued by one segment to another segment 
shall be treated as a subcontract.
* * * * *

0
5. Section 9903.201-2 is amended by revising paragraphs (c)(3) and (5) 
to read as follows:


9903.201-2  Types of CAS coverage.

* * * * *
    (c) * * *
    (3) Applicable standards. Coverage for educational institutions 
requires that the business unit comply with all of the CAS specified in 
part 9905 that are in effect on the date of the contract award and with 
any CAS that become applicable because of later award of a CAS-covered 
contract. This coverage applies to business units that receive 
negotiated contracts in excess of the Truth in Negotiations Act (TINA) 
threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 
1502(b)(1)(B)), except for CAS-covered contracts awarded to FFRDCs 
operated by an educational institution.
* * * * *
    (5) Contract clauses. The contract clause at 9903.201-4(e) shall be 
incorporated in each negotiated contract and subcontract awarded to an 
educational institution when the negotiated contract or subcontract 
price exceeds the Truth in Negotiations Act (TINA) threshold, as 
adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)). 
For CAS-covered contracts awarded to an FFRDC operated by an 
educational institution, however, the full or modified CAS contract 
clause specified at 9903.201-4(a) or (c), as applicable, shall be 
incorporated.
* * * * *

0
6. Section 9903.201-3 is amended in paragraph (a)(2) under the 
provision heading, ``Cost Accounting Standards Notices and 
Certification'', by revising the provision date and paragraph (a) of 
Part I of the provision to read as follows:


9903.201-3  Solicitation provisions.

* * * * *

Cost Accounting Standards Notices and Certification (JUL 2011)

* * * * *

I. Disclosure Statement--Cost Accounting Practices and Certification

    (a) Any contract in excess of the Truth in Negotiations Act (TINA) 
threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 
1502(b)(1)(B)), resulting from this solicitation, except for those 
contracts which are exempt as specified in 9903.201-1.
* * * * *
0
7. Section 9903.201-4 is amended:
0
a. In paragraph (a)(2) under the clause heading, ``Cost Accounting 
Standards'', by revising the clause date and paragraph (d) of the 
clause.
0
b. By revising paragraph (c)(1); and in paragraph (c)(2) under the 
clause heading ``Disclosure and Consistency of Cost Accounting 
Practices'', by revising the clause date and paragraph (d)(2) of the 
clause.
0
c. In paragraph (e)(2) under the clause heading, ``Cost Accounting 
Standards--Educational Institutions'', by revising the clause date and 
paragraph (d)(2) of the clause; and in paragraph (f)(2) under the 
clause heading, ``Cost Accounting Practices--Foreign Concerns'', by 
revising the clause date and paragraph (d)(2) of the clause .


9903.201-4  Contract clauses.

    (a) * * *
    (2) * * *

Cost Accounting Standards (JUL 2011)

* * * * *
    (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, including the obligation to comply with 
all CAS in effect on the subcontractor's award date or if the 
subcontractor has submitted cost or pricing data, on the date of 
final agreement on price as shown on the subcontractor's signed 
Certificate of Current Cost or Pricing Data. If the subcontract is 
awarded to a business unit which pursuant to 9903.201-2 is subject 
to other types of CAS coverage, the substance of the applicable 
clause set forth in 9903.201-4 shall be inserted. This requirement 
shall apply only to negotiated subcontracts in excess of the Truth 
in Negotiations Act (TINA) threshold, as adjusted for inflation (41 
U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)), except that the 
requirement shall not apply to negotiated subcontracts otherwise 
exempt from the requirement to include a CAS clause as specified in 
9903.201-1.


[[Page 40820]]



(End of clause)
* * * * *
    (c) Disclosure and Consistency of Cost Accounting Practices. (1) 
The contracting officer shall insert the clause set forth below, 
Disclosure and Consistency of Cost Accounting Practices, in negotiated 
contracts when the contract amount is over the Truth in Negotiations 
Act (TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 
U.S.C. 1502(b)(1)(B)), but less than $50 million, and the offeror 
certifies it is eligible for and elects to use modified CAS coverage 
(see 9903.201-2, unless the clause prescribed in paragraph (d) of this 
subsection is used).
    (2) * * *

Disclosure and Consistency of Cost Accounting Practices (JUL 2011)

* * * * *
    (d) * * *
    (2) This requirement shall apply only to negotiated subcontracts 
in excess of the Truth in Negotiations Act (TINA) threshold, as 
adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)).
* * * * *


(End of clause)
* * * * *
    (e) * * *
    (2) * * *

Cost Accounting Standards--Education Institutions (JUL 2011)

* * * * *
    (d) * * *
    (2) This requirement shall apply only to negotiated subcontracts 
in excess of the Truth in Negotiations Act (TINA) threshold, as 
adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C 1502(b)(1)B)).
* * * * *

(End of clause)

    (f) * * *
    (2) * * *

Disclosure and Consistency of Cost Accounting Practices--Foreign 
Concerns (JUL 2011)

* * * * *
    (d) * * *
    (2) This requirement shall apply only to negotiated subcontracts 
in excess of the Truth in Negotiations Act (TINA) threshold, as 
adjusted for inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)).
* * * * *


(End of clause)

* * * * *

0
8. Section 9903.202-1 is amended by revising paragraphs (c) 
introductory text, (f)(2)(i), and (f)(3)(i) through (iii) to read as 
follows:


Sec.  9903.202-1  General requirements.

* * * * *
    (c) When a Disclosure Statement is required, a separate Disclosure 
Statement must be submitted for each segment whose costs included in 
the total price of any CAS-covered contract or subcontract exceed the 
Truth in Negotiations Act (TINA) threshold, as adjusted for inflation 
(41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)) unless
* * * * *
    (f) * * *
    (2) * * *
    (i) Any business unit of an educational institution that is 
selected to receive a CAS-covered contract or subcontract in excess of 
the Truth in Negotiations Act (TINA) threshold, as adjusted for 
inflation (41 U.S.C. 1908 and 41 U.S.C. 1502(b)(1)(B)), and is part of 
a college or university location listed in Exhibit A of Office of 
Management and Budget (OMB) Circular A-21 shall submit a Disclosure 
Statement before award. A Disclosure Statement is not required; 
however, if the listed entity can demonstrate that the net amount of 
Federal contract and financial assistance awards received during its 
immediately preceding cost accounting period was less than $25 million.
* * * * *
    (3) * * *
    (i) For business units that are selected to receive a CAS-covered 
contract or subcontract in excess of the Truth in Negotiations Act 
(TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 
U.S.C. 1502(b)(1)(B)), and are part of the first 20 college or 
university locations (i.e., numbers 1 through 20) listed in Exhibit A 
of OMB Circular A-21, Disclosure Statements shall be submitted within 
six months after the date of contract award.
    (ii) For business units that are selected to receive a CAS-covered 
contract or subcontract in excess of the Truth in Negotiations Act 
(TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 
U.S.C. 1502(b)(1)(B)), and are part of a college or university location 
that is listed as one of the institutions numbered 21 through 50, in 
Exhibit A of OMB Circular A-21, Disclosure Statements shall be 
submitted during the six month period ending twelve months after the 
date of contract award.
    (iii) For business units that are selected to receive a CAS-covered 
contract or subcontract in excess of the Truth in Negotiations Act 
(TINA) threshold, as adjusted for inflation (41 U.S.C. 1908 and 41 
U.S.C. 1502(b)(1)(B)), and are part of a college or university location 
that is listed as one of the institutions numbered 51 through 99, in 
Exhibit A of OMB Circular A-21, Disclosure Statements shall be 
submitted during the six month period ending eighteen months after the 
date of contract award.
* * * * *

[FR Doc. 2011-16846 Filed 7-11-11; 8:45 am]
BILLING CODE P