153 
head of the agency issues the order. Review shall conform to chapter 
7 of title 5. 
(e) SCOPE OF SECTION.—This section does not— 
(1) authorize the discharge of, demotion of, or discrimination against 
an employee for a disclosure other than a disclosure protected by sub-
section (b); or 
(2) modify or derogate from a right or remedy otherwise available 
to the employee. 
§ 4706. Examination of facilities and records of contractor 
(a) DEFINITION.—In this section, the term ‘‘records’’ includes books, doc-
uments, accounting procedures and practices, and other data, regardless of 
type and regardless of whether the items are in written form, in the form 
of computer data, or in any other form. 
(b) AGENCY AUTHORITY.— 
(1) INSPECTION OF PLANT AND AUDIT OF RECORDS.—The head of 
an executive agency, acting through an authorized representative, may 
inspect the plant and audit the records of— 
(A) a contractor performing a cost-reimbursement, incentive, 
time-and-materials, labor-hour, or price-redeterminable contract, 
or any combination of those contracts, the executive agency makes 
under this division; and 
(B) a subcontractor performing a cost-reimbursement, incentive, 
time-and-materials, 
labor-hour, 
or 
price-redeterminable 
sub-
contract, or any combination of those subcontracts, under a con-
tract referred to in subparagraph (A). 
(2) EXAMINATION OF RECORDS.—The head of an executive agency, 
acting through an authorized representative, may, for the purpose of 
evaluating the accuracy, completeness, and currency of certified cost or 
pricing data required to be submitted pursuant to chapter 35 of this 
title with respect to a contract or subcontract, examine all records of 
the contractor or subcontractor related to— 
(A) the proposal for the contract or subcontract; 
(B) the discussions conducted on the proposal; 
(C) pricing of the contract or subcontract; or 
(D) performance of the contract or subcontract. 
(c) SUBPOENA POWER.— 
(1) AUTHORITY TO REQUIRE THE PRODUCTION OF RECORDS.—The 
Inspector General of an executive agency appointed under section 3 or 
8G of the Inspector General Act of 1978 (5 U.S.C. App.) or, on re-
quest of the head of an executive agency, the Director of the Defense 
Contract Audit Agency (or any successor agency) of the Department 
VerDate Nov 24 2008 
09:09 Feb 24, 2009
Jkt 079200
PO 00000
Frm 00153
Fmt 6652
Sfmt 6221
E:\BILLS\H1107.IH
H1107
cprice-sewell on PROD1PC72 with BILLS
154 
of Defense or the Inspector General of the General Services Adminis-
tration may require by subpoena the production of records of a con-
tractor, access to which is provided for that executive agency by sub-
section (b). 
(2) ENFORCEMENT OF SUBPOENA.—A subpoena under paragraph 
(1), in the case of contumacy or refusal to obey, is enforceable by order 
of an appropriate United States district court. 
(3) AUTHORITY NOT DELEGABLE.—The authority provided by para-
graph (1) may not be delegated. 
(4) REPORT.—In the year following a year in which authority pro-
vided in paragraph (1) is exercised for an executive agency, the head 
of the executive agency shall submit to the Committee on Homeland 
Security and Governmental Affairs of the Senate and the Committee 
on Oversight and Government Reform of the House of Representatives 
a report on the exercise of the authority during the preceding year and 
the reasons why the authority was exercised in any instance. 
(d) AUTHORITY OF COMPTROLLER GENERAL.— 
(1) IN GENERAL.—Except as provided in paragraph (2), each con-
tract awarded after using procedures other than sealed bid procedures 
shall provide that the Comptroller General and representatives of the 
Comptroller General may examine records of the contractor, or any of 
its subcontractors, that directly pertain to, and involve transactions re-
lating to, the contract or subcontract and to interview any current em-
ployee regarding the transactions. 
(2) EXCEPTION FOR FOREIGN CONTRACTOR OR SUBCONTRACTOR.— 
Paragraph (1) does not apply to a contract or subcontract with a for-
eign contractor or foreign subcontractor if the executive agency con-
cerned determines, with the concurrence of the Comptroller General or 
the designee of the Comptroller General, that applying paragraph (1) 
to the contract or subcontract would not be in the public interest. The 
concurrence of the Comptroller General or the designee is not required 
when— 
(A) the contractor or subcontractor is— 
(i) the government of a foreign country or an agency of 
that government; or 
(ii) precluded by the laws of the country involved from 
making its records available for examination; and 
(B) the executive agency determines, after taking into account 
the price and availability of the property and services from United 
States sources, that the public interest would be best served by not 
applying paragraph (1). 
VerDate Nov 24 2008 
09:09 Feb 24, 2009
Jkt 079200
PO 00000
Frm 00154
Fmt 6652
Sfmt 6221
E:\BILLS\H1107.IH
H1107
cprice-sewell on PROD1PC72 with BILLS
155 
(3) ADDITIONAL RECORDS NOT REQUIRED.—Paragraph (1) does not 
require a contractor or subcontractor to create or maintain a record 
that the contractor or subcontractor does not maintain in the ordinary 
course of business or pursuant to another law. 
(e) LIMITATION ON AUDITS RELATING TO INDIRECT COSTS.—An execu-
tive agency may not perform an audit of indirect costs under a contract, 
subcontract, or modification before or after entering into the contract, sub-
contract, or modification when the contracting officer determines that the 
objectives of the audit can reasonably be met by accepting the results of 
an audit that was conducted by another department or agency of the Fed-
eral Government within one year preceding the date of the contracting offi-
cer’s determination. 
(f) EXPIRATION OF AUTHORITY.—The authority of an executive agency 
under subsection (b) and the authority of the Comptroller General under 
subsection (d) shall expire 3 years after final payment under the contract 
or subcontract. 
(g) INAPPLICABILITY TO CERTAIN CONTRACTS.—This section does not 
apply to the following contracts: 
(1) Contracts for utility services at rates not exceeding those estab-
lished to apply uniformly to the public, plus any applicable reasonable 
connection charge. 
(2) A contract or subcontract that is not greater than the simplified 
acquisition threshold. 
(h) ELECTRONIC FORM ALLOWED.—This section does not preclude a con-
tractor from duplicating or storing original records in electronic form. 
(i) ORIGINAL RECORDS NOT REQUIRED.—An executive agency shall not 
require a contractor or subcontractor to provide original records in an audit 
carried out pursuant to this section if the contractor or subcontractor pro-
vides photographic or electronic images of the original records and meets 
the following requirements: 
(1) PRESERVATION PROCEDURES ESTABLISHED.—The contractor or 
subcontractor has established procedures to ensure that the imaging 
process preserves the integrity, reliability, and security of the original 
records. 
(2) INDEXING
SYSTEM
MAINTAINED.—The contractor or subcon-
tractor maintains an effective indexing system to permit timely and 
convenient access to the imaged records. 
(3) ORIGINAL
RECORDS
RETAINED.—The contractor or subcon-
tractor retains the original records for a minimum of one year after 
imaging to permit periodic validation of the imaging systems. 
VerDate Nov 24 2008 
09:09 Feb 24, 2009
Jkt 079200
PO 00000
Frm 00155
Fmt 6652
Sfmt 6221
E:\BILLS\H1107.IH
H1107
cprice-sewell on PROD1PC72 with BILLS
156 
§ 4707. Remission of liquidated damages 
When a contract made on behalf of the Federal Government by the head 
of a Federal agency, or by an authorized officer of the agency, includes a 
provision for liquidated damages for delay, the Secretary of the Treasury 
on recommendation of the head of the agency may remit any part of the 
damages as the Secretary of the Treasury believes is just and equitable. 
§ 4708. Payment of reimbursable indirect costs in cost-type 
research and development contracts with edu-
cational institutions 
A cost-type research and development contract (including a grant) with 
a university, college, or other educational institution may provide for pay-
ment of reimbursable indirect costs on the basis of predetermined fixed-per-
centage rates applied to the total of the reimbursable direct costs incurred 
or to an element of the total of the reimbursable direct costs incurred. 
§ 4709. Implementation of electronic commerce capability 
(a) ROLE OF HEAD OF EXECUTIVE AGENCY.—The head of each execu-
tive agency shall implement the electronic commerce capability required by 
section 2301 of this title. In implementing the capability, the head of an 
executive agency shall consult with the Administrator. 
(b) PROGRAM MANAGER.—The head of each executive agency shall des-
ignate a program manager to implement the electronic commerce capability 
for the agency. The program manager reports directly to an official at a 
level not lower than the senior procurement executive designated for the 
agency under section 1702(c) of this title. 
§ 4710. Limitations on tiering of subcontractors 
(a) DEFINITION.—In this section, the term ‘‘executive agency’’ has the 
same meaning given in section 133 of this title. 
(b) REGULATIONS.—For executive agencies other than the Department of 
Defense, the Federal Acquisition Regulation shall— 
(1) require contractors to minimize the excessive use of subcontrac-
tors, or of tiers of subcontractors, that add no or negligible value; and 
(2) ensure that neither a contractor nor a subcontractor receives in-
direct costs or profit on work performed by a lower-tier subcontractor 
to which the higher-tier contractor or subcontractor adds no or neg-
ligible value (but not to limit charges for indirect costs and profit based 
on the direct costs of managing lower-tier subcontracts). 
(c) COVERED CONTRACTS.—This section applies to any cost-reimburse-
ment type contract or task or delivery order in an amount greater than the 
simplified acquisition threshold (as defined by section 134 of this title). 
VerDate Nov 24 2008 
09:09 Feb 24, 2009
Jkt 079200
PO 00000
Frm 00156
Fmt 6652
Sfmt 6221
E:\BILLS\H1107.IH
H1107
cprice-sewell on PROD1PC72 with BILLS