[Federal Register Volume 83, Number 84 (Tuesday, May 1, 2018)]
[Rules and Regulations]
[Pages 19149-19150]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09169]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 49

[FAC 2005-98, FAR Case 2015-039; Item IV; Docket No. 2015-0039, 
Sequence No. 1]
RIN 9000-AN26


Federal Acquisition Regulations: Audit of Settlement Proposals

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

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule to amend the 
Federal Acquisition Regulation (FAR) to raise the dollar threshold 
requirement for the audit of prime contract settlement proposals and 
subcontract settlements from $100,000 to align with the threshold for 
obtaining certified cost or pricing data.

DATES: Effective: May 31, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Zenaida Delgado, Procurement 
Analyst, at 202-969-7207, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2005-98, FAR Case 
2015-039.

SUPPLEMENTARY INFORMATION: 

I. Background

    DOD, GSA, and NASA published a proposed rule in the Federal 
Register at 81 FR 63158 on September 14, 2016, to amend FAR 49.107 to 
increase the dollar threshold for the audit of prime contract 
settlement proposals and subcontract settlements submitted in the event 
of contract termination, from $100,000 to align with the threshold in 
FAR 15.403-4(a)(1) for obtaining certified cost or pricing data, which 
is currently $750,000.

II. Discussion and Analysis

    No public comments were submitted in response to the proposed rule. 
Therefore, there are no changes from the proposed rule made in the 
final rule.

[[Page 19150]]

III. Expected Cost Savings

    This final rule impacts contractors subject to audits of their 
termination settlement proposals. The rule is administrative in nature, 
because it raises a threshold. This rule eliminates termination 
settlements audits between $100,000 and the threshold for obtaining 
certified cost or pricing data, currently $750,000. Contractors will 
save costs associated with the preparation and support for the 
termination settlement audits. This will also enable faster final 
settlement payments to contractors, thereby improving contractor cash 
flow.

IV. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule does not add any new solicitation provisions or clauses, 
or impact any existing provisions or clauses.

V. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

VI. Executive Order 13771

    Pursuant to E.O. 13771, this rule is a deregulatory action. 
Information on the expected cost savings of this action can be found in 
section III of the preamble.

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a final regulatory flexibility 
analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    This final rule amends FAR 49.107, Audit of prime contract 
settlement proposals and subcontract settlements, to raise the 
dollar threshold for the audit of prime contract settlement 
proposals and subcontract settlements submitted in the event of 
contract termination from $100,000 to the threshold for obtaining 
certified cost or pricing data set forth in FAR 15.403-4(a)(1), 
which is currently $750,000. The rule is necessary to reduce the 
administrative burdens associated with termination settlement 
proposals.
    No public comments were received in response to the initial 
regulatory flexibility analysis.
    DoD, GSA, and NASA do not expect this 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. 
Since the rule raises the audit threshold, even fewer small 
businesses will be subject to audits of their termination settlement 
proposals. It is estimated that an average of 4 small entities per 
year will be relieved from the requirements of supporting an audit 
of a contract settlement proposal, which is a minute fraction of all 
contracts awarded to small businesses in a typical year.
    The rule imposes no reporting, recordkeeping, or other 
information collection requirements.
    There are no known significant alternatives to the rule. The 
impact of this rule on small business is not expected to be 
significant.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

VIII. Paperwork Reduction Act

    This rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 49

    Government procurement.

    Dated: April 25, 2018.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR part 49 as set forth 
below:

PART 49--TERMINATION OF CONTRACTS

0
1. The authority citation for part 49 continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.


0
2. Amend section 49.107 by revising paragraphs (a) and (b) to read as 
follows:


49.107   Audit of prime contract settlement proposals and subcontract 
settlements.

    (a) The TCO shall refer each prime contractor settlement proposal 
valued at or above the threshold for obtaining certified cost or 
pricing data set forth in FAR 15.403-4(a)(1) to the appropriate audit 
agency for review and recommendations. The TCO may submit settlement 
proposals of less than the threshold for obtaining certified cost or 
pricing data to the audit agency. Referrals shall indicate any specific 
information or data that the TCO considers relevant and shall include 
facts and circumstances that will assist the audit agency in performing 
its function. The audit agency shall develop requested information and 
may make any further accounting reviews it considers appropriate. After 
its review, the audit agency shall submit written comments and 
recommendations to the TCO. When a formal examination of settlement 
proposals valued under the threshold for obtaining certified cost or 
pricing data is not warranted, the TCO will perform or have performed a 
desk review and include a written summary of the review in the 
termination case file.
    (b) The TCO shall refer subcontract settlements received for 
approval or ratification to the appropriate audit agency for review and 
recommendations when--
    (1) The amount exceeds the threshold for obtaining certified cost 
or pricing data; or
    (2) The TCO determines that a complete or partial accounting review 
is advisable. The audit agency shall submit written comments and 
recommendations to the TCO. The review by the audit agency does not 
relieve the prime contractor or higher tier subcontractor of the 
responsibility for performing an accounting review.
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[FR Doc. 2018-09169 Filed 4-30-18; 8:45 am]
 BILLING CODE 6820-EP-P