31790 Federal Register / Vol. 61, No. 120 / Thursday, June 20, 1996 / Proposed Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES

ADMINISTRATION

NATIONAL AERONAUTICS AND

SPACE ADMINISTRATION

48 CFR Part 31

[FAR Case 95–020]

RIN 9000–AH05

Federal Acquisition Regulation; Costs

Related to Legal/Other Proceedings

AGENCIES: Department of Defense (DOD),

General Services Administration (GSA),

and National Aeronautics and Space

Administration (NASA).

ACTION: Proposed rule.

SUMMARY: The Civilian Agency

Acquisition Council and the Defense

Acquisition Regulations Council are

proposing to amend the Federal

Acquisition Regulation (FAR) to clarify

the allowability of costs incurred for qui

tam suits in which the Government does

not intervene. The rule also clarifies, in

FAR 31.205–47(e)(3), that the maximum

reimbursement contractors can receive

for legal costs in connection with

agreements reached under paragraph (c)

of FAR 31.205–47 is 80 percent of

otherwise allowable and allocable

incurred costs.This regulatory action

was not subject to Office of Management

and Budget review under Executive

Order 12866, dated September 30, 1993.

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

804.

DATES: Comments should be submitted

on or before August 19, 1996 to be

considered in the formulation of a final

rule.

ADDRESSES: Interested parties should

submit written comments to: General

Services Administration, FAR

Secretariat (MVRS), 18th & F Streets,

NW, Room 4037, Washington, DC

20405.

Please cite FAR Case 95–020 in all

correspondence related to this case.

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 FAR case 95–020.

SUPPLEMENTARY INFORMATION:

A. Background

This case was initiated to clarify the

proper interpretation of cost principle

FAR 31.205–47 as it relates to qui tam

suits not joined in by the Government.

B. Regulatory Flexibility Act

This proposed rule is not expected to

have a significant economic impact on

a substantial number of small entities

within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq.,

because most contracts awarded to

small entities are awarded on a

competitive fixed-price basis, and the

cost principles do not apply. An Initial

Regulatory Flexibility Analysis has,

therefore, not been performed.

Comments from small entities

concerning the affected FAR subpart

will be considered in accordance with 5

U.S.C. 610 of the Act. Such comments

must be submitted separately and

should cite 5 U.S.C. 601, et seq. (FAR

case 95–020) in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act does

not apply because the proposed changes

to the FAR do not impose recordkeeping

or information collection requirements,

or collections of information from

offerors, contractors, or members of the

public which 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: June 6, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, it is proposed that 48 CFR

Part 31 be amended 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: 40 U.S.C. 486(c); 10 U.S.C.

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

2. Section 31.205–47 is amended by

revising paragraph (b) introductory text,

(c) and (e)(3) to read as follows:

31.205–47 Costs related to legal and other

proceedings.

* * * * *

(b) Costs incurred in connection with

any proceeding brought by a Federal,

State, local or foreign government for

violation of, or a failure to comply with,

law or regulation by the contractor

(including its agents or employees) or

costs incurred in connection with any

proceeding brought by a third party in

the name of the United States under the

False Claims Act, 31 U.S.C. 3730, are

unallowable if the result is—

* * * * *

(c) (1) To the extent that they are not

otherwise unallowable, costs incurred

in connection with any proceeding

under paragraph (b) of this subsection

commenced by the United States that is

resolved by consent or compromise

pursuant to an agreement entered into

between the contractor and the United

States, and which are unallowable

solely because of paragraph (b) of this

subsection, may be allowed to the extent

specifically provided in such agreement.

(2) In the event of a settlement of any

proceeding brought by a third party

under the False Claims Act in which the

United States did not intervene,

reasonable costs incurred by the

contractor in connection with such a

proceeding that are not otherwise

unallowable by regulation or by separate

agreement with the United States, may

be allowed if the contracting officer, in

consultation with his or her legal

advisor, determines that there was very

little likelihood that the third party

would have been successful on the

merits.

* * * * *

(e) * * *

(3) The percentage of costs allowed

does not exceed the percentage

determined to be appropriate

considering the complexity of

procurement litigation, generally

accepted principles governing the award

of legal fees in civil actions involving

the United States as a party, and such

other factors as may be appropriate.

Such percentage shall not exceed 80

percent. Agreements reached under

paragraph (c) of this subsection shall be

subject to this limitation. If, however, an

agreement described in subparagraph

(c)(1) explicitly states the amount of

otherwise allowable incurred legal fees

and limits the allowable recovery to 80

percent or less of the stated legal fees,

no additional limitation need be

applied. The amount of reimbursement

allowed for legal costs in connection

with any proceeding described in

subparagraph (c)(2) shall be determined

by the cognizant contracting officer, but

shall not exceed 80 percent of otherwise

allowable legal costs incurred.

* * * * *

[FR Doc. 96–14839 Filed 6–19–96; 8:45 am]

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