HR 1107 RH 
(B) establish procedures for the waiver of the requirements of 
this chapter for individual contracts and subcontracts. 
(3) WAIVER BY HEAD OF EXECUTIVE AGENCY.— 
(A) IN GENERAL.—The head of an executive agency may waive 
the applicability of the cost accounting standards for a contract 
or subcontract with a value of less than $15,000,000 if that offi-
cial determines in writing that the segment of the contractor or 
subcontractor that will perform the work— 
(i) is primarily engaged in the sale of commercial items; 
and 
(ii) would not otherwise be subject to the cost accounting 
standards under this section. 
(B) IN EXCEPTIONAL CIRCUMSTANCES.—The head of an execu-
tive agency may waive the applicability of the cost accounting 
standards for a contract or subcontract under exceptional cir-
cumstances when necessary to meet the needs of the agency. A de-
termination to waive the applicability of the standards under this 
subparagraph shall be set forth in writing and shall include a 
statement of the circumstances justifying the waiver. 
(C) RESTRICTION ON DELEGATION OF AUTHORITY.—The head 
of an executive agency may not delegate the authority under sub-
paragraph (A) or (B) to an official in the executive agency below 
the senior policymaking level in the executive agency. 
(D) CONTENTS OF FEDERAL ACQUISITION REGULATION.—The 
Federal Acquisition Regulation shall include— 
(i) criteria for selecting an official to be delegated authority 
to grant waivers under subparagraph (A) or (B); and 
(ii) the specific circumstances under which the waiver may 
be granted. 
(E) REPORT.—The head of each executive agency shall report 
the waivers granted under subparagraphs (A) and (B) for that 
agency to the Board on an annual basis. 
(c) REQUIRED BOARD ACTION FOR PRESCRIBING STANDARDS AND IN-
TERPRETATIONS.—Before prescribing cost accounting standards and inter-
pretations, the Board shall— 
(1) take into account, after consultation and discussions with the 
Comptroller General, professional accounting organizations, contrac-
tors, and other interested parties— 
(A) the probable costs of implementation, including any infla-
tionary effects, compared to the probable benefits; 
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(B) the advantages, disadvantages, and improvements antici-
pated in the pricing and administration of, and settlement of dis-
putes concerning, contracts; and 
(C) the scope of, and alternatives available to, the action pro-
posed to be taken; 
(2) prepare and publish a report in the Federal Register on the 
issues reviewed under paragraph (1); 
(3)(A) publish an advanced notice of proposed rulemaking in the 
Federal Register to solicit comments on the report prepared under 
paragraph (2); 
(B) provide all parties affected at least 60 days after publication to 
submit their views and comments; and 
(C) during the 60-day period, consult with the Comptroller General 
and consider any recommendation the Comptroller General may make; 
and 
(4) publish a notice of proposed rulemaking in the Federal Register 
and provide all parties affected at least 60 days after publication to 
submit their views and comments. 
(d) EFFECTIVE DATES.—Rules, regulations, cost accounting standards, 
and modifications thereof prescribed or amended under this chapter shall 
have the full force and effect of law, and shall become effective within 120 
days after publication in the Federal Register in final form, unless the 
Board determines that a longer period is necessary. The Board shall deter-
mine implementation dates for contractors and subcontractors. The dates 
may not be later than the beginning of the second fiscal year of the con-
tractor or subcontractor after the standard becomes effective. 
(e) ACCOMPANYING
MATERIAL.—Rules, regulations, cost accounting 
standards, and modifications thereof prescribed or amended under this 
chapter shall be accompanied by prefatory comments and by illustrations, 
if necessary. 
(f) IMPLEMENTING REGULATIONS.—The Board shall prescribe regula-
tions for the implementation of cost accounting standards prescribed or in-
terpreted under this section. The regulations shall be incorporated into the 
Federal Acquisition Regulation and shall require contractors and sub-
contractors as a condition of contracting with the Federal Government to— 
(1) disclose in writing their cost accounting practices, including 
methods of distinguishing direct costs from indirect costs and the basis 
used for allocating indirect costs; and 
(2) agree to a contract price adjustment, with interest, for any in-
creased costs paid to the contractor or subcontractor by the Federal 
Government because of a change in the contractor’s or subcontractor’s 
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