Federal Acquisition Regulation; Contract Closeout, 31402-31410 [2011-12852]
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Federal Register / Vol. 76, No. 104 / Tuesday, May 31, 2011 / Rules and Regulations
(iv) Best management practices for
energy-efficient management of servers
and Federal data centers.
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(vii) 52.223–5, Pollution Prevention and
Right-to-Know Information (May 2011) (E.O.
13423) (Applies to services performed on
Federal facilities).
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
■
36. Revise section 52.204–4 to read as
follows:
■
52.204–4 Printed or Copied Double-Sided
on Postconsumer Fiber Content Paper.
As prescribed in 4.303, insert the
following clause:
Printed or Copied Double-Sided on
Postconsumer Fiber Content Paper (May
2011)
(a) Definitions. As used in this clause—
Postconsumer fiber means—(1) Paper,
paperboard, and fibrous materials from retail
stores, office buildings, homes, and so forth,
after they have passed through their endusage as a consumer item, including: used
corrugated boxes; old newspapers; old
magazines; mixed waste paper; tabulating
cards; and used cordage; or
(2) All paper, paperboard, and fibrous
materials that enter and are collected from
municipal solid waste; but not
(3) Fiber derived from printers’ over-runs,
converters’ scrap, and over-issue
publications.
(b) The Contractor is required to submit
paper documents, such as offers, letters, or
reports that are printed or copied doublesided on paper containing at least 30 percent
postconsumer fiber, whenever practicable,
when not using electronic commerce
methods to submit information or data to the
Government.
(End of clause)
37. Amend section 52.204–8 by
revising the date of the provision;
removing paragraph (c)(2)(vi); and
redesignating paragraphs (c)(2)(vii) and
(viii) as paragraphs (c)(2)(vi) and (vii),
respectively.
The revised text reads as follows:
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39. Amend section 52.223–5 by—
a. Revising the date of the clause;
■ b. Removing from paragraph (a) the
definition ‘‘Priority chemical’’;
■ c. Revising paragraphs (b) and (c)(6);
■ d. Revising the date of Alternate I and
paragraph (c)(7); and
■ e. Revising the date of Alternate II and
paragraph (c)(7).
The revised text reads as follows:
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52.223–5 Pollution Prevention and Rightto-Know Information.
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Pollution Prevention and Right-to-Know
Information (May 2011)
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(b) Federal facilities are required to comply
with the provisions of the Emergency
Planning and Community Right-to-Know Act
of 1986 (EPCRA) (42 U.S.C. 11001–11050),
and the Pollution Prevention Act of 1990
(PPA) (42 U.S.C. 13101–13109).
(c) * * *
(6) The toxic chemical and hazardous
substance release and use reduction goals of
section 2(e) of Executive Order 13423 and of
Executive Order 13514.
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Alternate I (May 2011). * * *
(c)(7) The environmental management
system as described in section 3(b) of E.O.
13423 and 2(j) of E.O. 13514.
Alternate II (May 2011). * * *
(c)(7) The facility compliance audits as
described in section 3(c) of E.O. 13423.
40. Amend section 52.223–10 by
revising the introductory paragraph, the
date of the clause, and the first sentence
of paragraph (b) to read as follows:
■
52.223–10
52.204–8 Annual Representations and
Certifications.
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Waste Reduction Program.
As prescribed in 23.705(a), insert the
following clause:
*
Annual Representations and Certifications
(May 2011)
Waste Reduction Program (May 2011)
*
(b) Consistent with the requirements of
section 3(e) of Executive Order 13423, the
Contractor shall establish a program to
promote cost-effective waste reduction in all
operations and facilities covered by this
contract. * * *
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■ 38. Amend section 52.213–4 by
revising the date of the clause and
paragraph (b)(1)(vii) to read as follows:
52.213–4 Terms and Conditions—
Simplified Acquisitions (Other Than
Commercial Items).
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(b) * * *
(1) * * *
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52.223–13 and 52.223–14
Reserved]
Terms and Conditions—Simplified
Acquisitions (Other Than Commercial Items)
(May 2011)
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[Removed and
41. Remove and reserve sections
52.223–13 and 52.223–14.
■
42. Amend section 52.223–16 by
revising the introductory paragraph, and
the introductory paragraph of Alternate
I to read as follows:
■
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52.223–16 IEEE 1680 Standard for the
Environmental Assessment of Personal
Computer Products.
As prescribed in 23.705(b)(1), insert
the following clause:
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Alternate I (Dec 2007). As prescribed in
23.705(b)(2), substitute the following
paragraph (b) for paragraph (b) of the basic
clause:
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43. Add section 52.223–19 to read as
follows:
■
52.223–19 Compliance with Environmental
Management Systems.
As prescribed in 23.903, insert the
following clause:
Compliance With Environmental
Management Systems (May 2011)
The Contractor’s work under this contract
shall conform with all operational controls
identified in the applicable agency or facility
Environmental Management Systems and
provide monitoring and measurement
information necessary for the Government to
address environmental performance relative
to the goals of the Environmental
Management Systems.
(End of clause)
[FR Doc. 2011–12851 Filed 5–27–11; 8:45 am]
BILLING CODE 6820–EP–P
DEPARTMENT OF DEFENSE
GENERAL SERVICES
ADMINISTRATION
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
48 CFR Parts 4, 42, and 52
[FAC 2005–52; FAR Case 2008–020; Item
II; Docket 2009–0031, Sequence 1]
RIN 9000–AL43
Federal Acquisition Regulation;
Contract Closeout
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
DoD, GSA, and NASA are
issuing a final rule amending the
Federal Acquisition Regulation (FAR)
procedures for closing out contract files.
This case revises procedures for clearing
final patent reports and quick-closeout
procedure, and sets forth a description
of an adequate final indirect cost rate
proposal and supporting data.
DATES: Effective Date: June 30, 2011.
FOR FURTHER INFORMATION CONTACT: Ms.
Clare McFadden, Procurement Analyst,
SUMMARY:
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at (202) 501–0044, for clarification of
content. For information pertaining to
status or publication schedules, contact
the Regulatory Secretariat at (202) 501–
4755. Please cite FAC 2005–52, FAR
Case 2008–020.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a
proposed rule in the Federal Register at
74 FR 42044 on August 20, 2009.
Sixteen respondents provided
comments. The Civilian Agency
Acquisition Council and the Defense
Acquisition Regulations Council (the
Councils) reviewed the comments in
development of the final rule.
II. Discussion and Analysis of the
Public Comments
Comments received were grouped
under 13 general topics. A discussion of
the comments and the changes made to
the rule as a result of those comments
are provided as follows:
A. ‘‘Adequacy’’ Definition
The final rule implements the changes
published in the proposed rule, without
further amendments in response to
comments in this category.
Comment: One respondent
recommends a new definition for
‘‘adequacy’’ at FAR 42.705–1. The
respondent states that guidelines for
determining adequacy should be
established in order to provide a
baseline against which the contracting
officer can resolve differences of
opinion on adequacy between the
auditor and the contractor.
Response: A new definition is not
necessary, as specific information has
been provided in the clause to ensure
uniformity, consistency, and fairness for
all contractors. This assures that
contractors are fully informed in
advance of the Government’s parameters
for the content of an adequate final
indirect cost rate proposal.
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B. Adequacy Determination
The final rule implements the changes
published in the proposed rule, without
further amendments in response to
comments in this category.
Comment: One respondent
recommends the term ‘‘adequate’’ be
replaced with ‘‘complete’’ or ‘‘detailed’’
at FAR 42.705–1(b). The respondent
states that the phrase ‘‘the contractor
shall submit * * * an adequate indirect
cost rate proposal’’ is inappropriate, as
the Defense Contract Audit Agency
(DCAA) has historically interpreted the
term ‘‘adequate’’ to mean identical to
DCAA’s incurred cost model.
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Response: Use of the term ‘‘adequate’’
for describing the Government’s
requirements for submission of costs is
more appropriate than utilizing the
terms ‘‘complete’’ or ‘‘detailed’’. The FAR
already required the submission of an
adequate final indirect cost rate
proposal (FAR 42.705–1(b)). This final
rule establishes the content of an
adequate submission.
C. Adequacy Determination and Roles
The final rule includes amendments
to FAR 42.705–1(b) and 42.705–2(b) in
response to comments in this category.
Comment: One respondent
recommends that the granting of an
extension to the contractor for
submitting its indirect cost rate proposal
by the contracting officer be made in
writing at FAR 42.705–1(b)(1)(i).
Response: The language at FAR
42.705–1(b)(1)(ii) is revised accordingly.
Comments: Five respondents question
whether it is appropriate for DCAA to
have sole responsibility to determine
the adequacy of indirect cost rate
proposals. One respondent believes a
determination from the auditor exceeds
the auditor’s authority under law.
Three respondents state that any final
determination regarding adequacy
should be the responsibility of the
contracting officer. One respondent
states that the contracting officer/
auditor relationship that is provided for
in the audit process should be followed.
Response: The term ‘‘determination’’
in this case was not intended to shift the
authority to make determinations from
the contracting officer to the auditor;
rather, the intent was for the auditor to
offer advice to the contracting officer
regarding adequacy of the proposal. The
language in 42.705–1(b)(1)(iii), 42.705–
1(b)(2), and 42.705–2(b) has been
revised to remove the term
‘‘determination’’ and to clarify that the
auditor reviews the proposal for
adequacy and provides the findings of
inadequacy to the contracting officer
and contractor.
Comment: One respondent states that
the proposed rule creates a review
process within which there is little
latitude for a contracting officer to
resolve administrative disagreements
between auditors and contractors.
Response: The rule does not diminish
the latitude or the authority that
contracting officers have to resolve any
and all matters arising under the
contract with respect to an indirect cost
rate proposal. The current FAR already
allows flexibility for the content based
on the situation, e.g., complexity and
size of the contractor.
Comment: One respondent states that
the proposed changes at FAR 42.705–
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31403
1(b)(1)(iv) and FAR 52.216–7(d)
contradict FAR 42.705–1(b)(1)(i), which
requires the parties to work together to
make the proposal, audit, and
negotiation process as efficient as
possible. The proposed default choice
requiring data in FAR 52.216–7(d)(2)(iii)
will result in contractors trying to
provide unrelated data to avoid an
auditor’s automatic ‘‘checklist’’
determination of inadequate proposals.
Such rigid requirements will lead to an
increase in disagreements about the
adequacy of final indirect cost rate
proposals.
Response: The process of reviewing
the proposal for adequacy, performing
the audit, and conducting negotiations
has not changed. Also, no new
requirement is imposed on contractors
by this rule. The list of data (schedules)
now included in FAR 52.216–7(d)
requires the same information
previously cited in FAR 42.705–1(b).
D. Adequacy of Indirect Cost Rate
Proposal
The final rule includes amendments
to FAR 52.216–7(d)(2)(iv) in response to
comments in this category.
Comment: One respondent agrees
with the proposed language at FAR
42.705–1 as positive changes.
Comment: One respondent states that
the proposed rule was not clear as to
whether the list of required data in FAR
52.216–7(d)(2)(iv) that ‘‘may’’ be
submitted with the proposal will be
considered in making a determination of
the adequacy of the contractor’s
proposal. The respondent recommends
clarification.
Response: The language at FAR
52.216–7(d)(2)(iv) has been revised by
replacing ‘‘will’’ with ‘‘may’’; however,
clarification of FAR 42.705–1(b)(1)(ii) is
not necessary. The supplemental
information listed in FAR 52.216–
7(d)(2)(iv) is not required for a
determination on the adequacy for the
contractor’s proposal for audit.
Comment: One respondent states that
the proposed statement at FAR 42.705–
1(b)(1)(iii) ‘‘The proposal must be
supported with adequate supporting
data, which may be required subsequent
to proposal submission’’ is repetitious of
FAR 52.216–7(d)(iv) and unnecessary.
The respondent further states that the
statement adds a level of subjectivity as
contractors guess at what information
‘‘may be required’’ subsequent to
submission.
Response: The contractor’s
requirements are located in the clause at
FAR 52.216–7(d)(2)(iv). The FAR
42.705–1(b)(1)(iv) text is directed to the
contracting officer, explaining the
supplemental information that is
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required by contract clause, FAR clause
52.216–7, Allowable Cost and Payment.
The language directed to the contracting
officer and the contract clause serve
different purposes; therefore, both are
necessary.
Comment: One respondent
recommends rescinding the proposed
rule and revising the approach to
determining adequacy. The respondent
states that the approach taken to set
forth a description of an adequate final
indirect cost rate proposal and
supporting data fails to improve the
process and unnecessarily creates
additional and very significant process
and administrative problems.
Response: The rule will provide
uniformity and consistency. Further, the
information is not new and should be
readily available from the contractor’s
books, records, and systems.
E. Data Requirements
The final rule includes amendments
to FAR 52.216–7(d)(2)(iv) in response to
the comments in this category. Many
respondents submitted comments
regarding data requirements.
Comments: Three respondents
submitted comments objecting to the
volume of data required for
determination of an adequate indirect
cost rate proposal.
Response: The revisions to FAR
42.705–1 and FAR 52.216–7 are
necessary to clarify the submission of an
adequate indirect cost rate proposal.
While the information required may be
considered lengthy, it is not new, and it
is essential information necessary for an
adequate claim for cost.
Comments: Four respondents believe
the proposed rule is overly prescriptive.
One respondent specifically suggests the
rule is a regulation to legitimize DCAA’s
longstanding insistence that an adequate
final indirect cost rate proposal be
inclusive of several mandatory
schedules and supplemental
information as represented by DCAA
within its Model Incurred Cost Proposal
rate as stipulated in DCAA Pamphlet
No. 7641.90. This respondent further
takes the position that use of the DCAA
model schedule information eliminates
any opportunity for further variation in
proposal content.
Response: The information required
from the contractor for an adequate
indirect cost rate proposal is not new.
No specific format is prescribed for the
submission. This information is readily
available in the contractor’s books,
records, and systems. DCAA has been
the primary provider of information
necessary for contracting officers to
adequately perform their functions as
stewards of public trust. Furthermore,
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the revised language ‘‘shall include the
following data, unless otherwise
specified by the cognizant Federal
agency official’’ allows flexibility,
depending on the circumstances of the
contract (e.g., size, complexity).
Comments: Four respondents
submitted four comments objecting to
the inclusion of one or more schedule
items and stated that some of the
information proposed to be required for
an adequate submission is not necessary
for an adequate contractor rate
submission.
Response: The information required
in the schedules is the minimum
standard for an adequate indirect cost
rate proposal. For example, the
information in FAR 52.216–7(d)(2)(iii)
item G, reconciliation of books of
account and claimed direct costs, is
necessary for an adequate submission
and different from the information
requested for item H, which is a
schedule of direct costs by contract/
subcontract and indirect expenses
applied. The rule language does not
require the reconciliation to be
presented in a single schedule. An
updated schedule (as specified in FAR
52.216–7(d)(2)(v)) is necessary to ensure
timely adjustments to amounts claimed
and billed by a contractor for the period
covered by the final indirect cost rate
determination.
Comment: One respondent states that
‘‘a requirement for the adequacy of an
indirect cost rate submission that final
direct costs must be submitted for audit
is out of the scope of this clause’’ at FAR
52.216–7(g).
Response: This rule does not amend
paragraph (g) of the clause at FAR
52.216–7, which has no bearing on the
adequacy of an indirect cost rate
submission as required by FAR 52.216–
7(d)(2)(iii). The Government has the
right to audit any invoice or voucher
and statements of cost prior to final
payment pursuant to FAR 52.216–7.
Comments: Two respondents
submitted comments in regard to
formatting. One respondent states that
DCAA’s insistence that data be
converted into other formats (such as
spreadsheets using DCAA’s ICE Model)
is in direct contradiction of FAR
52.215–2(d)(2) that access to records
‘‘may not be construed to require the
contractor or subcontractor to create or
maintain any record that the contractor
or subcontractor does not maintain in
the ordinary course of business or
pursuant to a provision of law.’’ The
other respondent suggests that the
proposed revision at FAR 42.705–1(b)(1)
eliminates the suggestion in the current
rule that contractors can use the DCAA
model incurred cost rate proposal and
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supporting data for guidance on what
constitutes an adequate final indirect
cost rate proposal. According to the
respondent, this proposed revision also
refers the definition of adequacy to the
revised clause at FAR 52.216–7(d)(2),
which makes mandatory specific
schedules and data requirements taken
almost verbatim from the DCAA ICE
Model.
Response: The information required
from the contractor for an adequate
indirect cost rate proposal is not new.
No specific format is prescribed for the
submission. This information should be
readily available in the contractor’s
books, records, and systems.
Comment: One respondent states that
the list of requirements proposed at FAR
52.216–7(d)(2) is contradictory to the
definition of supporting documentation
for final indirect cost rate proposals in
the current FAR. According to FAR
31.201–2(d), supporting documentation
means records necessary to demonstrate
the costs claimed in the proposal have
been incurred, are allocable to the
contract, and comply with applicable
cost principles. This makes clear the
meaning of the current FAR 52.216–
7(d), ‘‘The contractor shall support its
proposal with adequate supporting
documentation.’’
Response: The cost principles are not
intended to set forth the submission
requirements of an adequate indirect
cost rate proposal.
Comment: One respondent states he
does not believe that the proposed rule
is in line with the FAR objective of
achieving a timely settlement of final
indirect rates. The rule delineates
extensive requirements and
supplemental data related to the
description of an adequate final indirect
cost rate proposal that are unnecessarily
burdensome and largely irrelevant to
indirect cost rate proposals. Levying
requirements for the creation of new
books and records as supporting
documentation for costs is contradictory
to existing provisions of FAR 52.215–2.
The respondent is concerned that many
of the proposed data requirements
under the proposed rule have no
connection to the indirect cost rates and
may result in the unnecessary
disclosure of proprietary information,
e.g., schedules O and L.
Response: The revisions to FAR
42.705–1 and FAR 52.216–7 are
necessary to clarify the submission of an
adequate indirect cost rate proposal.
The information required is necessary
for an adequate claim for cost. The
supplemental information, if applicable,
is what auditors expect to review in
support of an adequate claim for cost.
The proposed language ‘‘shall include
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the following data, unless otherwise
specified by the cognizant Federal
agency official’’ allows flexibility
depending on the circumstances of the
contract (e.g. size, complexity). The
information being requested should be
readily available from the contractor’s
accounting system. The information is
not new and the format of the
information has not been designated for
the contractor. The Government treats
all audit information from contractors as
confidential and protects it against all
unauthorized disclosure.
Comment: One respondent states that
the list of data required by FAR 52.216–
7 (regardless of type of business, sector,
or accounting system) is inconsistent
and contradictory to FAR 42.705–
1(b)(1)(i), which states that the ‘‘required
content of the proposal and supporting
data will vary depending on such
factors as business type, size, and
accounting system capabilities.’’ The
final rule should afford contractors the
flexibility to provide only that
information necessary to support an
indirect cost rate proposal.
Response: The information required
from the contractor for an adequate
indirect cost rate proposal is not new.
No specific format is prescribed for the
submission. This information is readily
available in the contractor’s books,
records, and systems. DCAA has been
the primary provider for information
necessary for contracting officers to
adequately perform their functions as
stewards of the public trust.
Comment: One respondent takes
exception to the statement in FAR
52.216–7(d)(2)(iv) that ‘‘The following
supplemental information which will be
required during the audit process
* * *’’ and suggests it should be
restated ‘‘the following supplemental
information may be required * * *.’’
Response: The language has been
revised to read ‘‘the following
supplemental information is not
required to determine if a proposal is
adequate, but may be required during
the audit process.’’
srobinson on DSK4SPTVN1PROD with RULES2
F. Indirect Cost Rate Proposal
The final rule implements the changes
published in the proposed rule, without
further amendments in response to the
comments in this category.
Comment: One respondent states that
the indirect cost rate proposal mandates
at FAR 52.216–7 will result in an
increase in proposal rejections,
administrative costs and burden, and
will significantly delay contract
closeout.
Response: The information will
provide uniformity, consistency,
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timeliness, and reduce the number of
proposals being returned as inadequate.
Comment: One respondent agrees
with the language to require a
completion invoice to be submitted
within 120 days after all rates have been
settled for all years during a contract’s
period of performance and require
inclusion of settled subcontract amounts
and rates at FAR 52.216–7(d)(5) may
assist in more timely completion of
indirect cost audits and facilitate
closeout. The respondent further agrees
with the list set forth for an adequate
indirect cost rate proposal.
Response: No response required.
Comment: One respondent states that
timely closeout of subcontracts issued
under a Government prime contract
should be addressed and that
contracting officers should be
empowered and encouraged to
unilaterally close out the prime
contract, even if subcontracts have not
been settled.
Response: The prime contractor is
responsible for resolution of subcontract
costs and rates prior to submission of
final vouchers. FAR 52.216–7(d)(6)(i)
allows the contracting officer to
unilaterally close out a prime contract,
when the contractor fails to submit a
final voucher within 120 days.
31405
the patent report may be cleared
whether an invention is disclosed or
not.
Comment: Two respondents concur
with the proposed procedures for
clearing final patent reports.
Response: Comment noted.
H. Payment Withhold
The final rule implements the changes
published in the proposed rule, without
further amendments in response to the
comments in this category.
Comment: One respondent states that
the rule, in regard to payment
withholds, should allow the contracting
officer to use their discretion regarding
whether to withhold payment so that
the provision is applied only when
necessary.
Response: The institution of a
uniform policy is more appropriate
because the contracting officer will
know what is required, as a minimum,
for fee withholds for all contract types.
This uniform policy will help to
facilitate contract closeout by
encouraging timely submission of final
indirect cost rate proposals and final
vouchers.
Comment: One respondent states that
the retainage of a maximum of $100,000
is a good start, but for large contractors
it is not much of a disincentive for the
G. Final Patent Report
untimely submission of New
The final rule implements the changes Technology/Patent Reports and
published in the proposed rule, without recommends the retainage be changed to
15 percent of the fee. This respondent
further amendments in response to the
also states that changes in the proposed
comments in this category.
Comment: One respondent states that rule may facilitate closeout; however,
withholding of $100,000 in fee is
if clearance by the contracting officer is
insufficient to influence the actions of
not received within 60 days of receipt
larger contractors.
of the final patent report, the contract
Another respondent does not believe
can be closed (FAR 4.804–5(a)(2)).
that the withhold changes in FAR
Two respondents recommend
timelines be established (FAR 4.804–5). 52.216–8, 52.216–9, and 52.216–10 are
necessary; the changes should be
One respondent states that patent
rescinded; and, the current clauses
reports are seldom, if ever, cleared
remain in their current form.
within 60 days and recommends
Response: The intent of this FAR case
timelines be established for both the
is not to change the amount of the
contractor and legal community with
withholdings. The intent is to make the
finite time constraints to respond. The
other respondent suggests establishing a fee withholds mandatory, not optional,
and to define an adequate indirect cost
time period for responding to the
rate proposal.
contracting officer’s notification.
Comments: Two respondents object to
Response: The final rule provides for
the allegedly arbitrary fee withholds
60 days for the clearance of patent
that will negatively impact cash flow,
reports and allows for flexibility on a
harm the industrial base, and increase
case-by-case basis. Any further
the amount of cancelled funds. Also, the
clarification, if needed, should be
other respondent states that the
provided in agency guidance.
prescribed withholding of fee will result
Comment: One respondent suggests
in contracting officers experiencing
revising FAR 4.804–5(a)(2)(i) to read
significant ongoing contract
‘‘Final Patent Reports, where no
contractor invention is disclosed should administration issues with expiring
funds with no clear benefit.
be cleared within 60 days of receipt.’’
Response: The intent of this FAR case
Response: The inclusion of the
language ‘‘where no contractor invention is not to change the amount of the fee
withholdings. The intent is to make the
is disclosed’’ is not necessary because
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fee withholds mandatory, not optional,
and to define an adequate indirect cost
rate proposal. The proposed rule does
not change the current procedures in
regard to expiring funds.
Comment: One respondent objects to
making the proposed fee withholds
mandatory because there are existing
FAR provisions that already provide for
fee withholds so no change is necessary.
The combined effect of adding an
exhaustive, ill fitting list of
requirements for an adequate indirect
cost rate proposal with mandatory fee
withholds for inadequacy means that
inevitable differences in interpreting the
new rule will punish contractors
unfairly and unilaterally. It is contrary
to FAR 42.705–1(b) and could result in
increases in the amount of cancelled
funds.
Response: It is in the Government’s
best interest to set a uniform policy to
establish mandatory fee withholds and
define an adequate indirect cost rate
proposal.
I. Quick-Closeout
The final rule includes amendments
to FAR 42.708(a), in response to
comments in this category.
Five respondents provided comments
in this category.
Comment: One respondent welcomes
the change at FAR 42.708(a) through (d)
but requests clarification of direct costs
to be allocated to a cost contract as
direct costs are normally assigned/
charged rather than allocated to
contracts.
Response: The language is revised in
FAR 42.708(a)(2) to read ‘‘unsettled
direct costs and indirect costs to be
allocated to the contract.’’
Comment: One respondent states that
setting the limitation at FAR
42.708(a)(2)(i) to 20 percent is
inconsistent with the historical intent of
the provision to settle only an
‘‘insignificant’’ portion of the costs in
advance of determination of final costs
and rates. The respondent recommends
a percentage of 10 or less.
Response: This rule changes the
criteria for use of quick-closeout
procedures from unsettled indirect rates
on the contract as a percentage of total
unsettled indirect costs, to both
unsettled direct and indirect contract
costs as a percentage of total claimed
contract costs. The Councils believe this
change expands the number of
contracting actions, which will meet the
criteria for quick-closeout. The
limitation has been lowered from the
proposed 20 percent to 10 percent of the
total unsettled direct and indirect costs
to be allocated to any one contract. The
coverage is also revised in FAR
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42.708(a)(2) to state that ‘‘Cost amounts
will be considered relatively
insignificant when the total unsettled
direct costs and indirect costs to be
allocated to any one contract, task order,
or delivery order, do not exceed the
lesser of (i) $1,000,000; or (ii) 10 percent
of the total contract, task order, or
delivery order amount.’’ The Councils
believe the percentage and monetary
threshold should be lower because the
lower percentage and dollar threshold
will provide increased oversight and
reduced risk to the government. The
$1,000,000 threshold aligns with current
inventories of physically-complete
contracts that are amenable to use of
quick-closeout procedures.
Comments: Three respondents
comment that the proposed revisions
limiting the use of quick-closeout
procedures are counter-productive and
will decrease their use. One respondent
recommends adopting the Defense
Contract Management Agency (DCMA)
Class Deviation in FAR 42.703–1(b),
42.703–1(c)(2), and 42.708(a)(2) entitled
‘‘use of quick-closeout procedures for
cost-reimbursement, fixed-price
incentive, fixed-price redeterminable,
and time-and-material contracts.’’
Another respondent recommends
deletion of the phrase ‘‘other concerns of
the cognizant auditor’’ at FAR
42.708(a)(2)(i) in the risk assessment
verbiage. The respondent also
recommends that unsettled direct costs
be defined.
Response: Previously, the FAR
limited the use of quick-closeout
procedures to instances where only
indirect cost rates remain unsettled.
This final rule allows the contracting
officer to close contracts with unaudited
direct costs and unsettled indirect cost
rates. The intent of the rule is to
increase the use of quick-closeout
procedures for instances involving
relatively insignificant amounts of
unaudited costs under certain
circumstances. DCMA’s deviation does
not allow the contracting officer to close
out contracts without audit of all direct
costs. The contracting officer’s risk
assessment plan includes coordination
with the cognizant auditor. There is no
need for a definition of ‘‘unsettled direct
costs’’ because unsettled direct costs are
identified on a case-by-case basis.
J. Timelines for the Government
The final rule implements the changes
published in the proposed rule, without
further amendments in response to the
comments in this category.
Comment: One respondent states that
the ‘‘provision at FAR 42.705–1(b)(ii)
does not state a time limitation for the
auditor to make a written determination
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of adequacy.’’ Also, according to the
respondent, time limitations should be
established for completing audits.
Another respondent states that the
Government needs to emphasize its role,
including timely finalization of indirect
rates, which includes DCAA completing
audits of indirect costs proposals and
administrative contracting officer’s
settling rates, signing off on reports,
doing plant clearances, etc. Another
respondent states that the rule does not
define time requirements which all
parties, not just contractors, must meet.
Response: Timelines should not be
instituted for auditors to make a written
determination of adequacy or for
completion of audits, and for
administrative contracting officers to
settle rates, sign off on reports, do plant
clearances, etc., in order to ensure
quality and allow flexibility, based on
the size and complexity of each
contract.
Comment: One respondent does not
believe that the proposed rule will
achieve any predictable reduction of
time or resources associated with
contract closeout.
Response: This rule clarifies the
contract closeout process.
K. Regulatory Flexibility Act
Comments: One respondent questions
the statement within the Regulatory
Flexibility Act section of the preamble
to the proposed rule that the rule is
intended to ‘‘clarify and streamline’’
closeout procedures. The respondent
further suggests that adoption of the
DCAA Model Incurred Cost Proposal
rate is not justified. Another respondent
does not agree that the rule will not
have a significant impact on a
substantial number of small entities.
The respondent believes that the
numbers of schedules and the
imposition of a six-month time
constraint will have significant impact
on small businesses. The third
respondent also strongly disagrees with
the conclusion that the proposed rule
will not have a significant economic
impact on a substantial number of small
entities. Requiring preparation and
submittal of DCAA’s Model Indirect
Cost Proposal rate and withholding fees,
the proposed rule will have a significant
economic impact on a substantial
number of small entities. The
respondent encourages the Councils to
prepare and make available for public
comment an initial regulatory flexibility
analysis.
Response: Contractors are already
required to support their indirect cost
rate proposals with adequate supporting
data. (See FAR 42.705–1(b).) No new
requirement is imposed on contractors
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by this rule. The changes to FAR parts
4 and 42 clarify and streamline closeout
procedures. The model for an adequate
indirect cost rate proposal is contained
in the DCAA Model Incurred Cost
Proposal rate. The data required in this
model is not new to contractors nor is
there evidence of any effect on small
businesses when this information is
required. In fact, because the
information required is not new and the
format of the information has not been
designated for the contractor, this
should be helpful to small businesses.
The information being requested should
be readily available from the
contractor’s accounting system. The
inclusion of this information list should
improve consistency, efficiency, and
timeliness in contractor submissions.
The clauses at FAR 52.216–8, 52.216–9,
and 52.216–10 are being changed to
make the reserve mandatory. However,
the reserve amount set aside in the
proposed rule has not changed. No
small businesses commented on the
changes to the clauses at FAR 52.216–
8, 52.216–9, and 52.216–10 as published
in the proposed rule. Therefore, the
Councils conclude that this change will
not have a significant impact on small
businesses.
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L. Paperwork Reduction Act
Comments: Several respondents
disagree with the preamble to the
proposed rule, which stated that the
proposed changes to the FAR would not
impose additional information
collection requirements to the
paperwork burden previously approved
by the Office of Management and
Budget (OMB). According to one
respondent, mandating preparation and
submittal of DCAA’s model indirect cost
rate proposal for every contract that
requires an indirect cost rate proposal
will significantly increase the
paperwork burdens.
Response: No new requirement is
imposed on contractors by this
proposed rule. The schedules now
contained in FAR 52.216–7(d) require
the same information previously cited
in FAR 42.705–1(b). FAR 42.705–1(b)
requires contractors to 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. This requirement is
contained in OMB Clearance 9000–
0013. The clause at FAR 52.216–7,
Allowable Cost and Payment, is covered
by OMB Clearance 9000–0069. The
clause at FAR 52.216–10, Incentive Fee,
is covered by OMB Clearance 9000–
0067.
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M. General
There are no revisions to the FAR
based on this comment category.
Comment: One respondent inquires as
to why the FAR case and new clause are
limited to DoD, GSA, and NASA and
that other civilian agencies would
benefit from the new streamlined
procedures as well.
Response: By law, 41 U.S.C. 1302
(formerly 41 U.S.C. 421(b)), DoD, GSA,
and NASA are the signatories of the
FAR. GSA signs on behalf of all the
other civilian agencies that are subject
to the FAR except NASA. The final rule
is applicable Government-wide to those
executive agencies under the Federal
Acquisition Regulations System.
Comment: One respondent
recommends that ‘‘contracting officers
should be encouraged to unilaterally deobligate cancelling funds as an
administrative action without fear of
violating anti-deficiency or other
contracting protocols.’’
Another respondent recommends that
a timeframe should be targeted for the
replacement of cancelled funds.
Response: These comments on
funding are outside the scope of this
case.
Comments: Two respondents question
the application of this rule to the FAR
guiding principles in FAR 1.102.
Response: This guidance helps to
clarify the requirements of an adequate
submission of an indirect cost rate
proposal. The guidance for the proper
submission of an adequate indirect cost
rate proposal is provided to contractors
in the clause at FAR 52.216–7. The
inclusion of this list of information
should help to provide consistency,
efficiency, and more timely submission.
N. Summary of Changes
The Councils made the following
changes to the FAR as a result of the
public comments:
1. Revised FAR 42.705–1(b)(1) to be
consistent with language at FAR
52.216–7(d)(2).
2. Revised FAR 42.705–1(b) and
42.705–2(b)(2) to clarify the role of the
auditor.
• The term ‘‘determination’’ was
removed from proposed 42.705–
1(b)(1)(ii);
• FAR 42.705–1(b)(1)(iii), 42.705–
1(b)(2), and 42.705–2(b) clarify that the
auditor—
Æ Reviews the proposal for adequacy
and provides the findings of inadequacy
to the contractor and contracting officer;
and
Æ Prepares an advisory audit report,
after the proposal has been determined
to be adequate for audit.
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3. Revised FAR 42.708(a)(2) to lower
the percentage limitation in the existing
quick-closeout criteria. FAR
42.708 (a)(2)(i) dollar limitation reverts
to $1,000,000, instead of $4,000,000 in
the proposed rule. Renumbered FAR
42.708(a)(3) as FAR 42.708(a)(4) and
added a new paragraph FAR
42.708(a)(3). Provided examples of other
pertinent information at new paragraph
FAR 42.708(a)(3)(iii).
4. Revised FAR 52.216–7(d)(2)(iii) to
further illustrate the data.
5. Revised FAR 52.216–7(d)(2)(iv) to
clarify that the supplemental
information listed, although it may not
be required for a determination on the
adequacy of the contractor’s proposal,
may be required during the audit
process.
6. Revised FAR 52.216–7(d)(2)(iii) and
(d)(2)(iv) to clarify items provided for
adequate final indirect cost rate
proposal at FAR 52.216–7(d)(2)(i).
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and
13563 direct agencies to assess all costs
and benefits of available regulatory
alternatives and, if regulation is
necessary, to select regulatory
approaches that maximize net benefits
(including potential economic,
environmental, public health and safety
effects, distributive impacts, and
equity). E.O. 13563 emphasizes the
importance of quantifying both costs
and benefits, of reducing costs, of
harmonizing rules, and of promoting
flexibility. This is a significant
regulatory action and, therefore, was
subject to review under section 6(b) of
E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This
rule is not a major rule under 5 U.S.C.
804.
IV. 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 does not impose any additional
requirements on small businesses. The
changes to FAR parts 4 and 42 clarify
and streamline closeout procedures. The
changes to the clauses at FAR 52.216–
8, 52.216–9, and 52.216–10 allow for a
reserve to be set-aside to protect the
Government’s interest. Contracting
Officers already may set aside a reserve
under current FAR procedures.
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V. Paperwork Reduction Act
The Paperwork Reduction Act (44
U.S.C. chapter 35) does apply; however
these changes to the FAR do not impose
additional information collection
requirements to the paperwork burden
previously approved under the
following:
• OMB Control Number 9000–0013,
titled: Cost or Pricing Data
Requirements Information Other Than
Cost or Pricing Data;
• OMB Control Number 9000–0067,
titled: Incentive Contract; and
• OMB Control Number 9000–0069,
titled: Indirect Cost Rates.
List of Subjects in 48 CFR Parts 4, 42,
and 52
Government procurement.
Dated: May 18, 2011.
Millisa Gary,
Acting Director, Office of Governmentwide
Acquisition Policy.
Therefore, DoD, GSA, and NASA
amend 48 CFR parts 4, 42, and 52 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. 121(c); 10 U.S.C.
chapter 137; and 42 U.S.C. 2473(c).
PART 4—ADMINISTRATIVE MATTERS
2. Amend section 4.804–5 by revising
paragraph (a)(2) to read as follows.
■
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4.804–5 Procedures for closing out
contract files.
(a) * * *
(2) Final patent report is cleared. If a
final patent report is required, the
contracting officer may proceed with
contract closeout in accordance with the
following procedures, or as otherwise
prescribed by agency procedures:
(i) Final patent reports should be
cleared within 60 days of receipt.
(ii) If the final patent report is not
received, the contracting officer shall
notify the contractor of the contractor’s
obligations and the Government’s rights
under the applicable patent rights
clause, in accordance with 27.303. If the
contractor fails to respond to this
notification, the contracting officer may
proceed with contract closeout upon
consultation with the agency legal
counsel responsible for patent matters
regarding the contractor’s failure to
respond.
*
*
*
*
*
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agreements or restrictive terms of
specific contracts.
*
*
*
*
*
■ 4. Amend section 42.705–2 by—
■ 3. Amend section 42.705–1 by
■ a. Revising the introductory text of
revising paragraphs (b)(1) and (b)(2) to
paragraph (b)(2) and (b)(2)(i); and
read as follows:
■ b. Redesignating paragraphs (b)(2)(ii)
42.705–1 Contracting officer determination through (iv) as paragraphs (b)(2)(iii)
procedure.
through (v), respectively; and adding a
new paragraph (b)(2)(ii) to read as
*
*
*
*
*
(b) Procedures. (1) In accordance with follows:
the Allowable Cost and Payment clause
42.705–2 Auditor determination
at 52.216–7, the contractor is required to procedure.
submit an adequate final indirect cost
*
*
*
*
*
rate proposal to the contracting officer
(b) * * *
(or cognizant Federal agency official)
(2) Once a proposal has been
and to the cognizant auditor.
determined to be adequate for audit in
(i) The required content of the
support of negotiating final indirect cost
proposal and supporting data will vary
rates, the auditor shall—
depending on such factors as business
(i) Audit the proposal and prepare an
type, size, and accounting system
advisory audit report, including a listing
capabilities. The contractor, contracting
of any relevant advance agreements or
officer, and auditor must work together
restrictive terms of specific contracts;
to make the proposal, audit, and
(ii) Seek agreement on indirect costs
negotiation process as efficient as
with the contractor;
possible.
*
*
*
*
*
(ii) Each contractor is required to
submit the final indirect cost rate
■ 5. Amend section 42.708 by revising
proposal within the six-month period
paragraph (a) to read as follows:
following the expiration of each of its
fiscal years. The contracting officer may 42.708 Quick-closeout procedure.
(a) The contracting officer responsible
grant, in writing, reasonable extensions,
for contract closeout shall negotiate the
for exceptional circumstances only,
settlement of direct and indirect costs
when requested in writing by the
for a specific contract, task order, or
contractor.
delivery order to be closed, in advance
(iii) Upon receipt of the proposal—
(A) The cognizant auditor will review of the determination of final direct costs
and indirect rates set forth in 42.705,
the adequacy of the contractor’s
if—
proposal for audit in support of
(1) The contract, task order, or
negotiating final indirect cost rates and
will provide a written description of any delivery order is physically complete;
(2) The amount of unsettled direct
inadequacies to the contractor and
costs and indirect costs to be allocated
contracting officer.
to the contract, task order, or delivery
(B) If the auditor and contractor are
order is relatively insignificant. Cost
unable to resolve the proposal’s
amounts will be considered relatively
inadequacies identified by the auditor,
insignificant when the total unsettled
the auditor will elevate the issue to the
direct costs and indirect costs to be
contracting office to resolve the
allocated to any one contract, task order,
inadequacies.
or delivery order does not exceed the
(iv) The proposal must be supported
lesser of—
with adequate supporting data, some of
(i) $1,000,000; or
which may be required subsequent to
(ii) 10 percent of the total contract,
finding that the proposal is adequate for
task order, or delivery order amount;
audit in support of negotiating final
(3) The contracting officer performs a
indirect cost rates (e.g., during the
risk assessment and determines that the
course of the performance of the
use of the quick-closeout procedure is
advisory audit). See the clause at
appropriate. The risk assessment shall
52.216–7(d)(2) for the description of an
include—
adequate final indirect cost rate
(i) Consideration of the contractor’s
proposal and supporting data.
accounting, estimating, and purchasing
(2) Once a proposal has been
systems;
determined to be adequate for audit in
(ii) Other concerns of the cognizant
support of negotiating final indirect cost
rates, the auditor will audit the proposal contract auditors; and
(iii) Any other pertinent information,
and prepare an advisory audit report to
such as, documented history of Federal
the contracting officer (or cognizant
Government approved indirect cost rate
Federal agency official), including a
agreements, changes to contractor’s rate
listing of any relevant advance
PART 42—CONTRACT
ADMINISTRATION AND AUDIT
SERVICES
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structure, volatility of rate fluctuations
during affected periods, mergers or
acquisitions, special contract provisions
limiting contractor’s recovery of
otherwise allowable indirect costs under
cost reimbursement or time-andmaterials contracts; and
(4) Agreement can be reached on a
reasonable estimate of allocable dollars.
*
*
*
*
*
PART 52—SOLICITATION PROVISIONS
AND CONTRACT CLAUSES
6. Amend section 52.216–7 by—
a. Revising the date of the clause;
b. Adding paragraphs (d)(2)(iii)
through (d)(2)(v); and
■ c. Adding two sentences to the end of
paragraph (d)(5) to read as follows:
■
■
■
52.216–7
*
*
Allowable Cost and Payment.
*
*
*
Allowable Cost and Payment (JUN 2011)
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*
*
*
*
*
(d) * * *
(2) * * *
(iii) An adequate indirect cost rate proposal
shall include the following data unless
otherwise specified by the cognizant Federal
agency official:
(A) Summary of all claimed indirect
expense rates, including pool, base, and
calculated indirect rate.
(B) General and Administrative expenses
(final indirect cost pool). Schedule of claimed
expenses by element of cost as identified in
accounting records (Chart of Accounts).
(C) Overhead expenses (final indirect cost
pool). Schedule of claimed expenses by
element of cost as identified in accounting
records (Chart of Accounts) for each final
indirect cost pool.
(D) Occupancy expenses (intermediate
indirect cost pool). Schedule of claimed
expenses by element of cost as identified in
accounting records (Chart of Accounts) and
expense reallocation to final indirect cost
pools.
(E) Claimed allocation bases, by element of
cost, used to distribute indirect costs.
(F) Facilities capital cost of money factors
computation.
(G) Reconciliation of books of account (i.e.,
General Ledger) and claimed direct costs by
major cost element.
(H) Schedule of direct costs by contract
and subcontract and indirect expense applied
at claimed rates, as well as a subsidiary
schedule of Government participation
percentages in each of the allocation base
amounts.
(I) Schedule of cumulative direct and
indirect costs claimed and billed by contract
and subcontract.
(J) Subcontract information. Listing of
subcontracts awarded to companies for
which the contractor is the prime or uppertier contractor (include prime and
subcontract numbers; subcontract value and
award type; amount claimed during the fiscal
year; and the subcontractor name, address,
and point of contact information).
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(K) Summary of each time-and-materials
and labor-hour contract information,
including labor categories, labor rates, hours,
and amounts; direct materials; other direct
costs; and, indirect expense applied at
claimed rates.
(L) Reconciliation of total payroll per IRS
form 941 to total labor costs distribution.
(M) Listing of decisions/agreements/
approvals and description of accounting/
organizational changes.
(N) Certificate of final indirect costs (see
52.242–4, Certification of Final Indirect
Costs).
(O) Contract closing information for
contracts physically completed in this fiscal
year (include contract number, period of
performance, contract ceiling amounts,
contract fee computations, level of effort, and
indicate if the contract is ready to close).
(iv) The following supplemental
information is not required to determine if a
proposal is adequate, but may be required
during the audit process:
(A) Comparative analysis of indirect
expense pools detailed by account to prior
fiscal year and budgetary data.
(B) General Organizational information and
Executive compensation for the five most
highly compensated executives. See 31.205–
6(p). Additional salary reference information
is available at https://www.whitehouse.gov/
omb/procurement_index_exec_comp/.
(C) Identification of prime contracts under
which the contractor performs as a
subcontractor.
(D) Description of accounting system
(excludes contractors required to submit a
CAS Disclosure Statement or contractors
where the description of the accounting
system has not changed from the previous
year’s submission).
(E) Procedures for identifying and
excluding unallowable costs from the costs
claimed and billed (excludes contractors
where the procedures have not changed from
the previous year’s submission).
(F) Certified financial statements and other
financial data (e.g., trial balance,
compilation, review, etc.).
(G) Management letter from outside CPAs
concerning any internal control weaknesses.
(H) Actions that have been and/or will be
implemented to correct the weaknesses
described in the management letter from
subparagraph (G) of this section.
(I) List of all internal audit reports issued
since the last disclosure of internal audit
reports to the Government.
(J) Annual internal audit plan of scheduled
audits to be performed in the fiscal year
when the final indirect cost rate submission
is made.
(K) Federal and State income tax returns.
(L) Securities and Exchange Commission
10–K annual report.
(M) Minutes from board of directors
meetings.
(N) Listing of delay claims and termination
claims submitted which contain costs
relating to the subject fiscal year.
(O) Contract briefings, which generally
include a synopsis of all pertinent contract
provisions, such as: Contract type, contract
amount, product or service(s) to be provided,
contract performance period, rate ceilings,
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advance approval requirements, pre-contract
cost allowability limitations, and billing
limitations.
(v) The Contractor shall update the billings
on all contracts to reflect the final settled
rates and update the schedule of cumulative
direct and indirect costs claimed and billed,
as required in paragraph (d)(2)(iii)(I) of this
section, within 60 days after settlement of
final indirect cost rates.
*
*
*
*
*
(5) * * * The completion invoice or
voucher shall include settled subcontract
amounts and rates. The prime contractor is
responsible for settling subcontractor
amounts and rates included in the
completion invoice or voucher and providing
status of subcontractor audits to the
contracting officer upon request.
*
*
*
*
*
7. Amend section 52.216–8 by
revising the date of the clause and
paragraph (b) to read as follows:
■
52.216–8
*
*
Fixed Fee.
*
*
*
Fixed Fee (JUN 2011)
*
*
*
*
*
(b) Payment of the fixed fee shall be made
as specified in the Schedule; provided that
the Contracting Officer withholds a reserve
not to exceed 15 percent of the total fixed fee
or $100,000, whichever is less, to protect the
Government’s interest. The Contracting
Officer shall release 75 percent of all fee
withholds under this contract after receipt of
an adequate certified final indirect cost rate
proposal covering the year of physical
completion of this contract, provided the
Contractor has satisfied all other contract
terms and conditions, including the
submission of the final patent and royalty
reports, and is not delinquent in submitting
final vouchers on prior years’ settlements.
The Contracting Officer may release up to 90
percent of the fee withholds under this
contract based on the Contractor’s past
performance related to the submission and
settlement of final indirect cost rate
proposals.
*
*
*
*
*
8. Amend section 52.216–9 by
revising the date of the clause and
paragraph (c) to read as follows:
■
52.216–9
*
*
Fixed Fee—Construction.
*
*
*
Fixed Fee—Construction (JUN 2011)
*
*
*
*
*
(c) The Contracting Officer shall withhold
a reserve not to exceed 15 percent of the total
fixed fee or $100,000, whichever is less, to
protect the Government’s interest. The
Contracting Officer shall release 75 percent of
all fee withholds under this contract after
receipt of an adequate certified final indirect
cost rate proposal covering the year of
physical completion of this contract,
provided the Contractor has satisfied all
other contract terms and conditions,
including the submission of the final patent
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31MYR2
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Federal Register / Vol. 76, No. 104 / Tuesday, May 31, 2011 / Rules and Regulations
and royalty reports, and is not delinquent in
submitting final vouchers on prior years’
settlements. The Contracting Officer may
release up to 90 percent of the fee withholds
under this contract based on the Contractor’s
past performance related to the submission
and settlement of final indirect cost rate
proposals.
DEPARTMENT OF DEFENSE
*
48 CFR Parts 4, 9, and 52
*
*
*
*
*
*
*
Federal Acquisition Regulation;
Prohibition on Contracting With
Inverted Domestic Corporations
*
Incentive Fee (JUN 2011)
*
*
*
*
*
*
*
*
[FR Doc. 2011–12852 Filed 5–27–11; 8:45 am]
srobinson on DSK4SPTVN1PROD with RULES2
BILLING CODE 6820–EP–P
VerDate Mar<15>2010
17:35 May 27, 2011
Department of Defense (DoD),
General Services Administration (GSA),
and National Aeronautics and Space
Administration (NASA).
ACTION: Final rule.
AGENCY:
*
(c) Withholding of payment. (1) Normally,
the Government shall pay the fee to the
Contractor as specified in the Schedule.
However, when the Contracting Officer
considers that performance or cost indicates
that the Contractor will not achieve target,
the Government shall pay on the basis of an
appropriate lesser fee. When the Contractor
demonstrates that performance or cost clearly
indicates that the Contractor will earn a fee
significantly above the target fee, the
Government may, at the sole discretion of the
Contracting Officer, pay on the basis of an
appropriate higher fee.
(2) Payment of the incentive fee shall be
made as specified in the Schedule; provided
that the Contracting Officer withholds a
reserve not to exceed 15 percent of the total
incentive fee or $100,000, whichever is less,
to protect the Government’s interest. The
Contracting Officer shall release 75 percent of
all fee withholds under this contract after
receipt of an adequate certified final indirect
cost rate proposal covering the year of
physical completion of this contract,
provided the Contractor has satisfied all
other contract terms and conditions,
including the submission of the final patent
and royalty reports, and is not delinquent in
submitting final vouchers on prior years’
settlements. The Contracting Officer may
release up to 90 percent of the fee withholds
under this contract based on the Contractor’s
past performance related to the submission
and settlement of final indirect cost rate
proposals.
*
NATIONAL AERONAUTICS AND
SPACE ADMINISTRATION
RIN 9000–AL28
Incentive Fee.
*
GENERAL SERVICES
ADMINISTRATION
[FAC 2005–52; FAR Case 2008–009; Item
III; Docket 2009–0020, Sequence 1]
9. Amend section 52.216–10 by
revising the date of the clause and
paragraph (c) to read as follows:
■
52.216–10
appropriated funds for FY 2010. Eight
respondents submitted comments on the
interim rule.
Jkt 223001
DoD, GSA, and NASA have
adopted as final, with changes, the
interim rule amending the Federal
Acquisition Regulation (FAR) to
implement section 743 of Division D of
the Omnibus Appropriations Act, 2009.
Section 743 of Division D of this Act
prohibits the award of contracts using
appropriated funds to any foreign
incorporated entity that is treated as an
inverted domestic corporation or to any
subsidiary of one. For Fiscal Year (FY)
2010, the same restrictions were
continued under section 740 of Division
C of the Consolidated Appropriations
Act, 2010.
DATES: Effective Date: May 31, 2011.
FOR FURTHER INFORMATION CONTACT: Ms.
Cecelia L. Davis, Procurement Analyst,
at (202) 219–0202, for clarification of
content. Please cite FAC 2005–52, FAR
Case 2008–009. For information
pertaining to status or publication
schedules, contact the FAR Secretariat
at (202) 501–4755.
SUPPLEMENTARY INFORMATION:
SUMMARY:
I. Background
DoD, GSA, and NASA published an
interim rule in the Federal Register at
74 FR 31561 on July 1, 2009, to
implement section 743 of the Division D
of the Omnibus Appropriations Act,
2009 (Pub. L. 111–8). Section 743 of
Division D of this Act prohibited the use
of Federal appropriated funds for FY
2009 to contract with any inverted
domestic corporation, as defined at
section 835(b) of the Homeland Security
Act of 2002 (Pub. L. 107–296, 6 U.S.C.
395(b)), or any subsidiary of such an
entity. On December 16, 2009, section
740 of Division C of the Consolidated
Appropriations Act, 2010 (Pub. L. 111–
117), also prohibited the use of Federal
PO 00000
Frm 00018
Fmt 4701
Sfmt 4700
II. Discussion and Analysis of the
Public Comments
The Civilian Agency Acquisition
Council and the Defense Acquisition
Regulations Council (the Councils)
reviewed the public comments in the
development of the final rule. A
discussion of the comments and the
changes made to the rule as a result of
those comments are provided as
follows:
A. Applicability to Fiscal Years (FY)
2006 and 2007 Funds
Comment: Three respondents
commented that the interim rule
inaccurately applies the ban on
contracting with inverted domestic
corporations to funds appropriated in
FY 2006 and FY 2007 on a
Governmentwide basis. Section 743 of
Division D of the Omnibus
Appropriations Act, 2009, and section
745 of the Consolidated Appropriations
Act, 2008, prohibit all Federal agencies
from using appropriated funds on
contracts with any foreign incorporated
entity that is treated as an inverted
domestic corporation or the subsidiary
of such a corporation. In FY 2006 and
FY 2007, the statutory prohibition was
limited to agencies funded under the
Treasury, Transportation and Housing
Appropriation (Pub. L. 109–115, Pub. L.
109–289, Pub. L. 109–369, Pub. L. 109–
383, and Pub. L. 110–5).
Response: The Councils agree with
the respondents that the prohibition in
the FY 2006 and FY 2007
appropriations bills only covers a
limited number of agencies, whereas the
FY 2008 and FY 2009 prohibition
applies Governmentwide. The Councils
therefore have revised FAR 9.108–3 to
apply the prohibition to the use of FY
2008 and FY 2009 appropriated funds.
The Councils recommend that each
covered agency continue with its
implementation of the FY 2006 and FY
2007 prohibitions because the required
implementation has probably already
occurred within the covered agencies.
B. Applicability to Task Orders
Comment: One respondent
commented that the interim rule fails to
reflect a statutory exception for funds
expended on task orders issued under
contracts entered into before December
26, 2007. Section 743(c) of Division D of
the Omnibus Appropriations Act, 2009,
and section 745(c) of Division D of
Public Law 110–161 (the Consolidated
Appropriations Act, 2008) each provide
that ‘‘This section shall not apply to any
E:\FR\FM\31MYR2.SGM
31MYR2
]]>Agencies
[Federal Register Volume 76, Number 104 (Tuesday, May 31, 2011)]
[Rules and Regulations]
[Pages 31402-31410]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-12852]
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 4, 42, and 52
[FAC 2005-52; FAR Case 2008-020; Item II; Docket 2009-0031, Sequence 1]
RIN 9000-AL43
Federal Acquisition Regulation; Contract Closeout
AGENCY: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the
Federal Acquisition Regulation (FAR) procedures for closing out
contract files. This case revises procedures for clearing final patent
reports and quick-closeout procedure, and sets forth a description of
an adequate final indirect cost rate proposal and supporting data.
DATES: Effective Date: June 30, 2011.
FOR FURTHER INFORMATION CONTACT: Ms. Clare McFadden, Procurement
Analyst,
[[Page 31403]]
at (202) 501-0044, for clarification of content. For information
pertaining to status or publication schedules, contact the Regulatory
Secretariat at (202) 501-4755. Please cite FAC 2005-52, FAR Case 2008-
020.
SUPPLEMENTARY INFORMATION:
I. Background
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 74 FR 42044 on August 20, 2009. Sixteen respondents
provided comments. The Civilian Agency Acquisition Council and the
Defense Acquisition Regulations Council (the Councils) reviewed the
comments in development of the final rule.
II. Discussion and Analysis of the Public Comments
Comments received were grouped under 13 general topics. A
discussion of the comments and the changes made to the rule as a result
of those comments are provided as follows:
A. ``Adequacy'' Definition
The final rule implements the changes published in the proposed
rule, without further amendments in response to comments in this
category.
Comment: One respondent recommends a new definition for
``adequacy'' at FAR 42.705-1. The respondent states that guidelines for
determining adequacy should be established in order to provide a
baseline against which the contracting officer can resolve differences
of opinion on adequacy between the auditor and the contractor.
Response: A new definition is not necessary, as specific
information has been provided in the clause to ensure uniformity,
consistency, and fairness for all contractors. This assures that
contractors are fully informed in advance of the Government's
parameters for the content of an adequate final indirect cost rate
proposal.
B. Adequacy Determination
The final rule implements the changes published in the proposed
rule, without further amendments in response to comments in this
category.
Comment: One respondent recommends the term ``adequate'' be
replaced with ``complete'' or ``detailed'' at FAR 42.705-1(b). The
respondent states that the phrase ``the contractor shall submit * * *
an adequate indirect cost rate proposal'' is inappropriate, as the
Defense Contract Audit Agency (DCAA) has historically interpreted the
term ``adequate'' to mean identical to DCAA's incurred cost model.
Response: Use of the term ``adequate'' for describing the
Government's requirements for submission of costs is more appropriate
than utilizing the terms ``complete'' or ``detailed''. The FAR already
required the submission of an adequate final indirect cost rate
proposal (FAR 42.705-1(b)). This final rule establishes the content of
an adequate submission.
C. Adequacy Determination and Roles
The final rule includes amendments to FAR 42.705-1(b) and 42.705-
2(b) in response to comments in this category.
Comment: One respondent recommends that the granting of an
extension to the contractor for submitting its indirect cost rate
proposal by the contracting officer be made in writing at FAR 42.705-
1(b)(1)(i).
Response: The language at FAR 42.705-1(b)(1)(ii) is revised
accordingly.
Comments: Five respondents question whether it is appropriate for
DCAA to have sole responsibility to determine the adequacy of indirect
cost rate proposals. One respondent believes a determination from the
auditor exceeds the auditor's authority under law.
Three respondents state that any final determination regarding
adequacy should be the responsibility of the contracting officer. One
respondent states that the contracting officer/auditor relationship
that is provided for in the audit process should be followed.
Response: The term ``determination'' in this case was not intended
to shift the authority to make determinations from the contracting
officer to the auditor; rather, the intent was for the auditor to offer
advice to the contracting officer regarding adequacy of the proposal.
The language in 42.705-1(b)(1)(iii), 42.705-1(b)(2), and 42.705-2(b)
has been revised to remove the term ``determination'' and to clarify
that the auditor reviews the proposal for adequacy and provides the
findings of inadequacy to the contracting officer and contractor.
Comment: One respondent states that the proposed rule creates a
review process within which there is little latitude for a contracting
officer to resolve administrative disagreements between auditors and
contractors.
Response: The rule does not diminish the latitude or the authority
that contracting officers have to resolve any and all matters arising
under the contract with respect to an indirect cost rate proposal. The
current FAR already allows flexibility for the content based on the
situation, e.g., complexity and size of the contractor.
Comment: One respondent states that the proposed changes at FAR
42.705-1(b)(1)(iv) and FAR 52.216-7(d) contradict FAR 42.705-
1(b)(1)(i), which requires the parties to work together to make the
proposal, audit, and negotiation process as efficient as possible. The
proposed default choice requiring data in FAR 52.216-7(d)(2)(iii) will
result in contractors trying to provide unrelated data to avoid an
auditor's automatic ``checklist'' determination of inadequate
proposals. Such rigid requirements will lead to an increase in
disagreements about the adequacy of final indirect cost rate proposals.
Response: The process of reviewing the proposal for adequacy,
performing the audit, and conducting negotiations has not changed.
Also, no new requirement is imposed on contractors by this rule. The
list of data (schedules) now included in FAR 52.216-7(d) requires the
same information previously cited in FAR 42.705-1(b).
D. Adequacy of Indirect Cost Rate Proposal
The final rule includes amendments to FAR 52.216-7(d)(2)(iv) in
response to comments in this category.
Comment: One respondent agrees with the proposed language at FAR
42.705-1 as positive changes.
Comment: One respondent states that the proposed rule was not clear
as to whether the list of required data in FAR 52.216-7(d)(2)(iv) that
``may'' be submitted with the proposal will be considered in making a
determination of the adequacy of the contractor's proposal. The
respondent recommends clarification.
Response: The language at FAR 52.216-7(d)(2)(iv) has been revised
by replacing ``will'' with ``may''; however, clarification of FAR
42.705-1(b)(1)(ii) is not necessary. The supplemental information
listed in FAR 52.216-7(d)(2)(iv) is not required for a determination on
the adequacy for the contractor's proposal for audit.
Comment: One respondent states that the proposed statement at FAR
42.705-1(b)(1)(iii) ``The proposal must be supported with adequate
supporting data, which may be required subsequent to proposal
submission'' is repetitious of FAR 52.216-7(d)(iv) and unnecessary. The
respondent further states that the statement adds a level of
subjectivity as contractors guess at what information ``may be
required'' subsequent to submission.
Response: The contractor's requirements are located in the clause
at FAR 52.216-7(d)(2)(iv). The FAR 42.705-1(b)(1)(iv) text is directed
to the contracting officer, explaining the supplemental information
that is
[[Page 31404]]
required by contract clause, FAR clause 52.216-7, Allowable Cost and
Payment. The language directed to the contracting officer and the
contract clause serve different purposes; therefore, both are
necessary.
Comment: One respondent recommends rescinding the proposed rule and
revising the approach to determining adequacy. The respondent states
that the approach taken to set forth a description of an adequate final
indirect cost rate proposal and supporting data fails to improve the
process and unnecessarily creates additional and very significant
process and administrative problems.
Response: The rule will provide uniformity and consistency.
Further, the information is not new and should be readily available
from the contractor's books, records, and systems.
E. Data Requirements
The final rule includes amendments to FAR 52.216-7(d)(2)(iv) in
response to the comments in this category. Many respondents submitted
comments regarding data requirements.
Comments: Three respondents submitted comments objecting to the
volume of data required for determination of an adequate indirect cost
rate proposal.
Response: The revisions to FAR 42.705-1 and FAR 52.216-7 are
necessary to clarify the submission of an adequate indirect cost rate
proposal. While the information required may be considered lengthy, it
is not new, and it is essential information necessary for an adequate
claim for cost.
Comments: Four respondents believe the proposed rule is overly
prescriptive. One respondent specifically suggests the rule is a
regulation to legitimize DCAA's longstanding insistence that an
adequate final indirect cost rate proposal be inclusive of several
mandatory schedules and supplemental information as represented by DCAA
within its Model Incurred Cost Proposal rate as stipulated in DCAA
Pamphlet No. 7641.90. This respondent further takes the position that
use of the DCAA model schedule information eliminates any opportunity
for further variation in proposal content.
Response: The information required from the contractor for an
adequate indirect cost rate proposal is not new. No specific format is
prescribed for the submission. This information is readily available in
the contractor's books, records, and systems. DCAA has been the primary
provider of information necessary for contracting officers to
adequately perform their functions as stewards of public trust.
Furthermore, the revised language ``shall include the following data,
unless otherwise specified by the cognizant Federal agency official''
allows flexibility, depending on the circumstances of the contract
(e.g., size, complexity).
Comments: Four respondents submitted four comments objecting to the
inclusion of one or more schedule items and stated that some of the
information proposed to be required for an adequate submission is not
necessary for an adequate contractor rate submission.
Response: The information required in the schedules is the minimum
standard for an adequate indirect cost rate proposal. For example, the
information in FAR 52.216-7(d)(2)(iii) item G, reconciliation of books
of account and claimed direct costs, is necessary for an adequate
submission and different from the information requested for item H,
which is a schedule of direct costs by contract/subcontract and
indirect expenses applied. The rule language does not require the
reconciliation to be presented in a single schedule. An updated
schedule (as specified in FAR 52.216-7(d)(2)(v)) is necessary to ensure
timely adjustments to amounts claimed and billed by a contractor for
the period covered by the final indirect cost rate determination.
Comment: One respondent states that ``a requirement for the
adequacy of an indirect cost rate submission that final direct costs
must be submitted for audit is out of the scope of this clause'' at FAR
52.216-7(g).
Response: This rule does not amend paragraph (g) of the clause at
FAR 52.216-7, which has no bearing on the adequacy of an indirect cost
rate submission as required by FAR 52.216-7(d)(2)(iii). The Government
has the right to audit any invoice or voucher and statements of cost
prior to final payment pursuant to FAR 52.216-7.
Comments: Two respondents submitted comments in regard to
formatting. One respondent states that DCAA's insistence that data be
converted into other formats (such as spreadsheets using DCAA's ICE
Model) is in direct contradiction of FAR 52.215-2(d)(2) that access to
records ``may not be construed to require the contractor or
subcontractor to create or maintain any record that the contractor or
subcontractor does not maintain in the ordinary course of business or
pursuant to a provision of law.'' The other respondent suggests that
the proposed revision at FAR 42.705-1(b)(1) eliminates the suggestion
in the current rule that contractors can use the DCAA model incurred
cost rate proposal and supporting data for guidance on what constitutes
an adequate final indirect cost rate proposal. According to the
respondent, this proposed revision also refers the definition of
adequacy to the revised clause at FAR 52.216-7(d)(2), which makes
mandatory specific schedules and data requirements taken almost
verbatim from the DCAA ICE Model.
Response: The information required from the contractor for an
adequate indirect cost rate proposal is not new. No specific format is
prescribed for the submission. This information should be readily
available in the contractor's books, records, and systems.
Comment: One respondent states that the list of requirements
proposed at FAR 52.216-7(d)(2) is contradictory to the definition of
supporting documentation for final indirect cost rate proposals in the
current FAR. According to FAR 31.201-2(d), supporting documentation
means records necessary to demonstrate the costs claimed in the
proposal have been incurred, are allocable to the contract, and comply
with applicable cost principles. This makes clear the meaning of the
current FAR 52.216-7(d), ``The contractor shall support its proposal
with adequate supporting documentation.''
Response: The cost principles are not intended to set forth the
submission requirements of an adequate indirect cost rate proposal.
Comment: One respondent states he does not believe that the
proposed rule is in line with the FAR objective of achieving a timely
settlement of final indirect rates. The rule delineates extensive
requirements and supplemental data related to the description of an
adequate final indirect cost rate proposal that are unnecessarily
burdensome and largely irrelevant to indirect cost rate proposals.
Levying requirements for the creation of new books and records as
supporting documentation for costs is contradictory to existing
provisions of FAR 52.215-2. The respondent is concerned that many of
the proposed data requirements under the proposed rule have no
connection to the indirect cost rates and may result in the unnecessary
disclosure of proprietary information, e.g., schedules O and L.
Response: The revisions to FAR 42.705-1 and FAR 52.216-7 are
necessary to clarify the submission of an adequate indirect cost rate
proposal. The information required is necessary for an adequate claim
for cost. The supplemental information, if applicable, is what auditors
expect to review in support of an adequate claim for cost. The proposed
language ``shall include
[[Page 31405]]
the following data, unless otherwise specified by the cognizant Federal
agency official'' allows flexibility depending on the circumstances of
the contract (e.g. size, complexity). The information being requested
should be readily available from the contractor's accounting system.
The information is not new and the format of the information has not
been designated for the contractor. The Government treats all audit
information from contractors as confidential and protects it against
all unauthorized disclosure.
Comment: One respondent states that the list of data required by
FAR 52.216-7 (regardless of type of business, sector, or accounting
system) is inconsistent and contradictory to FAR 42.705-1(b)(1)(i),
which states that the ``required content of the proposal and supporting
data will vary depending on such factors as business type, size, and
accounting system capabilities.'' The final rule should afford
contractors the flexibility to provide only that information necessary
to support an indirect cost rate proposal.
Response: The information required from the contractor for an
adequate indirect cost rate proposal is not new. No specific format is
prescribed for the submission. This information is readily available in
the contractor's books, records, and systems. DCAA has been the primary
provider for information necessary for contracting officers to
adequately perform their functions as stewards of the public trust.
Comment: One respondent takes exception to the statement in FAR
52.216-7(d)(2)(iv) that ``The following supplemental information which
will be required during the audit process * * *'' and suggests it
should be restated ``the following supplemental information may be
required * * *.''
Response: The language has been revised to read ``the following
supplemental information is not required to determine if a proposal is
adequate, but may be required during the audit process.''
F. Indirect Cost Rate Proposal
The final rule implements the changes published in the proposed
rule, without further amendments in response to the comments in this
category.
Comment: One respondent states that the indirect cost rate proposal
mandates at FAR 52.216-7 will result in an increase in proposal
rejections, administrative costs and burden, and will significantly
delay contract closeout.
Response: The information will provide uniformity, consistency,
timeliness, and reduce the number of proposals being returned as
inadequate.
Comment: One respondent agrees with the language to require a
completion invoice to be submitted within 120 days after all rates have
been settled for all years during a contract's period of performance
and require inclusion of settled subcontract amounts and rates at FAR
52.216-7(d)(5) may assist in more timely completion of indirect cost
audits and facilitate closeout. The respondent further agrees with the
list set forth for an adequate indirect cost rate proposal.
Response: No response required.
Comment: One respondent states that timely closeout of subcontracts
issued under a Government prime contract should be addressed and that
contracting officers should be empowered and encouraged to unilaterally
close out the prime contract, even if subcontracts have not been
settled.
Response: The prime contractor is responsible for resolution of
subcontract costs and rates prior to submission of final vouchers. FAR
52.216-7(d)(6)(i) allows the contracting officer to unilaterally close
out a prime contract, when the contractor fails to submit a final
voucher within 120 days.
G. Final Patent Report
The final rule implements the changes published in the proposed
rule, without further amendments in response to the comments in this
category.
Comment: One respondent states that if clearance by the contracting
officer is not received within 60 days of receipt of the final patent
report, the contract can be closed (FAR 4.804-5(a)(2)).
Two respondents recommend timelines be established (FAR 4.804-5).
One respondent states that patent reports are seldom, if ever, cleared
within 60 days and recommends timelines be established for both the
contractor and legal community with finite time constraints to respond.
The other respondent suggests establishing a time period for responding
to the contracting officer's notification.
Response: The final rule provides for 60 days for the clearance of
patent reports and allows for flexibility on a case-by-case basis. Any
further clarification, if needed, should be provided in agency
guidance.
Comment: One respondent suggests revising FAR 4.804-5(a)(2)(i) to
read ``Final Patent Reports, where no contractor invention is disclosed
should be cleared within 60 days of receipt.''
Response: The inclusion of the language ``where no contractor
invention is disclosed'' is not necessary because the patent report may
be cleared whether an invention is disclosed or not.
Comment: Two respondents concur with the proposed procedures for
clearing final patent reports.
Response: Comment noted.
H. Payment Withhold
The final rule implements the changes published in the proposed
rule, without further amendments in response to the comments in this
category.
Comment: One respondent states that the rule, in regard to payment
withholds, should allow the contracting officer to use their discretion
regarding whether to withhold payment so that the provision is applied
only when necessary.
Response: The institution of a uniform policy is more appropriate
because the contracting officer will know what is required, as a
minimum, for fee withholds for all contract types. This uniform policy
will help to facilitate contract closeout by encouraging timely
submission of final indirect cost rate proposals and final vouchers.
Comment: One respondent states that the retainage of a maximum of
$100,000 is a good start, but for large contractors it is not much of a
disincentive for the untimely submission of New Technology/Patent
Reports and recommends the retainage be changed to 15 percent of the
fee. This respondent also states that changes in the proposed rule may
facilitate closeout; however, withholding of $100,000 in fee is
insufficient to influence the actions of larger contractors.
Another respondent does not believe that the withhold changes in
FAR 52.216-8, 52.216-9, and 52.216-10 are necessary; the changes should
be rescinded; and, the current clauses remain in their current form.
Response: The intent of this FAR case is not to change the amount
of the withholdings. The intent is to make the fee withholds mandatory,
not optional, and to define an adequate indirect cost rate proposal.
Comments: Two respondents object to the allegedly arbitrary fee
withholds that will negatively impact cash flow, harm the industrial
base, and increase the amount of cancelled funds. Also, the other
respondent states that the prescribed withholding of fee will result in
contracting officers experiencing significant ongoing contract
administration issues with expiring funds with no clear benefit.
Response: The intent of this FAR case is not to change the amount
of the fee withholdings. The intent is to make the
[[Page 31406]]
fee withholds mandatory, not optional, and to define an adequate
indirect cost rate proposal. The proposed rule does not change the
current procedures in regard to expiring funds.
Comment: One respondent objects to making the proposed fee
withholds mandatory because there are existing FAR provisions that
already provide for fee withholds so no change is necessary. The
combined effect of adding an exhaustive, ill fitting list of
requirements for an adequate indirect cost rate proposal with mandatory
fee withholds for inadequacy means that inevitable differences in
interpreting the new rule will punish contractors unfairly and
unilaterally. It is contrary to FAR 42.705-1(b) and could result in
increases in the amount of cancelled funds.
Response: It is in the Government's best interest to set a uniform
policy to establish mandatory fee withholds and define an adequate
indirect cost rate proposal.
I. Quick-Closeout
The final rule includes amendments to FAR 42.708(a), in response to
comments in this category.
Five respondents provided comments in this category.
Comment: One respondent welcomes the change at FAR 42.708(a)
through (d) but requests clarification of direct costs to be allocated
to a cost contract as direct costs are normally assigned/charged rather
than allocated to contracts.
Response: The language is revised in FAR 42.708(a)(2) to read
``unsettled direct costs and indirect costs to be allocated to the
contract.''
Comment: One respondent states that setting the limitation at FAR
42.708(a)(2)(i) to 20 percent is inconsistent with the historical
intent of the provision to settle only an ``insignificant'' portion of
the costs in advance of determination of final costs and rates. The
respondent recommends a percentage of 10 or less.
Response: This rule changes the criteria for use of quick-closeout
procedures from unsettled indirect rates on the contract as a
percentage of total unsettled indirect costs, to both unsettled direct
and indirect contract costs as a percentage of total claimed contract
costs. The Councils believe this change expands the number of
contracting actions, which will meet the criteria for quick-closeout.
The limitation has been lowered from the proposed 20 percent to 10
percent of the total unsettled direct and indirect costs to be
allocated to any one contract. The coverage is also revised in FAR
42.708(a)(2) to state that ``Cost amounts will be considered relatively
insignificant when the total unsettled direct costs and indirect costs
to be allocated to any one contract, task order, or delivery order, do
not exceed the lesser of (i) $1,000,000; or (ii) 10 percent of the
total contract, task order, or delivery order amount.'' The Councils
believe the percentage and monetary threshold should be lower because
the lower percentage and dollar threshold will provide increased
oversight and reduced risk to the government. The $1,000,000 threshold
aligns with current inventories of physically-complete contracts that
are amenable to use of quick-closeout procedures.
Comments: Three respondents comment that the proposed revisions
limiting the use of quick-closeout procedures are counter-productive
and will decrease their use. One respondent recommends adopting the
Defense Contract Management Agency (DCMA) Class Deviation in FAR
42.703-1(b), 42.703-1(c)(2), and 42.708(a)(2) entitled ``use of quick-
closeout procedures for cost-reimbursement, fixed-price incentive,
fixed-price redeterminable, and time-and-material contracts.'' Another
respondent recommends deletion of the phrase ``other concerns of the
cognizant auditor'' at FAR 42.708(a)(2)(i) in the risk assessment
verbiage. The respondent also recommends that unsettled direct costs be
defined.
Response: Previously, the FAR limited the use of quick-closeout
procedures to instances where only indirect cost rates remain
unsettled. This final rule allows the contracting officer to close
contracts with unaudited direct costs and unsettled indirect cost
rates. The intent of the rule is to increase the use of quick-closeout
procedures for instances involving relatively insignificant amounts of
unaudited costs under certain circumstances. DCMA's deviation does not
allow the contracting officer to close out contracts without audit of
all direct costs. The contracting officer's risk assessment plan
includes coordination with the cognizant auditor. There is no need for
a definition of ``unsettled direct costs'' because unsettled direct
costs are identified on a case-by-case basis.
J. Timelines for the Government
The final rule implements the changes published in the proposed
rule, without further amendments in response to the comments in this
category.
Comment: One respondent states that the ``provision at FAR 42.705-
1(b)(ii) does not state a time limitation for the auditor to make a
written determination of adequacy.'' Also, according to the respondent,
time limitations should be established for completing audits.
Another respondent states that the Government needs to emphasize
its role, including timely finalization of indirect rates, which
includes DCAA completing audits of indirect costs proposals and
administrative contracting officer's settling rates, signing off on
reports, doing plant clearances, etc. Another respondent states that
the rule does not define time requirements which all parties, not just
contractors, must meet.
Response: Timelines should not be instituted for auditors to make a
written determination of adequacy or for completion of audits, and for
administrative contracting officers to settle rates, sign off on
reports, do plant clearances, etc., in order to ensure quality and
allow flexibility, based on the size and complexity of each contract.
Comment: One respondent does not believe that the proposed rule
will achieve any predictable reduction of time or resources associated
with contract closeout.
Response: This rule clarifies the contract closeout process.
K. Regulatory Flexibility Act
Comments: One respondent questions the statement within the
Regulatory Flexibility Act section of the preamble to the proposed rule
that the rule is intended to ``clarify and streamline'' closeout
procedures. The respondent further suggests that adoption of the DCAA
Model Incurred Cost Proposal rate is not justified. Another respondent
does not agree that the rule will not have a significant impact on a
substantial number of small entities. The respondent believes that the
numbers of schedules and the imposition of a six-month time constraint
will have significant impact on small businesses. The third respondent
also strongly disagrees with the conclusion that the proposed rule will
not have a significant economic impact on a substantial number of small
entities. Requiring preparation and submittal of DCAA's Model Indirect
Cost Proposal rate and withholding fees, the proposed rule will have a
significant economic impact on a substantial number of small entities.
The respondent encourages the Councils to prepare and make available
for public comment an initial regulatory flexibility analysis.
Response: Contractors are already required to support their
indirect cost rate proposals with adequate supporting data. (See FAR
42.705-1(b).) No new requirement is imposed on contractors
[[Page 31407]]
by this rule. The changes to FAR parts 4 and 42 clarify and streamline
closeout procedures. The model for an adequate indirect cost rate
proposal is contained in the DCAA Model Incurred Cost Proposal rate.
The data required in this model is not new to contractors nor is there
evidence of any effect on small businesses when this information is
required. In fact, because the information required is not new and the
format of the information has not been designated for the contractor,
this should be helpful to small businesses. The information being
requested should be readily available from the contractor's accounting
system. The inclusion of this information list should improve
consistency, efficiency, and timeliness in contractor submissions. The
clauses at FAR 52.216-8, 52.216-9, and 52.216-10 are being changed to
make the reserve mandatory. However, the reserve amount set aside in
the proposed rule has not changed. No small businesses commented on the
changes to the clauses at FAR 52.216-8, 52.216-9, and 52.216-10 as
published in the proposed rule. Therefore, the Councils conclude that
this change will not have a significant impact on small businesses.
L. Paperwork Reduction Act
Comments: Several respondents disagree with the preamble to the
proposed rule, which stated that the proposed changes to the FAR would
not impose additional information collection requirements to the
paperwork burden previously approved by the Office of Management and
Budget (OMB). According to one respondent, mandating preparation and
submittal of DCAA's model indirect cost rate proposal for every
contract that requires an indirect cost rate proposal will
significantly increase the paperwork burdens.
Response: No new requirement is imposed on contractors by this
proposed rule. The schedules now contained in FAR 52.216-7(d) require
the same information previously cited in FAR 42.705-1(b). FAR 42.705-
1(b) requires contractors to 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. This
requirement is contained in OMB Clearance 9000-0013. The clause at FAR
52.216-7, Allowable Cost and Payment, is covered by OMB Clearance 9000-
0069. The clause at FAR 52.216-10, Incentive Fee, is covered by OMB
Clearance 9000-0067.
M. General
There are no revisions to the FAR based on this comment category.
Comment: One respondent inquires as to why the FAR case and new
clause are limited to DoD, GSA, and NASA and that other civilian
agencies would benefit from the new streamlined procedures as well.
Response: By law, 41 U.S.C. 1302 (formerly 41 U.S.C. 421(b)), DoD,
GSA, and NASA are the signatories of the FAR. GSA signs on behalf of
all the other civilian agencies that are subject to the FAR except
NASA. The final rule is applicable Government-wide to those executive
agencies under the Federal Acquisition Regulations System.
Comment: One respondent recommends that ``contracting officers
should be encouraged to unilaterally de-obligate cancelling funds as an
administrative action without fear of violating anti-deficiency or
other contracting protocols.''
Another respondent recommends that a timeframe should be targeted
for the replacement of cancelled funds.
Response: These comments on funding are outside the scope of this
case.
Comments: Two respondents question the application of this rule to
the FAR guiding principles in FAR 1.102.
Response: This guidance helps to clarify the requirements of an
adequate submission of an indirect cost rate proposal. The guidance for
the proper submission of an adequate indirect cost rate proposal is
provided to contractors in the clause at FAR 52.216-7. The inclusion of
this list of information should help to provide consistency,
efficiency, and more timely submission.
N. Summary of Changes
The Councils made the following changes to the FAR as a result of
the public comments:
1. Revised FAR 42.705-1(b)(1) to be consistent with language at FAR
52.216-7(d)(2).
2. Revised FAR 42.705-1(b) and 42.705-2(b)(2) to clarify the role
of the auditor.
The term ``determination'' was removed from proposed
42.705-1(b)(1)(ii);
FAR 42.705-1(b)(1)(iii), 42.705-1(b)(2), and 42.705-2(b)
clarify that the auditor--
[cir] Reviews the proposal for adequacy and provides the findings
of inadequacy to the contractor and contracting officer; and
[cir] Prepares an advisory audit report, after the proposal has
been determined to be adequate for audit.
3. Revised FAR 42.708(a)(2) to lower the percentage limitation in
the existing quick-closeout criteria. FAR 42.708 (a)(2)(i) dollar
limitation reverts to $1,000,000, instead of $4,000,000 in the proposed
rule. Renumbered FAR 42.708(a)(3) as FAR 42.708(a)(4) and added a new
paragraph FAR 42.708(a)(3). Provided examples of other pertinent
information at new paragraph FAR 42.708(a)(3)(iii).
4. Revised FAR 52.216-7(d)(2)(iii) to further illustrate the data.
5. Revised FAR 52.216-7(d)(2)(iv) to clarify that the supplemental
information listed, although it may not be required for a determination
on the adequacy of the contractor's proposal, may be required during
the audit process.
6. Revised FAR 52.216-7(d)(2)(iii) and (d)(2)(iv) to clarify items
provided for adequate final indirect cost rate proposal at FAR 52.216-
7(d)(2)(i).
III. Executive Orders 12866 and 13563
Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess
all costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits (including potential economic, environmental, public
health and safety effects, distributive impacts, and equity). E.O.
13563 emphasizes the importance of quantifying both costs and benefits,
of reducing costs, of harmonizing rules, and of promoting flexibility.
This is a significant regulatory action and, therefore, was subject to
review under section 6(b) of E.O. 12866, Regulatory Planning and
Review, dated September 30, 1993. This rule is not a major rule under 5
U.S.C. 804.
IV. 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 does not
impose any additional requirements on small businesses. The changes to
FAR parts 4 and 42 clarify and streamline closeout procedures. The
changes to the clauses at FAR 52.216-8, 52.216-9, and 52.216-10 allow
for a reserve to be set-aside to protect the Government's interest.
Contracting Officers already may set aside a reserve under current FAR
procedures.
[[Page 31408]]
V. Paperwork Reduction Act
The Paperwork Reduction Act (44 U.S.C. chapter 35) does apply;
however these changes to the FAR do not impose additional information
collection requirements to the paperwork burden previously approved
under the following:
OMB Control Number 9000-0013, titled: Cost or Pricing Data
Requirements Information Other Than Cost or Pricing Data;
OMB Control Number 9000-0067, titled: Incentive Contract;
and
OMB Control Number 9000-0069, titled: Indirect Cost Rates.
List of Subjects in 48 CFR Parts 4, 42, and 52
Government procurement.
Dated: May 18, 2011.
Millisa Gary,
Acting Director, Office of Governmentwide Acquisition Policy.
Therefore, DoD, GSA, and NASA amend 48 CFR parts 4, 42, and 52 as
set forth below:
0
1. The authority citation for 48 CFR parts 4, 42, and 52 continues to
read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 4--ADMINISTRATIVE MATTERS
0
2. Amend section 4.804-5 by revising paragraph (a)(2) to read as
follows.
4.804-5 Procedures for closing out contract files.
(a) * * *
(2) Final patent report is cleared. If a final patent report is
required, the contracting officer may proceed with contract closeout in
accordance with the following procedures, or as otherwise prescribed by
agency procedures:
(i) Final patent reports should be cleared within 60 days of
receipt.
(ii) If the final patent report is not received, the contracting
officer shall notify the contractor of the contractor's obligations and
the Government's rights under the applicable patent rights clause, in
accordance with 27.303. If the contractor fails to respond to this
notification, the contracting officer may proceed with contract
closeout upon consultation with the agency legal counsel responsible
for patent matters regarding the contractor's failure to respond.
* * * * *
PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES
0
3. Amend section 42.705-1 by revising paragraphs (b)(1) and (b)(2) 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, the contractor is required to submit an
adequate final indirect cost rate proposal to the contracting officer
(or cognizant Federal agency official) and to the cognizant auditor.
(i) 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.
(ii) Each contractor is required to submit the final indirect cost
rate proposal within the six-month period following the expiration of
each of its fiscal years. The contracting officer may grant, in
writing, reasonable extensions, for exceptional circumstances only,
when requested in writing by the contractor.
(iii) Upon receipt of the proposal--
(A) The cognizant auditor will review the adequacy of the
contractor's proposal for audit in support of negotiating final
indirect cost rates and will provide a written description of any
inadequacies to the contractor and contracting officer.
(B) If the auditor and contractor are unable to resolve the
proposal's inadequacies identified by the auditor, the auditor will
elevate the issue to the contracting office to resolve the
inadequacies.
(iv) The proposal must be supported with adequate supporting data,
some of which may be required subsequent to finding that the proposal
is adequate for audit in support of negotiating final indirect cost
rates (e.g., during the course of the performance of the advisory
audit). See the clause at 52.216-7(d)(2) for the description of an
adequate final indirect cost rate proposal and supporting data.
(2) Once a proposal has been determined to be adequate for audit in
support of negotiating final indirect cost rates, the auditor will
audit the proposal and prepare an advisory audit report to the
contracting officer (or cognizant Federal agency official), including a
listing of any relevant advance agreements or restrictive terms of
specific contracts.
* * * * *
0
4. Amend section 42.705-2 by--
0
a. Revising the introductory text of paragraph (b)(2) and (b)(2)(i);
and
0
b. Redesignating paragraphs (b)(2)(ii) through (iv) as paragraphs
(b)(2)(iii) through (v), respectively; and adding a new paragraph
(b)(2)(ii) to read as follows:
42.705-2 Auditor determination procedure.
* * * * *
(b) * * *
(2) Once a proposal has been determined to be adequate for audit in
support of negotiating final indirect cost rates, the auditor shall--
(i) Audit the proposal and prepare an advisory audit report,
including a listing of any relevant advance agreements or restrictive
terms of specific contracts;
(ii) Seek agreement on indirect costs with the contractor;
* * * * *
0
5. Amend section 42.708 by revising paragraph (a) to read as follows:
42.708 Quick-closeout procedure.
(a) The contracting officer responsible for contract closeout shall
negotiate the settlement of direct and indirect costs for a specific
contract, task order, or delivery order to be closed, in advance of the
determination of final direct costs and indirect rates set forth in
42.705, if--
(1) The contract, task order, or delivery order is physically
complete;
(2) The amount of unsettled direct costs and indirect costs to be
allocated to the contract, task order, or delivery order is relatively
insignificant. Cost amounts will be considered relatively insignificant
when the total unsettled direct costs and indirect costs to be
allocated to any one contract, task order, or delivery order does not
exceed the lesser of--
(i) $1,000,000; or
(ii) 10 percent of the total contract, task order, or delivery
order amount;
(3) The contracting officer performs a risk assessment and
determines that the use of the quick-closeout procedure is appropriate.
The risk assessment shall include--
(i) Consideration of the contractor's accounting, estimating, and
purchasing systems;
(ii) Other concerns of the cognizant contract auditors; and
(iii) Any other pertinent information, such as, documented history
of Federal Government approved indirect cost rate agreements, changes
to contractor's rate
[[Page 31409]]
structure, volatility of rate fluctuations during affected periods,
mergers or acquisitions, special contract provisions limiting
contractor's recovery of otherwise allowable indirect costs under cost
reimbursement or time-and-materials contracts; and
(4) Agreement can be reached on a reasonable estimate of allocable
dollars.
* * * * *
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
0
6. Amend section 52.216-7 by--
0
a. Revising the date of the clause;
0
b. Adding paragraphs (d)(2)(iii) through (d)(2)(v); and
0
c. Adding two sentences to the end of paragraph (d)(5) to read as
follows:
52.216-7 Allowable Cost and Payment.
* * * * *
Allowable Cost and Payment (JUN 2011)
* * * * *
(d) * * *
(2) * * *
(iii) An adequate indirect cost rate proposal shall include the
following data unless otherwise specified by the cognizant Federal
agency official:
(A) Summary of all claimed indirect expense rates, including
pool, base, and calculated indirect rate.
(B) General and Administrative expenses (final indirect cost
pool). Schedule of claimed expenses by element of cost as identified
in accounting records (Chart of Accounts).
(C) Overhead expenses (final indirect cost pool). Schedule of
claimed expenses by element of cost as identified in accounting
records (Chart of Accounts) for each final indirect cost pool.
(D) Occupancy expenses (intermediate indirect cost pool).
Schedule of claimed expenses by element of cost as identified in
accounting records (Chart of Accounts) and expense reallocation to
final indirect cost pools.
(E) Claimed allocation bases, by element of cost, used to
distribute indirect costs.
(F) Facilities capital cost of money factors computation.
(G) Reconciliation of books of account (i.e., General Ledger)
and claimed direct costs by major cost element.
(H) Schedule of direct costs by contract and subcontract and
indirect expense applied at claimed rates, as well as a subsidiary
schedule of Government participation percentages in each of the
allocation base amounts.
(I) Schedule of cumulative direct and indirect costs claimed and
billed by contract and subcontract.
(J) Subcontract information. Listing of subcontracts awarded to
companies for which the contractor is the prime or upper-tier
contractor (include prime and subcontract numbers; subcontract value
and award type; amount claimed during the fiscal year; and the
subcontractor name, address, and point of contact information).
(K) Summary of each time-and-materials and labor-hour contract
information, including labor categories, labor rates, hours, and
amounts; direct materials; other direct costs; and, indirect expense
applied at claimed rates.
(L) Reconciliation of total payroll per IRS form 941 to total
labor costs distribution.
(M) Listing of decisions/agreements/approvals and description of
accounting/organizational changes.
(N) Certificate of final indirect costs (see 52.242-4,
Certification of Final Indirect Costs).
(O) Contract closing information for contracts physically
completed in this fiscal year (include contract number, period of
performance, contract ceiling amounts, contract fee computations,
level of effort, and indicate if the contract is ready to close).
(iv) The following supplemental information is not required to
determine if a proposal is adequate, but may be required during the
audit process:
(A) Comparative analysis of indirect expense pools detailed by
account to prior fiscal year and budgetary data.
(B) General Organizational information and Executive
compensation for the five most highly compensated executives. See
31.205-6(p). Additional salary reference information is available at
https://www.whitehouse.gov/omb/procurement_index_exec_comp/.
(C) Identification of prime contracts under which the contractor
performs as a subcontractor.
(D) Description of accounting system (excludes contractors
required to submit a CAS Disclosure Statement or contractors where
the description of the accounting system has not changed from the
previous year's submission).
(E) Procedures for identifying and excluding unallowable costs
from the costs claimed and billed (excludes contractors where the
procedures have not changed from the previous year's submission).
(F) Certified financial statements and other financial data
(e.g., trial balance, compilation, review, etc.).
(G) Management letter from outside CPAs concerning any internal
control weaknesses.
(H) Actions that have been and/or will be implemented to correct
the weaknesses described in the management letter from subparagraph
(G) of this section.
(I) List of all internal audit reports issued since the last
disclosure of internal audit reports to the Government.
(J) Annual internal audit plan of scheduled audits to be
performed in the fiscal year when the final indirect cost rate
submission is made.
(K) Federal and State income tax returns.
(L) Securities and Exchange Commission 10-K annual report.
(M) Minutes from board of directors meetings.
(N) Listing of delay claims and termination claims submitted
which contain costs relating to the subject fiscal year.
(O) Contract briefings, which generally include a synopsis of
all pertinent contract provisions, such as: Contract type, contract
amount, product or service(s) to be provided, contract performance
period, rate ceilings, advance approval requirements, pre-contract
cost allowability limitations, and billing limitations.
(v) The Contractor shall update the billings on all contracts to
reflect the final settled rates and update the schedule of
cumulative direct and indirect costs claimed and billed, as required
in paragraph (d)(2)(iii)(I) of this section, within 60 days after
settlement of final indirect cost rates.
* * * * *
(5) * * * The completion invoice or voucher shall include
settled subcontract amounts and rates. The prime contractor is
responsible for settling subcontractor amounts and rates included in
the completion invoice or voucher and providing status of
subcontractor audits to the contracting officer upon request.
* * * * *
0
7. Amend section 52.216-8 by revising the date of the clause and
paragraph (b) to read as follows:
52.216-8 Fixed Fee.
* * * * *
Fixed Fee (JUN 2011)
* * * * *
(b) Payment of the fixed fee shall be made as specified in the
Schedule; provided that the Contracting Officer withholds a reserve
not to exceed 15 percent of the total fixed fee or $100,000,
whichever is less, to protect the Government's interest. The
Contracting Officer shall release 75 percent of all fee withholds
under this contract after receipt of an adequate certified final
indirect cost rate proposal covering the year of physical completion
of this contract, provided the Contractor has satisfied all other
contract terms and conditions, including the submission of the final
patent and royalty reports, and is not delinquent in submitting
final vouchers on prior years' settlements. The Contracting Officer
may release up to 90 percent of the fee withholds under this
contract based on the Contractor's past performance related to the
submission and settlement of final indirect cost rate proposals.
* * * * *
0
8. Amend section 52.216-9 by revising the date of the clause and
paragraph (c) to read as follows:
52.216-9 Fixed Fee--Construction.
* * * * *
Fixed Fee--Construction (JUN 2011)
* * * * *
(c) The Contracting Officer shall withhold a reserve not to
exceed 15 percent of the total fixed fee or $100,000, whichever is
less, to protect the Government's interest. The Contracting Officer
shall release 75 percent of all fee withholds under this contract
after receipt of an adequate certified final indirect cost rate
proposal covering the year of physical completion of this contract,
provided the Contractor has satisfied all other contract terms and
conditions, including the submission of the final patent
[[Page 31410]]
and royalty reports, and is not delinquent in submitting final
vouchers on prior years' settlements. The Contracting Officer may
release up to 90 percent of the fee withholds under this contract
based on the Contractor's past performance related to the submission
and settlement of final indirect cost rate proposals.
* * * * *
0
9. Amend section 52.216-10 by revising the date of the clause and
paragraph (c) to read as follows:
52.216-10 Incentive Fee.
* * * * *
Incentive Fee (JUN 2011)
* * * * *
(c) Withholding of payment. (1) Normally, the Government shall
pay the fee to the Contractor as specified in the Schedule. However,
when the Contracting Officer considers that performance or cost
indicates that the Contractor will not achieve target, the
Government shall pay on the basis of an appropriate lesser fee. When
the Contractor demonstrates that performance or cost clearly
indicates that the Contractor will earn a fee significantly above
the target fee, the Government may, at the sole discretion of the
Contracting Officer, pay on the basis of an appropriate higher fee.
(2) Payment of the incentive fee shall be made as specified in
the Schedule; provided that the Contracting Officer withholds a
reserve not to exceed 15 percent of the total incentive fee or
$100,000, whichever is less, to protect the Government's interest.
The Contracting Officer shall release 75 percent of all fee
withholds under this contract after receipt of an adequate certified
final indirect cost rate proposal covering the year of physical
completion of this contract, provided the Contractor has satisfied
all other contract terms and conditions, including the submission of
the final patent and royalty reports, and is not delinquent in
submitting final vouchers on prior years' settlements. The
Contracting Officer may release up to 90 percent of the fee
withholds under this contract based on the Contractor's past
performance related to the submission and settlement of final
indirect cost rate proposals.
* * * * *
[FR Doc. 2011-12852 Filed 5-27-11; 8:45 am]
BILLING CODE 6820-EP-P
