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these promulgations are required to be included in major negotiated defense contracts.

The major promulgations of the Board are listed in Appendix A to this statement. In addition, there are presently many projects in various stages of research and development which we expect will culminate in Cost Accounting Standards or regulations. A brief description of these projects is included in Appendix B to this statement. The Board continually evaluates its promulgations for the purpose of determining their effectiveness and what additional Standards are required.

The Board also has designed a Disclosure Statement of cost accounting practices which contractors must submit to the Government as a condition of contracting. These Disclosure Statements require major defense contractors to describe cost accounting practices they will follow for negotiated defense contracts. The disclosure requirement is now applicable to each contractor who receives in any one year negotiated defense prime and subcontract awards in excess of $10 million.

As of September 30, 1978, the Board has received copies of 1,617 Disclosure Statements from 261 companies. These Disclosure Statements facilitate the negotiation, audit, and settlement of contracts. In addition, the Board has established a computerized data bank into which are placed the responses contained in every Disclosure Statement received. We have the capacity to provide aggregate data with respect to any question or combination of questions covered by the Disclosure Statements. This data bank is of considerable assistance to the Board in its research into possible Standards. Much of this information is available to the public in aggregate form.

The task of issuing sound, fair Cost Accounting Standards is exceedingly complex. To assist the Board in achieving its objectives, the Board has continued its policy of seeking the cooperation of all those who have an interest in its work. The Board has established active, open consultations with representatives of all groups, including Government agencies, professional and industry associations, the academic community, and representatives of individual companies. There are now more than 1,400 organizations and individuals to whom Board proposals are regularly mailed during the course of the Board's research. These organizations and individuals generally have provided constructive comments on Board materials.

Recognizing that training on Board regulations and newly issued Standards could materially assist both industry and Government, the Board has been actively participating in established training programs of the Government and professional accounting and legal associations. In addition, Board Members and staff speak to interested groups and participate in panels, conferences, and the like which are sponsored by accounting or legal professional associations or by industry associations. These occasions have afforded opportunities to provide interested parties with information about the Board and also to answer questions and to discuss concerns about the Board's Standards and regulations. The Board pays all travel and living expenses in accordance with the standardized travel regulations whenever Board and staff members attend out-of-town business meetings. The Board has also worked cooperatively with Federal agencies in the development of regulations implementing Cost Accounting Standards and

pertinent Board rules and regulations. The Board sponsored establishment of an Interagency Advisory Committee to which procurement and finance representatives of DOD, DOE, NASA, GSA, HEW and DOT are appointed. This committee meets from time to time to discuss problems of common interest concerning the Board's regulations and Cost Accounting Standards and to discuss ways whereby uniform action can be taken by all Executive Branch agencies on such matters. The Administrator of the Office of Federal Procurement Policy is Chairman of this Committee.

During the past year, the Board undertook a study of the application of its Standards to contracts awarded to foreign governments and foreign concerns for performance substantially outside of the United States. There has been an increasing number of such contracts under the national defense policy of co-production with NATO countries. The Board discussed foreign accounting practices and the application of the Board's Standards with representatives of a number of foreign countries, particularly with those involved in the F-16 co-production program and with the Government of the Federal Republic of Germany. After considering the information developed during those discussions, as well as comments received in response to a proposed exemption from most Standards for contracts with foreign concerns, the Board established an exemption from its rules, regulations and Standards for contracts and subcontracts awarded to foreign governments and their agencies and instrumentalities, and from Standard 403 and subsequent Standards for contracts and subcontracts awarded to foreign concerns. This exemption became effective on November 3, 1978.

Standards.

The Board receives annual reports from Federal agencies which use The reports have provided an opportunity for agencies to comment on their experience in the use of Standards and Board regulations. The agencies have reported the following improvements in contract negotiation and administration because of Board promulgations:

1. More detailed and accurate data are being submitted in contractors' proposals, thereby increasing confidence in the accuracy of the proposals.

2. There is greater visibility of cost and pricing data in cost proposals.

3. The Disclosure Statement requirements and issued Standards have provided increased awareness of the contractors' cost accounting and estimating practices.

Agencies also reported recoveries of costs as a result of application of Standards, rules and regulations. The recoveries resulted from:

1. Adjustments to contracts because of changes in cost accounting practices initiated by contractors.

2. Determinations of noncompliance with Standards.

3. Reductions in contractors' proposals.

4.

Decreases through equitable adjustments to existing contracts because of the application of new Cost Accounting Standards.

Turning now to our request for appropriations, our budget estimate

of $1,800,000 for Fiscal Year 1980 will be allocated as follows:

$1,352,000 for salaries and related benefits of the members of
the Board, permanent professional staff, part-time consulting
assistants, and supportive clerical staff. This estimate covers
the salary costs for 35 permanent positions for Fiscal Year 1980,
the same number of positions as is estimated for Fiscal Year 1979.
The 35 positions include three Board members from outside the
Government. Three of the 32 staff positions are currently un-
filled. The $34,000 increase over the amount estimated for
Fiscal Year 1979 represents the continuing effect of the Federal
pay increase in October 1978.

$70,000 for travel of Board members and staff, the same as the
amount projected for Fiscal Year 1979. This travel estimate
reflects a continuing need for field work to perform research
and development of possible Cost Accounting Standards. We must
travel to obtain on-site information at contractors' offices and
plants regarding cost accounting practices if we are to assure
that Standards give due consideration to the requirements and
views of contractors, as well as those of the Government.

$188,000 for contractual services, computer services and reim-
bursement to other Government agencies for administrative and
personnel services; this is a slight increase over the amount
projected for these services in Fiscal Year 1979.

$190,000 for costs of space and services furnished by GSA, communications, utilities, printing and reproduction, supplies, materials, and equipment, which is a $5,000 increase over the amount projected for Fiscal Year 1979.

This statement covers, in general, a summary of the Board's activities and our budget estimate for Fiscal Year 1980. I will be glad to answer any of your questions.

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