Cost Accounting Standards Board (CAS) Changes to Acquisition Thresholds, 73423-73426 [05-23647]

Download as PDF Federal Register / Vol. 70, No. 237 / Monday, December 12, 2005 / Proposed Rules ‘‘(Date)’’; and removing from the last sentence of paragraph (d) of the clause ‘‘$500,000’’ and adding ‘‘$550,000’’ in its place. 52.230–3 [Amended] 84. Amend section 52.230–3 by revising the date of the clause to read ‘‘(Date)’’; and removing from paragraph (d)(2) ‘‘$500,000’’ and adding ‘‘$550,000’’ in its place. 52.230–5 [Amended] 85. Amend section 52.230–5 by revising the date of the clause to read ‘‘(Date)’’; and removing from paragraph (d)(2) of the clause ‘‘$500,000’’ and adding ‘‘$550,000’’ in its place. 86. Amend section 52.236–1 by revising the introductory paragraph to read as follows: 52.236–1 Performance of Work by the Contractor. As prescribed in 36.501(b), insert the following clause. Complete the clause by inserting the appropriate percentage consistent with the complexity and magnitude of the work and customary or necessary specialty subcontracting (see 36.501(a)): * * * * * 87. Amend section 52.243–7 by revising the introductory paragraph to read as follows: 52.243–7 [Amended] 89. Amend section 52.248–3 by revising the date of the clause to read ‘‘(Date)’’; and removing from the first sentence of paragraph (h) of the clause ‘‘$50,000’’ and adding ‘‘$55,000’’ in its place. 90. Amend section 52.249–1 by revising the introductory paragraph to read as follows: 52.249–1 Termination for Convenience of the Government (Fixed-Price) (Short Form). VerDate Aug<31>2005 15:48 Dec 09, 2005 Jkt 208001 53.301–294 [Amended] 92. Amend section 53.301–294 at the bottom of page 1 of the form by revising the date of the form to read ‘‘(Date)’’; and on page 2 of the form, by removing from the first sentence of paragraph 3, under General Instructions, ‘‘$500,000’’ and adding ‘‘$550,000’’ in its place. 53.301–295 [Amended] 93. Amend section 53.301–295 at the bottom of page 1 of the form by revising the date of the form to read ‘‘(Date)’’; and on page 2 of the form, by removing from the first sentences of paragraphs 2 and 5, under General Instructions, ‘‘$500,000’’ and adding ‘‘$550,000’’ in their place. [FR Doc. 05–16971 Filed 12–9–05; 8:45 am] BILLING CODE 6820–EP–S OFFICE OF MANAGEMENT AND BUDGET Office of Federal Procurement Policy 48 CFR Parts 9901 and 9903 Cost Accounting Standards Board, Office of Federal Procurement Policy, OMB. ACTION: Proposed rule with request for comment. [Amended] As prescribed in 49.502(a)(1), insert the following clause: * * * * * [Amended] 91. Amend section 53.219 by removing from paragraphs (a) and (b) ‘‘(Rev. 10/01)’’ and adding ‘‘(Date)’’ in its place. AGENCY: 88. Amend section 52.244–6 by revising the date of the clause to read ‘‘(Date)’’; removing from paragraph (c)(1)(i) of the clause ‘‘$500,000’’ and adding ‘‘$550,000’’ in its place, and removing from paragraph (c)(1)(iii) of the clause ‘‘(Dec 2001)’’ and adding ‘‘(Date)’’ in its place. 52.248–3 53.219 Cost Accounting Standards Board (CAS) Changes to Acquisition Thresholds Notification of Changes. As prescribed in 43.107, insert the following clause: * * * * * 52.244–6 PART 53—FORMS SUMMARY: The Cost Accounting Standards (CAS) Board is proposing to adjust the CAS application and full coverage thresholds for inflation in accordance with section 807 of the Ronald W. Reagan National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108–375). DATES: Comments upon this proposed rule must be in writing and must be received by February 10, 2006. ADDRESSES: Due to delays in OMB’s receipt and processing of mail, respondents are strongly encouraged to submit comments electronically to ensure timely receipt. Electronic comments may be submitted to casb2@omb.eop.gov. Please put the full body of your comments in the text of the electronic message and also as an attachment readable in either MS Word or Corel WordPerfect. Please include your name, title, organization, postal PO 00000 Frm 00033 Fmt 4702 Sfmt 4702 73423 address, telephone number, and e-mail address in the text of the message. Comments may also be submitted via facsimile to (202) 395–5105. FOR FURTHER INFORMATION CONTACT: David J. Capitano, Cost Accounting Standards Board (telephone: 703–847– 7486). SUPPLEMENTARY INFORMATION: A. Background Analysis of Statutory AcquisitionRelated Thresholds Section 807 provides for adjustment every 5 years of acquisition-related thresholds, except for thresholds set by the Davis-Bacon Act, Service Contract Act, and trade agreements. The statute requires that the adjustment be based on inflation, using the Consumer Price Index (CPI) for all-urban consumers. Acquisition-related thresholds in statutes that were in effect on October 1, 2000, are subject to 5 years of inflation. For purposes of this proposed rule, the calculation of escalation is based on the CPI from December 1999 to December 2004 (the most recent available data), which currently computes at 1.1307, as determined by the Federal Acquisition Regulatory (FAR) Council. Once the escalation factor is applied to the acquisition-related threshold, the law requires rounding of the calculated threshold as follows: < $10,000 ...................... $10,000–<$100,000 ...... $100,000–<$1,000,000 $1,000,000 or more ...... Nearest Nearest Nearest Nearest $500 $5,000 $50,000 $500,000 Applying the 1.1307 factor and the rounding criteria described above, the CAS thresholds have been revised as follows: (a) For contract applicability, from $500,000 to $550,000; (b) For applicability to a business unit, from $7.5 million to $8.5 million; (c) For waiver authority, from $15 million to $17 million; (d) For full coverage, from $50 million to $56.5 million; (e) For disclosure statement submissions by a company (other than educational institutions), from $50 million to $56.5 million; (f) For disclosure statement submissions by a segment of a company, from $10 million to $11.5 million; and (g) For disclosure statement submissions by an educational institutions, from $25 million to $28.3 million. B. Paperwork Reduction Act The Paperwork Reduction Act, Public Law 96–511, does not apply to this rulemaking, because this rule imposes E:\FR\FM\12DEP1.SGM 12DEP1 73424 Federal Register / Vol. 70, No. 237 / Monday, December 12, 2005 / Proposed Rules no 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. PART 9903—CONTRACT COVERAGE C. Executive Order 12866 and the Regulatory Flexibility Act Subpart 9903.2—CAS Program Requirements The economic impact of this rule on contractors and subcontractors is expected to be minor. As a result, the Board has determined that this rule is not significant under the provisions of Executive Order 12866, and that a regulatory impact analysis will not be required. Furthermore, this rule will not have a significant impact on a substantial number of small businesses because small businesses are exempt from the application of the Cost Accounting Standards. Therefore, this rule does not require a regulatory flexibility analysis under the Regulatory Flexibility Act of 1980. 4. Section 9903.201–1 is amended by revising paragraphs (b)(2) and (b)(7) to read as follows: D. Public Comments Interested persons are invited to participate by submitting data, views or arguments with respect to this proposed rule. All comments must be in writing and submitted to the address indicated in the ADDRESSES section. List of Subjects in 48 CFR Part 9903 Accounting, Government procurement. For the reasons set forth in this preamble, chapter 99 of title 48 of the Code of Federal Regulations is proposed to be amended as set forth below: PART 9901—RULES AND PROCEDURES 1. The authority citation for part 9901 is revised to read as follows: Authority: 41 U.S.C. 422(f). 2. Revise section 9901.306 to read as follows: Standards applicability. Cost Accounting Standards promulgated by the Board shall be mandatory for use by all executive agencies and by contractors and subcontractors in estimating, accumulating, and reporting costs in connection with pricing and administration of, and settlement of disputes concerning, all negotiated prime contract and subcontract procurements with the United States Government in excess of $550,000, other than contracts or subcontracts that have been exempted by the Board’s regulations. VerDate Aug<31>2005 15:48 Dec 09, 2005 Authority: 41 U.S.C. 422(f). § 9903.201–1 Jkt 208001 CAS applicability. * * * * * (b) * * * (2) Negotiated contracts and subcontracts not in excess of $550,000. For purposes of this paragraph (b)(2) an order issued by one segment to another segment shall be treated as a subcontract. * * * * * (7) Contracts or subcontracts of less than $8.5 million, provided that, at the time of award, the business unit of the contractor or subcontractor is not currently performing any CAS-covered contracts or subcontracts valued at $8.5 million or greater. * * * * * 5. Section 9903–201–2 is amended by revising paragraphs (a)(1) and (2), (b)(1) and (2), and (c)(3) and (5) to read as follows: § 9903.201–2 Joshua B. Bolten, Director. § 9901.306 3. The authority citation for part 9903 continues to read as follows: Types of CAS coverage. (a) * * * (1) Receive a single CAS-covered contract award of $56.5 million or more; (2) Receive $56.5 million or more in net CAS-covered awards during its preceding accounting period. (b) Modified coverage. (1) Modified CAS coverage requires only that the contractor comply with Standard 9904.401, Consistency in Estimating, Accumulating, and Reporting Costs, Standard 9904.402, Consistency in Allocating Costs Incurred for the Same Purpose, Standard 9904.405, Accounting for Unallowable Costs and Standard 9904.406, Cost Accounting Standard—Cost Accounting Period. Modified, rather than full, CAS coverage may be applied to a covered contract if less than $56.5 million awarded to a business unit that received less than $56.5 million in net CAS-covered awards in the immediately preceding cost accounting period. (2) If any one contract is awarded with modified CAS coverage, all CAScovered contracts awarded to that business unit during that cost accounting period must also have modified coverage with the following exceptions: if the business unit receives a single CAS-covered contract award of PO 00000 Frm 00034 Fmt 4702 Sfmt 4702 $56.5 million or more, the contract must be subject to full CAS coverage. Thereafter, any covered contract awarded in the same cost accounting period must also be subject to full CAS coverage. * * * * * (c) * * * (3) Applicable Standards. Coverage for educational institutions requires that the business unit comply with all of the CAS specified in part 9905 that are in effect on the date of the contract award and with any CAS that become applicable because of later award of a CAS-covered contract. This coverage applies to business units that receive negotiated contracts in excess of $550,000, except for CAS-covered contracts awarded to FFRDCs operated by an educational institution. * * * * * (5) Contract Clauses. The contract clause at 9903.201–4(e) shall be incorporated in each negotiated contract and subcontract awarded to an educational institution when the negotiated contract or subcontract price exceeds $550,000. For CAS-covered contracts awarded to an FFRDC operated by an educational institution, however, the full or modified CAS contract clause specified at 9903.201– 4(a) or (c), as applicable, shall be incorporated. * * * * * 6. Section 9903–201–3 is amended by revising the clause heading; by revising paragraphs (a) and (c)(3) in Part I of the clause, by revising the CAUTION paragraph following paragraph (c)(4) in Part I of the clause; and by revising Part II of the clause, to read as follows: § 9903.201–3 * * * Solicitation provisions. * * Cost Accounting Standards Notices and Certification (October 2005) * * * * * I. Disclosure Statement—Cost Accounting Practices and Certification (a) Any contract in excess of $550,000 resulting from this solicitation, except for those contracts which are exempt as specified in 9903.201–1. * * * * * (c) * * * (3) Certificate of Monetary Exemption. The offeror hereby certifies that the offeror, together with all divisions, subsidiaries, and affiliates under common control, did not receive net awards of negotiated prime contracts and subcontracts subject to CAS totaling $56.5 million or more in the cost accounting period immediately preceding the period in which this proposal was submitted. The offeror further certifies that if such status changes before an award resulting from this E:\FR\FM\12DEP1.SGM 12DEP1 Federal Register / Vol. 70, No. 237 / Monday, December 12, 2005 / Proposed Rules proposal, the offeror will advise the Contracting Officer immediately. (4) * * * Caution: Offerors currently required to disclose because they were awarded a CAScovered prime contract or subcontract of $56.5 million or more in the current cost accounting period may not claim this exemption (4). Further, the exemption applies only in connection with proposals submitted before expiration of the 90-day period following the cost accounting period in which the monetary exemption was exceeded. II. Cost Accounting Standards—Eligibility for Modified Contract Coverage If the offeror is eligible to use the modified provisions of 9903.201–2(b) and elects to do so, the offeror shall indicate by checking the box below. Checking the box below shall mean that the resultant contract is subject to the Disclosure and Consistency of Cost Accounting Practices clause in lieu of the Cost Accounting Standards clause. The offeror hereby claims an exemption from the Cost Accounting Standards clause under the provisions of 9903.201–2(b) and certifies that the offeror is eligible for use of the Disclosure and Consistency of Cost Accounting Practices clause because during the cost accounting period immediately preceding the period in which this proposal was submitted, the offeror received less than $56.5 million in awards of CAS-covered prime contracts and subcontracts. The offeror further certifies that if such status changes before an award resulting from this proposal, the offeror will advise the Contracting Officer immediately. Caution: An offeror may not claim the above eligibility for modified contract coverage if this proposal is expected to result in the award of a CAS-covered contract of $56.5 million or more or if, during its current cost accounting period, the offeror has been awarded a single CAS-covered prime contract or subcontract of $56.5 million or more. * * * * * 7. Section 9903.201–4 is amended by revising: A. The clause heading in paragraph (a)(2); B. Paragraph (d) of the clause in paragraph (a); C. Paragraph (c)(1); D. The clause heading in paragraph (c)(2); E. Paragraph (d)(2) of the clause in paragraph (c); F. The clause heading in paragraph (e)(2); and G. Paragraph (d) introductory text and (d)(2) of the clause in paragraph (e). The revisions read as follows: enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all CAS in effect on the subcontractor’s award date or if the subcontractor has submitted cost or pricing data, on the date of final agreement on price as shown on the subcontractor’s signed Certificate of Current Cost or Pricing Data. If the subcontract is awarded to a business unit which pursuant to 9903.201–2 is subject to other types of CAS coverage, the substance of the applicable clause set forth in 9903.201–4 shall be inserted. This requirement shall apply only to negotiated subcontracts in excess of $550,000, except that the requirement shall not apply to negotiated subcontracts otherwise exempt from the requirement to include a CAS clause as specified in 9903.201–1. (End of Clause) 9903.201–5 * 9903.202–1 * * * * (c) Disclosure and Consistency of Cost Accounting Practices. (1) The contracting officer shall insert the clause set forth below, Disclosure and Consistency of Cost Accounting Practices, in negotiated contracts when the contract amount is over $550,000 but less than $56.5 million, and the offeror certifies it is eligible for and elects to use modified CAS coverage (see 9903.201–2, unless the clause prescribed in paragraph (d) of this subsection is used). (2) * * * Disclosure and Consistency of Cost Accounting Practices (October 2005) * * * * * (d) * * * (2) This requirement shall apply only to negotiated subcontracts in excess of $550,000. * * * * * (e) Cost Accounting Standards— Educational Institutions. * * * (2) * * * Cost Accounting Standards—Educational Institution (October 2005) * * * * * Cost Accounting Standards (October 2005) (d) The Contractor shall include in all negotiated subcontracts which the Contractor enters into, the substance of this clause, except paragraph (b), and shall require such inclusion in all other subcontracts, of any tier, including the obligation to comply with all applicable CAS in effect on the subcontractor’s award date or if the subcontractor has submitted cost or pricing data, on the date of final agreement on price as shown on the subcontractor’s signed Certificate of Current Cost or Pricing Data, except that: (1) * * * (2) This requirement shall apply only to negotiated subcontracts in excess of $550,000. * * 9903.201–4 Contract clauses. (a) * * * (2) * * * * * * * (d) The contractor shall include in all negotiated subcontracts which the Contractor VerDate Aug<31>2005 15:48 Dec 09, 2005 Jkt 208001 * * * * 8. Section 9903.201–5 is amended by revising paragraph (a) to read as follows: PO 00000 Frm 00035 Fmt 4702 Sfmt 4702 73425 Waiver. (a) The head of an executive agency may waive the applicability of the Cost Accounting Standards for a contract or subcontract with a value of less than $17 million, if that official determines, in writing, that the business unit of the contractor or subcontractor that will perform the work: (1) Is primarily engaged in the sale of commercial items; and (2) Would not otherwise be subject to the Cost Accounting Standards under this Chapter. * * * * * 9903.202 Disclosure requirements. 9. Section 9903–202–1 is amended by revising (b)(1) and (2); (c); and (f)(2)(i), (ii), and (iii) to read as follows: General requirements. * * * * * (b) Completed Disclosure Statements are required in the following circumstances: (1) Any business unit that is selected to receive a CAS-covered contract or subcontract of $56.5 million or more shall submit a Disclosure Statement before award. (2) Any company which, together with its segments, received net awards of negotiated prime contracts and subcontracts subject to CAS totaling $56.5 million or more in its most recent cost accounting period, must submit a Disclosure Statement before award of its first CAS-covered contract in the immediately following cost accounting period. However, if the first CAScovered contract is received within 90 days of the start of the cost accounting period, the contractor is not required to file until the end of 90 days. (c) When a Disclosure Statement is required, a separate Disclosure Statement must be submitted for each segment whose costs included in the total price of any CAS-covered contract or subcontract exceed $550,000, unless: (1) The contract or subcontract is of the type or value exempted by 9903.201–1 or (2) In the most recently completed cost accounting period the segment’s CAS-covered awards are less than 30 percent of total segment sales for the period and less than $11.5 million. * * * * * (f) Educational institutions-disclosure requirements. (1) * * * (2) * * * (i) Any business unit of an educational institution that is selected to receive a CAS-covered contract or subcontract in excess of $550,000 and is part of a college or university location E:\FR\FM\12DEP1.SGM 12DEP1 73426 Federal Register / Vol. 70, No. 237 / Monday, December 12, 2005 / Proposed Rules listed in Exhibit A of Office of Management and Budget (OMB) Circular A–21 shall submit a Disclosure Statement before award. A Disclosure Statement is not required, however, if the listed entity can demonstrate that the net amount of Federal contract and financial assistance awards received during its immediately preceding cost accounting period was less than $28.5 million. (ii) Any business unit that is selected to receive a CAS-covered contract or subcontract of $28.5 million or more shall submit a Disclosure Statement before award. (iii) Any educational institution which, together with its segments, received net awards of negotiated prime contracts and subcontracts subject to CAS totaling $28.5 million or more in its most recent cost accounting period, of which, at least one award exceeded $1 million, must submit a Disclosure Statement before award of its first CAScovered contract in the immediately following cost accounting period. However, if the first CAS-covered contract is received within 90 days of the start of the cost accounting period, the institution is not required to file until the end of 90 days. * * * * * [FR Doc. 05–23647 Filed 12–9–05; 8:45 am] BILLING CODE 3110–01–P DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 216 [Docket No. 051110296–5296–01; I.D. 102405A] RIN 0648–AU02 Protecting Spinner Dolphins in the Main Hawaiian Islands From Human Activities that Cause ‘‘Take,’’ as Defined in the Marine Mammal Protection Act and Its Implementing Regulations, or To Otherwise Adversely Affect the Dolphins National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Advance notice of proposed rulemaking. AGENCY: SUMMARY: NMFS is considering whether to propose regulations to protect wild spinner dolphins (Stenella longirostris) in the main Hawaiian Islands from ‘‘take,’’ as defined in the Marine Mammal Protection Act (MMPA) and its VerDate Aug<31>2005 15:48 Dec 09, 2005 Jkt 208001 implementing regulations, or to otherwise adversely affect the dolphins. The scope of this advance notice of proposed rulemaking (ANPR) encompasses the activities of any person or conveyance that may result in the unauthorized taking of spinner dolphins and/or that may diminish the value to the dolphins of habitat routinely used by them for resting and/or that may cause detrimental individual-level and population-level impacts. The proposed regulation would apply only to the main Hawaiian Islands and only to spinner dolphins. NMFS requests comments on whether—and if so, what type of— conservation measures, regulations, and, if necessary, other measures would be appropriate to protect spinner dolphins in the main Hawaiian Islands from the effects of these activities. DATES: Comments must be received at the appropriate address (see ADDRESSES) no later than January 11, 2006. ADDRESSES: You may submit comments by any of the following methods: • E-mail: 0648– AU02.NOA@noaa.gov. Include in the subject line the following document identifier: 0648–AU02–NOA. • Federal e-rulemaking Portal: http:// www.regulations.gov. • Mail: Marine Mammal Branch Chief, Protected Resources Division, Pacific Islands Regional Office, National Marine Fisheries Service, 1601 Kapiolani Boulevard, Suite 1110, Honolulu, HI 96814. FOR FURTHER INFORMATION CONTACT: Chris Yates or Jennifer Sepez, Pacific Islands Regional Office, 808–944–2105; or Trevor Spradlin, Office of Protected Resources, 301–713–2322. SUPPLEMENTARY INFORMATION: Background Viewing wild marine mammals in Hawaii is a popular recreational activity for both tourists and residents alike. In the past, most recreational viewing focused on humpback whales (Megaptera novaeangliae) during the winter months when the whales migrate from their feeding grounds off the coast of Alaska to Hawaii’s warm and protected waters to breed and calve. However, in recent years, recreational activities have increasingly focused on viewing small cetaceans, with a particular emphasis on spinner dolphins (Stenella longirostris), which are routinely found close to shore in shallow coves and bays and other areas throughout the main Hawaiian Islands. NMFS is concerned that some of these activities cause unauthorized taking of dolphins, diminish the value to the dolphins of habitat routinely used by PO 00000 Frm 00036 Fmt 4702 Sfmt 4702 them for resting, and cause detrimental individual-level and population-level impacts. The biology and behavior of Hawaiian spinner dolphins has been well documented in the scientific literature. Hawaiian spinner dolphins are identified as a race of Pacific spinner dolphins found in and around the Hawaiian Islands, including both the main Islands of Hawaii and the Northwestern Hawaiian Islands (Norris et al. 1994, page 17). Hawaiian spinner dolphins routinely utilize shallow coves and bays and other areas close to shore during the day to rest, care for their young and avoid predators before traveling to deeper water at night to ¨ hunt for food (Wursig et al. 1994, Norris 1994). As the dolphins begin or end their resting period, they engage in aerial spinning and leaping behaviors ¨ that are noticeable from shore (Wursig et al. 1994). However, when they are in a period of deep rest, their behavior consists of synchronous dives and extended periods swimming in quiet formation along the shallow bottom (see: Norris and Dohl 1980, Norris et al. ¨ 1985, Wells and Norris 1994, Wursig et al. 1994). Scientific research studies have documented human disturbance of Hawaiian spinner dolphins during their resting periods along the west coast of the Big Island of Hawaii, most notably in and around Kealakekua Bay. Norris and Dohl (1980) noted that ‘‘cruise boats’’ would seek out and run through groups of spinner dolphins during an initial study of the dolphins in 1970, and in follow up research, Norris et al. (1985) found that spinner dolphins were particularly sensitive to disturbance during the early stage of their entry into the bay. Forest (2001) compared sightings records of spinner dolphins in Kealakekua Bay from 1979–1980 and 1993–1994, and found that the dolphins were utilizing the bay and engaging in aerial behaviors less frequently than before, and suggested increasing human disturbance as a cause. Courbis (2004) reported high levels of vessel and swimmer traffic in Kealakekua Bay and neighboring Honaunau Bay and Kauhako Bay, and found that spinner dolphins exhibited decreased aerial activity during their entry and exit into Kealakekua Bay when compared to previous studies, as well as increased aerial activity during mid-day when dolphins typically rest. Spinner dolphins in Kealakekua Bay also appeared to have shifted their preferred resting area in response to vessel and swimmer presence. In Kauhako Bay, dolphins were documented avoiding swimmers and leaving the bay in E:\FR\FM\12DEP1.SGM 12DEP1

Agencies

[Federal Register Volume 70, Number 237 (Monday, December 12, 2005)]
[Proposed Rules]
[Pages 73423-73426]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-23647]


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OFFICE OF MANAGEMENT AND BUDGET

Office of Federal Procurement Policy

48 CFR Parts 9901 and 9903


Cost Accounting Standards Board (CAS) Changes to Acquisition 
Thresholds

AGENCY: Cost Accounting Standards Board, Office of Federal Procurement 
Policy, OMB.

ACTION: Proposed rule with request for comment.

-----------------------------------------------------------------------

SUMMARY: The Cost Accounting Standards (CAS) Board is proposing to 
adjust the CAS application and full coverage thresholds for inflation 
in accordance with section 807 of the Ronald W. Reagan National Defense 
Authorization Act for Fiscal Year 2005 (Pub. L. 108-375).

DATES: Comments upon this proposed rule must be in writing and must be 
received by February 10, 2006.

ADDRESSES: Due to delays in OMB's receipt and processing of mail, 
respondents are strongly encouraged to submit comments electronically 
to ensure timely receipt. Electronic comments may be submitted to 
casb2@omb.eop.gov. Please put the full body of your comments in the 
text of the electronic message and also as an attachment readable in 
either MS Word or Corel WordPerfect. Please include your name, title, 
organization, postal address, telephone number, and e-mail address in 
the text of the message. Comments may also be submitted via facsimile 
to (202) 395-5105.

FOR FURTHER INFORMATION CONTACT: David J. Capitano, Cost Accounting 
Standards Board (telephone: 703-847-7486).

SUPPLEMENTARY INFORMATION:

A. Background

Analysis of Statutory Acquisition-Related Thresholds

    Section 807 provides for adjustment every 5 years of acquisition-
related thresholds, except for thresholds set by the Davis-Bacon Act, 
Service Contract Act, and trade agreements. The statute requires that 
the adjustment be based on inflation, using the Consumer Price Index 
(CPI) for all-urban consumers. Acquisition-related thresholds in 
statutes that were in effect on October 1, 2000, are subject to 5 years 
of inflation. For purposes of this proposed rule, the calculation of 
escalation is based on the CPI from December 1999 to December 2004 (the 
most recent available data), which currently computes at 1.1307, as 
determined by the Federal Acquisition Regulatory (FAR) Council.
    Once the escalation factor is applied to the acquisition-related 
threshold, the law requires rounding of the calculated threshold as 
follows:

< $10,000.............................  Nearest $500
$10,000-<$100,000.....................  Nearest $5,000
$100,000-<$1,000,000..................  Nearest $50,000
$1,000,000 or more....................  Nearest $500,000
 

    Applying the 1.1307 factor and the rounding criteria described 
above, the CAS thresholds have been revised as follows:
    (a) For contract applicability, from $500,000 to $550,000;
    (b) For applicability to a business unit, from $7.5 million to $8.5 
million;
    (c) For waiver authority, from $15 million to $17 million;
    (d) For full coverage, from $50 million to $56.5 million;
    (e) For disclosure statement submissions by a company (other than 
educational institutions), from $50 million to $56.5 million;
    (f) For disclosure statement submissions by a segment of a company, 
from $10 million to $11.5 million; and
    (g) For disclosure statement submissions by an educational 
institutions, from $25 million to $28.3 million.

B. Paperwork Reduction Act

    The Paperwork Reduction Act, Public Law 96-511, does not apply to 
this rulemaking, because this rule imposes

[[Page 73424]]

no 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.

C. Executive Order 12866 and the Regulatory Flexibility Act

    The economic impact of this rule on contractors and subcontractors 
is expected to be minor. As a result, the Board has determined that 
this rule is not significant under the provisions of Executive Order 
12866, and that a regulatory impact analysis will not be required. 
Furthermore, this rule will not have a significant impact on a 
substantial number of small businesses because small businesses are 
exempt from the application of the Cost Accounting Standards. 
Therefore, this rule does not require a regulatory flexibility analysis 
under the Regulatory Flexibility Act of 1980.

D. Public Comments

    Interested persons are invited to participate by submitting data, 
views or arguments with respect to this proposed rule. All comments 
must be in writing and submitted to the address indicated in the 
ADDRESSES section.

List of Subjects in 48 CFR Part 9903

    Accounting, Government procurement.

Joshua B. Bolten,
Director.
    For the reasons set forth in this preamble, chapter 99 of title 48 
of the Code of Federal Regulations is proposed to be amended as set 
forth below:

PART 9901--RULES AND PROCEDURES

    1. The authority citation for part 9901 is revised to read as 
follows:

    Authority: 41 U.S.C. 422(f).

    2. Revise section 9901.306 to read as follows:


Sec.  9901.306  Standards applicability.

    Cost Accounting Standards promulgated by the Board shall be 
mandatory for use by all executive agencies and by contractors and 
subcontractors in estimating, accumulating, and reporting costs in 
connection with pricing and administration of, and settlement of 
disputes concerning, all negotiated prime contract and subcontract 
procurements with the United States Government in excess of $550,000, 
other than contracts or subcontracts that have been exempted by the 
Board's regulations.

PART 9903--CONTRACT COVERAGE

    3. The authority citation for part 9903 continues to read as 
follows:

    Authority: 41 U.S.C. 422(f).

Subpart 9903.2--CAS Program Requirements

    4. Section 9903.201-1 is amended by revising paragraphs (b)(2) and 
(b)(7) to read as follows:


Sec.  9903.201-1  CAS applicability.

* * * * *
    (b) * * *
    (2) Negotiated contracts and subcontracts not in excess of 
$550,000. For purposes of this paragraph (b)(2) an order issued by one 
segment to another segment shall be treated as a subcontract.
* * * * *
    (7) Contracts or subcontracts of less than $8.5 million, provided 
that, at the time of award, the business unit of the contractor or 
subcontractor is not currently performing any CAS-covered contracts or 
subcontracts valued at $8.5 million or greater.
* * * * *
    5. Section 9903-201-2 is amended by revising paragraphs (a)(1) and 
(2), (b)(1) and (2), and (c)(3) and (5) to read as follows:


Sec.  9903.201-2  Types of CAS coverage.

    (a) * * *
    (1) Receive a single CAS-covered contract award of $56.5 million or 
more;
    (2) Receive $56.5 million or more in net CAS-covered awards during 
its preceding accounting period.
    (b) Modified coverage. (1) Modified CAS coverage requires only that 
the contractor comply with Standard 9904.401, Consistency in 
Estimating, Accumulating, and Reporting Costs, Standard 9904.402, 
Consistency in Allocating Costs Incurred for the Same Purpose, Standard 
9904.405, Accounting for Unallowable Costs and Standard 9904.406, Cost 
Accounting Standard--Cost Accounting Period. Modified, rather than 
full, CAS coverage may be applied to a covered contract if less than 
$56.5 million awarded to a business unit that received less than $56.5 
million in net CAS-covered awards in the immediately preceding cost 
accounting period.
    (2) If any one contract is awarded with modified CAS coverage, all 
CAS-covered contracts awarded to that business unit during that cost 
accounting period must also have modified coverage with the following 
exceptions: if the business unit receives a single CAS-covered contract 
award of $56.5 million or more, the contract must be subject to full 
CAS coverage. Thereafter, any covered contract awarded in the same cost 
accounting period must also be subject to full CAS coverage.
* * * * *
    (c) * * *
    (3) Applicable Standards. Coverage for educational institutions 
requires that the business unit comply with all of the CAS specified in 
part 9905 that are in effect on the date of the contract award and with 
any CAS that become applicable because of later award of a CAS-covered 
contract. This coverage applies to business units that receive 
negotiated contracts in excess of $550,000, except for CAS-covered 
contracts awarded to FFRDCs operated by an educational institution.
* * * * *
    (5) Contract Clauses. The contract clause at 9903.201-4(e) shall be 
incorporated in each negotiated contract and subcontract awarded to an 
educational institution when the negotiated contract or subcontract 
price exceeds $550,000. For CAS-covered contracts awarded to an FFRDC 
operated by an educational institution, however, the full or modified 
CAS contract clause specified at 9903.201-4(a) or (c), as applicable, 
shall be incorporated.
* * * * *
    6. Section 9903-201-3 is amended by revising the clause heading; by 
revising paragraphs (a) and (c)(3) in Part I of the clause, by revising 
the CAUTION paragraph following paragraph (c)(4) in Part I of the 
clause; and by revising Part II of the clause, to read as follows:


Sec.  9903.201-3  Solicitation provisions.

* * * * *

Cost Accounting Standards Notices and Certification (October 2005)

* * * * *

I. Disclosure Statement--Cost Accounting Practices and 
Certification

    (a) Any contract in excess of $550,000 resulting from this 
solicitation, except for those contracts which are exempt as 
specified in 9903.201-1.
* * * * *
    (c) * * *
    (3) Certificate of Monetary Exemption.
    The offeror hereby certifies that the offeror, together with all 
divisions, subsidiaries, and affiliates under common control, did 
not receive net awards of negotiated prime contracts and 
subcontracts subject to CAS totaling $56.5 million or more in the 
cost accounting period immediately preceding the period in which 
this proposal was submitted. The offeror further certifies that if 
such status changes before an award resulting from this

[[Page 73425]]

proposal, the offeror will advise the Contracting Officer 
immediately.
    (4) * * *
    Caution: Offerors currently required to disclose because they 
were awarded a CAS-covered prime contract or subcontract of $56.5 
million or more in the current cost accounting period may not claim 
this exemption (4). Further, the exemption applies only in 
connection with proposals submitted before expiration of the 90-day 
period following the cost accounting period in which the monetary 
exemption was exceeded.

II. Cost Accounting Standards--Eligibility for Modified Contract 
Coverage

    If the offeror is eligible to use the modified provisions of 
9903.201-2(b) and elects to do so, the offeror shall indicate by 
checking the box below. Checking the box below shall mean that the 
resultant contract is subject to the Disclosure and Consistency of 
Cost Accounting Practices clause in lieu of the Cost Accounting 
Standards clause.
    The offeror hereby claims an exemption from the Cost Accounting 
Standards clause under the provisions of 9903.201-2(b) and certifies 
that the offeror is eligible for use of the Disclosure and 
Consistency of Cost Accounting Practices clause because during the 
cost accounting period immediately preceding the period in which 
this proposal was submitted, the offeror received less than $56.5 
million in awards of CAS-covered prime contracts and subcontracts. 
The offeror further certifies that if such status changes before an 
award resulting from this proposal, the offeror will advise the 
Contracting Officer immediately.
    Caution: An offeror may not claim the above eligibility for 
modified contract coverage if this proposal is expected to result in 
the award of a CAS-covered contract of $56.5 million or more or if, 
during its current cost accounting period, the offeror has been 
awarded a single CAS-covered prime contract or subcontract of $56.5 
million or more.
* * * * *
    7. Section 9903.201-4 is amended by revising:
    A. The clause heading in paragraph (a)(2);
    B. Paragraph (d) of the clause in paragraph (a);
    C. Paragraph (c)(1);
    D. The clause heading in paragraph (c)(2);
    E. Paragraph (d)(2) of the clause in paragraph (c);
    F. The clause heading in paragraph (e)(2); and
    G. Paragraph (d) introductory text and (d)(2) of the clause in 
paragraph (e).
    The revisions read as follows:


9903.201-4  Contract clauses.

    (a) * * *
    (2) * * *

Cost Accounting Standards (October 2005)

* * * * *
    (d) The contractor shall include in all negotiated subcontracts 
which the Contractor enters into, the substance of this clause, 
except paragraph (b), and shall require such inclusion in all other 
subcontracts, of any tier, including the obligation to comply with 
all CAS in effect on the subcontractor's award date or if the 
subcontractor has submitted cost or pricing data, on the date of 
final agreement on price as shown on the subcontractor's signed 
Certificate of Current Cost or Pricing Data. If the subcontract is 
awarded to a business unit which pursuant to 9903.201-2 is subject 
to other types of CAS coverage, the substance of the applicable 
clause set forth in 9903.201-4 shall be inserted. This requirement 
shall apply only to negotiated subcontracts in excess of $550,000, 
except that the requirement shall not apply to negotiated 
subcontracts otherwise exempt from the requirement to include a CAS 
clause as specified in 9903.201-1.

(End of Clause)
* * * * *
    (c) Disclosure and Consistency of Cost Accounting Practices. (1) 
The contracting officer shall insert the clause set forth below, 
Disclosure and Consistency of Cost Accounting Practices, in negotiated 
contracts when the contract amount is over $550,000 but less than $56.5 
million, and the offeror certifies it is eligible for and elects to use 
modified CAS coverage (see 9903.201-2, unless the clause prescribed in 
paragraph (d) of this subsection is used).
    (2) * * *

Disclosure and Consistency of Cost Accounting Practices (October 2005)

* * * * *
    (d) * * *
    (2) This requirement shall apply only to negotiated subcontracts 
in excess of $550,000.
* * * * *
    (e) Cost Accounting Standards--Educational Institutions. * * *
    (2) * * *

Cost Accounting Standards--Educational Institution (October 2005)

* * * * *
    (d) The Contractor shall include in all negotiated subcontracts 
which the Contractor enters into, the substance of this clause, 
except paragraph (b), and shall require such inclusion in all other 
subcontracts, of any tier, including the obligation to comply with 
all applicable CAS in effect on the subcontractor's award date or if 
the subcontractor has submitted cost or pricing data, on the date of 
final agreement on price as shown on the subcontractor's signed 
Certificate of Current Cost or Pricing Data, except that:
    (1) * * *
    (2) This requirement shall apply only to negotiated subcontracts 
in excess of $550,000.
* * * * *
    8. Section 9903.201-5 is amended by revising paragraph (a) to read 
as follows:


9903.201-5  Waiver.

    (a) The head of an executive agency may waive the applicability of 
the Cost Accounting Standards for a contract or subcontract with a 
value of less than $17 million, if that official determines, in 
writing, that the business unit of the contractor or subcontractor that 
will perform the work:
    (1) Is primarily engaged in the sale of commercial items; and
    (2) Would not otherwise be subject to the Cost Accounting Standards 
under this Chapter.
* * * * *


9903.202  Disclosure requirements.

    9. Section 9903-202-1 is amended by revising (b)(1) and (2); (c); 
and (f)(2)(i), (ii), and (iii) to read as follows:


9903.202-1  General requirements.

* * * * *
    (b) Completed Disclosure Statements are required in the following 
circumstances:
    (1) Any business unit that is selected to receive a CAS-covered 
contract or subcontract of $56.5 million or more shall submit a 
Disclosure Statement before award.
    (2) Any company which, together with its segments, received net 
awards of negotiated prime contracts and subcontracts subject to CAS 
totaling $56.5 million or more in its most recent cost accounting 
period, must submit a Disclosure Statement before award of its first 
CAS-covered contract in the immediately following cost accounting 
period. However, if the first CAS-covered contract is received within 
90 days of the start of the cost accounting period, the contractor is 
not required to file until the end of 90 days.
    (c) When a Disclosure Statement is required, a separate Disclosure 
Statement must be submitted for each segment whose costs included in 
the total price of any CAS-covered contract or subcontract exceed 
$550,000, unless:
    (1) The contract or subcontract is of the type or value exempted by 
9903.201-1 or
    (2) In the most recently completed cost accounting period the 
segment's CAS-covered awards are less than 30 percent of total segment 
sales for the period and less than $11.5 million.
* * * * *
    (f) Educational institutions-disclosure requirements.
    (1) * * *
    (2) * * *
    (i) Any business unit of an educational institution that is 
selected to receive a CAS-covered contract or subcontract in excess of 
$550,000 and is part of a college or university location

[[Page 73426]]

listed in Exhibit A of Office of Management and Budget (OMB) Circular 
A-21 shall submit a Disclosure Statement before award. A Disclosure 
Statement is not required, however, if the listed entity can 
demonstrate that the net amount of Federal contract and financial 
assistance awards received during its immediately preceding cost 
accounting period was less than $28.5 million.
    (ii) Any business unit that is selected to receive a CAS-covered 
contract or subcontract of $28.5 million or more shall submit a 
Disclosure Statement before award.
    (iii) Any educational institution which, together with its 
segments, received net awards of negotiated prime contracts and 
subcontracts subject to CAS totaling $28.5 million or more in its most 
recent cost accounting period, of which, at least one award exceeded $1 
million, must submit a Disclosure Statement before award of its first 
CAS-covered contract in the immediately following cost accounting 
period. However, if the first CAS-covered contract is received within 
90 days of the start of the cost accounting period, the institution is 
not required to file until the end of 90 days.
* * * * *
[FR Doc. 05-23647 Filed 12-9-05; 8:45 am]
BILLING CODE 3110-01-P