Federal Acquisition Regulation; Allowability of Legal Costs for Whistleblower Proceedings, 60173-60174 [2013-23702]

Download as PDF Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / Rules and Regulations [FAC 2005–70; FAR Case 2013–017; Item II; Docket 2013–0017, Sequence 1] name (if any), and ‘‘FAR Case 2013– 017’’ on your attached document. • Fax: 202–501–4067. • Mail: General Services Administration, Regulatory Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd Floor, Washington, DC 20405. Instructions: Please submit comments only and cite FAC 2005–70, FAR Case 2013–017, in all correspondence related to this case. All comments received will be posted without change to http:// www.regulations.gov, including any personal and/or business confidential information provided. FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement Analyst, at 202–501–3221 for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat at 202–501–4755. Please cite FAC 2005–70, FAR Case 2013–017. SUPPLEMENTARY INFORMATION: RIN 9000–AM64 I. Background Federal Acquisition Regulation; Allowability of Legal Costs for Whistleblower Proceedings This interim rule revises the cost principle at FAR 31.205–47 to implement sections 827 paragraph (g) and 828 paragraph (d) of the NDAA for FY 2013 (Pub. L. 112–239). Section 827 paragraph (g) amends 10 U.S.C. 2324(k), Allowable costs under defense contracts, and section 828 paragraph (d) similarly amends 41 U.S.C. 4310, Proceeding costs not allowable, to address the allowability of legal costs incurred by a contractor or subcontractor in connection with a whistleblower proceeding commenced by a contractor or subcontractor employee submitting a complaint of reprisal under the applicable whistleblower statute (10 U.S.C. 2409, Contractor employees: protection from reprisal for disclosure of certain information, or 41 U.S.C. 4712, Pilot program for enhancement of contractor [employee] protection from reprisal for disclosure of certain information, respectively). The NDAA for FY 2013 (Pub. L. 112– 239, enacted January 2, 2013) enacted enhanced whistleblower protections for contractor and subcontractor employees in separate, but parallel, sections of the NDAA for titles 10 and 41 agencies, respectively. Title 10 agencies are required by the terms of section 827 paragraph (i)(2) to revise their respective FAR supplements. These enhanced whistleblower protections and the associated cost principle changes are being implemented by two Defense Federal Acquisition Regulation Supplement (DFARS) cases (for DoD only) and two FAR cases (for title 41 265’’ and adding ‘‘41 U.S.C. 4712’’ in its place. The revised text reads as follows: 52.212–4 Contract Terms and Conditions—Commercial Items. * * * * * Contract Terms and Conditions— Commercial Items (Sep 2013) * * * * * [FR Doc. 2013–23703 Filed 9–27–13; 8:45 am] BILLING CODE 6820–EP–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Part 31 Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). ACTION: Interim rule. AGENCY: DoD, GSA, and NASA are issuing an interim rule amending the Federal Acquisition Regulation (FAR) to implement a section of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013 that addresses the allowability of legal costs incurred by a contractor or subcontractor related to a whistleblower proceeding commenced by the submission of a complaint of reprisal by the contractor or subcontractor employee. DATES: Effective: September 30, 2013. Comment Date: Interested parties should submit written comments to the Regulatory Secretariat on or before November 29, 2013 to be considered in the formulation of a final rule. ADDRESSES: Submit comments identified by FAC 2005–70, FAR Case 2013–017, by any of the following methods: • Regulations.gov: http:// www.regulations.gov. Submit comments via the Federal eRulemaking portal by searching for ‘‘FAR Case 2013–017’’ Select the link ‘‘Submit a Comment’’ that corresponds with ‘‘FAR Case 2013– 017.’’ Follow the instructions provided at the ‘‘Submit a Comment’’ screen. Please include your name, company tkelley on DSK3SPTVN1PROD with RULES4 SUMMARY: VerDate Mar<15>2010 19:34 Sep 27, 2013 Jkt 229001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 60173 agencies), which are independent, but parallel, rulemakings because of some minor differences in the operations of the underlying statutes and because the title 41 statute is only a four-year pilot program. Sections 827 and 828, in addition to the paragraphs relating to the allowability of the legal costs for whistleblower proceedings, also enhance the whistleblower protections for contractor and subcontractor employees at 10 U.S.C. 2409 (applicable to DoD, NASA, and the Coast Guard) and create a new pilot program for enhancement of contractor and subcontractor employee whistleblower protections at 41 U.S.C. 4712, applicable to all other civilian agencies (see FAR case 2013–015). The NDAA for FY 2013 was enacted on January 2, 2013. Section 827 (amending 10 U.S.C. 2409 and 10 U.S.C. 2324) takes effect 180 days after enactment (July 1, 2013) and requires implementation in the DFARS no later than that date. Section 828 paragraph (a), which established 41 U.S.C. 4712, took effect 180 days after enactment. The pilot program is effective through January 1, 2017. During the time period that 41 U.S.C. 4712 (the pilot program) is in effect, the effectiveness of the prior statute that covered whistleblower protections under 41 U.S.C. 4705 is suspended. The changes to 41 U.S.C. 4310 (required by section 828 paragraph (d)) were effective upon enactment and specifically referenced 41 U.S.C. 4712, with no specified applicability to contracts, orders, or contract modifications. Although the change to the text of 41 U.S.C. 4310 is permanent, the change only covers actions under 41 U.S.C. 4712, which expires January 1, 2017. Therefore, the new portion of the statute addressing proceeding costs that references 41 U.S.C. 4712, unless the pilot program is extended, will cease to be effective after January 1, 2017. II. 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:\FR\FM\30SER4.SGM 30SER4 60174 Federal Register / Vol. 78, No. 189 / Monday, September 30, 2013 / Rules and Regulations Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804. III. Regulatory Flexibility Act DoD, GSA, and NASA do not expect this rule to have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., because most contracts awarded to small entities are awarded on a competitive fixed-price basis, and do not require application of the cost principles contained in this rule. However, an Initial Regulatory Flexibility Analysis (IRFA) has been prepared and is summarized as follows: tkelley on DSK3SPTVN1PROD with RULES4 The objective of this rule is to address the allowability of legal costs incurred by a contractor in connection with a proceeding commenced by an employee submitting a complaint under 10 U.S.C. 2409 or 41 U.S.C. 4712. The statutory authority is 10 U.S.C. 2324(k) and 41 U.S.C. 4310. Most contracts awarded on a fixed-price competitive basis do not require application of the cost principles. Most contracts valued at or below the simplified acquisition threshold are awarded on a fixed price competitive basis. Requiring submission of certified cost or pricing data for acquisitions that do not exceed the simplified acquisition threshold is prohibited (FAR 15.403–4(a)(2)). According to Federal Procurement Data System (FPDS) data for FY 2012, there were 73,014 Federal new contract awards over the simplified acquisition threshold in FY 2012. Of those contracts, only 11,279 awards were to small businesses on other than a competitive fixed-price basis. Within that number of awards, this rule would only affect a contractor if a contractor employee commenced a proceeding by submitting a complaint under 10 U.S.C. 2409 or 41 U.S.C. 4712, and if that proceeding resulted in imposition of a monetary penalty or an order to take corrective action under 10 U.S.C. 2409 or 41 U.S.C. 4712. We do not have data on the percentage of contracts that involve submission of a whistleblower complaint and result in monetary penalty or an order to take corrective action. There are no reporting, recordkeeping, or other compliance requirements in this rule. The rule does not duplicate, overlap, or conflict with any other Federal rules. DoD, GSA, and NASA were unable to identify any alternatives to the rule which would reduce the impact on small entities and still meet the requirements of the statute. The Regulatory Secretariat has submitted a copy of the IRFA to the Chief Counsel for Advocacy of the Small Business Administration. A copy of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA, and NASA invite comments from small business concerns and other interested parties on the expected impact of this rule on small entities. VerDate Mar<15>2010 19:34 Sep 27, 2013 Jkt 229001 DoD, GSA, and NASA will also consider comments from small entities concerning the existing regulations in subparts affected by this rule in accordance with 5 U.S.C. 610. Interested parties must submit such comments separately and should cite 5 U.S.C. 610 (FAC 2005–70, FAR Case 2013–017) in correspondence. IV. Paperwork Reduction Act The interim rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35). V. Determination To Issue an Interim Rule A determination has been made under the authority of the Secretary of Defense (DoD), the Administrator of General Services (GSA), and the Administrator of the National Aeronautics and Space Administration (NASA) that urgent and compelling reasons exist to promulgate this interim rule without prior opportunity for public comment. By operation of law, the new statute for the whistleblower protection pilot program became effective on July 1, 2013, i.e., Congress included language in section 828 paragraph (b) specifically addressing the effective date of 41 U.S.C. 4712. Section 828 paragraph (d), which is implemented through this rulemaking, revised 41 U.S.C. 4310, effective upon enactment. 41 U.S.C. 4310 addresses the contractor’s legal fees arising from an employee’s complaint of reprisal and makes these fees expressly unallowable costs when there is contractor culpability. The most effective and efficient way to ensure awareness and compliance by agencies and their contractors with section 828 paragraph (d) is through the issuance of an interim rule. This regulation requires nothing beyond that which is set forth clearly in the statute. However, pursuant to 41 U.S.C. 1707 and FAR 1.501–3(b), DoD, GSA, and NASA will consider public comments received in response to this interim rule in the formation of the final rule. List of Subjects in 48 CFR Part 31 Government procurement. Dated: September 24, 2013. William Clark, Acting Director, Office of Government-wide Acquisition Policy, Office of Acquisition Policy, Office of Government-wide Policy. Therefore, DoD, GSA, and NASA amend 48 CFR part 31 as set forth below: PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 PART 31—CONTRACT COST PRINCIPLES AND PROCEDURES 1. The authority citation for 48 CFR part 31 continues to read as follows: ■ Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 U.S.C. 20113. 2. Amend section 31.205–47 by revising the introductory text of paragraph (b), and paragraph (b)(2) to read as follows: ■ 31.205–47 Costs related to legal and other proceedings. * * * * * (b) In accordance with 41 U.S.C. 4310 and 10 U.S.C. 2324(k), costs incurred in connection with any proceeding brought by a Federal, State, local, or foreign government, or by a contractor or subcontractor employee submitting a whistleblower complaint of reprisal in accordance with 41 U.S.C. 4712 or 10 U.S.C. 2409, for violation of, or a failure to comply with, law or regulation by the contractor (including its agents or employees), or costs incurred in connection with any proceeding brought by a third party in the name of the United States under the False Claims Act, 31 U.S.C. 3730, are unallowable if the result is— * * * * * (2) In a civil or administrative proceeding, either a finding of contractor liability where the proceeding involves an allegation of fraud or similar misconduct; or imposition of a monetary penalty, or an order issued by the agency head to the contractor or subcontractor to take corrective action under 41 U.S.C. 4712 or 10 U.S.C. 2409, where the proceeding does not involve an allegation of fraud or similar misconduct; * * * * * [FR Doc. 2013–23702 Filed 9–27–13; 8:45 am] BILLING CODE 6820–EP–P DEPARTMENT OF DEFENSE GENERAL SERVICES ADMINISTRATION NATIONAL AERONAUTICS AND SPACE ADMINISTRATION 48 CFR Chapter 1 [Docket FAR 2013–0078, Sequence 6] Federal Acquisition Regulation; Federal Acquisition Circular 2005–70; Small Entity Compliance Guide Department of Defense (DoD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA). AGENCY: E:\FR\FM\30SER4.SGM 30SER4

Agencies

[Federal Register Volume 78, Number 189 (Monday, September 30, 2013)]
[Rules and Regulations]
[Pages 60173-60174]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-23702]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 31

[FAC 2005-70; FAR Case 2013-017; Item II; Docket 2013-0017, Sequence 1]
RIN 9000-AM64


Federal Acquisition Regulation; Allowability of Legal Costs for 
Whistleblower Proceedings

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule.

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

SUMMARY: DoD, GSA, and NASA are issuing an interim rule amending the 
Federal Acquisition Regulation (FAR) to implement a section of the 
National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2013 
that addresses the allowability of legal costs incurred by a contractor 
or subcontractor related to a whistleblower proceeding commenced by the 
submission of a complaint of reprisal by the contractor or 
subcontractor employee.

DATES: Effective: September 30, 2013.
    Comment Date: Interested parties should submit written comments to 
the Regulatory Secretariat on or before November 29, 2013 to be 
considered in the formulation of a final rule.

ADDRESSES: Submit comments identified by FAC 2005-70, FAR Case 2013-
017, by any of the following methods:
     Regulations.gov: http://www.regulations.gov. Submit 
comments via the Federal eRulemaking portal by searching for ``FAR Case 
2013-017'' Select the link ``Submit a Comment'' that corresponds with 
``FAR Case 2013-017.'' Follow the instructions provided at the ``Submit 
a Comment'' screen. Please include your name, company name (if any), 
and ``FAR Case 2013-017'' on your attached document.
     Fax: 202-501-4067.
     Mail: General Services Administration, Regulatory 
Secretariat (MVCB), ATTN: Ms. Flowers, 1800 F Street NW., 2nd Floor, 
Washington, DC 20405.
    Instructions: Please submit comments only and cite FAC 2005-70, FAR 
Case 2013-017, in all correspondence related to this case. All comments 
received will be posted without change to http://www.regulations.gov, 
including any personal and/or business confidential information 
provided.

FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement 
Analyst, at 202-501-3221 for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat at 202-501-4755. Please cite FAC 2005-70, FAR Case 2013-
017.

SUPPLEMENTARY INFORMATION: 

I. Background

    This interim rule revises the cost principle at FAR 31.205-47 to 
implement sections 827 paragraph (g) and 828 paragraph (d) of the NDAA 
for FY 2013 (Pub. L. 112-239). Section 827 paragraph (g) amends 10 
U.S.C. 2324(k), Allowable costs under defense contracts, and section 
828 paragraph (d) similarly amends 41 U.S.C. 4310, Proceeding costs not 
allowable, to address the allowability of legal costs incurred by a 
contractor or subcontractor in connection with a whistleblower 
proceeding commenced by a contractor or subcontractor employee 
submitting a complaint of reprisal under the applicable whistleblower 
statute (10 U.S.C. 2409, Contractor employees: protection from reprisal 
for disclosure of certain information, or 41 U.S.C. 4712, Pilot program 
for enhancement of contractor [employee] protection from reprisal for 
disclosure of certain information, respectively).
    The NDAA for FY 2013 (Pub. L. 112-239, enacted January 2, 2013) 
enacted enhanced whistleblower protections for contractor and 
subcontractor employees in separate, but parallel, sections of the NDAA 
for titles 10 and 41 agencies, respectively. Title 10 agencies are 
required by the terms of section 827 paragraph (i)(2) to revise their 
respective FAR supplements. These enhanced whistleblower protections 
and the associated cost principle changes are being implemented by two 
Defense Federal Acquisition Regulation Supplement (DFARS) cases (for 
DoD only) and two FAR cases (for title 41 agencies), which are 
independent, but parallel, rulemakings because of some minor 
differences in the operations of the underlying statutes and because 
the title 41 statute is only a four-year pilot program.
    Sections 827 and 828, in addition to the paragraphs relating to the 
allowability of the legal costs for whistleblower proceedings, also 
enhance the whistleblower protections for contractor and subcontractor 
employees at 10 U.S.C. 2409 (applicable to DoD, NASA, and the Coast 
Guard) and create a new pilot program for enhancement of contractor and 
subcontractor employee whistleblower protections at 41 U.S.C. 4712, 
applicable to all other civilian agencies (see FAR case 2013-015).
    The NDAA for FY 2013 was enacted on January 2, 2013. Section 827 
(amending 10 U.S.C. 2409 and 10 U.S.C. 2324) takes effect 180 days 
after enactment (July 1, 2013) and requires implementation in the DFARS 
no later than that date. Section 828 paragraph (a), which established 
41 U.S.C. 4712, took effect 180 days after enactment. The pilot program 
is effective through January 1, 2017. During the time period that 41 
U.S.C. 4712 (the pilot program) is in effect, the effectiveness of the 
prior statute that covered whistleblower protections under 41 U.S.C. 
4705 is suspended.
    The changes to 41 U.S.C. 4310 (required by section 828 paragraph 
(d)) were effective upon enactment and specifically referenced 41 
U.S.C. 4712, with no specified applicability to contracts, orders, or 
contract modifications. Although the change to the text of 41 U.S.C. 
4310 is permanent, the change only covers actions under 41 U.S.C. 4712, 
which expires January 1, 2017. Therefore, the new portion of the 
statute addressing proceeding costs that references 41 U.S.C. 4712, 
unless the pilot program is extended, will cease to be effective after 
January 1, 2017.

II. 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

[[Page 60174]]

Executive Order 12866, Regulatory Planning and Review, dated September 
30, 1993. This rule is not a major rule under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    DoD, GSA, and NASA do not expect this rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq., 
because most contracts awarded to small entities are awarded on a 
competitive fixed-price basis, and do not require application of the 
cost principles contained in this rule. However, an Initial Regulatory 
Flexibility Analysis (IRFA) has been prepared and is summarized as 
follows:

    The objective of this rule is to address the allowability of 
legal costs incurred by a contractor in connection with a proceeding 
commenced by an employee submitting a complaint under 10 U.S.C. 2409 
or 41 U.S.C. 4712. The statutory authority is 10 U.S.C. 2324(k) and 
41 U.S.C. 4310.
    Most contracts awarded on a fixed-price competitive basis do not 
require application of the cost principles. Most contracts valued at 
or below the simplified acquisition threshold are awarded on a fixed 
price competitive basis. Requiring submission of certified cost or 
pricing data for acquisitions that do not exceed the simplified 
acquisition threshold is prohibited (FAR 15.403-4(a)(2)). According 
to Federal Procurement Data System (FPDS) data for FY 2012, there 
were 73,014 Federal new contract awards over the simplified 
acquisition threshold in FY 2012. Of those contracts, only 11,279 
awards were to small businesses on other than a competitive fixed-
price basis. Within that number of awards, this rule would only 
affect a contractor if a contractor employee commenced a proceeding 
by submitting a complaint under 10 U.S.C. 2409 or 41 U.S.C. 4712, 
and if that proceeding resulted in imposition of a monetary penalty 
or an order to take corrective action under 10 U.S.C. 2409 or 41 
U.S.C. 4712. We do not have data on the percentage of contracts that 
involve submission of a whistleblower complaint and result in 
monetary penalty or an order to take corrective action.
    There are no reporting, recordkeeping, or other compliance 
requirements in this rule. The rule does not duplicate, overlap, or 
conflict with any other Federal rules. DoD, GSA, and NASA were 
unable to identify any alternatives to the rule which would reduce 
the impact on small entities and still meet the requirements of the 
statute.

    The Regulatory Secretariat has submitted a copy of the IRFA to the 
Chief Counsel for Advocacy of the Small Business Administration. A copy 
of the IRFA may be obtained from the Regulatory Secretariat. DoD, GSA, 
and NASA invite comments from small business concerns and other 
interested parties on the expected impact of this rule on small 
entities.
    DoD, GSA, and NASA will also consider comments from small entities 
concerning the existing regulations in subparts affected by this rule 
in accordance with 5 U.S.C. 610. Interested parties must submit such 
comments separately and should cite 5 U.S.C. 610 (FAC 2005-70, FAR Case 
2013-017) in correspondence.

IV. Paperwork Reduction Act

    The interim rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

V. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that urgent and compelling reasons exist to promulgate this 
interim rule without prior opportunity for public comment. By operation 
of law, the new statute for the whistleblower protection pilot program 
became effective on July 1, 2013, i.e., Congress included language in 
section 828 paragraph (b) specifically addressing the effective date of 
41 U.S.C. 4712. Section 828 paragraph (d), which is implemented through 
this rulemaking, revised 41 U.S.C. 4310, effective upon enactment. 41 
U.S.C. 4310 addresses the contractor's legal fees arising from an 
employee's complaint of reprisal and makes these fees expressly 
unallowable costs when there is contractor culpability. The most 
effective and efficient way to ensure awareness and compliance by 
agencies and their contractors with section 828 paragraph (d) is 
through the issuance of an interim rule. This regulation requires 
nothing beyond that which is set forth clearly in the statute. However, 
pursuant to 41 U.S.C. 1707 and FAR 1.501-3(b), DoD, GSA, and NASA will 
consider public comments received in response to this interim rule in 
the formation of the final rule.

List of Subjects in 48 CFR Part 31

    Government procurement.

    Dated: September 24, 2013.
William Clark,
Acting Director, Office of Government-wide Acquisition Policy, Office 
of Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR part 31 as set forth 
below:

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

0
1. The authority citation for 48 CFR part 31 continues to read as 
follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.


0
2. Amend section 31.205-47 by revising the introductory text of 
paragraph (b), and paragraph (b)(2) to read as follows:


31.205-47  Costs related to legal and other proceedings.

* * * * *
    (b) In accordance with 41 U.S.C. 4310 and 10 U.S.C. 2324(k), costs 
incurred in connection with any proceeding brought by a Federal, State, 
local, or foreign government, or by a contractor or subcontractor 
employee submitting a whistleblower complaint of reprisal in accordance 
with 41 U.S.C. 4712 or 10 U.S.C. 2409, for violation of, or a failure 
to comply with, law or regulation by the contractor (including its 
agents or employees), or costs incurred in connection with any 
proceeding brought by a third party in the name of the United States 
under the False Claims Act, 31 U.S.C. 3730, are unallowable if the 
result is--
* * * * *
    (2) In a civil or administrative proceeding, either a finding of 
contractor liability where the proceeding involves an allegation of 
fraud or similar misconduct; or imposition of a monetary penalty, or an 
order issued by the agency head to the contractor or subcontractor to 
take corrective action under 41 U.S.C. 4712 or 10 U.S.C. 2409, where 
the proceeding does not involve an allegation of fraud or similar 
misconduct;
* * * * *
[FR Doc. 2013-23702 Filed 9-27-13; 8:45 am]
BILLING CODE 6820-EP-P