[Federal Register Volume 76, Number 246 (Thursday, December 22, 2011)]
[Rules and Regulations]
[Pages 79545-79547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32726]


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

ACTION: Final rule.

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SUMMARY: The Office of Federal Procurement Policy (OFPP), Cost 
Accounting Standards (CAS) Board (Board), has adopted, without change 
from the interim rule, a final 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 
threshold. 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 the interim change for 
this final rule, the CAS applicability threshold was a stated dollar 
amount ($650,000) in the Code of

[[Page 79546]]

Federal Regulations. This wording change effectively revised the CAS 
threshold to $700,000 and will 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: December 22, 2011.

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

SUPPLEMENTARY INFORMATION:

A. Background and Summary

    On July 12, 2011, the Cost Accounting Standards Board (Board) 
published an interim rule with a request for comment (76 FR 40817) for 
the purpose of revising 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))''. This was done because 
of a recent increase to $700,000 in the FAR 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 referenced 
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 FAR 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). Until the interim rule for this final rule, 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 FAR TINA threshold, the Board 
revised 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 made any future changes to the CAS 
applicability threshold self-executing upon any changes that the FAR 
makes to the FAR TINA threshold. Thus, because the FAR's TINA threshold 
is now $700,000, the CAS applicability threshold under this final rule 
will be $700,000.

B. Public Comments

    The Board received two sets of public comments in response to the 
Interim Rule.
    1. Future changes to the FAR TINA threshold automatically applied 
to the CAS applicability threshold.
    Comment: One respondent agreed with the interim rule stating 
``[t]his is a good step in streamlining the process (i.e., deleting the 
requirements for future interim and final CAS rules for TINA 
changes).'' However, another respondent disagreed and thought that as a 
matter of policy, the CAS Board ``should issue its own dollar 
applicability threshold(s)'' because ``effectively delegating the 
authority to establish the CAS contract applicability threshold'' was 
``yet another weakening of the CAS Board's basic authority.''
    Response: The CAS Board agrees with the comment that supports the 
interim rule and disagrees with the comment to the contrary. The CAS 
Board does not see making this change as a weakening of the CAS Board's 
authority. The change is consistent with the CAS statutory authority at 
41 U.S.C. 1502(b)(1)(B) which provides that CAS ``are mandatory for use 
by all executive agencies and by contractors and subcontractors * * * 
concerning, all negotiated prime contract and subcontract procurements 
with the Federal Government in excess of the amount set forth in 
section 2306a(a)(1)(A)(i) of title 10 [i.e., the Truth in Negotiations 
Act (TINA)] as the amount is adjusted in accordance with applicable 
requirements of law.'' 41 U.S.C. 1908 provides for the inflation 
adjustment of acquisition-related dollar, including TINA, by the 
Federal Acquisition Regulatory Council.
    2. The phrase ``as adjusted for inflation'' is unnecessary.
    Comment: One respondent opined that the phrase ``as adjusted for 
inflation'' ``is both unnecessary and redundant.''
    Response: The CAS Board does not agree. The text is consistent with 
the CAS statutory authority at 41 U.S.C. 1502(b)(1)(B). See the 
Response to Comment 1.
    3. Changes to FAR Parts 30 and 52 required to be made for the 
changes to the CAS applicability threshold.
    Comment: One respondent noted that ``FAR Part 30 and the [CAS] 
clauses at FAR 52.230 [et seq.] continue to reference the $650,000 
which is now outdated.'' The respondent acknowledged that the FAR is 
the responsibility of the FAR Council, rather than the CAS Board.
    Response: The changes to the FAR to reflect the CAS Board's interim 
and final rules are beyond the authority of the CAS Board as 
acknowledged by the respondent. The comments have been sent to the OFPP 
Administrator, the Chair of the FAR Council, for implementation in the 
FAR.

[[Page 79547]]

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 final 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 final rule on 
contractors and subcontractors is expected to be minor. As a result, 
the Board has determined that this final 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 final rule is not a ``major rule'' under the Congressional Review 
Act, 5 U.S.C. Chapter 8. Finally, this final 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 final rule does not require a regulatory 
flexibility analysis under the Regulatory Flexibility Act of 1980, 5 
U.S.C. Chapter 6.

List of Subjects in 48 CFR Parts 9901 and 9903

    Government procurement, Cost accounting standards.

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

48 CFR PARTS 9901 and 9903--[AMENDED]

0
For the reasons set forth in this preamble, the interim rule published 
at 76 FR 40817, July 12, 2011, amending Chapter 99 of Title 48 of the 
Code of Federal Regulations, is adopted as final without change.

[FR Doc. 2011-32726 Filed 12-21-11; 8:45 am]
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