Federal Acquisition Regulation; Changes in Contract Administration and Audit Cognizance

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 31, 32, 42, 46, 47, and 52

[FAC 97-04; FAR Case 95-022; Item XII]

RIN 9000-AH27

Federal Acquisition Regulation; Changes in Contract

Administration and Audit Cognizance

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 add policies and procedures

for assigning and performing contract audit services and to clarify the

policy for assigning or delegating responsibility for establishing

forward pricing and billing rates and final indirect cost 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: April 24, 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 97-04, FAR case 95-022.

SUPPLEMENTARY INFORMATION:

A. Background

In February 1994, the Office of Federal Procurement Policy formed a

Contract Audit Committee. This final rule implements recommendations of

the committee pertaining to civilian agencies' contract administration

and audit practices. The rule amends FAR Parts 31, 32, 42, 46, 47, and

52 to add policies and procedures for assigning and performing contract

audit services, and to clarify the policy for assigning or delegating

responsibility for establishing forward pricing and billing rates and

final indirect costs rates. A proposed rule was published in the

Federal Register on December 11, 1996 (61 FR 65306). Forty-two comments

were received from 19 respondents. All comments were considered in the

development of this 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 the rule primarily

pertains to internal Government procedures for performing contract

administration functions.

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 31, 32, 42, 46, 47, and 52

Government procurement.

Dated: February 13, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 31, 32, 42, 46, 47, and 52 are amended as

set forth below:

1. The authority citation for 48 CFR Parts 31, 32, 42, 46, 47, 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 31--CONTRACT COST PRINCIPLES AND PROCEDURES

31.109 [Amended]

2. Section 31.109 is amended in paragraph (f)(3) by removing the

word ``cognizant'' and adding ``responsible'' in its place.

PART 32--CONTRACT FINANCING

32.503-3 [Amended]

3. Section 32.503-3 is amended in paragraph (b)(2) by removing

``cognizant independent'' and adding ``responsible'' in its place.

32.503-12 [Amended]

4. Section 32.503-12 is amended in paragraph (c) by removing

``cognizant independent'' and adding ``responsible'' in its place.

[[Page 9062]]

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

5. The heading for Part 42 is revised as set forth above.

6. Section 42.000 and Subparts 42.1 and 42.2 are revised to read as

follows:

Sec.

42.000 Scope of part.

42.001 Definitions.

42.002 Interagency agreements.

42.003 Cognizant Federal agency.

Subpart 42.1--Contract Audit Services

42.101 Contract audit responsibilities.

42.102 Assignment of contract audit services.

42.103 Contract audit services directory.

Subpart 42.2--Contract Administration Services

42.201 Contract administration responsibilities.

42.202 Assignment of contract administration.

42.203 Contract administration services directory.

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

U.S.C. 2473(c).

42.000 Scope of part.

This part prescribes policies and procedures for assigning and

performing contract administration and contract audit services.

42.001 Definitions.

As used in this part--

Cognizant Federal agency means the Federal agency that, on behalf

of all Federal agencies, is responsible for establishing final indirect

cost rates and forward pricing rates, if applicable, and administering

cost accounting standards for all contracts in a business unit.

Responsible audit agency means the agency that is responsible for

performing all required contract audit services at a business unit (as

defined in 48 CFR 31.001).

42.002 Interagency agreements.

(a) Agencies shall avoid duplicate audits, reviews, inspections,

and examinations of contractors or subcontractors, by more than one

agency, through the use of interagency agreements (see OFPP Policy

Letter 78-4, Field Contract Support Cross-Servicing Program).

(b) Subject to the fiscal regulations of the agencies and

applicable interagency agreements, the requesting agency shall

reimburse the servicing agency for rendered services in accordance with

the Economy Act (31 U.S.C. 1535).

(c) When an interagency agreement is established, the agencies are

encouraged to consider establishing procedures for the resolution of

issues that may arise under the agreement.

42.003 Cognizant Federal agency.

(a) For contractors other than educational institutions and

nonprofit organizations, the cognizant Federal agency normally will be

the agency with the largest dollar amount of negotiated contracts,

including options. For educational institutions and nonprofit

organizations, the cognizant Federal agency is established according to

Subsection G.11 of OMB Circular A-21, Cost Principles for Educational

Institutions, and Attachment A, Subsection E.2, of OMB Circular A-122,

Cost Principles for Nonprofit Organizations, respectively.

(b) Once a Federal agency assumes cognizance for a contractor, it

should remain cognizant for at least 5 years to ensure continuity and

ease of administration. If, at the end of the 5-year period, another

agency has the largest dollar amount of negotiated contracts, including

options, the two agencies shall coordinate and determine which will

assume cognizance. However, if circumstances warrant it and the

affected agencies agree, cognizance may transfer prior to the

expiration of the 5-year period.

Subpart 42.1--Contract Audit Services

42.101 Contract audit responsibilities.

(a) The auditor is responsible for--

(1) Submitting information and advice to the requesting activity,

based on the auditor's analysis of the contractor's financial and

accounting records or other related data as to the acceptability of the

contractor's incurred and estimated costs;

(2) Reviewing the financial and accounting aspects of the

contractor's cost control systems; and

(3) Performing other analyses and reviews that require access to

the contractor's financial and accounting records supporting proposed

and incurred costs.

(b) Normally, for contractors other than educational institutions

and nonprofit organizations, the Defense Contract Audit Agency (DCAA)

is the responsible Government audit agency. However, there may be

instances where an agency other than DCAA desires cognizance of a

particular contractor. In those instances, the two agencies shall agree

on the most efficient and economical approach to meet contract audit

requirements. For educational institutions and nonprofit organizations,

audit cognizance will be determined according to the provisions of OMB

Circular A-133, Audits of Institutions of Higher Education and Other

Non-Profit Institutions.

42.102 Assignment of contract audit services.

(a) As provided in agency procedures or interagency agreements,

contracting officers may request audit services directly from the

responsible audit agency cited in the Directory of Federal Contract

Audit Offices. The audit request should include a suspense date and

should identify any information needed by the contracting officer.

(b) The responsible audit agency may decline requests for services

on a case-by-case basis, if resources of the audit agency are

inadequate to accomplish the tasks. Declinations shall be in writing.

42.103 Contract audit services directory.

(a) DCAA maintains and distributes the Directory of Federal

Contract Audit Offices. The directory identifies cognizant audit

offices and the contractors over which they have cognizance. Changes to

audit cognizance shall be provided to DCAA so that the directory can be

updated.

(b) Agencies may obtain a copy of the directory or information

concerning cognizant audit offices by contacting the--Defense Contract

Audit Agency, ATTN: CMO, Publications Officer, 8725 John J. Kingman

Road, Suite 2135, Fort Belvoir, VA 22060-6219.

Subpart 42.2--Contract Administration Services

42.201 Contract administration responsibilities.

(a) For each contract assigned for administration, the contract

administration office (CAO) (see 48 CFR 2.101) shall--

(1) Perform the functions listed in 42.302(a) to the extent that

they apply to the contract, except for the functions specifically

withheld;

(2) Perform the functions listed in 42.302(b) only when and to the

extent specifically authorized by the contracting officer; and

(3) Request supporting contract administration under 42.202(e) and

(f) when it is required.

(b) The Defense Logistics Agency, Defense Contract Management

Command, Fort Belvoir, Virginia, and other agencies offer a wide

variety of contract administration and support services.

42.202 Assignment of contract administration.

(a) Delegating functions. As provided in agency procedures,

contracting officers may delegate contract administration or

specialized support services, either through interagency agreements or

by direct request to the cognizant CAO listed in the Federal

[[Page 9063]]

Directory of Contract Administration Services Components. The

delegation should include--

(1) The name and address of the CAO designated to perform the

administration (this information also shall be entered in the

contract);

(2) Any special instructions, including any functions withheld or

any specific authorization to perform functions listed in 42.302(b);

(3) A copy of the contract to be administered; and

(4) Copies of all contracting agency regulations or directives that

are--

(i) Incorporated into the contract by reference; or

(ii) Otherwise necessary to administer the contract, unless copies

have been provided previously.

(b) Special instructions. As necessary, the contracting officer

also shall advise the contractor (and other activities as appropriate)

of any functions withheld from or additional functions delegated to the

CAO.

(c) Delegating additional functions. For individual contracts or

groups of contracts, the contracting office may delegate to the CAO

functions not listed in 42.302: Provided that--

(1) Prior coordination with the CAO ensures the availability of

required resources;

(2) In the case of authority to issue orders under provisioning

procedures in existing contracts and under basic ordering agreements

for items and services identified in the schedule, the head of the

contracting activity or designee approves the delegation; and

(3) The delegation does not require the CAO to undertake new or

follow-on acquisitions.

(d) Rescinding functions. The contracting officer at the requesting

agency may rescind or recall a delegation to administer a contract or

perform a contract administration function, except for functions

pertaining to cost accounting standards and negotiation of forward

pricing rates and indirect cost rates (also see 42.003). The requesting

agency must coordinate with the CAO to establish a reasonable

transition period prior to rescinding or recalling the delegation.

(e) Secondary delegations of contract administration. (1) A CAO

that has been delegated administration of a contract under paragraph

(a) or (c) of this section, or a contracting office retaining contract

administration, may request supporting contract administration from the

CAO cognizant of the contractor location where performance of specific

contract administration functions is required. The request shall--

(i) Be in writing;

(ii) Clearly state the specific functions to be performed; and

(iii) Be accompanied by a copy of pertinent contractual and other

necessary documents.

(2) The prime contractor is responsible for managing its

subcontracts. The CAO's review of subcontracts is normally limited to

evaluating the prime contractor's management of the subcontracts (see

Part 44). Therefore, supporting contract administration shall not be

used for subcontracts unless--

(i) The Government otherwise would incur undue cost;

(ii) Successful completion of the prime contract is threatened; or

(iii) It is authorized under paragraph (f) of this section or

elsewhere in this regulation.

(f) Special surveillance. For major system acquisitions (see Part

34), the contracting officer may designate certain high risk or

critical subsystems or components for special surveillance in addition

to requesting supporting contract administration. This surveillance

shall be conducted in a manner consistent with the policy of requesting

that the cognizant CAO perform contract administration functions at a

contractor's facility (see 42.002).

(g) Refusing delegation of contract administration. An agency may

decline a request for contract administration services on a case-by-

case basis if resources of the agency are inadequate to accomplish the

tasks. Declinations shall be in writing.

42.203 Contract administration services directory.

The Defense Contract Management Command (DCMC) maintains and

distributes the Federal Directory of Contract Administration Services

Components. The directory lists the names and telephone numbers of

those DCMC and other agency offices that offer contract administration

services within designated geographic areas and at specified contractor

plants. Federal agencies may obtain a free copy of the directory on

disk by writing to--HQ Defense Logistics Agency, ATTN: DCMC-AQBF, 8725

John J. Kingman Road, Fort Belvoir, VA 22060, or access it on the

Internet at http://www.dcmc.dcrb.dla.mil.

7. Section 42.301 is revised to read as follows:

42.301 General.

When a contract is assigned for administration under Subpart 42.2,

the contract administration office (CAO) shall perform contract

administration functions in accordance with 48 CFR Chapter I, the

contract terms, and, unless otherwise agreed to in an interagency

agreement (see 42.002), the applicable regulations of the servicing

agency.

8. Section 42.302 is amended by revising paragraphs (a)

introductory text, (a)(11) introductory text, (a)(11)(iv), (a)(13),

(a)(20), (a)(32), (a)(61), and (a)(63) to read as follows:

42.302 Contract administration functions.

(a) The following contract administration functions are normally

delegated to a CAO. The contracting officer may retain any of these

functions, except those in paragraphs (a)(5), (a)(9), and (a)(11) of

this section, unless the contracting officer has been designated to

perform these functions by the cognizant Federal agency (see 42.001).

* * * * *

(11) In connection with Cost Accounting Standards (see 48 CFR

30.601 and 48 CFR Chapter 99 (FAR Appendix))--

* * * * *

(iv) Negotiate price adjustments and execute supplemental

agreements under the Cost Accounting Standards clauses at 48 CFR

52.230-2, 52.230-3, 52.230-4, 52.230-5, and 52.230-6.

* * * * *

(13) Make payments on assigned contracts when prescribed in agency

acquisition regulations.

* * * * *

(20) For classified contracts, administer those portions of the

applicable industrial security program delegated to the CAO (see

Subpart 4.4).

* * * * *

(32) Perform preaward surveys (see Subpart 9.1).

* * * * *

(61) Obtain contractor proposals for any contract price adjustments

resulting from amended shipping instructions. Review all amended

shipping instructions on a periodic, consolidated basis to ensure that

adjustments are timely made. Except when the ACO has settlement

authority, the ACO shall forward the proposal to the contracting

officer for contract modification. The ACO shall not delay shipments

pending completion and formalization of negotiations of revised

shipping instructions.

* * * * *

(63) Cancel unilateral purchase orders when notified of

nonacceptance by the contractor. The CAO shall notify the contracting

officer when the purchase order is canceled.

* * * * *

[[Page 9064]]

9. Section 42.602 is amended by revising paragraphs (c)(2) and (d)

to read as follows:

42.602 Assignment and location.

* * * * *

(c) * * *

(2) When the locations are under the contract administration

cognizance of more than one agency, the agencies concerned shall agree

on the responsible agency (normally on the basis of the agency with the

largest dollar balance, including options, of affected contracts). In

such cases, agencies may also consider geographic location.

(d) The directory of contract administration services components

referenced in 42.203 includes a listing of CACO's and the contractors

for which they are assigned responsibility.

42.603 [Amended]

10. Section 42.603 is amended in the introductory text of paragraph

(a) by removing the parenthetical ``(see subpart 42.3)''; and in the

introductory text of paragraph (b)(1) by removing the word

``cognizant'' and adding ``responsible'' in its place.

11. Section 42.701 is amended by revising the definitions for

``Business unit'' and ``Indirect cost'', and by adding, in alphabetical

order, the definition for ``Forward pricing rate agreement'' to read as

follows:

42.701 Definitions.

* * * * *

Business unit is defined at 31.001.

* * * * *

Forward pricing rate agreement is defined at 48 CFR 15.401.

Indirect cost is defined at 48 CFR 31.203.

* * * * *

12. Section 42.703-1 is amended by revising the first sentence of

paragraph (a), and paragraph (c) to read as follows:

42.703-1 Policy.

(a) A single agency (see 42.705-1) shall be responsible for

establishing final indirect cost rates for each business unit. * * *

* * * * *

(c) To ensure compliance with 10 U.S.C. 2324(a) and 41 U.S.C.

256(a)--

(1) Final indirect cost rates shall be used for contract closeout

for a business unit, unless the quick-closeout procedure in 42.708 is

used. These final rates shall be binding for all cost-reimbursement

contracts at the business unit, subject to any specific limitation in a

contract or advance agreement; and

(2) Established final indirect cost rates shall be used in

negotiating the final price of fixed-price incentive and fixed-price

redeterminable contracts and in other situations requiring that

indirect costs be settled before contract prices are established,

unless the quick-closeout procedure in 42.708 is used.

42.703-2 [Amended]

13. Section 42.703-2(d) is amended by removing the word

``contractor'' and adding ``contractor's'' in its place.

14. Section 42.704 is amended by revising paragraphs (a), (b), and

(c) to read as follows:

42.704 Billing rates.

(a) The contracting officer (or cognizant Federal agency official)

or auditor responsible under 42.705 for establishing the final indirect

cost rates also shall be responsible for determining the billing rates.

(b) The contracting officer (or cognizant Federal agency official)

or auditor shall establish billing rates on the basis of information

resulting from recent review, previous rate audits or experience, or

similar reliable data or experience of other contracting activities. In

establishing billing rates, the contracting officer (or cognizant

Federal agency official) or auditor should ensure that the billing

rates are as close as possible to the final indirect cost rates

anticipated for the contractor's fiscal period, as adjusted for any

unallowable costs. When the contracting officer (or cognizant Federal

agency official) or auditor determines that the dollar value of

contracts requiring use of billing rates does not warrant submission of

a detailed billing rate proposal, the billing rates may be established

by making appropriate adjustments from the prior year's indirect cost

experience to eliminate unallowable and nonrecurring costs and to

reflect new or changed conditions.

(c) Once established, billing rates may be prospectively or

retroactively revised by mutual agreement of the contracting officer

(or cognizant Federal agency official) or auditor and the contractor at

either party's request, to prevent substantial overpayment or

underpayment. When agreement cannot be reached, the billing rates may

be unilaterally determined by the contracting officer (or cognizant

Federal agency official).

* * * * *

15. Section 42.705-1 is amended by revising paragraphs (a)

introductory text, (a)(3), (a)(4), (b)(1), (b)(2), and (b)(3) to read

as follows:

42.705-1 Contracting officer determination procedure.

(a) Applicability and responsibility. Contracting officer

determination shall be used for the following, with the indicated

cognizant contracting officer (or cognizant Federal agency official)

responsible for establishing the final indirect cost rates:

* * * * *

(3) For business units not included in paragraph (a)(1) or (a)(2)

of this subsection, the contracting officer (or cognizant Federal

agency official) will determine whether the rates will be contracting

officer or auditor determined.

(4) Educational institutions (see 42.705-3).

* * * * *

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

Payment clause at 48 CFR 52.216-7 or 52.216-13, the contractor shall

submit to the contracting officer (or cognizant Federal agency

official) 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 (or cognizant Federal

agency official) 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/

chap5.html;

(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

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

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

6219.

(2) The auditor shall submit to the contracting officer (or

cognizant Federal agency official) an advisory audit report identifying

any relevant advance agreements or restrictive terms of specific

contracts.

[[Page 9065]]

(3) The contracting officer (or cognizant Federal agency official)

shall head the Government negotiating team, which includes the

cognizant auditor and technical or functional personnel as required.

Contracting offices having significant dollar interest shall be invited

to participate in the negotiation and in the preliminary discussion of

critical issues. Individuals or offices that have provided a

significant input to the Government position should be invited to

attend.

* * * * *

15. Section 42.705-2 is amended by revising paragraphs (a)(2)

introductory text, (a)(2)(iv), and (b) to read as follows:

42.705-2 Auditor determination procedure.

(a) * * *

* * * * *

(2) In addition, auditor determination may be used for business

units that are covered in 42.705-1(a) when the contracting officer (or

cognizant Federal agency official) and auditor agree that the indirect

costs can be settled with little difficulty and any of the following

circumstances apply:

* * * * *

(iv) The contracting officer (or cognizant Federal agency official)

and auditor agree that special circumstances require auditor

determination.

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

contracting officer (or cognizant Federal agency official) and auditor

a final indirect cost rate proposal in accordance with 42.705-1(b)(1).

(2) Upon receipt of a proposal, the auditor shall--

(i) Audit the proposal and seek agreement on indirect costs with

the contractor;

(ii) Prepare an indirect cost rate agreement conforming to the

requirements of the contracts. The agreement shall be signed by the

contractor and the auditor;

(iii) If agreement with the contractor is not reached, forward the

audit report to the contracting officer (or cognizant Federal agency

official) identified in the Directory of Contract Administration

Services Components (see 42.203), who will then resolve the

disagreement; and

(iv) Distribute resulting documents in accordance with 42.706.

16. Section 42.705-3 is amended by revising paragraph (a)(2) to

read as follows:

42.705-3 Educational institutions.

(a) * * *

(2) OMB Circular No. A-21, Cost Principles for Educational

Institutions, assigns each educational institution to a single

Government agency for the negotiation of indirect cost rates and

provides that those rates shall be accepted by all Federal agencies.

Cognizant Government agencies and educational institutions are listed

in the Directory of Federal Contract Audit Offices (see 42.103).

* * * * *

PART 46--QUALITY ASSURANCE

17. Section 46.103 is amended by revising paragraph (d) to read as

follows:

46.103 Contracting office responsibilities.

* * * * *

(d) When contract administration is retained (see 42.201),

verifying that the contractor fulfills the contract quality

requirements; and

* * * * *

18. Section 46.104 is amended by revising paragraph (f) to read as

follows:

46.104 Contract administration office responsibilities.

* * * * *

(f) Recommend any changes necessary to the contract,

specifications, instructions, or other requirements that will provide

more effective operations or eliminate unnecessary costs (see

46.103(c)).

19. Section 46.502 is amended by revising the second sentence to

read as follows:

46.502 Responsibility for acceptance.

* * * When this responsibility is assigned to a cognizant contract

administration office or to another agency (see 42.202(g)), acceptance

by that office or agency is binding on the Government.

PART 47--TRANSPORTATION

47.301-3 [Amended]

20. Section 47.301-3 is amended in the introductory text of

paragraph (c) by removing ``42.202(d)'' and adding ``42.202(a)'' in its

place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

21. Section 52.216-7 is amended by revising the clause date and the

first sentence of paragraph (d)(2)(i) to read as follows:

52.216-7 Allowable Cost and Payment.

* * * * *

Allowable Cost and Payment (Apr 1998)

* * * * *

(d) Final indirect cost rates. (1) * * *

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

cost rate proposal to the Contracting Officer (or cognizant Federal

agency official) and auditor within the 6-month period following the

expiration of each of its fiscal years. * * *

* * * * *

(End of clause)

22. Section 52.216-13 is amended by revising the clause date and

the first sentence of paragraph (c)(2)(i) to read as follows:

52.216-13 Allowable Cost and Payment--Facilities.

* * * * *

Allowable Cost and Payment--Facilities (Apr 1998)

* * * * *

(c) Negotiated Indirect Costs. (1) * * *

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

cost rate proposal to the Contracting Officer (or cognizant Federal

agency official) and auditor within the 6-month period following the

expiration of each of its fiscal years. * * *

* * * * *

(End of clause)

23. Section 52.216-15 is amended by revising the clause date and

the first sentence of paragraph (b)(1); by revising the second sentence

of paragraph (d); and revising paragraph (e) to read as follows:

52.216-15 Predetermined Indirect Cost Rates.

* * * * *

Predetermined Indirect Cost Rates (APR 1998)

* * * * *

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

cost rate proposal to the Contracting Officer (or cognizant Federal

agency official) and auditor within the 6-month period following the

expiration of each of its fiscal years. * * *

* * * * *

(d)* * * The Contracting Officer (or cognizant Federal agency

official) and Contractor shall negotiate rates for subsequent

periods and execute a written indirect cost rate agreement setting

forth the results. * * *

(e) Pending establishment of predetermined indirect cost rates

for any fiscal year (or other period agreed to by the parties), the

Contractor shall be reimbursed either at the rates fixed for the

previous fiscal year (or other period) or at billing rates

acceptable to the Contracting Officer (or cognizant Federal agency

official), subject to appropriate adjustment when the final rates

for that period are established.

* * * * *

(End of clause)

[FR Doc. 98-4303 Filed 2-20-98; 8:45 am]

BILLING CODE 6820-EP-P