5272 Federal Register / Vol. 63, No. 21 / Monday, February 2, 1998 /Rules and Regulations

Subpart WW—Washington

2. Section 52.2470 is amended by

adding paragraph (c) (76) to read as

follows:

§ 52.2470 Identification of plan.

* * * * *

(c) * * *

(76) On March 24, 1989, the

Washington Department of Ecology

submitted a plan for attaining and

maintaining the NAAQS for PM10 in

the Yakima PM10 moderate

nonattainment area requesting EPA’s

review and approval. The plan was

amended with additional submittals

between 1992 and 1995.

(i) Incorporation by reference.

(A) The attainment plan is contained

in the following documents: a submittal

of March 24, 1989, adopted that same

date, from Washington State Department

of Ecology, titled, State Implementation

Plan for Particulate Matter—Yakima

Area A Plan for Attaining and

Maintaining the National Ambient Air

Quality Standard for PM10; a

supplement to the plan adopted August

19, 1992, titled, Supplement State

Implementation Plan for Particulate

Matter (PM10) in Yakima, WA and an

addendum adopted February 3, 1994 on

contingency measures.

(B) Portions of Restated Regulation I

of the Yakima County Clean Air

Authority, effective December 15, 1995,

including Article I; Article II except

Section 2.01; Article III; Article IV;

Article V except Section 5.09; Article

VIII; Article IX; Article XI; Article XII

except Section 12.02; and, Article XIII

except Sections 13.04 and 13.05.

(ii) Additional material:

(A) August 19, 1992: A modeling and

inventory supplement to the original

plan.

(B) March 10, 1995: A supplemental

information package primarily on

emissions and modeling.

(C) June 27, 1995: A supplemental

letter on monitoring, public notice and

emissions.

(D) August 17, 1995: A supplemental

emissions analysis.

(E) November 3, 1995: More emissions

analysis and the maintenance

demonstration.

[FR Doc. 98–2492 Filed 1–30–98; 8:45 am]

BILLING CODE 6560–50–F

DEPARTMENT OF ENERGY

48 CFR Parts 932 and 970

RIN 1991–AB29

Acquisition Regulation: Contract

Financing; Management and Operating

Contracts

AGENCY: Department of Energy.

ACTION: Final rule.

SUMMARY: The Department of Energy

(DOE) amends its Acquisition

Regulation to incorporate coverage

required by the Federal Acquisition

Streamlining Act of 1994. These

amendments will clarify the

allowability of costs reimbursed under

Department of Energy contracts and

establish the responsibilities of the

remedy coordination official within the

Department.

DATES: This final rule is effective March

4, 1998.

FOR FURTHER INFORMATION CONTACT:

Terrence D. Sheppard, Office of Policy

(HR–51), Office of Procurement and

Assistance Policy, Department of

Energy, 1000 Independence Avenue

S.W., Washington, D.C. 20585, (202)

586–8193 (Phone), (202) 586–0545

(Facsimile), terry.sheppard@hq.doe.gov

(Internet).

SUPPLEMENTARY INFORMATION:

I. Background

II. Resolution of Comments

III. Procedural Requirements

A. Review Under Executive Order 12866

B. Review Under Executive Order 12988

C. Review Under the Regulatory Flexibility

Act

D. Review Under the Paperwork Reduction

Act

E. Review Under the National

Environmental Policy Act

F. Review Under Executive Order 12612

G. Review Under Small Business

Regulatory Enforcement Fairness Act of

1996

H. Review Under the Unfunded Mandates

Reform Act of 1995

I. Background

On June 4, 1997 the Department of

Energy published in the Federal

Register (62 FR 30558) a notice of

proposed rulemaking to amend the

Department’s acquisition regulations

based on selected provisions in Sections

2051, 2151, and 2192 of the Federal

Acquisition Streamlining Act of 1994

(the Act). These amendments establish

certification of cost submissions and

assessment of penalties on unallowable

costs; a remedy coordination official for

payment requests suspected to be based

on substantial evidence of fraud;

parameters for resolution of questioned

costs; guidance for application of cost

principles; general prohibitions on

severance payments to foreign nationals

and compensation costs associated with

a change in management control or

ownership; clarification of employee

morale, recreation, entertainment,

executive branch lobbying, company

furnished automobiles, and insurance

costs which protect the contractor

against defects in material or

workmanship.

The public comment period closed

August 4, 1997. The Department

received comments from three entities.

Today’s final rulemaking adopts the

amendments in the notice of proposed

rulemaking with certain changes

discussed under the Resolution of

Comments section.

II. Resolution of Comments

Three entities responded with 20 total

comments. A comment resolution

package has been prepared and is part

of the file. The Department has

considered and evaluated all the

comments received during the comment

period. Comments that resulted in

changes to the proposed rulemaking are

summarized below.

Comment: It was stated that, as

written, the proposed language under

Political Activity Costs addressing

unallowable costs associated with

attempting to influence executive or

legislative actions could be construed to

make unallowable the costs of

negotiations.

Response: Concur. DOE has modified

its coverage by deleting a portion of the

last sentence of the proposed coverage.

The final rule makes the following

changes to the June 4, 1997, proposed

rulemaking: 970.3102–7(b), 970.5204–

13(e)(31)(ii), 970.5204–14(e)(29)(ii), and

970.5204–17(a)(6) were revised by

deleting language which addressed costs

associated with proposals.

Comment: Proposed changes to the

Payments and Advances clause,

970.5204–16, would complicate other

DOE efforts at streamlining.

Response: Concur. The proposed

change has been deleted from the final

rulemaking.

Comment: As written, DOE appears to

disallow the cost of local travel at

970.3102–17.

Response: It was not our intent to

disallow the costs of local business

travel and we do not believe we have

done so. However, the coverage could

be clearer. Accordingly, DOE has

modified its proposed coverage to

ensure a distinction between companyfurnished automobiles used for

company business, which can be

allowable if approved by the contracting

officer and personal use of company
Federal Register / Vol. 63, No. 21 / Monday, February 2, 1998 /Rules and Regulations 5273

furnished automobiles. It does prohibit,

as does FAR 31.205–46(f), that portion

of the costs that relate to personal use.

DEAR 970.3102–17(b)(3) was revised by

clarifying the distinction between costs

of company-furnished automobiles that

can be allowable if approved by the

contracting officer and the cost of

company-furnished automobiles.

III. Procedural Requirements

A. Review Under Executive Order 12866

Today’s regulatory action has been

determined not to be a ‘‘significant

regulatory action’’ under Executive

Order 12866, ‘‘Regulatory Planning and

Review,’’ (58 FR 51735, October 4,

1993). Accordingly, this action was not

subject to review under that Executive

Order by the Office of Information and

Regulatory Affairs of the Office of

Management and Budget (OMB).

B. Review Under Executive Order 12988

With respect to the review of existing

regulations and the promulgation of

new regulations, section 3(a) of

Executive Order 12988, ‘‘Civil Justice

Reform,’’ 61 FR 4729 (February 7, 1996),

imposes on Executive agencies the

general duty to adhere to the following

requirements: (1) eliminate drafting

errors and ambiguity; (2) write

regulations to minimize litigation: and

(3) provide a clear legal standard for

affected conduct rather than a general

standard and promote simplification

and burden reduction. With regard to

the review required by section 3(a),

section 3(b) of Executive Order 12988

specifically requires that Executive

agencies make every reasonable effort to

ensure that the regulation: (1) clearly

specifies the preemptive effect, if any;

(2) clearly specifies any effect on

existing Federal law or regulation; (3)

provides a clear legal standard for

affected conduct while promoting

simplification and burden reduction; (4)

specifies the retroactive effect, if any; (5)

adequately defines key terms; and (6)

addresses other important issues

affecting clarity and general

draftmenship under any guidelines

issued by the Attorney General. Section

3(c) of Executive Order 12988 requires

Executive agencies to review regulations

in light of applicable standards in

section 3(a) and section 3(b) to

determine whether they are met or it is

unreasonable to meet one or more of

them. The Department of Energy has

completed the required review and

determined that, to the extent permitted

by law, the regulations meet the relevant

standards of Executive Order 12988.

C. Review Under the Regulatory

Flexibility Act

This rule was reviewed under the

Regulatory Flexibility Act of 1980 (Pub.

L. 96–354) which requires preparation

of a regulatory flexibility analysis for

any rule which is likely to have

significant economic impact on a

substantial number of small entities.

DOE certifies that this rule will not have

a significant economic impact on a

substantial number of small entities,

and, therefore, no regulatory flexibility

analysis has been prepared.

D. Review Under the Paperwork

Reduction Act

No new information or recordkeeping

requirements are imposed by this

rulemaking. Accordingly, no OMB

clearance is required under the

Paperwork Reduction Act of 1980 (44

U.S.C. 3501 et seq.).

E. Review Under the National

Environmental Policy Act

DOE has concluded that promulgation

of this rule falls into a class of actions

which would not individually or

cumulatively have significant impact on

the human environment, as determined

by DOE’s regulations (10 CFR Part 1021,

Subpart D) implementing the National

Environmental Policy Act of 1969

(NEPA) (42 U.S.C. 4321 et seq.).

Specifically, this rule is categorically

excluded from NEPA review because

the proposed amendments to the DEAR

do not change the environmental effect

of the rule being amended (categorical

exclusion A5). Therefore, this rule does

not require an environmental impact

statement or environmental assessment

pursuant to NEPA.

F. Review Under Executive Order 12612

Executive Order 12612 (52 FR 41685,

October 30, 1987) requires that

regulations, rules, legislation, and any

other policy actions be reviewed for any

substantial direct effects on States, on

the relationship between the National

Government and the States, or in the

distribution of power and

responsibilities among the various

levels of Government. If there are

sufficient substantial direct effects, then

the Executive Order requires the

preparation of a federalism assessment

to be used in all decisions involved in

promulgating and implementing a

policy action. This rule, when finalized,

will revise certain policy and

procedural requirements. States which

contract with DOE will be subject to this

rule. However, DOE has determined that

this rule will not have a substantial

direct effect on the institutional

interests or traditional functions of the

States.

G. Review Under Small Business

Regulatory Enforcement Fairness Act of

1996

As required by 5 U.S.C. 801, the

Department of Energy will report to

Congress promulgation of the rule prior

to its effective date. The report will state

that it has been determined that the rule

is not a ‘‘major rule’’ as defined by 5

U.S.C. 804(3).

H. Review Under the Unfunded

Mandates Reform Act of 1995

The Unfunded Mandates Reform Act

of 1995 (Pub. L. 104–4) generally

requires a Federal agency to perform a

detailed assessment of costs and

benefits of any rule imposing a Federal

Mandate with costs to State, local or

tribal governments, or to the private

sector, of $100 million or more.

This rulemaking only affects private

sector entities, and the impact is less

than $100 million.

List of Subjects in 48 CFR Parts 932 and

970

Government procurement.

Issued in Washington, D.C. on January 5,

1998.

Richard H. Hopf,

Deputy Assistant Secretary for

Procurement and Assistance Management.

For the reasons set out in the

preamble, Chapter 9 of Title 48 of the

Code of Federal Regulations is amended

as set forth below.

1. The authority citation for Part 932

continues to read as follows:

Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c)

PART 932—CONTRACT FINANCING

2. Section 932.006–4 is added before

Subpart 932.1 to read as follows:

932.006–4 Procedures.

(a) The remedy coordination official

shall follow the procedures identified in

FAR 32.006–4.

(b) [Reserved]

3. The authority citation for Part 970

continues to read as follows:

Authority: Sec. 161 of the Atomic Energy

Act of 1954 (42 U.S.C. 2201), sec 644 of the

Department of Energy Organization Act, Pub.

L. 95–91 (42 U.S.C. 7254).

PART 970—DOE MANAGEMENT AND

OPERATING CONTRACTS

4. Subpart 970.25 is added to read as

follows:
5274 Federal Register / Vol. 63, No. 21 / Monday, February 2, 1998 /Rules and Regulations

970.25 Foreign acquisition.

970.2501 Severance payments for foreign

nationals.

970.2501 Severance payments for foreign

nationals.

(a) The Head of the Contracting

Activity may waive the application of

the provisions of 48 CFR 970.3102–

2(i)(2)(iv) and (v) in accordance with 41

U.S.C. 256(e)(2) if:

(1) The application of the provisions

would adversely affect the continuation

of a program, project, or activity that

provides significant support services for

Department of Energy employees posted

outside the United States;

(2) The contractor has taken, or plans

to take, appropriate actions within its

control to minimize the amount and

number of incidents of payment of

severance pay to employees under the

contract who are foreign nationals; and

(3) The payment of severance pay

under the contract is necessary to

comply with a law that is generally

applicable to a significant number of

businesses in the country in which the

foreign national receiving the payment

performed services or is necessary to

comply with a collective bargaining

agreement.

(b) Solicitation provision and contract

clause. The solicitation provision at

970.5204–84, Waiver of Limitations on

Severance Payments to Foreign

Nationals, shall be included in

solicitations and resulting contracts

involving support services for

Department of Energy operations

outside of the United States expected to

exceed $500,000, when, prior to the

solicitation, the limitations on severance

to foreign nationals has been waived.

Use the Alternate 1 contract clause in

solicitations and resulting contracts,

when the Head of the Contracting

Activity may waive the limitations on

severance to foreign nationals after

contract award.

5. Section 970.3101–3 is amended by

adding paragraphs (b), (c), and (d) to

read as follows:

970.3101–3 General basis for

reimbursement of costs.

* * * * *

(b) A contracting officer shall not

resolve any questioned costs until the

contracting officer has obtained:

(1) Adequate documentation with

respect to such costs; and

(2) The opinion of the Department of

Energy’s auditor on the allowability of

such costs.

(c) The contracting officer shall

ensure that the documentation

supporting the final settlement

addresses the amount of the questioned

costs and the subsequent disposition of

such questioned costs.

(d) The contracting officer shall

ensure, to the maximum extent

practicable, that the Department of

Energy’s auditor is afforded an

opportunity to attend any negotiation or

meeting with the contractor regarding a

determination of allowability.

6. Section 970.3101–7 is added to

read as follows:

970.3101–7 Cost submission, certification,

penalties, and waivers.

(a) The contracting officer shall

require that management and operating

contractors provide a submission for

settlement of costs incurred during the

period stipulated on the submission and

a certification that the costs included in

the submission are allowable. The

contracting officer shall assess a penalty

if unallowable costs are included in the

submission. Unallowable costs are

either expressly unallowable or

determined unallowable.

(1) An expressly unallowable cost is

a particular item or type of cost which,

under the express provisions of an

applicable law, regulation, or this

contract, is specifically named and

stated to be unallowable.

(2) A cost determined unallowable is

one which, for that contractor

(i) Was subject to a contracting

officer’s final decision and not

appealed;

(ii) The Department’s Board of

Contract Appeals or a court has

previously ruled as unallowable; or

(iii) Was mutually agreed to be

unallowable.

(b) If, during the review of the

submission, the contracting officer

determines that the submission contains

an expressly unallowable cost or a cost

determined to be unallowable prior to

the submission, the contracting officer

shall assess a penalty.

(c) If the contracting officer

determines that a cost submitted by the

contractor in its submission for

settlement is

(1) Expressly unallowable, then the

contracting officer shall assess a penalty

in an amount equal to the disallowed

cost allocated to this contract plus

interest on the paid portion of the

disallowed cost. Interest shall be

computed from the date of overpayment

to the date of repayment using the

interest rate specified by the Secretary

of the Treasury pursuant to 50 U.S.C.

1215.

(2) Determined unallowable, then the

contracting officer shall assess a penalty

in an amount equal to two times the

amount of the disallowed cost allocated

to this contract.

(d) The contracting officer may waive

the penalty provisions when

(1) The contractor withdraws the

submission before the formal initiation

of an audit of the submission and

submits a revised submission;

(2) The amount of the unallowable

costs allocated to covered contracts is

$10,000 or less; or

(3) The contractor demonstrates to the

contracting officer’s satisfaction that:

(i) It has established appropriate

policies, personnel training, and an

internal control and review system that

provides assurances that unallowable

costs subject to penalties are precluded

from the contractor’s submission for

settlement of costs; and

(ii) The unallowable costs subject to

the penalty were inadvertently

incorporated into the submission.

(e) The Head of the Contracting

Activity may waive the certification

when—

(1) It is determined that it would be

in the best interest to waive such

certification; and

(2) The Head of the contracting

Activity states in writing the reasons for

that determination and makes such

determination available to the public.

7. Section 970.3102 is amended by

removing the last sentence of the

existing paragraph, designating the

existing paragraph as (a) and adding a

new paragraph (b) to read as follows.

970.3102 Application of cost principles.

* * * * *

(b) This section does not cover every

element of cost. Failure to include any

item of cost does not imply that it is

either allowable or unallowable. The

determination of allowability shall be

based on the principles and standards in

this subpart and the treatment of similar

or related items. When more than one

paragraph in this section is relevant to

a contractor cost, the cost shall be

apportioned among the applicable

subsections, and the determination of

allowability of each portion shall be

based on the guidance contained in the

applicable subsection. As an example,

the cost of meals while in a travel status

would normally be allowable if

reasonable. However, the cost of

alcoholic beverages associated with a

meal would be unallowable. In no case

shall costs made specifically

unallowable under one cost principle be

made allowable under another cost

principle.

8. Section 970.3102–2 is amended by

adding a sentence at the end of

paragraph (i)(2) introductory text and

adding new paragraphs (i)(2)(iv), (v),

(vi), and (p) to read as follows:
Federal Register / Vol. 63, No. 21 / Monday, February 2, 1998 /Rules and Regulations 5275

970.3102–2 Compensation for personal

services.

* * * * *

(i) * * *

(2) * * * In addition, paragraphs

(i)(2)(iv) and (v) of this section apply if

the severance cost is for foreign

nationals employed outside the United

States.

* * * * *

(iv) Notwithstanding the provision of

paragraph (c) of this section, which

references geographic area, under 41

U.S.C. 256(e)(1)(M), the costs of

severance payments to foreign nationals

employed under a service contract

performed outside the United States are

unallowable to the extent that such

payments exceed amounts typically

paid to employees providing similar

services in the same industry in the

United States.

(v) Further, under 41 U.S.C.

256(e)(1)(N), the costs of severance

payments referred to in paragraph

(i)(2)(iv) of this section are unallowable

if the termination of employment is the

result of the closing of, or curtailment

of, activities at a United States facility

in that country at the request of the

government of that country.

(vi) The Head of the Contracting

Activity may waive the application of

the provisions of paragraphs (i)(2)(iv)

and (v) of this section under the

conditions specified in subpart 970.25.

* * * * *

(p) Special compensation. The

following costs are unallowable:

(1) Special compensation to

employees pursuant to agreements

which permit payments in excess of the

contractor’s normal severance pay

practices, if their employment

terminates following a change in the

management control over, or ownership

of, the contractor or a substantial

portion of its assets.

(2) Special compensation to

employees pursuant to agreements

which permit payments resulting from a

change, whether actual or prospective,

in the management control over, or

ownership of, the contractor or a portion

of its assets which is contingent upon

the employee remaining with the

contractor for a stated period of time.

9. Section 970.3102–5 is revised to

read as follows:

970.3102–5 Employee morale, health,

welfare, food service, and dormitory costs.

(a) Employee morale, health, and

welfare activities are those services or

benefits provided by the contractor to its

employees to improve working

conditions, employer-employee

relations, employee morale, and

employee performance. These activities

include such items as house or

employee publications, health or firstaid clinics, wellness/fitness centers,

employee counseling services, awards

for performance or awards made in

recognition of employee achievements

pursuant to an established contractor

plan or policy, and, for the purpose of

this section, food service and dormitory

costs. However, these activities do not

include, and should be differentiated

from compensation for personal services

as defined in 970.3102–2. Food and

dormitory services include operating or

furnishing facilities for cafeterias,

dining rooms, canteens, lunch wagons,

vending machines, living

accommodations, or similar types of

services for the contractor’s employees

at or near the contractor’s facilities or

site of the contract work.

(b) Costs of recreation, registration

fees of employees participating in

competitive fitness promotions, team

activities, and sporting events are

unallowable, except for the costs of

employees’ participation in company

sponsored intramural sports teams or

employee’ organizations designed to

improve company loyalty, team work, or

physical fitness.

(c) Except as limited by paragraph (d)

of this section, the aggregate of costs

incurred on account of all activities

mentioned in paragraph (a) of this

section, less income generated by all

such activities, is allowable to the extent

that the net aggregate cost of all such

activities, as well as the net cost of each

individual activity, is reasonable and

allocable to the contract work.

Additionally, advance understandings

with respect to the costs mentioned in

paragraph (a) of this section are to be

reached prior to the incurrence of these

costs as required in 48 CFR 970.3101–

6.

(d) Losses from the operation of food

or dormitory services may be included

as costs incurred under paragraph (c) of

this section only if the contractor’s

objective is to operate such services at

least on a break-even basis. Losses

sustained because food services or

lodging accommodations are furnished

without charge or at prices or rates

which obviously would not be

conducive to operation on a break-even

basis are not allowable, except in those

instances where the contractor can

demonstrate that unusual circumstances

exist, such that, even with efficient

management, operation of the services

on a break-even basis would require

charging inordinately high prices, or

prices or rates higher than those charged

by commercial establishments offering

the same services in the same

geographical areas. Typical examples of

such unusual circumstances are:

(1) Where the contractor must provide

food or dormitory services at remote

locations where adequate commercial

facilities are not reasonably available, or

(2) Where it is necessary to operate a

facility at a lower volume than the

facility could economically support.

Cost of food and dormitory services

shall include an allocable share of

indirect expenses pertaining to these

activities.

(e) In those situations where the

contractor has an arrangement

authorizing an employee association to

provide or operate a service such as

vending machines in the contractor’s

plant, and retain the profits derived

therefrom, such profits shall be treated

in the same manner as if the contractor

were providing the service, except as

provided in paragraph (f) of this section.

(f) Contributions by the contractor to

an employee organization, including

funds set over from vending machines

receipts or similar sources, may be

included as cost incurred under

paragraph (c) of this section, only to the

extent that the contractor demonstrates

that an equivalent amount of the costs

incurred by the employee organization

would be allowable, if incurred by the

contractor directly.

10. Section 970.3102–7 is revised to

read as follows:

970.3102–7 Political activity costs.

The following costs are unallowable,

except for costs associated with

providing information pursuant to

970.5204–17, unless approved by the

contracting officer: Contractor costs

incurred to influence either directly or

indirectly—

(a) Legislative action on any matter

pending before Congress, a State

legislature, or a legislative body of a

political subdivision of a State; or

(b) Federal, State, or executive body of

a political subdivision of a State action

on regulatory and contract matters.

11. Section 970.3102–17 Travel costs,

is amended by revising the paragraph

heading for (b) and by adding paragraph

(b)(3) to read as follows:

970.3102–17 Travel costs.

* * * * *

(b) Government-owned, commercial

rental, and company-furnished vehicles.

* * *

(3) The costs of contractor-owned or

-leased vehicles include the costs of

lease, operation, maintenance,

depreciation, insurance, and other

similar costs. These costs are

unallowable except as approved by the

contracting officer. That portion of the
5276 Federal Register / Vol. 63, No. 21 / Monday, February 2, 1998 /Rules and Regulations

cost of company-furnished automobiles

that relates to personal use by

employees, including transportation to

and from work is unallowable.

* * * * *

12. Section 970.3103 is amended by

revising paragraph (b) to read as follows:

970.3103 Contract clauses.

* * * * *

(b) The political activity cost

prohibition clause at 48 CFR 970.5204–

17 shall be included in all M&O

contracts.

* * * * *

13. Section 970.3272 is added to read

as follows:

Subpart 970.32—Contract Financing

970.3272 Reduction or suspension of

advance, partial, or progress payments.

(a) The procedures prescribed at FAR

32.006 shall be followed.

(b) The agency head has delegated

their responsibilities under this section

to the Senior Procurement Executive.

(c) The remedy coordination official is

responsible for receiving, assessing, and

making recommendations to the Senior

Procurement Executive.

(d) The contracting officer shall insert

the clause at 48 CFR 970.5204–85,

Reduction or suspension of contract

payments, in management and operating

contracts.

14. Section 970.5204–13, Allowable

costs and fixed-fee (management and

operating contracts), is amended by

revising clause paragraphs (d)(8)(iv),

(e)(11), (e)(31); and adding new

paragraphs (e)(37) and (38) to read as

follows:

970.5204–13 Allowable costs and fixed-fee

(management and operating contracts).

* * * * *

(d) * * *

(8) * * *

(iv) Employee relations, welfare, morale,

etc.; programs including incentive or

suggestion awards; employee counseling

services, health or first-aid clinics; house or

employee publications; and wellness/fitness

centers;

* * * * *

(e) * * *

(11) Entertainment, including costs of

amusement, diversion, social activities; and

directly associated costs such as tickets to

shows or sports events, meals, lodging,

rentals, transportation, and gratuities; costs of

membership in any social, dining or country

club or organization.

* * * * *

(31) Contractor costs incurred to influence

either directly or indirectly—

(i) Legislative action on any matter pending

before Congress, a State legislature, or a

legislative body of a political subdivision of

a State; or

(ii) Federal, State, or executive body of a

political subdivision of a State action on

regulatory and contract matters as described

in the ‘‘Political Activity Cost Prohibition’’

clause of this contract.

* * * * *

(37) Costs of gifts; however, gifts do not

include awards for performance or awards

made in recognition of employee

achievements pursuant to an established

contractor plan or policy.

(38) The costs of recreation, registration

fees of employees participating in

competitive fitness promotions, team

activities, and sporting events except for the

costs of employees’ participation in company

sponsored intramural sports teams or

employee organizations designed to improve

company loyalty, team work, or physical

fitness.

15. Section 970.5204–14 is amended

by revising clause paragraphs (d)(8)(iv),

(e)(9), (e)(29); and adding new

paragraphs (e)(35) and (e)(36) to read as

follows:

970.5204–14 Allowable costs and fixed-fee

(support contracts).

* * * * *

(d) * * *

(8) * * *

(iv) Employee relations, welfare, morale,

etc.; programs including incentive or

suggestion awards; employee counseling

services, health or first-aid clinics; and house

or employee publications; and wellness/

fitness centers;

* * * * *

(e) * * *

(9) Entertainment, including costs of

amusement, diversion, social activities; and

directly associated costs such as tickets to

shows or sports events, meals, lodging,

rentals, transportation, and gratuities; costs of

membership in any social, dining or country

club or organization.

* * * * *

(29) Contractor costs incurred to influence

either directly or indirectly—

(i) Legislative action on any matter pending

before Congress, a State legislature, or a

legislative body of a political subdivision of

a State; or

(ii) Federal, State, or local executive branch

action on regulatory and contract matters as

described in the ‘‘Political Activity Cost

Prohibition’’ clause of this contract.

* * * * *

(35) Costs of gifts; however, gifts do not

include awards for performance or awards

made in recognition of employee

achievements pursuant to an established

contractor plan or policy.

(36) The costs of recreation, registration

fees of employees participating in

competitive fitness promotions, team

activities, and sporting events except for the

costs of employees’ participation in company

sponsored intramural sports teams or

employee organizations designed to improve

company loyalty, team work, or physical

fitness.

16. Section 970.5204–17 is amended

by revising the section heading and

clause heading and adding clause

paragraph (a)(6) to read as follows:

970.5204–17 Political activity cost

prohibition.

* * * * *

Political Activity Cost Prohibition (Dec.

1997)

(a) * * *

(6) Contractor costs incurred to influence

(directly or indirectly) Federal, State, or local

executive branch action on regulatory and

contract matters.

* * * * *

17. Section 970.5204–84 is added to

read as follows:

970.5204–84 Waiver of limitations on

severance payments to foreign nationals.

As prescribed in subpart 970.25,

insert the following solicitation

provision, or its alternate 1, clause:

Waiver of Limitations on Severance

Payments to Foreign Nationals (Dec. 1997).

Pursuant to Department of Energy

Acquisition Regulation (DEAR) subpart

970.25, the cost allowability limitations in

(DEAR) subpart 970.3102–2(i)(iv) and (v) are

waived for this contract.

Alternate 1 (Dec. 1997). Substitute the

following paragraph for the foregoing

solicitation provision when the waiver of

limitations to severance payments for foreign

nationals has not been predetermined by the

Department.

Pursuant to Department of Energy

Acquisition Regulation (DEAR) subpart

970.25, the Department will consider waiving

the cost allowability limitations in (DEAR) 48

CFR 970.3102–2(i)(iv) and (v) for this

contract.

18. Section 970.5204–85 is added to

read as follows:

970.5204–85 Reduction or suspension of

advance, partial, or progress payments

upon finding of substantial evidence of

fraud.

As prescribed in 48 CFR 970.3272,

insert the following clause:

Reduction or Suspension of Advance, Partial,

or Progress Payments (Dec. 1997)

(a) The contracting officer may reduce or

suspend further advance, partial, or progress

payments to the contractor upon a written

determination by the Secretary that

substantial evidence exists that the

contractor’s request for advance, partial, or

progress payment is based on fraud.

(b) The contractor shall be afforded a

reasonable opportunity to respond in writing.

[End of Clause]

[FR Doc. 98–2049 Filed 1–30–98; 8:45 am]

BILLING CODE 6450–01–P