H. R. 1107—123 
(e) LIMITATION ON AUDITS RELATING TO INDIRECT COSTS.—An 
executive agency may not perform an audit of indirect costs under 
a contract, subcontract, or modification before or after entering 
into the contract, subcontract, 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 Federal Government within 
one year preceding the date of the contracting officer’s determina-
tion. 
(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 pay-
ment 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 
established 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 contractor 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 provides 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 sys-
tems. 
§ 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 payment of reimbursable indirect costs on the basis 
of predetermined fixed-percentage rates applied to the total of the 
reimbursable direct costs incurred or to an element of the total 
of the reimbursable direct costs incurred.
H. R. 1107—124 
§ 4709. Implementation of electronic commerce capability 
(a) ROLE OF HEAD OF EXECUTIVE AGENCY.—The head of each 
executive agency shall implement the electronic commerce capa-
bility 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 
designate 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 Depart-
ment of Defense, the Federal Acquisition Regulation shall— 
(1) require contractors to minimize the excessive use of sub-
contractors, or of tiers of subcontractors, that add no or neg-
ligible value; and 
(2) ensure that neither a contractor nor a subcontractor 
receives indirect costs or profit on work performed by a lower- 
tier subcontractor to which the higher-tier contractor or subcon-
tractor adds no or negligible value (but not to limit charges 
for indirect costs and profit based on the direct costs of man-
aging lower-tier subcontracts). 
(c) COVERED CONTRACTS.—This section applies to any cost- 
reimbursement type contract or task or delivery order in an amount 
greater than the simplified acquisition threshold (as defined by 
section 134 of this title). 
(d) RULE OF CONSTRUCTION.—Nothing in this section shall be 
construed as limiting the ability of the Department of Defense 
to implement more restrictive limitations on the tiering of sub-
contractors. 
(e) APPLICABILITY.—The Department of Defense shall continue 
to be subject to guidance on limitations on tiering of subcontractors 
issued by the Department of Defense pursuant to section 852 of 
the John Warner National Defense Authorization Act for Fiscal 
Year 2007 (Public Law 109–364, 10 U.S.C. 2324 note). 
§ 4711. Linking of award and incentive fees to acquisition 
outcomes 
(a) DEFINITION.—In this section, the term ‘‘executive agency’’ has 
the same meaning given in section 133 of this title. 
(b) GUIDANCE FOR EXECUTIVE AGENCIES ON LINKING OF AWARD 
AND INCENTIVE FEES
TO ACQUISITION OUTCOMES.—The Federal 
Acquisition Regulation shall provide executive agencies other than 
the Department of Defense with instructions, including definitions, 
on the appropriate use of award and incentive fees in Federal 
acquisition programs. 
(c) ELEMENTS.—The regulations under subsection (b) shall— 
(1) ensure that all new contracts using award fees link the 
fees to acquisition outcomes (which shall be defined in terms 
of program cost, schedule, and performance);