[Federal Register Volume 61, Number 120 (Thursday, June 20, 1996)]
[Rules and Regulations]
[Pages 31655-31656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14534]



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


DEPARTMENT OF DEFENSE
48 CFR Part 31

[FAC 90-39; FAR Case 93-020; Item XIX]
RIN 9000-AF99


Federal Acquisition Regulation; Records Retention

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 have agreed on a final rule to amend 
the Federal Acquisition Regulation (FAR) to explicitly state that 
contractors must maintain adequate cost records in order to be 
reimbursed for all claimed costs. This regulatory action was 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: August 19, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy F. 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 90-39, FAR case 93-020.

[[Page 31656]]

SUPPLEMENTARY INFORMATION:

A. Background

    The guidance for determining cost allowability at FAR 31.201-2 
previously did not explicitly state that contractors must maintain 
adequate cost records in order to be reimbursed for all claimed costs 
nor did it specifically state that the contracting officer has the 
authority to disallow costs which are determined to be inadequately 
supported. This requirement and authority have, heretofore, been 
considered to be implicit in the cost principles. However, the Councils 
are revising the FAR to explicitly address these issues because the 
Office of Federal Procurement Policy SWAT Team on Civilian Agency 
Contracting in its report of December 3, 1992, ``Improving Contracting 
Practices and Management Controls on Cost-Type Federal Contracts,'' 
found that agencies were having difficulty because the FAR was silent 
on these issues. A new paragraph (d) is added to FAR 31.201-2 to 
explicitly state that costs claimed for reimbursement must be 
adequately supported and that the contracting officer may disallow 
costs which are inadequately supported. A proposed rule was published 
in the Federal Register at 59 FR 47776 on September 16, 1994. After 
evaluation of public comments, the Councils agreed to convert the 
proposed rule to a final rule without further change.

B. 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 are awarded on a competitive, fixed-price basis and 
the cost principles do not apply. No comments were received on the 
impact of this rule on small entities during the public comment period.

C. Paperwork Reduction Act

    The Paperwork Reduction Act does not apply because the 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 4, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR Part 31 is 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 31.201-2 is amended by adding paragraph (d) to read as 
follows:


31.201-2  Determining allowability.

* * * * *
    (d) A contractor is responsible for accounting for costs 
appropriately and for maintaining records, including supporting 
documentation, adequate to demonstrate that costs claimed have been 
incurred, are allocable to the contract, and comply with applicable 
cost principles in this subpart and agency supplements. The contracting 
officer may disallow all or part of a claimed cost which is 
inadequately supported.

[FR Doc. 96-14534 Filed 6-19-96; 8:45 am]
BILLING CODE 6820-EP-P