H. R. 1107—22 
(ii) would not otherwise be subject to the cost 
accounting standards under this section. 
(B) IN EXCEPTIONAL CIRCUMSTANCES.—The head of an 
executive agency may waive the applicability of the cost 
accounting standards for a contract or subcontract under 
exceptional circumstances when necessary to meet the 
needs of the agency. A determination to waive the applica-
bility 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 subparagraph (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 
INTERPRETATIONS.—Before prescribing cost accounting standards 
and interpretations, the Board shall— 
(1) take into account, after consultation and discussions with 
the Comptroller General, professional accounting organizations, 
contractors, and other interested parties— 
(A) the probable costs of implementation, including any 
inflationary effects, compared to the probable benefits; 
(B) the advantages, disadvantages, and improvements 
anticipated in the pricing and administration of, and settle-
ment of disputes concerning, contracts; and 
(C) the scope of, and alternatives available to, the action 
proposed 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 pre-
pared under paragraph (2); 
(B) provide all parties affected at least 60 days after publica-
tion 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 stand-
ards, 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 determine implementation dates for 
contractors and subcontractors. The dates may not be later than
H. R. 1107—23 
the beginning of the second fiscal year of the contractor or subcon-
tractor 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 regu-
lations for the implementation of cost accounting standards pre-
scribed or interpreted under this section. The regulations shall 
be incorporated into the Federal Acquisition Regulation and shall 
require contractors and subcontractors 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 increased costs paid to the contractor or subcontractor 
by the Federal Government because of a change in the contrac-
tor’s or subcontractor’s cost accounting practices or a failure 
by the contractor or subcontractor to comply with applicable 
cost accounting standards. 
(g) NONAPPLICABILITY OF CERTAIN SECTIONS OF TITLE 5.—Func-
tions exercised under this chapter are not subject to sections 551, 
553 to 559, and 701 to 706 of title 5. 
§ 1503. Contract price adjustment 
(a) DISAGREEMENT CONSTITUTES
A DISPUTE.—If the Federal 
Government and a contractor or subcontractor fail to agree on 
a contract price adjustment, including whether the contractor or 
subcontractor has complied with the applicable cost accounting 
standards, the disagreement will constitute a dispute under chapter 
71 of this title. 
(b) AMOUNT OF ADJUSTMENT.—A contract price adjustment under-
taken under section 1502(f)(2) of this title shall be made, where 
applicable, on relevant contracts between the Federal Government 
and the contractor that are subject to the cost accounting standards 
so as to protect the Federal Government from payment, in the 
aggregate, of increased costs, as defined by the Cost Accounting 
Standards Board. The Federal Government may not recover costs 
greater than the aggregate increased cost to the Federal Govern-
ment, as defined by the Board, on the relevant contracts subject 
to the price adjustment unless the contractor made a change in 
its cost accounting practices of which it was aware or should have 
been aware at the time of the price negotiation and which it 
failed to disclose to the Federal Government. 
(c) INTEREST.—The interest rate applicable to a contract price 
adjustment is the annual rate of interest established under section 
6621 of the Internal Revenue Code of 1986 (26 U.S.C. 6621) for 
the period. Interest accrues from the time payments of the increased 
costs were made to the contractor or subcontractor to the time 
the Federal Government receives full compensation for the price 
adjustment. 
§ 1504. Effect on other standards and regulations 
(a) PREVIOUSLY EXISTING STANDARDS.—All cost accounting stand-
ards, waivers, exemptions, interpretations, modifications, rules, and 
regulations prescribed by the Cost Accounting Standards Board