Revisions to Independent Research and Development and Bid and Proposal Costs Policy, Travel Policy, and Technical Changes

Federal RegisterOct 31, 1994

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DEPARTMENT OF ENERGY

48 CFR Parts 915, 931, 942, 951, 952, and 970

RIN 1991-AB12

Revisions to Independent Research and Development and Bid and

Proposal Costs Policy, Travel Policy, and Technical Changes

AGENCY: Department of Energy.

ACTION: Proposed rule.

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SUMMARY: The Department of Energy (DOE) proposes to amend its

Acquisition Regulation to effect changes to Independent Research and

Development (IR&D) and Bid and Proposal Costs (B&P); reflect Federal

Acquisition Regulation (FAR) changes to the Cost Accounting Standards

(CAS); and incorporate travel policy revisions resulting from Public

Law and FAR changes. Additionally, there are technical changes updating

references, correcting editorial errors, and clarifying language.

DATES: Written comments must be submitted no later than December 30,

1994.

ADDRESSES: Comments should be addressed to: Terrence D. Sheppard,

Business and Financial Policy Division (HR-521.2), Office of

Procurement and Assistance Management, Department of Energy, 1000

Independence Avenue SW., Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT: Terrence D. Sheppard, (202) 586-8174.

SUPPLEMENTARY INFORMATION:

I. Background

II. Public Comments

III. Procedural Requirements

A. Review Under Executive Order 12866

B. Review Under Executive Order 12778

C. Review Under the Regulatory Flexibility Act

D. Review Under the Paperwork Reduction Act

E. Review Under the National Environmental Policy Act

F. Review Under Executive Order 12612

I. Background

Pursuant to section 644 of the Department of Energy Organization

Act, Public Law 95-91 (42 U.S.C. 7254), the Secretary of Energy is

authorized to prescribe such procedural rules and regulations as may be

deemed necessary or appropriate to accomplish the functions vested in

the Secretary. In accordance with this authority, the Department of

Energy Acquisition Regulation (DEAR), 48 CFR chapter 9, was promulgated

with an effective date of April 1, 1984 (49 FR 11922, March 28, 1984).

The purpose of this rule is to amend the DEAR to formally establish

policies, procedures, and contract provisions that reflect the DOE

position relative to the allowability of IR&D/B&P costs and IR&D/B&P

advance agreements and travel costs. Additionally, it reflects the

recodification of the CAS into 48 CFR chapter 99, and its incorporation

into FAR, Appendix B. Concomitant with these changes, there are several

revisions which delete references to outdated policies or activities.

A detailed list of changes follows:

1. The authority citation for parts 915, 931, 942, 951, and 952 is

restated.

2. Subsection 915.805-5 is amended to delete the requirement in

paragraph (c)(1) that a copy of the audit request be sent to the DOE

Inspector General (IG). Pursuant to interagency agreements, the DOE

contract audit agency is the Defense Contract Audit Agency (DCAA); the

Department of Health and Human Services (HHS) has audit cognizance for

most educational institutions.

3. Subparagraph 915.970-8(d)(1) is revised to add a reference to

the relocation of the CAS to FAR Appendix B (Federal Acquisition

Circular (FAC) 90-12, August 31, 1992).

4. Subsection 931.205-18 is revised to add the acronyms ``IR&D''

and ``B&P'' to the title. The DEAR reference to the FAR is changed from

(c)(3) to (c)(2), because the FAR amendment (FAC 90-13, September 24,

1992) deleted FAR (c)(3). Paragraph (c)(4) is deleted in its entirety,

except for a portion of the first sentence of (c)(4) which was moved to

(c)(2). Also, FAC 90-13 replaced the requirement for separate advance

agreements with temporary limits (for a 3-year period) on allowable

IR&D/B&P costs. DOE has chosen not to institute the temporary limits,

but rather to allow for full recovery, immediately. Thus, the text was

amended to reflect the DOE policy that generally IR&D costs are

allowable if reasonable, allocable, and they have a potential benefit

or relationship to the DOE program. B&P costs are generally allowable

if they are reasonable and allocable.

5. Section 942.003, paragraph (a) is revised to delete references

to the Department of Defense (DOD) services; the services no longer

have individual plant residencies. This revision reflects the current

DOD structure for contract administration.

6. Section 942.101 is amended by deleting the reference to the Air

Force Contract Management Division (AFCMD) and the DOE IG in paragraphs

(a)(2) and (c), respectively. The AFCMD no longer exists and the Office

of Procurement and Assistance Management now negotiates the interagency

agreements with DCAA and HHS. Paragraph (a)(3) is redesignated as

(a)(2) to accommodate the deletion of AFCMD.

7. Subsection 942.705-1 is revised at paragraph (a)(3) by deleting

the statement that a listing of business units, for which DOE has final

indirect cost rate negotiation responsibility, is published in the DOE

Order System. The listing is no longer published in the DOE Order

System. The revised paragraph (b)(1) clarifies the proscription that

contractors shall neither be required nor directed to submit final

indirect cost rate proposals to the auditor.

8. Subsection 942.705-3 is revised to correct the statement that

negotiated rates are ``centrally maintained'' when, in fact, they are

only ``distributed'' by the Office of Policy.

9. Subsection 942.705-4 is revised to correct the statement that

negotiated rates are maintained by the Office of Policy, when, in fact,

they are only distributed by the Office.

10. Subsection 942.705-5 is revised to correct the statement that

negotiated rates are maintained by the Office of Policy, when, in fact,

they are only distributed by the Office.

11. Subpart 942.10 is removed as a result of concomitant changes to

the IR&D/B&P advance agreements (see item 4, foregoing). There is no

longer a requirement to negotiate advance agreements; thus, the

coverage is removed in its entirety.

12. Subsection 942.7003-6 is revised to add the word

``Administration'' to the title of FAR Part 30, which was changed as a

result of FAC 90-12, August 31, 1992. Additionally, the reference to

Public Law 91-379, which established the CAS, is deleted due to the

subsequent incorporation of the CAS in FAR Appendix B and their

application to civilian agencies pursuant to Public Law 100-679.

13. Subsection 942.7004 is revised at paragraph (a) to incorporate

the results of the interagency agreements between the Office of

Procurement and Assistance Management and DCAA and HHS. References to

the DOE IG are deleted. Paragraphs (b), (c), and (d) are deleted as

they describe internal operating procedures that, in large part, are no

longer valid.

14. Subsection 951.7000 is revised to delete the reference to

outdated General Services Administration (GSA) Bulletin A-95. The

reference to the Federal Property Management Regulations (FPMRs) is

sufficient.

15. Subsection 951.7001 is revised to delete the reference to

outdated GSA Bulletin A-95 in the introductory paragraph. Paragraphs

(a), (b), and (c) are deleted as they duplicate information contained

in clause 952.251-70.

16. Subsection 952.251-70 is amended to correct a referenced

citation at paragraph (a) from ``Property Management Regulation (FPMR),

Temporary Regulation A-30'' to ``Travel Regulation (FTR), Part 301-15,

Travel Management Programs.''

17. The authority citation for part 970 is restated.

18. Subsection 970.3001-1 is revised to reflect the relocation of

the CAS, within the FAR, from part 30 to appendix B.

19. Subsection 970.3001-2 is revised to correct the cross reference

from ``970.3102-10'' to ``970.3102-3.''

20. Subsection 970.3102-17 is amended by revising paragraph

(c)(2)(i) and adding new paragraphs (c)(6) and (c)(7). In (c)(2)(i),

line 1, the letter ``s'' is deleted from the word ``Regulations'' to

reflect the new title. New subparagraph (c)(6) is added to reflect

changes in FAR 31.205-46, ``Travel costs'' as a result of FAC 90-7

which provided for downward adjustments to the maximum per diem rates

when no lodging costs are incurred or on partial travel days. A new

paragraph (c)(7) is added which refers to the incorporation of the

Public Law 100-679 requirements in 970.5204-13 and 970.5204-14. Public

Law 100-679, which amended the Office of Federal Procurement Policy

Act, states that, for State and nonprofit institutions performing

federally sponsored research, travel costs shall be considered

reasonable and allowable only to the extent that such costs do not

exceed charges normally allowed by the respective institution in its

regular operations as a result of an institutional policy. In the

absence of institutional policies, rates and amounts shall be

determined by either subchapter I of chapter 57 of title 5, United

States Code, or by the General Services Administration, or the

President, or his designee.

21. Subsection 970.5204-13 is amended by revising paragraph (e)(35)

to add a ``NOTE'' directing the Contracting Officer to use the

alternate clause for contracts with State and nonprofit institutions.

The ``NOTE'' reflects that, pursuant to Public Law 100-679, which

amended the Office of Federal Procurement Policy Act, travel costs of

State and nonprofit institutions performing federally sponsored

research shall be considered reasonable and allowable only to the

extent that such costs do not exceed charges normally allowed by the

respective institution in its regular operations as a result of an

institutional policy. In the absence of institutional policies, rates

and amounts shall be determined by either subchapter I of chapter 57 of

title 5, United States Code, or by the General Services Administration,

or the President, or his designee.

22. Subsection 970.5204-14 is amended by revising paragraph (e)(33)

to add a ``NOTE'' directing the Contracting Officer to use the

alternate clause for contracts with State and nonprofit institutions.

The ``Note'' reflects that, pursuant to Public Law 100-679, which

amended the Office of Federal Procurement Policy Act, travel costs of

State and nonprofit institutions performing federally sponsored

research shall be considered reasonable and allowable only to the

extent that such costs do not exceed charges normally allowed by the

respective institution in its regular operations as a result of an

institutional policy. In the absence of institutional policies, rates

and amounts shall be determined by either subchapter I of Chapter 57 of

Title 5, United States Code, or by the General Services Administration,

or the President, or his designee.

23. Subsection 970.7104-33 is revised to reflect the relocation of

the Cost Accounting Standards, within the FAR, from part 30 to appendix

II. Public Comments

Interested persons are invited to participate by submitting data,

views, or arguments with respect to the proposed Department of Energy

Acquisition Regulation amendments set forth in this notice. Three

copies of written comments should be submitted to the address indicated

in the ADDRESSES section of this notice. All comments received will be

available for public inspection in the DOE Reading Room, Room 1E-190,

Forrestal Building, 1000 Independence Avenue SW., Washington, D.C.

20585, between the hours of 9 a.m. and 4 p.m., Monday through Friday,

except Federal holidays. All written comments received by the date

indicated in the DATES section of this notice and all other relevant

information in the record will be carefully assessed and fully

considered prior to publication of the final rule. Any information

considered to be confidential must be so identified and submitted in

writing, one copy only. DOE reserves the right to determine the

confidential status of the information and to treat it according to our

determination (See 10 CFR 1004.11).

The Department has concluded that this proposed rule does not

involve a substantial issue of fact or law and that the proposed rule

should not have substantial impact on the nation's economy or a large

number of individuals or businesses. Therefore, pursuant to Public Law

95-91, the DOE Organization Act, and the Administrative Procedure Act

(5 U.S.C. 553), the Department does not plan to hold a public hearing

on this proposed rule.

III. Procedural Requirements

A. Review Under Executive Order 12866

Today's regulatory action has been determined not to be a

``significant regulatory action'' under Executive Order 12866,

``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993).

Accordingly, this action was not subject to review under that Executive

Order by the Office of Information and Regulatory Affairs of the Office

of Management and Budget (OMB).

B. Review Under Executive Order 12778

Section 2 of Executive Order 12778 instructs agencies to adhere to

certain requirements in promulgating new regulations and reviewing

existing regulations. These requirements, set forth in Sections 2(a)

and (b), include eliminating drafting errors and needless ambiguity,

drafting the regulations to minimize litigation, providing clear and

certain legal standards for affected conduct, and promoting

simplification and burden reduction. Agencies are also instructed to

make every reasonable effort to ensure that the regulation: Specifies

clearly any preemptive effect; describes any administrative proceedings

to be available prior to judicial review and any provisions for the

exhaustion of such administrative proceedings; and defines key terms.

DOE certifies that today's proposal meets the requirements of sections

2(a) and (b) of Executive Order 12778.

C. Review Under the Regulatory Flexibility Act

This proposed rule was reviewed under the Regulatory Flexibility

Act of 1980, Public Law 96-354, which requires preparation of a

regulatory flexibility analysis for any rule which is likely to have

significant economic impact on a substantial number of small entities.

DOE certifies that this rule will not have a significant economic

impact on a substantial number of small entities, and, therefore, no

regulatory flexibility analysis has been prepared.

D. Review Under the Paperwork Reduction Act

No new information or recordkeeping requirements are imposed by

this rulemaking. Accordingly, no OMB clearance is required under the

Paperwork Reduction Act of 1980 (44 U.S.C. 3501, et seq.).

E. Review Under the National Environmental Policy Act

DOE has concluded that promulgation of this rule falls into a class

of actions which would not individually or cumulatively have

significant impact on the human environment, as determined by DOE's

regulations (10 CFR part 1021, subpart D) implementing the National

Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.).

Specifically, this rule is categorically excluded from NEPA review

because the proposed amendments to the DEAR do not change the

environmental effect of the rule being amended (categorical exclusion

A5). Therefore, this rule does not require an environmental impact

statement or environmental assessment pursuant to NEPA.

F. Review Under Executive Order 12612

Executive Order 12612, (52 FR 41685, October 30, 1987), requires

that regulations, rules, legislation, and any other policy actions be

reviewed for any substantial direct effects on States, on the

relationship between the National Government and the States, or in the

distribution of power and responsibilities among the various levels of

Government. If there are sufficient substantial direct effects, then

the Executive Order requires the preparation of a federalism assessment

to be used in all decisions involved in promulgating and implementing a

policy action. This proposed rule, when finalized, will revise certain

policy and procedural requirements. States which contract with DOE will

be subject to this rule. However, DOE has determined that this rule

will not have a substantial direct effect on the institutional

interests or traditional functions of the States.

List of Subjects in 48 CFR Parts 915, 931, 942, 951, 952, and 970

Government Procurement.

Issued in Washington, D.C. on June 22, 1994.

Richard H. Hopf,

Deputy Assistant Secretary for Procurement and Assistance Management.

For the reasons set out in the preamble, Chapter 9 of Title 48 of

the Code of Federal Regulations is proposed to be amended as set forth

below.

1. The authority citation for Parts 915, 931, 942, and 951

continues to read as follows:

Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).

PART 915--CONTRACTING BY NEGOTIATION

2. Subsection 915.805-5 is amended by revising paragraph (c)(1) to

read as set forth below:

915.805-5 Field pricing support.

* * * * *

(c)(1) When an audit is required pursuant to 915.805-70, ``Audit as

an aid in proposal analysis,'' the request for audit shall be sent

directly to the Federal audit office assigned cognizance of the offeror

or prospective contractor. When the cognizant agency is other than the

Defense Contract Audit Agency or the Department of Health and Human

Services, and an appropriate interagency agreement has not been

established, the need for audit assistance shall be coordinated with

the Office of Policy, within the Headquarters procurement organization.

* * * * *

3. Subsection 915.970-8 is amended by revising the introductory

text to paragraph (d)(1) to read as set forth below:

915.970-8 Weighted guidelines application considerations.

* * * * *

(d) Capital investment (facilities). (1) This element relates to

the consideration to be given in the profit objective in recognition of

the investment risk associated with the facilities employed by the

contractor. Measurement of the amount of facilities capital employed is

discussed in 48 CFR 9904.414 (FAR Appendix B, 9904.414). Five to twenty

percent of the net book value of facilities capital allocated to the

contract is the normal range of weight for this profit factor. The key

factors that the negotiating official shall consider in evaluating this

factor are:

* * * * *

PART 931--CONTRACT COST PRINCIPLES AND PROCEDURES

4. Subsection 931.205-18 is revised to read as follows: 931.205-18

Independent research and development (IR&D) and bid and proposal (B&P)

costs.

(c)(2) IR&D costs are recoverable under DOE contracts to the extent

they are reasonable, allocable, not otherwise unallowable, and have

potential benefit or relationship to the DOE program. The term ``DOE

program'' encompasses the DOE total mission and its objectives. B&P

costs are recoverable under DOE contracts to the extent they are

reasonable, allocable, and not otherwise unallowable.

PART 942--CONTRACT ADMINISTRATION

5. Section 942.003 is amended by revising paragraph (a) as set

forth below:

942.003 Organizational structure.

(a) The Department of Defense has initiated a formal system of

independent organizations responsible for performance of post-award

management functions. A field structure of Contract Administration

Offices (CAO) responsible for contract management and administration of

contracts for major defense contractors has been established. DOD has

organized plant residencies of contract management specialists for

specific DOD contractors and their various business units. The Defense

Logistics Agency performs contract management functions both at onsite

residencies of contractors and on a mobile basis from centrally located

management areas for other defense contractors. A complete listing of

the DOD contract administration service components is contained in the

Defense Directory cited in (FAR) 48 CFR 42.102.

* * * * *

6. Section 942.101 is amended by removing paragraph (a)(2);

redesignating paragraph (a)(3) as (a)(2); and revising paragraph (c) to

read as follows:

942.101 Policy.

* * * * *

understanding with the Defense Contract Audit Agency and the Office of

Audit of the Department of Health and Human Services to provide audit

support service to the DOE in support of its procurement mission.

Procedures for acquiring these services are discussed in 942.70.

7. Subsection 942.705-1 is revised to read as follows:

942.705-1 Contracting officer determination procedure.

(a)(3) The Department of Energy shall use the contracting officer

determination procedure for all business units for which it shall be

required to negotiate final indirect cost rates. A listing of such

business units is maintained by the Office of Policy, within the

Headquarters procurement organization.

(b)(1) Pursuant to FAR 52.216-7, Allowable Cost and Payment,

contractors shall be requested to submit their final indirect cost rate

proposals reflecting actual cost experience during the covered periods

to the cognizant contracting officers responsible for negotiating their

final indirect rates. The DOE negotiating official shall request all

needed audit service in accordance with the procedures in 942.70, Audit

Services.

8. Subsection 942.705-3 is revised to read as follows:

942.705-3 Educational institutions.

(a)(2) The negotiated rates established for the institutions cited

in OMB Circular No. A-88 are distributed, to the Cognizant DOE Office

(CDO) assigned lead office responsibility for all DOE indirect cost

matters relating to a particular contractor, by the Office of Policy,

within the Headquarters procurement organization.

9. Subsection 942.705-4 is revised to read as follows:

942.705-4 State and local governments.

A list of cognizant agencies for State/local government

organizations is periodically published in the Federal Register by the

Office of Management and Budget (OMB). The responsible agencies are

notified of such assignments. The current negotiated rates for State/

local government activities are distributed to each CDO by the Office

of Policy, within the Headquarters procurement organization.

10. Subsection 942.705-5 is revised to read as follows:

942.705-5 Nonprofit organizations other than educational and state and

local governments.

OMB Circular A-122 establishes the rules for assigning cognizant

agencies for the negotiation and approval of indirect cost rates. The

Federal agency with the largest dollar value of awards (contracts plus

Federal financial assistance dollars) will be designated as the

cognizant agency. There is no published listing of assigned agencies.

The Office of Policy, within the Headquarters procurement organization,

distributes to each CDO the rates established by the cognizant agency.

Subpart 942.10 [Removed]

11. Subpart 942.10 (including 942.1004 and 942.1008) is removed.

12. Subsection 942.7003-6 is revised to read as follows:

942.7003-6 CAS disclosure statements.

The audit activity is available and, in accordance with (FAR) 48

CFR Part 30, Cost Accounting Standards Administration, is responsible

for making recommendations to the contracting officer as to whether the

CAS disclosure statement, submitted by the contractor as a condition of

the contract, adequately describes the actual or proposed cost

accounting practices and is in compliance with the Cost Accounting

Standards required under the terms of the contract. The contracting

officer shall request the auditor to review all Disclosure Statements

submitted by a contractor or potential contractor.

13. Section 942.7004 is revised to read as follows:

942.7004 Procedures.

The Department of Energy Headquarters procurement organization has

established formal interagency arrangements with the Defense Contract

Audit Agency (DCAA) and the Department of Health and Human Services,

Office of Inspector General. Audits are available to contracting

officers pursuant to terms of these arrangements. DCAA, as the DOE

cognizant auditor, is responsible for performing audits, when

requested, for all DOE prime contractors and DOE Management and

Operating contractors' subcontractors, except where another agency has

cognizance of a contractor. HHS, for example, has contract audit

cognizance for most educational institutions.

PART 951--USE OF GOVERNMENT SOURCES BY CONTRACTORS

14. Section 951.7000 is revised to read as follows:

951.7000 Scope of subpart.

The General Services Administration (GSA) and, in some cases, the

Department of Defense (DOD) Military Traffic Management Command

negotiate agreements with commercial organizations to provide certain

discounts to contractors traveling under Government cost-reimbursable

contracts. In the case of discount air fares and hotel/motel room

rates, the GSA has established agreements with certain airlines and

thousands of hotels/motels to extend discounts which were previously

only available to Federal employees on official travel status. DOD has

negotiated agreements with car rental companies for special rates with

unlimited mileage which were also to be used by only Federal employees

on official Government business. GSA Federal Property Management

Regulations (FPMRs) make these three travel discounts available to

Government cost-reimbursable contractors at the option of the vendor.

15. Section 951.7001 is revised to read as follows:

951.7001 General policy.

Contracting officers will encourage DOE cost-reimbursable

contractors (CRCs) to use Government travel discounts to the maximum

extent practicable in accordance with contractual terms and conditions.

Vendors providing the service may require that Government contractor

employees furnish a letter of identification signed by the authorizing

contracting officer. Contracting officers shall provide CRCs with a

``Standard Letter of Identification'' when appropriate to do so. An

example of a ``Standard Letter of Identification'' is at 952.251-70(e).

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

16. Subsection 952.251-70 is amended by revising paragraph (a) of

the clause to read as follows:

952.251-70 Contractor employee travel discounts.

* * * * *

(a) Contracted airlines. Airlines participating in travel

discounts are listed in the Federal Travel Directory (FTD),

published monthly by the General Services Administration (GSA).

Regulations governing the use of contracted airlines are contained

in the Federal Travel Regulation (FTR), 41 CFR Part 301-15, Travel

Management Programs. It stipulates that cost-reimbursable contractor

employees may obtain discount air fares by use of a Government

Transportation Request (GTR), Standard Form 1169, cash or personal

credit cards. When the GTR is used, contracting officers may issue a

blanket GTR for a period of not less than two weeks nor more than

one month. In unusual circumstances, such as prolonged or

international travel, the contracting officer may extend the period

for which a blanket GTR is effective to a maximum of three months.

Contractors will ensure that their employees traveling under GTR

provide the GTR number to the contracted airlines for entry on

individual tickets and on month-end billings to the contractor.

* * * * *

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

17. The authority citation for part 970 continues to read as

follows:

Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C.

2201), sec. 644 of the Department of Energy Organization Act, Public

Law 95-91 (42 U.S.C. 7254), sec. 201 of the Federal Civilian

Employee and Contractor Travel Expenses Act of 1985 (41 U.S.C. 420)

and sec. 1534 of the Department of Defense Authorization Act, 1986,

Public Law 99-145 (42 U.S.C. 7256a), as amended.

18. Subsection 970.3001-1 is revised to read as follows:

970.3001-1 Applicability.

The provisions of FAR Part 30 and 48 CFR Chapter 99 (FAR Appendix

B) shall be followed for management and operating contracts.

19. Subsection 970.3001-2 is revised to read as follows:

970.3001-2 Limitations.

Cost of money as an element of the cost of facilities capital (CAS

414) and as an element of the cost of capital assets under construction

(CAS 417) is not recognized as an allowable cost under contracts

subject to 48 CFR Part 970 (See 970.3102-3).

20. Subsection 970.3102-17 is amended by revising paragraph

(c)(2)(i) and by adding paragraphs (c)(6) and (c)(7) to read as

follows:

970.3102-17 Travel costs.

* * * * *

(2) * * *

(i) Federal Travel Regulation prescribed by the General Services

Administration, for travel in the conterminous 48 United States.

* * * * *

(6) The maximum per diem rates referenced in paragraph (c)(2) of

this section generally would not constitute a reasonable daily charge:

(i) when no lodging costs are incurred; and/or (ii) on partial travel

days (e.g., same day of departure and return). Appropriate downward

adjustments from the maximum per diem rates would normally be required

under these circumstances. While these adjustments need not be

calculated pursuant to the Federal Travel Regulation, Joint Travel

Regulations, or Standardized Regulations, they must result in a

reasonable charge.

(7) For contracts with State and nonprofit institutions which

conduct federally sponsored research and related activities, costs

incurred for lodging, other subsistence, and incidental expenses, are

subject to the provisions of 970.5204-13(e)(35) NOTE and 970.5204-

14(e)(33) NOTE.

21. Subsection 970.5204-13 is amended by revising paragraph (e)(35)

of the clause to read as follows:

970.5204-13 Allowable costs and fixed-fee (Management and Operating

contracts)

* * * * *

(e) * * *

(35) Contractor employee travel costs incurred for lodging,

meals and incidental expenses which exceed on a daily basis the

applicable maximum per diem rates in effect for Federal civilian

employees at the time of travel. When the applicable maximum per

diem rate is inadequate due to special or unusual situations, the

contractor may pay employees for actual expenses in excess of such

per diem rate limitations. To be allowable, however, such payments

must be properly authorized by an officer or appropriate official of

the contractor and shall not exceed the higher amounts that may be

authorized for Federal civilian employees in a similar situation.

Note: For contracts with State and nonprofit institutions which

conduct federally sponsored research and related activities, use the

following clause:

Contractor employee travel costs incurred for lodging, other

subsistence, and incidental expenses shall be considered reasonable

and allowable, to the extent such costs do not exceed charges

normally allowed by the institution in its regular operations

pursuant to a disclosed or established institutional policy and the

amounts claimed are otherwise reasonable and allocable. In the

absence of an acceptable institutional policy regarding travel

costs, the rates and amounts established under subchapter I of

Chapter 57 of Title 5, United States Code, or by the General

Services Administration, or the President (or his designee) pursuant

to any provisions of such subchapter shall apply to the agreements

(41 U.S.C. 420(b)).

* * * * *

22. Subsection 970.5204-14 is amended by revising paragraph (e)(33)

of the clause to read as follows:

970.5204-14 Allowable costs and fixed-fee (support contracts).

* * * * *

(e) * * *

(33) Contractor employee travel costs incurred for lodging,

meals and incidental expenses which exceed on a daily basis the

applicable maximum per diem rates in effect for Federal civilian

employees at the time of travel. When the applicable maximum per

diem rate is inadequate due to special or unusual situations, the

contractor may pay employees for actual expenses in excess of such

per diem rate limitation. To be allowable, however, such payments