Federal Acquisition Regulation; Final Overhead Settlement

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 4, 42, and 52

[FAC 97-03; FAR Case 95-017; Item III]

RIN 9000-AG87

Federal Acquisition Regulation; Final Overhead Settlement

AGENCIES: Department of Defense (DoD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to improve the process of

final settlement of contractor overhead rates. This regulatory action

was not subject to Office of Management and Budget review under

Executive Order 12866, dated September 30, 1993, and is not a major

rule under 5 U.S.C. 804.

EFFECTIVE DATE: February 9, 1998.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS

Building, Washington, DC 20405, (202) 501-4755, for information

pertaining to status or publication schedules. For clarification of

content, contact Ms. Linda Klein, Procurement Analyst, at (202) 501-

3775. Please cite FAC 97-03, FAR case 95-017.

SUPPLEMENTARY INFORMATION:

A. Background

This final rule amends FAR Parts 4, 42, and 52 to improve the

process of final settlement of contractor indirect cost rates under

cost-reimbursement contracts by--

Extending the time period within which a contractor must

submit an indirect cost rate proposal from 90 days to 6 months after

the end of the contractors fiscal year;

Permitting extensions to the 6-month time period for

exceptional circumstances only; and

Providing a specific reference to the Defense Contract

Audit Agency pamphlet that contains guidance on what generally

constitutes an adequate final indirect cost rate proposal and

supporting data.

A proposed rule was published in the Federal Register on July 29,

1996 (61 FR 39518). Fourteen sources submitted comments. All comments

were considered in the development of the final rule.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not 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 most contracts awarded

to small entities are awarded on a competitive, fixed-price basis and

do not require settlement of contractor indirect cost rates.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 4, 42, and 52

Government procurement.

Dated: December 1, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 4, 42, and 52 are amended as set forth

below:

1. The authority citation for 48 CFR Parts 4, 42, and 52 continues

to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS

4.703 [Amended]

2. Section 4.703 is amended in paragraph (b)(3) by removing ``90-

day'' each time it appears (twice).

PART 42--CONTRACT ADMINISTRATION

3. Section 42.705-1 is amended by revising paragraph (b)(1) to read

as follows:

42.705-1 Contracting officer determination procedure.

* * * * *

(b) Procedures. (1) In accordance with the Allowable Cost and

Payment clause at 52.216-7 or 52.216-13, the contractor shall submit to

the contracting officer and to the cognizant auditor a final indirect

cost rate proposal. The required content of the proposal and supporting

data will vary depending on such factors as business type, size, and

accounting system capabilities. The contractor, contracting officer,

and auditor must work together to make the proposal, audit, and

negotiation process as efficient as possible. Accordingly, each

contractor shall submit an adequate proposal to the contracting officer

and auditor within the 6-month period following the expiration of each

of its fiscal years. Reasonable extensions, for exceptional

circumstances only, may be requested in writing by the contractor and

granted in writing by the contracting officer. A contractor shall

support its proposal with adequate supporting data. For guidance on

what generally constitutes an adequate final indirect cost rate

proposal and supporting data, contractors should refer to the Model

Incurred Cost Proposal in Chapter 5 of the Defense Contract Audit

Agency Pamphlet (DCAAP) No. 7641.90, Information for Contractors. The

Model can be obtained by--

(i) Contacting Internet address http://www.dtic.mil/dcaa;

(ii) Sending a telefax request to Headquarters DCAA, ATTN: CMO,

Publications Officer, at (703) 767-1061;

(iii) Sending an E-Mail request to *[email protected]; or

[[Page 64916]]

(iv) Writing to: Headquarters DCAA, ATTN: CMO, Publications

Officer, 8725 John J. Kingman Road, Suite 2135, Fort Belvoir, VA 22060-

6219.

* * * * *

4. Section 42.705-2 is amended by revising paragraph (b)(1) to read

as follows:

42.705-2 Auditor determination procedures.

* * * * *

(b) Procedures. (1) The contractor shall submit to the cognizant

contracting officer and auditor a final indirect cost rate proposal in

accordance with 42.705-1(b)(1).

* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

5. Section 52.216-7 is amended by revising the date of the clause

and paragraph (d)(2) to read as follows:

52.216-7 Allowable Cost and Payment.

* * * * *

Allowable Cost and Payment (Feb 1998)

* * * * *

(d) * * *

(2)(i) The Contractor shall submit an adequate final indirect cost

rate proposal to the Contracting Officer and auditor within the 6-month

period following the expiration of each of its fiscal years. Reasonable

extensions, for exceptional circumstances only, may be requested in

writing by the Contractor and granted in writing by the Contracting

Officer. The Contractor shall support its proposal with adequate

supporting data.

(ii) The proposed rates shall be based on the Contractor's actual

cost experience for that period. The appropriate Government

representative and the Contractor shall establish the final indirect

cost rates as promptly as practical after receipt of the Contractor's

proposal.

* * * * *

6. Section 52.216-13 is amended by revising the date of the clause;

in the introductory text of paragraph (c) by removing the word

``below'' and inserting ``of this clause''; and by revising paragraph

(c)(2) to read as follows:

52.216-13 Allowable Cost and Payment--Facilities.

* * * * *

Allowable Cost and Payment Facilities (Feb 1998)

* * * * *

(c) * * *

(2)(i) The Contractor shall submit an adequate final indirect cost

rate proposal to the Contracting Officer and auditor within the 6-month

period following the expiration of each of its fiscal years. Reasonable

extensions, for exceptional circumstances only, may be requested in

writing by the Contractor and granted in writing by the Contracting

Officer. The Contractor shall support its proposal with adequate

supporting data.

(ii) The proposed rates shall be based on the Contractor's actual

cost experience for that period. The appropriate Government

representative and the Contractor shall establish the final indirect

cost rates as promptly as practical after receipt of the Contractor's

proposal.

* * * * *

7. Section 52.216-15 is amended by revising the date of the clause

and paragraph (b) to read as follows:

52.216-15 Predetermined Indirect Cost Rates.

* * * * *

Predetermined Indirect Cost Rates (Feb 1998)

* * * * *

(b)(1) The Contractor shall submit an adequate final indirect cost

rate proposal to the Contracting Officer and auditor within the 6-month

period following the expiration of each of its fiscal years. Reasonable

extensions, for exceptional circumstances only, may be requested in

writing by the Contractor and granted in writing by the Contracting

Officer. The Contractor shall support its proposal with adequate

supporting data.

(2) The proposed rates shall be based on the Contractor's actual

cost experience for that period. The appropriate Government

representative and the Contractor shall establish the final indirect

cost rates as promptly as practical after receipt of the Contractor's

proposal.

* * * * *

[FR Doc. 97-31816 Filed 12-8-97; 8:45 am]

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