Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57467 

penalty provisions at 42.709, the 

amount projected to the sampling 

universe from that sampled cost is also 

subject to the same penalty provisions. 

(4) Use of statistical sampling 

methods for identifying and segregating 

unallowable costs should be the subject 

of an advance agreement under the 

provisions of 31.109 between the 

contractor and the cognizant 

administrative contracting officer or 

Federal official. The advance agreement 

should specify the basic characteristics 

of the sampling process. The cognizant 

administrative contracting officer or 

Federal official shall request input from 

the cognizant auditor before entering 

into any such agreements. 

(5) In the absence of an advance 

agreement, if an initial review of the 

facts results in a challenge of the 

statistical sampling methods by the 

contracting officer or the contracting 

officer’s representative, the burden of 

proof shall be on the contractor to 

establish that such a method meets the 

criteria in paragraph (c)(2) of this 

subsection. 

* * * * * 

(e)(1) * * * 

(3) When a selected item of cost under 

31.205 provides that directly associated 

costs be unallowable, such directly 

associated costs are unallowable only if 

determined to be material in amount in 

accordance with the criteria provided in 

paragraphs (e)(1) and (e)(2) of this 

subsection, except in those situations 

where allowance of any of the directly 

associated costs involved would be 

considered to be contrary to public 

policy. 

[FR Doc. 05–19476 Filed 9–29–05; 8:45 am] 

BILLING CODE 6820–EP–S 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Part 31 

[FAC 2005–06; FAR Case 2003–002; Item 

X] 

RIN 9000–AJ81 

Federal Acquisition Regulation; 

Reimbursement of Relocation Costs 

on a Lump-Sum Basis 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) have agreed on a final rule 

amending the Federal Acquisition 

Regulation (FAR) by revising the 

relocation cost principle to permit 

contractors the option of being 

reimbursed on a lump-sum basis for 

three types of employee relocation costs: 

costs of finding a new home; costs of 

travel to the new location; and costs of 

temporary lodging. These three types of 

costs are in addition to the 

miscellaneous relocation costs for 

which lump-sum reimbursements are 

already permitted. 

DATES: Effective Date: October 31, 2005. 

FOR FURTHER INFORMATION CONTACT: The 

FAR Secretariat at (202) 501–4755 for 

information pertaining to status or 

publication schedules. For clarification 

of content, contact Mr. Jeremy Olson, 

Procurement Analyst, at (202) 501–

3221. Please cite FAC 2005–06, FAR 

case 2003–002. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The Councils originally considered 

expanding the reimbursement of 

relocation costs on a lump-sum basis 

under FAR case 1997–032, Relocation 

Costs. However, the Councils decided to 

study this issue further under a separate 

case and published a final rule on the 

remainder of FAR case 1997–032 in the 

Federal Register at 67 FR 43516, June 

27, 2002. On October 24, 2002, the 

Councils published a Notice of Request 

for Comments in the Federal Register 

(67 FR 65468) with a list of questions 

regarding the use of a lump-sum 

approach for reimbursing employee 

relocation expenses. After reviewing the 

public comments that were submitted in 

response to that Federal Register notice, 

the Councils held a public meeting on 

February 6, 2003, to further explore the 

views of interested parties on this issue. 

Public comments and the discussions 

at the public meeting revealed that, in 

addition to the miscellaneous relocation 

costs for which lump-sum 

reimbursements are already permitted 

by FAR 31.205–35(b)(4), it is common 

commercial practice to reimburse 

relocating employees on a lump-sum 

basis for their house-hunting, final 

move, and temporary lodging expenses. 

A FAR case was opened to expand the 

relocation cost principle to permit 

lump-sum reimbursements for these 

three types of costs. 

The Councils published a proposed 

FAR rule in the Federal Register at 68 

FR 69264, December 11, 2003, with a 

request for comments by February 9, 

2004. Seven respondents submitted 

comments on the proposed FAR rule. 

Two respondents supported the 

proposed rule, four respondents 

opposed it, and one respondent 

requested clarification. A discussion of 

the comments is provided below. The 

Councils considered all comments and 

concluded that the proposed rule 

should be converted to a final rule, with 

changes to the proposed rule. 

Differences between the proposed rule 

and final rule are discussed in Section 

B, Comment 1, and Section C below. 

B. Public Comments 

No standard for measuring 

reasonableness 

1. Comment: Four respondents 

opposed the proposed rule and 

expressed the concern that with 

contractors spending significant 

amounts on employee relocations, the 

Government would have no objective 

standard for evaluating the 

reasonableness of the new lump-sum 

amounts being claimed. 

After conducting surveys that suggest 

‘‘contractors are incurring hundreds of 

millions of dollars of relocation costs 

annually,’’ the first respondent 

expressed ‘‘significant concern as to 

where an auditor, contracting officer, or 

contractor could turn to gather adequate 

data to make a determination as to the 

appropriateness and reasonableness of 

the lump-sum method or resulting 

amount.’’ The respondent concluded its 

letter by stating it ‘‘believes that paying 

a lump-sum for such significant 

amounts places an unacceptable risk on 

the Government and creates an 

excessive audit task to establish 

allowability of relocation costs.’’

Also citing the above mentioned 

survey of the large amounts of 

relocation costs allocated to cost 

reimbursement contracts each year, the 

second respondent stated that ‘‘allowing 

lump-sum reimbursement of these costs 

without supporting documentation is 

not in the best interests of the 

Government’’ because ‘‘the proposed 

revision would subject millions of 

dollars to a subjective test of 

reasonableness requiring Government 

auditors, contracting officials, attorneys, 

and others to expend significantly more 

resources to determine the 

reasonableness of the claimed costs, 

review the determination, and resolve 

disputes between the Government and 

the contractor involving disallowed 

costs.’’ The respondent went on to 

suggest ‘‘contractors will also incur 

additional expenses in excess of any 

administrative costs saved supporting 

the reasonableness of the relocation 

costs.’’

57468 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

The third respondent based its 

opposition to the proposed rule on ‘‘the 

millions of taxpayer dollars that will be 

wasted on this special interest 

giveaway’’ and suggested that the 

Government’s motivation in pursuing it 

was ‘‘not wanting to disappoint 

contractors.’’ The respondent argued 

further that ‘‘contractors favor this 

approach, not because of any 

administrative burden reduction, but 

rather because it leads to higher levels 

of reimbursement without any need to 

justify costs.’’ Finally, the respondent 

expressed its opinion that ‘‘with few 

exceptions, these (relocation) costs 

should only be reimbursed on an ‘actual 

cost’ basis.’’

The fourth respondent did not submit 

any original comments, but simply 

forwarded the third respondent’s 

comments with an accompanying 

statement that it ‘‘fully concurs in the 

substantive objections expressed’’

therein. 

Councils’ response: The Councils 

believe that a provision permitting the 

expanded use of lump-sum 

reimbursements should be added to the 

relocation cost principle. Such a 

provision is expected to reduce the 

accounting and administrative burden 

of that cost principle on contractors and 

lead to faster relocations. 

The Councils are very receptive to the 

important concerns expressed by the 

respondents. The Councils believe that 

the words ‘‘on an appropriate lump-sum 

basis to the individual employee’’ in the 

proposed rule were intended to 

condition the allowability of the new 

lump-sum reimbursements on 

contractors by providing sufficient 

visibility into the component cost 

projections used in developing the 

lump-sum amounts to permit an audit 

determination of their reasonableness. 

However, the comments make it 

abundantly clear that such a 

requirement needs to be more explicit. 

The Councils certainly want to 

eliminate any possible public 

perception of this proposed rule change 

as a ‘‘blank check’’ for contractors and 

to ensure that the Government only 

reimburses reasonable costs. 

Accordingly, the Councils have added 

language at FAR 31.205–35(b)(6)(i) that 

makes the costs of lump-sum payments 

to relocating employees for househunting, final move, and temporary 

lodging expenses allowable only when 

‘‘adequately supported by data on the 

individual elements (e.g., 

transportation, lodging, and meals) 

comprising the build-up of the lumpsum amount to be paid based on the 

circumstances of the particular 

employee’s relocation.’’ This 

requirement should provide essentially 

the same audit visibility into the 

reasonableness of lump-sum payments 

as currently exists for actual relocation 

costs. 

Relocation lump-sums as a common 

commercial practice 

2. Comment: In opposing the 

proposed rule, one respondent also 

asserted that the use of lump-sum 

payments for travel and temporary 

lodging related relocation costs ‘‘is not 

a predominant industry practice at this 

time.’’ The respondent explained that it 

recently reviewed the current relocation 

policies in place at four large contractor 

locations and found that three of these 

four contractors use a single corporatewide policy for their employee 

relocation reimbursement programs. 

Even though one of these three 

companies claims it is a predominantly 

commercial company and the other two 

companies also have a substantial 

commercial business base, the 

respondent pointed out that none of the 

three has established a lump-sum option 

for its commercial business segments. 

In addition, the respondent cited an 

August 2003 news release from a 

relocation management firm which 

stated that only 30 percent of the 

companies it had recently surveyed said 

they were using lump-sums to cover 

travel and temporary lodging expenses. 

Finally, the respondent pointed out that 

it had recently been advised by a 

relocation management firm that, 

shortly before Dr. John Hamre left the 

Department of Defense, he ‘‘shut down’’

an effort by the relocation management 

firm and the Defense Integrated Travel 

and Relocation Solutions (DITRS) office 

to put together a plan for using lumpsums for DoD civilian relocations. 

After reviewing the responses to the 

October 24, 2002, Federal Register 

Notice of Request for Comments (67 FR 

65468), a respondent questioned 

‘‘whether the FAR Council has obtained 

sufficient information to support its 

assertion that it is now common 

commercial practice to reimburse 

relocating employees on a lump-sum 

basis for their house-hunting, final 

move, and temporary lodging 

expenses.’’ The respondent observed 

that of the eight respondents who 

responded to that notice, one 

respondent’s letter gave no specifics on 

the number of companies using lumpsum reimbursements, and another 

respondent stated that its 2001 survey 

showed that 55 companies out of 109 

contacted were using lump-sum 

reimbursements. 

In supporting the proposed rule, one 

respondent agreed ‘‘with the Councils’

statement that the use of lump-sum 

payments is a common commercial 

practice’’ and expressed the belief ‘‘that 

the proposed rule will help align 

relocation cost reimbursement policies 

with commercial best practices.’’

Another respondent also agreed that the 

proposed changes ‘‘are in keeping with 

current commercial business practice’’

and explained that ‘‘beginning in 1993 

with the Revenue Reconciliation Act, 

many companies moved to lump-sum 

allowances for what became taxable 

reimbursements to the home-finding, 

temporary living, and final move 

portions of relocation policy.’’ The 

respondent concluded with its opinion 

that ‘‘the recommended revision will 

enable Government contractors to 

implement this best practice and take 

advantage of a tested and proven 

process efficiency that has been an 

accepted part of the commercial sector’s 

relocation programs for over a decade.’’

Councils’ response: While the use of 

lump-sum reimbursements for selected 

relocation expenses may not be the 

predominant commercial practice at this 

time, the Councils believe there is 

ample evidence that the use of such 

payments is a common and growing 

commercial practice. The survey data 

cited by the respondents support this 

assessment. In addition, a relocation 

management firm that has been in 

business for more than 70 years stated 

at the February 6, 2003, public meeting 

and in its subsequent public comments 

that lump-sum reimbursement is now a 

common commercial practice for househunting, final move, and temporary 

lodging costs. 

The Councils do not find it surprising 

that contractors who wish to maintain a 

single, corporate-wide policy for 

reimbursing relocation costs continue to 

apply a policy which parallels the 

current cost principle, even though they 

may have significant commercial 

business. The revised relocation cost 

principle will give such firms an 

additional option for the first time on 

Government contracts that could well 

become their corporate-wide standard in 

the future. 

Finally, it is the Councils’

understanding that DoD terminated its 

two-year initiative to reengineer 

relocation policies and procedures and 

disbanded the DITRS office which 

oversaw that effort due to a lack of 

funds and interest from the military 

departments. And while the relocation 

management firm stated during its 

presentation at the February 6, 2003, 

public meeting that the Federal Deposit 

Insurance Corporation is currently using 

lump-sum reimbursements for its 

employees’ relocation costs, this 

appears to be an exception within the 

Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 57469 

Federal Government. However, even if 

lump-sum reimbursements for Federal 

employee relocation expenses are 

relatively rare, the purpose of this case 

is to recognize a common and growing 

commercial best practice in the 

relocation cost principle that should 

benefit both contractors and the 

Government. 

Allowability of lump-sum payments 

3. Comment: While supporting the 

effort to expand the use of lump-sum 

reimbursements for contractor employee 

relocation costs, one respondent 

suggested that the revised paragraph 

(b)(4) needs to include ‘‘a clear 

affirmative statement that the lump-sum 

payments are allowable costs’’ to avoid 

any possible confusion. In addition, the 

respondent recommended that the 

words ‘‘to the individual employee’’ be 

deleted from the revised paragraph 

(b)(4) because ‘‘contractors should not 

have to demonstrate on an individual 

basis that the lump-sum payments are 

reasonable and appropriate for each 

relocating employee.’’ Finally, the 

respondent recommended that the 

Councils eliminate the current ceilings 

on allowable home sale and purchase 

costs of 14 percent and 5 percent, 

respectively. 

Councils’ response: Nonconcur. The 

Councils do not agree that any 

additional language is necessary to 

avoid confusion regarding the 

allowability of the specified lump-sum 

payments. The Councils believe it is 

very clear from the language at FAR 

31.205–35(b)(6)(i) that lump-sum 

payments to employees for any of these 

three types of relocation costs will be 

allowable if the requisite criteria are 

met. The Councils also believe that the 

data provided by the contractor on the 

component cost projections used in 

developing its lump-sum amounts must 

be ‘‘based on the circumstances of the 

particular employee’s relocation,’’ such 

as family size, city, and number of 

vehicles. Otherwise, the lump-sum 

amount paid could be excessive, and 

therefore unreasonable, for a given 

relocation. Finally, the current ceilings 

on allowable home sale and purchase 

costs are outside the scope of this case. 

(Incidentally, the relocation 

management firm indicated at the 

February 6, 2003, public meeting that 

such costs are seldom included in lumpsum relocation payments.) 

Add the three types of employee 

relocation costs to current lump-sum 

cap for miscellaneous expenses 

4. Comment: One respondent 

suggested that if the proposed rule is not 

withdrawn, it ‘‘does not object to adding 

the three additional types of employee 

relocation costs, i.e., (1) the costs of 

finding a new home, (2) costs of travel 

to the new location, and (3) costs of 

temporary lodging, in addition to the 

existing ‘miscellaneous expenses’ that 

would be subject to a $5,000 lump-sum 

reimbursement, per employee move.’’

The respondent offered this alternative 

‘‘in the interest of promoting greater 

flexibility within the existing relocation 

cost principle, but without increasing 

overall costs to taxpayers.’’

Councils’ response: Nonconcur. 

Under its cost-type contracts, the 

Government is obligated to pay the 

contractor’s allocable and reasonable 

costs of contract performance. Not only 

would the respondent’s proposal be 

fundamentally unfair to contractors, but 

it would also severely undermine the 

basic rationale for this proposed rule 

change. The current cap on 

miscellaneous relocation costs at FAR 

31.205–35(b)(4) was increased to $5,000 

in June 2002 based on survey data 

published by the Employee Relocation 

Council regarding the median amount of 

such payments in the commercial 

sector. There is no logical reason to 

arbitrarily add house-hunting, final 

travel, and temporary lodging costs to 

this separate lump-sum cap. The cost 

principles should ensure that 

contractors are treated fairly, consistent 

with sound public policy. 

Proposed rule would make Federal 

employees second class citizens 

5. Comment: One respondent 

expressed concern ‘‘that this proposal 

would make Federal employees second 

class citizens vis-a ́-vis their contractor 

counterparts with respect to relocation 

expenses.’’ The respondent concluded 

by stating that ‘‘in no case should 

increases in lump-sum payments 

beyond $5,000 per contractor employee 

be considered until ... Federal 

employees are afforded the same 

advantages as their contractor 

counterparts.’’

Councils’ response: Nonconcur. While 

the Councils understand that the 

respondent is particularly sensitive to 

what it perceives to be preferential 

treatment of contractor employees, the 

Councils do not believe the allowability 

of contractor relocation costs must 

parallel exactly the treatment afforded 

Federal employees. It is now a common 

commercial practice to reimburse 

relocating employees on a lump-sum 

basis for their house-hunting, final 

move, and temporary lodging expenses, 

and the Councils believe the relocation 

cost principle should be revised to 

permit contractors the option of using 

this methodology. The language added 

at FAR 31.205–35(b)(6)(i) will ensure 

that, just as when reimbursement is 

based on actual expenses, only 

reasonable amounts are allowed for 

lump-sum reimbursements of these 

three types of relocation costs. This 

additional flexibility should help 

promote increased entry into the 

Federal marketplace by firms that have 

previously been hesitant to do so, 

resulting in increased competition on 

future purchases. 

Clarification of current lump-sum cap 

for miscellaneous expenses 

6. Comment: A respondent asked: ‘‘Is 

the proposed lump-sum amount of $5K 

applicable to both the continental 

United States (CONUS) and outside 

CONUS relocations?’’

Councils’ response: The $5,000 cap on 

allowable lump-sum reimbursements for 

miscellaneous relocation expenses is a 

current, not proposed, limitation at FAR 

31.205–35(b)(4). It applies to all 

contractor employee relocations, 

regardless of location. 

C. Additional Change—No adjustments 

The Councils are concerned that 

contractors who reimburse employee 

relocation costs on a lump-sum basis 

could make additional after-the-fact 

payments to employees whose actual 

costs exceeded the lump-sum amount. 

To address this concern, the Councils 

added the following limitation at FAR 

31.205–35(b)(6)(ii): ‘‘When 

reimbursement on a lump-sum basis is 

used, any adjustments to reflect actual 

costs are unallowable.’’

D. Regulatory Planning and Review 

This is not a significant regulatory 

action and, therefore, was not subject to 

review under Section 6(b) of Executive 

Order 12866, Regulatory Planning and 

Review, dated September 30, 1993. This 

rule is not a major rule under 5 U.S.C. 

804. 

E. 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 most 

contracts awarded to small entities use 

simplified acquisition procedures or are 

awarded on a competitive, fixed-price 

basis, and do not require application of 

the cost principle discussed in this rule. 

For Fiscal Year 2003, only 2.4 percent 

of all contract actions were cost 

contracts awarded to small businesses. 

F. Paperwork Reduction Act 

The Paperwork Reduction Act (Pub. 

L. 104–13) does not apply because the 

57470 Federal Register / Vol. 70, No. 189 / Friday, September 30, 2005 / Rules and Regulations 

changes to the FAR do not impose 

information collection requirements that 

require the approval of the Office of 

Management and Budget under 44 

U.S.C. 3501, et seq. 

List of Subjects in 48 CFR Part 31 

Government procurement. 

Dated: September 22, 2005. 

Julia B. Wise, 

Director, Contract Policy Division. 

■ Therefore, DoD, GSA, and NASA 

amend 48 CFR part 31 as set forth 

below: 

PART 31—CONTRACT COST 

PRINCIPLES AND PROCEDURES 

■ 1. The authority citation for 48 CFR 

part 31 continues to read as follows: 

Authority: Authority: 40 U.S.C. 121(c); 10 

U.S.C. chapter 137; and 42 U.S.C. 2473(c). 

■ 2. Amend section 31.205–35 by 

revising paragraph (b)(4); and adding 

paragraphs (b)(5) and (b)(6) to read as 

follows: 

31.205–35 Relocation costs. 

* * * * * 

(b)* * * 

(4) Amounts to be reimbursed shall 

not exceed the employee’s actual 

expenses, except as provided for in 

paragraphs (b)(5) and (b)(6) of this 

subsection. 

(5) For miscellaneous costs of the type 

discussed in paragraph (a)(5) of this 

subsection, a lump-sum amount, not to 

exceed $5,000, may be allowed in lieu 

of actual costs. 

(6)(i) Reimbursement on a lump-sum 

basis may be allowed for any of the 

following relocation costs when 

adequately supported by data on the 

individual elements (e.g., 

transportation, lodging, and meals) 

comprising the build-up of the lumpsum amount to be paid based on the 

circumstances of the particular 

employee’s relocation: 

(A) Costs of finding a new home, as 

discussed in paragraph (a)(2) of this 

subsection. 

(B) Costs of travel to the new location, 

as discussed in paragraph (a)(1) of this 

subsection (but not costs for the 

transportation of household goods). 

(C) Costs of temporary lodging, as 

discussed in paragraph (a)(2) of this 

subsection. 

(ii) When reimbursement on a lumpsum basis is used, any adjustments to 

reflect actual costs are unallowable. 

* * * * * 

[FR Doc. 05–19477 Filed 9–29–05; 8:45 am] 

BILLING CODE 6820–EP–S 

DEPARTMENT OF DEFENSE 

GENERAL SERVICES 

ADMINISTRATION 

NATIONAL AERONAUTICS AND 

SPACE ADMINISTRATION 

48 CFR Part 31 

[FAC 2005–06; FAR Case 2001–021; Item 

XI] 

RIN 9000–AJ38 

Federal Acquisition Regulation; 

Training and Education Cost Principle 

AGENCIES: Department of Defense (DoD), 

General Services Administration (GSA), 

and National Aeronautics and Space 

Administration (NASA). 

ACTION: Final rule. 

SUMMARY: The Civilian Agency 

Acquisition Council and the Defense 

Acquisition Regulations Council 

(Councils) have agreed on a final rule 

amending the Federal Acquisition 

Regulation (FAR) by revising the 

‘‘training and education costs’’ contract 

cost principle. The amendment 

streamlines the cost principle and 

increases clarity by eliminating 

restrictive and confusing language, and 

by restructuring the rule to list only 

specifically unallowable costs. The final 

rule eliminates several specific 

limitations on the allowability of costs 

associated with the various categories of 

education, eliminates the disparate 

treatment of full-time and part-time 

undergraduate education costs, and 

limits allowable costs to training and 

education related to the field in which 

the employee is working or may 

reasonably be expected to work. The 

rule makes job-related training and 

education costs generally allowable, 

except for six public policy exceptions 

that are retained from the current cost 

principle. Except for the six expressly 

unallowable cost exceptions, the 

reasonableness of specific contractor 

training and education costs is assessed 

by reference to the FAR section entitled 

‘‘Determining reasonableness.’’

DATES: Effective Date: October 31, 2005. 

FOR FURTHER INFORMATION CONTACT: The 

FAR Secretariat at (202) 501–4755 for 

information pertaining to status or 

publication schedules. For clarification 

of content, contact Mr. Jerry Olson at 

(202) 501–3221. Please cite FAC 2005–

06, FAR case 2001–021. 

SUPPLEMENTARY INFORMATION: 

A. Background 

The Councils published a proposed 

FAR rule in the Federal Register (67 FR 

34810) on May 15, 2002, with a request 

for comments by July 15, 2002. On June 

11, 2002, an amendment was published 

in the Federal Register (67 FR 40136) to 

correct an error in the Supplementary 

Information section accompanying the 

proposed rule. Six respondents 

submitted public comments. As a result 

of the comments received, the Councils 

made significant changes to the 

proposed FAR rule and published a 

second proposed FAR rule in the 

Federal Register (69 FR 4436) on 

January 29, 2004, with a request for 

comments by March 29, 2004. 

Nine respondents submitted 

comments in response to the second 

proposed FAR rule. A discussion of 

these public comments is provided 

below. The Councils considered all 

comments and concluded that the 

proposed rule should be converted to a 

final rule, with changes to the proposed 

rule. Differences between the second 

proposed rule and final rule are 

discussed in Section B, Comments 1, 2, 

4, and 6, below. 

B. Public Comments 

Proposed paragraph (a): Education for 

sole purpose to obtain academic degree 

or qualify for job. 

Comment 1: Seven respondents 

generally supported the proposed rule; 

however, they strongly recommended 

that proposed paragraph (a) be deleted 

before issuing a final rule. Several of the 

respondents pointed out that paragraph 

(a) is inconsistent with the Councils’

own Federal Register comments that 

they ‘‘support upward mobility, job 

retraining, and educational 

advancement.’’ In this regard, one 

respondent stated its concern that 

paragraph (a) would prevent it from 

providing ‘‘the educational 

opportunities that we have provided for 

decades.’’ Some respondents 

complained that it had ‘‘no idea how 

one is to discern whether the training 

and education relates ‘solely’ to 

obtaining an academic degree or to a 

particular position’’ and that 

‘‘implementation of this provision will 

be burdensome and lead to contested 

costs; hardly a simplification that 

increases the clarity of the cost 

principle.’’

Several respondents challenged the 

fundamental notion that the allowability 

of contractor employee training and 

education costs must parallel exactly 

the treatment afforded Federal 

employees. One respondent wrote— ‘‘We believe that utilization of the test of 

whether the Federal Government is willing to 

reimburse education costs for Federal 

employees is an inappropriate basis for 

determining cost allowability. The