[Federal Register Volume 61, Number 83 (Monday, April 29, 1996)]
[Rules and Regulations]
[Pages 18916-18920]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10429]



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DEPARTMENT OF DEFENSE
48 CFR Parts 1, 30, 42, and 52

[FAC 90-38; FAR Case 95-002; Item II]
RIN 9000-AG71


Federal Acquisition Regulation; Application of Cost Accounting 
Standards Board Regulations to Educational Institutions

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

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on a final rule to amend 
the Federal Acquisition Regulation (FAR) to implement changes made to 
the Cost Accounting Standards (CAS). The final rule applies to 
educational institutions receiving a negotiated Federal contract or 
subcontract award in excess of $500,000 (excluding contracts awarded 
for the operation of Federally Funded Research and Development Centers 
(FFRDCs) which are already subject to CAS Board regulations), and 
requires that such educational institutions comply with certain 
specified CAS Board rules, regulations and standards. The revisions to 
the FAR are based on the CAS Board's amendments to 48 CFR Chapter 99. 
This regulatory action was not subject to Office of Management and 
Budget review under Executive Order 12866, dated September 30, 1993. It 
is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: April 29, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-3221 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-38, FAR case 95-002.

SUPPLEMENTARY INFORMATION:

A. Background

    The Office of Federal Procurement Policy, Cost Accounting Standards 
Board (CASB), has amended the regulatory provisions contained at 48 CFR 
Chapter 99. The amendments apply to educational institutions receiving 
a negotiated Federal contract or subcontract award in excess of 
$500,000 (excluding contracts awarded for the operation of Federally 
Funded Research and Development Centers (FFRDCs) which are already 
subject to CASB regulations) and require that such educational 
institutions comply with certain specified CASB rules, regulations, and 
Cost Accounting Standards (CAS). The CAS final rule was published in 
the Federal Register on November 8, 1994, at 59 FR 55746, and became 
effective on January 9, 1995, and is authorized pursuant to section 26 
of the Office of Federal Procurement Policy Act. The Board has taken 
action on this topic in order to promote uniformity and consistency in 
educational institutions' cost accounting practices.

B. Regulatory Flexibility Act

    The final rule does not constitute a significant FAR revision 
within the meaning of FAR 1.501 and Public Law 98-577 and publication 
for public comment is not required because the requirements for the 
regulation were published by the CASB and codified at 48 CFR Chapter 
99. Therefore, the Regulatory Flexibility Act does not apply. However, 
comments from small entities concerning the affected FAR subparts will 
be considered in accordance with Section 610 of the Act. Such comments 
must be submitted separately and cite 5 U.S.C. 601, et seq., (FAC 90-
38, FAR Case 95-002).

C. Paperwork Reduction Act

    The information collection aspects of this rule have been approved 
by the Office of Management and Budget and assigned Control Number 
0348-0055.

D. Public Comments

    Public comments are not necessary because the policies and 
procedures contained in this regulation have already been publicized in 
the Federal Register by the Office of Federal Procurement Policy Cost 
Accounting Standards Board's Notice of Proposed Rulemaking made 
available for public comment in the Federal Register, at 57 FR 60503, 
on December 21, 1992.

List of Subjects in 48 CFR Parts 1, 30, 42, and 52

    Government procurement.

    Dated: April 18, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Parts 1, 30, 42, and 52 are amended as set forth 
below:

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

    1. The authority citation for 48 CFR Parts 1, 30, 42, and 52 
continues to read as follows:

    Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


1.106  [Amended]

    2. Section 1.106 is amended in the FAR segment column by removing 
``52.230-5'' and inserting ``52.230-6'' in its place.

PART 30--COST ACCOUNTING STANDARDS ADMINISTRATION


30.000  [Amended]

    3. Section 30.000 is amended by removing ``(appendix B, FAR loose-
leaf edition))'' and inserting ``(FAR appendix B)'' in its place, and 
by removing ``(see 48 CFR chapter 99 (appendix B, FAR loose-leaf 
edition), Subpart 9903.201-1(b),'' and inserting ``(see 48 CFR 
9903.201-1(b) (FAR appendix B)'' in its place.


30.201  [Amended]

    4. Section 30.201 is amended in the first sentence by removing ``48 
CFR chapter 99 (appendix B, FAR loose-leaf edition), Subpart 9903.201-
1,'' and inserting ``48 CFR 9903.201-1 (FAR appendix B)'' in its place, 
in the second sentence by removing ``subpart'' and inserting ``48 CFR'' 
in its place, and in the last sentence by removing ``48 CFR chapter 99 
(appendix B, FAR loose-leaf edition), Subpart 9903.201-2.'' and 
inserting ``48 CFR 9903.201-2 (FAR appendix B).'' in its place.
    5. Section 30.201-1 is revised to read as follows:


30.201-1  CAS applicability.

    See 48 CFR 9903.201-1 (FAR appendix B).
    6. Section 30.201-2 is revised to read as follows:


30.201-2  Types of CAS coverage.

    See 48 CFR 9903.201-2 (FAR appendix B).
    7. Section 30.201-3 is revised to read as follows:

[[Page 18917]]

30.201-3  Solicitation provisions.

    (a) The contracting officer shall insert the provision at 52.230-1, 
Cost Accounting Standards Notices and Certification, in solicitations 
for proposed contracts subject to CAS as specified in 48 CFR 9903.201 
(FAR appendix B).
    (b) If an award to an educational institution is contemplated prior 
to July 1, 1997, the contracting officer shall insert the basic 
provision set forth at 52.230-1 with its Alternate I, unless the 
contract is to be performed by a Federally Funded Research and 
Development Center (FFRDC) (see 48 CFR 9903.201-2(c)(5) (FAR appendix 
B)), or the provision at 48 CFR 9903.201-2(c)(6) (FAR appendix B) 
applies.
    8. Section 30.201-4 is revised to read as follows:


30.201-4  Contract clauses.

    (a) Cost Accounting Standards. (1) The contracting officer shall 
insert the clause at FAR 52.230-2, Cost Accounting Standards, in 
negotiated contracts, unless the contract is exempted (see 48 CFR 
9903.201-1 (FAR appendix B)), the contract is subject to modified 
coverage (see 48 CFR 9903.201-2 (FAR appendix B)), or the clause 
prescribed in paragraph (c) of this subsection is used.
    (2) The clause at FAR 52.230-2 requires the contractor to comply 
with all CAS specified in 48 CFR part 9904 (FAR appendix B), to 
disclose actual cost accounting practices (applicable to CAS-covered 
contracts only), and to follow disclosed and established cost 
accounting practices consistently.
    (b) Disclosure and Consistency of Cost Accounting Practices. (1) 
The contracting officer shall insert the clause at FAR 52.230-3, 
Disclosure and Consistency of Cost Accounting Practices, in negotiated 
contracts when the contract amount is over $500,000, but less than $25 
million, and the offeror certifies it is eligible for and elects to use 
modified CAS coverage (see 48 CFR 9903.201-2 (FAR appendix B), unless 
the clause prescribed in paragraph (c) of this subsection is used). -
    (2) The clause at FAR 52.230-3 requires the contractor to comply 
with 48 CFR 9904.401, 9904.402, 9904.405, and 9904.406 (FAR appendix B) 
to disclose (if it meets certain requirements) actual cost accounting 
practices, and to follow consistently its established cost accounting 
practices.
    (c) Consistency in Cost Accounting Practices. The contracting 
officer shall insert the clause at FAR 52.230-4, Consistency in Cost 
Accounting Practices, in negotiated contracts that are exempt from CAS 
requirements solely on the basis of the fact that the contract is to be 
awarded to a United Kingdom contractor and is to be performed 
substantially in the United Kingdom (see 48 CFR 9903.201-1(b)(12) (FAR 
appendix B)).-
    (d) Administration of Cost Accounting Standards. (1) The 
contracting officer shall insert the clause at FAR 52.230-6, 
Administration of Cost Accounting Standards, in contracts containing 
any of the clauses prescribed in paragraphs (a), (b), or (e) of this 
subsection.
    (2) The clause at FAR 52.230-6 specifies rules for administering 
CAS requirements and procedures to be followed in cases of failure to 
comply.
    (e) Cost Accounting Standards--Educational Institutions. (1) The 
contracting officer shall insert the clause at FAR 52.230-5, Cost 
Accounting Standards--Educational Institution, in negotiated contracts 
awarded to educational institutions, unless the contract is exempted 
(see 48 CFR 9903.201-1 (FAR appendix B)), the contract is to be 
performed by an FFRDC (see 48 CFR 9903.201-2(c)(5) (FAR appendix B)), 
or the provision at 48 CFR 9903.201-2(c)(6) (FAR appendix B) applies.
    (2) The clause at FAR 52.230-5 requires the educational institution 
to comply with all CAS specified in 48 CFR part 9905 (FAR appendix B), 
to disclose actual cost accounting practices as required by 48 CFR 
9903.202-1(f) (FAR appendix B), and to follow disclosed and established 
cost accounting practices consistently.
    9. Section 30.201-5 is revised to read as follows:


30.201-5  Waiver.

    In some instances, contractors or subcontractors may refuse to 
accept all or part of the requirements of the CAS clauses (FAR 52.230-
2, Cost Accounting Standards, FAR 52.230-3, Disclosure and Consistency 
of Cost Accounting Practices, and FAR 52.230-5, Cost Accounting 
Standards--Educational Institution). If the contracting officer 
determines that it is impractical to obtain the materials, supplies, or 
services from any other source, the contracting officer shall prepare a 
request for waiver in accordance with 48 CFR 9903.201-5 (FAR appendix 
B).
    10. Sections 30.201-6 and 30.201-7 are added to read as follows:


30.201-6  Findings.

    See 48 CFR 9903.201-6 (FAR appendix B).


30.201-7  Cognizant Federal agency responsibilities.

    See 48 CFR 9903.201-7 (FAR appendix B).
    11. Section 30.202-1 is revised to read as follows:


30.202-1  General requirements.

    See 48 CFR 9903.202-1 (FAR appendix B).
    12. Section 30.202-2 is revised to read as follows:


30.202-2  Impracticality of submission.

    See 48 CFR 9903.202-2 (FAR appendix B).
    13. Section 30.202-3 is revised to read as follows:


30.202-3  Amendments and revisions.

    See 48 CFR 9903.202-3 (FAR appendix B).

    14. Section 30.202-4 is revised to read as follows:


30.202-4  Privileged and confidential information.

    See 48 CFR 9903.202-4 (FAR appendix B).

    15. Section 52.202-5 is revised to read as follows:


30.202-5  Filing Disclosure Statements.

    See 48 CFR 9903.202-5 (FAR appendix B).


30.202-6  [Amended]

    16. Section 30.202-6(a) is amended by removing ``48 CFR chapter 99 
(appendix B, FAR loose-leaf edition), Subparts 9903.201-3 and 
9903.202.'' and inserting ``48 CFR 9903.201-3 and 9903.202 (FAR 
appendix B).'' in its place.
    17. Section 30.202-7 is amended in paragraph (a) by revising the 
first and third sentences; and in the first sentence of (b) by 
inserting the word ``cognizant'' before the word ``auditor'', and 
removing the word ``determine'' and inserting ``ascertain'' in its 
place. The revised text reads as follows:


30.202-7  Determinations.-

    (a) Adequacy determination. As prescribed by 48 CFR 9903.202-6 (FAR 
appendix B), the cognizant auditor shall conduct a review of the 
Disclosure Statement to ascertain whether it is current, accurate, and 
complete and shall report the results to the cognizant ACO, who shall 
determine whether or not it adequately describes the offeror's cost 
accounting practices. * * * If the Disclosure Statement is adequate, 
the ACO shall notify the offeror in writing, with copies to the 
cognizant auditor and contracting officer. * * *
* * * * *

[[Page 18918]]

    18. Section 30.202-8 is amended in the second sentence of paragraph 
(a) by removing ``ACO's'' and inserting in its place ``The ACO''; and 
by revising (b) to read as follows:


30.202-8  Subcontractor Disclosure Statements.

* * * * *
    (b) Any determination that it is impractical to secure a 
subcontractor's Disclosure Statement must be made in accordance with 48 
CFR 9903.202-2 (FAR appendix B).

    19. Subpart 30.3 is revised to read as follows:

Subpart 30.3--CAS Rules and Regulations [Reserved]

    Note: See 48 CFR 9903.3 (FAR appendix B).

    20. Subpart 30.4 is revised to read as follows:

Subpart 30.4--Cost Accounting Standards [Reserved]

    Note: See 48 CFR part 9904 (FAR appendix B).

    21. Subpart 30.5 is revised to read as follows:

Subpart 30.5--Cost Accounting Standards for Educational 
Institutions [Reserved]

    Note: See 48 CFR part 9905 (FAR appendix B).


30.602  [Amended]

    22. Section 30.602 is amended in the introductory text by removing 
``48 CFR chapter 99 (appendix B, FAR loose-leaf edition), subpart 
9903.305.'' and inserting ``48 CFR 9903.305 (FAR appendix B).'' in its 
place.


30.602-1  [Amended]

    23. Section 30.602-1 is amended in the first sentence of paragraph 
(a)(2) by inserting after the word ``Standards,'' the phrase ``or FAR 
52.230-5, Cost Accounting Standards--Educational Institution,''; in the 
third sentence of (a)(2) by inserting after ``52.230-2'' the phrase 
``or 52.230-5''; in paragraph (b)(1) by revising the citation ``52.230-
5'' to read ``FAR 52.230-6''; in the first sentence of (b)(2) by 
inserting after the word ``ACO'' the phrase ``, with the assistance of 
the auditor,''.


30.602-2  [Amended]

    24. Section 30.602-2 is amended as follows:
    a. In paragraph (a)(1) and the first sentence of paragraph (d)(1) 
by inserting the word ``cognizant'' before the word ``auditor'' the 
first time it appears;
    b. In paragraphs (a)(3), (b)(1), and (c)(1), by revising the 
citation ``52.230-5'' to read ``FAR 52.230-6'';
    c. In the second sentence of paragraph (c)(2) by inserting after 
the word ``Standards,'' the phrase ``or FAR 52.230-5, Cost Accounting 
Standards--Educational Institution,''; and
    d. In paragraph (d)(3) by inserting after the word ``Standards,'' 
the phrase ``52.230-5, Cost Accounting Standards--Educational 
Institution,''.


30.602-3  [Amended]

    25. Section 30.602-3 is amended in paragraph (b)(1) by revising the 
citation ``52.230-5'' to read `` FAR 52.230-6''; in the first sentence 
of (b)(2) by adding after the word ``ACO'' the phrase ``, with the 
assistance of the cognizant auditor,''; and in the first sentence of 
(d)(1) by adding before the word ``auditor'' the word ``cognizant''.


30.603  [Amended]

    26. Section 30.603 is amended in the first sentence by removing the 
word ``his'' and inserting ``the'' in its place; and in the second 
sentence by removing ``ACO's'' and inserting ``The ACOs'' in its place.

PART 42--CONTRACT ADMINISTRATION


42.302  [Amended]

    27. Section 42.302 is amended in paragraph (a)(11) by removing ``48 
CFR chapter 99)'' and inserting ``48 CFR chapter 99 (FAR appendix B))'' 
in its place, and in (a)(11)(iv) by removing ``and 52.230-5'' and 
inserting in its place ``52.230-5 and 52.230-6.''

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    28. Section 52.230-1 is amended by:
    (a) Revising the clause date;-
    (b) Adding a third paragraph following the NOTE under the clause 
heading;
    (c) Removing from paragraph (a)(2) the phrase ``48 CFR parts 9903 
and 9904'' and inserting ``the Cost Accounting Standards Board (48 CFR 
Chapter 99)'' in its place, and removing the phrase ``48 CFR, Subpart'' 
and inserting ``48 CFR'' in its place;
    (d) Removing in the first sentence of paragraph (b) the phrase ``, 
parts 9903 and 9904'' and inserting ``Chapter 99'' in its place, and 
removing the phrase ``48 CFR, Subpart'' and inserting ``48 CFR'' in its 
place; and in the second sentence by removing ``The'' and inserting 
``When required, the'' in its place;
    (e) Capitalizing all letters in the word ``Caution:'' in the 
CAUTION paragraph following paragraphs (b), (c)(4), and in Part II;
    (f) Revising paragraphs (c) (1) and (2);
    (g) Removing in paragraph (c)(4)(ii) under Part I the phrase ``48 
CFR, Subpart'' and inserting ``48 CFR'' in its place;
    (h) Removing in the first sentences of the first and second 
paragraphs in Part II the phrase ``48 CFR subpart'' and inserting ``48 
CFR'' in its place; and
    (i) Adding Alternate I. The added and revised text reads as 
follows:


52.230-1  Cost Accounting Standards Notices and Certification.

* * * * *

COST ACCOUNTING STANDARDS NOTICES AND CERTIFICATION (APR 1996)

* * * * *
    Note: * * *
    If the offeror is an educational institution, Part II does not 
apply unless the contemplated contract will be subject to full or 
modified CAS coverage pursuant to 48 CFR 9903.201-2(c)(5) or 
9903.201-2(c)(6), respectively.

I. DISCLOSURE STATEMENT-COST ACCOUNTING PRACTICES AND CERTIFICATION

* * * * *
    (c) * * *
      (1) Certificate of Concurrent Submission of Disclosure 
Statement.
    The offeror hereby certifies that, as a part of the offer, 
copies of the Disclosure Statement have been submitted as follows: 
(i) original and one copy to the cognizant Administrative 
Contracting Officer (ACO) or cognizant Federal agency official 
authorized to act in that capacity (Federal official), as 
applicable, and (ii) one copy to the cognizant Federal auditor.
    (Disclosure must be on Form No. CASB DS-1 or CASB DS-2, as 
applicable. Forms may be obtained from the cognizant ACO or Federal 
official and/or from the loose-leaf version of the Federal 
Acquisition Regulation.)

Date of Disclosure Statement:
----------------------------------------------------------------------

Name and Address of Cognizant ACO or Federal Official Where Filed:

----------------------------------------------------------------------

    The offeror further certifies that the practices used in 
estimating costs in pricing this proposal are consistent with the 
cost accounting practices disclosed in the Disclosure Statement.
      (2) Certificate of Previously Submitted Disclosure Statement.
    The offeror hereby certifies that the required Disclosure 
Statement was filed as follows:

Date of Disclosure Statement:
----------------------------------------------------------------------

Name and Address of Cognizant ACO or Federal Official Where Filed:

----------------------------------------------------------------------

    The offeror further certifies that the practices used in 
estimating costs in pricing this proposal are consistent with the 
cost

[[Page 18919]]

accounting practices disclosed in the applicable Disclosure 
Statement.

* * * * *

(End of provision)

    Alternate I (APR 1996). As prescribed in 30.201-3(b), add the 
following subparagraph (c)(5) to Part I of the basic provision:

    {time}  (5) Certificate of Disclosure Statement Due Date by 
Educational Institution. If the offeror is an educational 
institution that, under the transition provisions of 48 CFR 
9903.202-1(f), is or will be required to submit a Disclosure 
Statement after receipt of this award, the offeror hereby certifies 
that (check one and complete):

    {time}  (i) A Disclosure Statement Filing Due Date of 
__________________ has been established with the cognizant Federal 
agency.

       (ii) The Disclosure Statement will be submitted within the 6-
month period ending ______________ months after receipt of this 
award.

Name and Address of Cognizant ACO or Federal Official Where 
Disclosure Statement is to be Filed:
----------------------------------------------------------------------

52.230-2  [Amended]

    29. Section 52.230-2 is amended by revising the clause date to read 
``(Apr 1996)'', and by removing in paragraph (a) in the introductory 
text the phrase ``48 CFR subparts'' and inserting ``48 CFR'' in its 
place; in (a)(1) removing the phrase ``48 CFR subpart'' and inserting 
``48 CFR'' in its place, in (a)(3) removing the phrase ``48 CFR part 
9904, (appendix B, FAR loose-leaf edition),'' and inserting ``48 CFR 
Part 9904,'' in its place, and in (d)(2) removing the phrase ``48 CFR 
subpart'' and inserting ``48 CFR'' in its place.

    30. Section 52.230-3 is amended by:

    (a) Revising the clause date and paragraph (a)(1);
    (b) Removing in paragraph (a)(2) the phrase ``48 CFR subparts'' and 
inserting ``48 CFR'' in its place; and
    (c) Removing in paragraphs (a)(3)(ii), (d)(1) and (d)(3) the phrase 
``48 CFR subpart'' and inserting ``48 CFR'' in its place. The revised 
text reads as follows:


52.230-3   Disclosure and Consistency of Cost Accounting Practices.

* * * * *

DISCLOSURE AND CONSISTENCY OF COST ACCOUNTING PRACTICES (APR 1996)

    (a) * * *
    (1) Comply with the requirements of 48 CFR 9904.401, Consistency 
in Estimating, Accumulating, and Reporting Costs; 48 CFR 9904.402, 
Consistency in Allocating Costs Incurred for the Same Purpose; 48 
CFR 9904.405, Accounting for Unallowable Costs; and 48 CFR 9904.406, 
Cost Accounting Standard-Cost Accounting Period, in effect on the 
date of award of this contract as indicated in 48 CFR Part 9904.
* * * * *-


52.230-5  [Redesignated as 52.230-6]

    31. Section 52.230-5 is redesignated as 52.230-6 and a new section 
52.230-5 is added to read as follows:


52.230-5  Cost Accounting Standards--Educational Institution.

    As prescribed in 30.201-4(e), insert the following clause:

COST ACCOUNTING STANDARDS--EDUCATIONAL INSTITUTION (APR 1996)

    (a) Unless the contract is exempt under 48 CFR 9903.201-1 and 
9903.201-2, the provisions of 48 CFR Part 9903 are incorporated 
herein by reference and the Contractor, in connection with this 
contract, shall--
    (1) (CAS-covered contracts only). If a business unit of an 
educational institution required to submit a Disclosure Statement, 
disclose in writing the Contractor's cost accounting practices as 
required by 48 CFR 9903.202-1 through 9903.202-5, including methods 
of distinguishing direct costs from indirect costs and the basis 
used for accumulating and allocating indirect costs. The practices 
disclosed for this contract shall be the same as the practices 
currently disclosed and applied on all other contracts and 
subcontracts being performed by the Contractor and which contain a 
Cost Accounting Standards (CAS) clause. If the Contractor has 
notified the Contracting Officer that the Disclosure Statement 
contains trade secrets, and commercial or financial information 
which is privileged and confidential, the Disclosure Statement shall 
be protected and shall not be released outside of the Government.
    (2) Follow consistently the Contractor's cost accounting 
practices in accumulating and reporting contract performance cost 
data concerning this contract. If any change in cost accounting 
practices is made for the purposes of any contract or subcontract 
subject to CAS requirements, the change must be applied 
prospectively to this contract and the Disclosure Statement, if 
required, must be amended accordingly. If an accounting principle 
change mandated under Office of Management and Budget (OMB) Circular 
A-21, Cost Principles for Educational Institutions, requires that a 
change in the Contractor's cost accounting practices be made after 
the date of this contract award, the change must be applied 
prospectively to this contract and the Disclosure Statement, if 
required, must be amended accordingly. If the contract price or cost 
allowance of this contract is affected by such changes, adjustment 
shall be made in accordance with subparagraph (a)(4) or (a)(5) of 
this clause, as appropriate.
    (3) Comply with all CAS, including any modifications and 
interpretations indicated thereto contained in 48 CFR Part 9905 in 
effect on the date of award of this contract or, if the Contractor 
has submitted cost or pricing data, on the date of final agreement 
on price as shown on the Contractor's signed certificate of current 
cost or pricing data. The Contractor shall also comply with any CAS 
(or modifications to CAS) which hereafter become applicable to a 
contract or subcontract of the Contractor. Such compliance shall be 
required prospectively from the date of applicability to such 
contract or subcontract.
    (4) (i) Agree to an equitable adjustment as provided in the 
Changes clause of this contract if the contract cost is affected by 
a change which, pursuant to subparagraph (a)(3) of this clause, the 
Contractor is required to make to the Contractor's established cost 
accounting practices.
    (ii) Negotiate with the Contracting Officer to determine the 
terms and conditions under which a change may be made to a cost 
accounting practice, other than a change made under other provisions 
of subparagraph (a)(4) of this clause; provided that no agreement 
may be made under this provision that will increase costs paid by 
the United States.
    (iii) When the parties agree to a change to a cost accounting 
practice, other than a change under subdivision (a)(4)(i) or 
(a)(4)(iv) of this clause, negotiate an equitable adjustment as 
provided in the Changes clause of this contract.
    (iv) Agree to an equitable adjustment as provided in the Changes 
clause of this contract, if the contract cost is materially affected 
by an OMB Circular A-21 accounting principle amendment which, on 
becoming effective after the date of contract award, requires the 
Contractor to make a change to the Contractor's established cost 
accounting practices.
    (5) Agree to an adjustment of the contract price or cost 
allowance, as appropriate, if the Contractor or a subcontractor 
fails to comply with an applicable Cost Accounting Standard, or to 
follow any cost accounting practice consistently and such failure 
results in any increased costs paid by the United States. Such 
adjustment shall provide for recovery of the increased costs to the 
United States, together with interest thereon computed at the annual 
rate established under section 6621 of the Internal Revenue Code of 
1986 (26 U.S.C. 6621) for such period, from the time the payment by 
the United States was made to the time the adjustment is effected. 
In no case shall the Government recover costs greater than the 
increased cost to the Government, in the aggregate, on the relevant 
contracts subject to the price adjustment, unless the Contractor 
made a change in its cost accounting practices of which it was aware 
or should have been aware at the time of price negotiations and 
which it failed to disclose to the Government.
    (b) If the parties fail to agree whether the Contractor or a 
subcontractor has complied with an applicable CAS or a CAS rule or 
regulation in 48 CFR Part 9903, and as to any cost adjustment 
demanded by the United States, such failure to agree will constitute 
a dispute under the Contract Disputes Act (41 U.S.C. 601).
    (c) The Contractor shall permit any authorized representatives 
of the Government to examine and make copies of any documents, 
papers, or records relating to compliance with the requirements of 
this clause.

[[Page 18920]]

    (d) The Contractor shall include in all negotiated subcontracts 
which the Contractor enters into, the substance of this clause, 
except paragraph (b), and shall require such inclusion in all other 
subcontracts, of any tier, including the obligation to comply with 
all applicable CAS in effect on the subcontractor's award date or, 
if the subcontractor has submitted cost or pricing data, on the date 
of final agreement on price as shown on the subcontractor's signed 
Certificate of Current Cost or Pricing Data, except that--
    (1) If the subcontract is awarded to a business unit which 
pursuant to 48 CFR 9903.201-2 is subject to other types of CAS 
coverage, the substance of the applicable clause set forth in 48 CFR 
9903.201-4 shall be inserted; and
    (2) This requirement shall apply only to negotiated subcontracts 
in excess of $500,000 where the price negotiated is not based on--
    (i) Established catalog or market prices of commercial items 
sold in substantial quantities to the general public; or
    (ii) Prices set by law or regulation, and except that the 
requirement shall not apply to negotiated subcontracts otherwise 
exempt from the requirement to include a CAS clause as specified in 
48 CFR 9903.201-1.

(End of clause)

    32. Newly designated section 52.230-6 is amended:
    (a) By revising the date of the clause to read ``(APR 1996)'';
    (b) In paragraph (a)(1) by removing the phrase ``to comply with a 
new or modified CAS''; and removing the comma after the word 
``Standards'' and inserting in its place ``; or subparagraph (a)(3) and 
subdivisions (a)(4)(i) or (a)(4)(iv) of the clause at FAR 52.230-5, 
Cost Accounting Standards-Educational Institution;'';
    (c) In paragraph (a)(2) by adding an ``s'' to the end of the word 
``clause'' the first time it appears; and adding after the word 
``Standards,'' the phrase ``and FAR 52.230-5, Cost Accounting 
Standards-Educational Institution;'';
    (d) In paragraph (a)(3) by adding after the word ``Standards,'' the 
phrase ``and FAR 52.230-5, Cost Accounting Standards-Educational 
Institution;'';
    (e) In the introductory text of paragraph (b) by adding after the 
word ``ACO'' the phrase ``, or cognizant Federal agency official,'';
    (f) By revising paragraphs (b)(1) and (b)(2);
    (g) In paragraph (b)(3) by adding an ``s'' at the end of the word 
``clause'' the first time it appears; and adding after the word 
``Standards,'' the phrase ``and FAR 52.230-5, Cost Accounting 
Standards-Educational Institution;''
    (h) In paragraph (d) by removing ``CAS clause'' and inserting 
``clauses'' in its place; and adding after the citation ``52.230-2,'' 
the phrase ``and 52.230-5;'';
    (i) By revising the introductory text of paragraph (e) and the 
first sentence of paragraph (e)(2)(iv); and
    (j) In paragraph (g) by removing ``CAS clause,'' and inserting in 
its place ``clauses at FAR 52.230-2 or 52.230-5,''.
    The revised text reads as follows:


52.230-6   Administration of Cost Accounting Standards.

* * * * *

ADMINISTRATION OF COST ACCOUNTING STANDARDS (APR 1996)

* * * * *
    (b) * * *
    (1) Cost impact proposals submitted for changes in cost 
accounting practices required in accordance with subparagraph (a)(3) 
and subdivision (a)(4)(i) of the clause at FAR 52.230-2, Cost 
Accounting Standards; or subparagraph (a)(3) and subdivisions 
(a)(4)(i) or (a)(4)(iv) of the clause at FAR 52.230-5, Cost 
Accounting Standards-Educational Institution; shall identify the 
applicable standard or cost principle and all contracts and 
subcontracts containing the clauses entitled Cost Accounting 
Standards or Cost Accounting Standards-Educational Institution, 
which have an award date before the effective date of that standard 
or cost principle.
    (2) Cost impact proposals submitted for any change in cost 
accounting practices proposed in accordance with subdivisions (a)(4) 
(ii) or (iii) of the clauses at FAR 52.230-2, Cost Accounting 
Standards, and FAR 52.230-5, Cost Accounting Standards-Educational 
Institution; or with subparagraph (a)(3) of the clause at FAR 
52.230-3, Disclosure and Consistency of Cost Accounting Practices; 
shall identify all contracts and subcontracts containing the clauses 
at FAR 52.230-2, Cost Accounting Standards, FAR 52.230-5, Cost 
Accounting Standards-Educational Institution, and FAR 52.230-3, 
Disclosure and Consistency of Cost Accounting Practices.
* * * * *
    (e) For all subcontracts subject to the clauses at FAR 52.230-2, 
52.230-3, or 52.230-5--
* * * * *
    (2) * * *
    (iv) Any changes the subcontractor has made or proposes to make 
to cost accounting practices that affect prime contracts or 
subcontracts containing the clauses at FAR 52.230-2, 52.230-3, or 
52.230-5, unless these changes have already been reported.
* * * * *
[FR Doc. 96-10429 Filed 4-26-96; 8:45 am]
BILLING CODE 6820-EP-P