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(a) Submit to the cognizant Contracting tors, within 30 days after receipt of award Officer a description of the accounting (or such other date as may be mutually change and the general dollar magnitude of agreed to) to submit the following informathe change to reflect the sum of all in- tion to the Contract Administration Office creases and the sum of all decreases for all Cognizant of the subcontractor's facility. contracts containing the Cost Accounting (1) Subcontractor's name and subcontract Standards clause or the Disclosure and Con- number. sistency of Cost Accounting Practices (2) Dollar amount and date of award. clause:

(3) Name of Contractor making the award. (1) For any change in cost accounting (4) A statement as to whether the subconpractices required to comply with a new cost tractor has made or proposes to make any accounting standard in accordance with changes to accounting practices that affect paragraph (a)(3) and (a)(4)(A) of the Cost prime contracts or subcontracts containing Accounting Standards clause within 60 days the Cost Accounting Standards clause or (or such other date as may be mutually Disclosure and Consistency of Cost Accountagreed to) after award of a contract requir ing Practices clause unless such changes ing such change;

have already been reported. If award of the (2) For any change to cost accounting subcontract results in making a cost acpractices proposed in accordance with para counting standard(s) effective for the first graphs (a)(4)(B), (a)(4)(C) of the Cost Ac- time, this shall also be reported. counting Standards clause or with para. (f) For negotiated subcontracts containing graph (a)(3) or (a)(5) of the Disclosure and the Cost Accounting Standards clause, reConsistency of Cost Accounting Practices quire the subcontractor to comply with all clause not less than 60 days (or such other Standards in effect on the date of final date as may be mutually agreed to) prior to agreement on price as shown on the subconthe effective date of the Proposed change; tractor's signed Certificate of Current Cost or

or Pricing Data or date of award, whichever (3) For any failure to comply with an ap is earlier. plicable Cost Accounting Standard or to (g) In the event an adjustment is required follow a disclosed practice as contemplated to be made to any subcontract hereunder, by paragraph (a)(5) of the Cost Accounting notify the Contracting Officer in writing of Standards clause or with paragraph (a)(4) such adjustment and agree to an adjustof the Disclosure and Consistency of Costment in the price or estimated cost and fee Accounting Practices clause within 60 days of this contract, as appropriate, based upon (or such other date as may be mutually the adjustment established under the subagreed to) after the date of agreement of contract. Such notice shall be given within such noncompliance by the Contractor.

30 days after receipt of the proposed sub(b) Submit a cost impact proposal in the contract adjustment, and shall include a form and manner specified by the cognizant proposal for adjustment to such higher tier Contracting Officer within sixty (60) days subcontract or prime contract as appropri(or such other date as may be mutually ate. agreed to) after the date of determination (h) When either the Cost Accounting of the adequacy and compliance of a change Standards clause or the Disclosure and Consubmitted pursuant to (a) (1), (2), or (3), sistency of Cost Accounting Practices clause above.

and this clause are included in subcontracts, (c) Agree to appropriate contract and sub- the term "Contracting Officer" shall be contract amendments to reflect adjustments suitably altered to identify the purchaser. established in accordance with paragraphs (a)(4) and (a)(5) of the Cost Accounting

(End of Clause) Standards clause or with paragraphs (a)(3), (39 FR 43058, Dec. 10, 1974, as amended at (a)(4), or (a)(5) of the Disclosure and Con 40 FR 18786, Apr. 30, 1975. Redesignated sistency of Cost Accounting Practices and amended at 40 FR 60022, Dec. 31, 1975; clause.

43 FR 14115, Apr. 4, 1978; 43 FR 21039, May (d) When the subcontract is subject to 16, 1978) either the Cost Accounting Standards clause or the Disclosure and consistency of $ 1-3.1204-2 Nondefense contract clauses. Cost Accounting Practice clause so state in the body of the subcontract and/or in the

(a) Full contract coverage clause.' letter of award. Self-deleting clauses shall

Cost ACCOUNTING STANDARDS-NONDEFENSE not be used.

CONTRACT (e) Include the substance of this clause in all negotiated subcontracts containing

(a) Unless the Administrator of General either the Cost Accounting Standards Services has prescribed rules or regulations clause or the Disclosure and Consistency of Cost Accounting Practices clause. In addi For a document relating to this section, tion, include a provision in these subcon- see Appendix-Temporary Regulations, aptracts which will require such subcontrac pearing at the end of Chapter 1.

exempting the Contractor or this contract from standards, rules, and regulations promulgated by the Cost Accounting Standards Board, the Contractor, in connection with this contract, shall:

(1) Follow consistently the cost account ing practices established or disclosed as required by regulations of the Cost Account ing Standards Board and administered under the Administration of Cost Account ing Standards clause. If any change in disclosed practices is made for purposes of any contract or subcontract subject to those disclosure requirements, the change must be applied in a consistent manner to this contract.

(2) Comply with all cost accounting standards which the Contractor is required to comply with by reason of concurrent per formance of any contract or subcontract subject to the Cost Accounting Standards clause (4 CFR 331) and administered under the Administration of Cost Accounting Standards clause. The Contractor also shall comply with any cost accounting standard which hereafter becomes applicable to such a contract or subcontract. Such compliance shall be required prospectively from the date of applicability to such contract or subcontract. Compliance shall continue until the Contractor completes performance of work under this contract.

(3) Agree to an equitable adjustment (as provided in the Changes clause of this contract, if any) if the contract cost is affected by a change which, pursuant to (2) above, the Contractor is required to make to his established cost accounting practices whether such practices are covered by a Disclosure Statement or not.

(4) Negotiate with the Contracting Officer to determine the terms and conditions under which a change to either a disclosed cost accounting practice or an established cost accounting practice, other than a change under (a)(3) above or (a)(6) below, may be made. A change to a practice may be proposed by either the Government or the Contractor, Provided, however, That no agreement may be made under this provision that will increase costs paid by the United States.

(5) Agree to an adjustment of the contract price or cost allowance, as appropriate, if it or a subcontractor fails to con.ply with the applicable Cost Accounting Standards or to follow any practice disclosed or established pursuant to subparagraph (a)(1) or (a)(2) above and such failure results in any increased costs paid by the United States. Such adjustment shall provide for recovery of the increased costs to the United States together with interest thereon computed at the rate determined by the Secretary of the Treasury pursuant to Pub. L. 92-41 (50 U.S.C. App. 1215(b)(2)), or 7 percent per annum, whichever is less, from time the

payment by the United States was made to the time the adjustment is effected.

(6) Negotiate an equitable adjustment (as provided in the Changes clause of this contract, if any) when the parties agree to a change to either a disclosed cost accounting practice or an established cost accounting practice.

(b) The Contractor shall permit any authorized representatives of the head of the agency, of the Cost Accounting Standards Board, or of the Comptroller General of the United States to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause until the expiration of 3 years after final payment under this contract or such lesser time specified in the Federal Procurement Regulations (FPR) part 1-20.

(c) Unless a subcontract or Subcontractor is exempt under rules or regulations prescribed by the administrator of General Services, the Contractor: (1) shall include the substance of this clause including this paragraph (c) in all negotiated subcontracts under this contract with subcontractors that are currently performing a national defense contract or subcontract that contains the clause entitled to Cost Accounting Standards and that are currently required to accept the clause in applicable national defense awards, and (2) shall include the substance of the Consistency of Cost Accounting Practices--Nondefense Contract clause set forth $ 1-3.1204-2(b) of the FPR in negotiated subcontracts under this contract with all other subcontractors. The Contractor may elect to use the substance of the solicitation notice set forth in § 13.1203-2(b) of the FPR in his determination of applicability cost accounting standards to subcontracts.

(d) The terms defined in § 331.20 of Part 331 of Title 4, Code of Federal Regulations, shall have the same meaning herein. As there defined, “negotiated subcontract" means “any subcontract except a firm fixedprice subcontract made by a contractor or subcontractor after receiving offers from at least two firms not associated with each other or such contractor or subcontractor, providing (1) the solicitation to all competing firms is identical, (2) price is the only consideration in selecting the subcontractor from among the competing firms solicited, and (3) the lowest offer received in compliance with the solicitation from among those solicited is accepted.”

(e) The administration of this clause by the Government shall be accomplished in conjunction with the administration of the Contractor's national defense contracts and subcontracts subject to rules and regulations of the Cost Accounting Standards Board, pursuant to the Administration of Cost Accounting Standards clause. For the purposes of the Administration of Cost Accounting Standards clause contained in this contract, references to the Cost Accounting Standards clause shall be deemed to include this Cost Accounting Standards—Nondefense Contract clause and reference to the Disclosure and Consistency of Cost Accounting Practices clause shall be deemed to in clude the Consistency of Cost Accounting Practices-Nondefense Contract clause.

(b) Modified contract coverage clause.

CONSISTENCY OF COST ACCOUNTING

PRACTICES-NONDEFENSE CONTRACT (a) Unless the Administrator of General Services has prescribed rules or regulations exempting the Contractor or this contract from standards, rules, and regulations promulgated by the Cost Accounting Standards Board, the Contractor, in connection with this contract, shall:

(1) Comply with the requirements of 4 CFR Parts 401, Consistency in Estimating, Accumulating and Reporting Costs, and 402, Consistency in Allocating Costs Incurred for the Same Purpose, in effect on the date of award of this contract and administered under the Administration of Cost Accounting Standards clause. Compliance shall continue until the Contractor completes performance of work under this contract.

(2) Follow consistently the cost accounting practices established or disclosed as required by regulations of the Cost Accounting Standards Board and administered under the Administration of Cost Accounting Standards clause. If any change is made in established or in disclosed practices for purposes of any contract or subcontract subject to those disclosure requirements, the change must be applied in a consistent manner to this contract. A change to such practices may be proposed, however, by either the Government or the Contractor and the Contractor agrees to negotiate with the Contracting officer the terms and conditions s under which a change may be made. After the terms and Conditions under which the change is to be made have been agreed to the change must be applied prospectively to this contract. No agreement may be made under this provision that will increase costs paid by the United States.

(3) Agree to an adjustment of the contract price or cost allowance, as appropriate, if it or a subcontractor fails to comply with the applicable Cost Accounting Standards or to follow any practice disclosed or established pursuant to subpargraph (a)(2) above and such failure results in any increased costs paid by the United States. Such adjustment shall provide for recovery of the increased costs to the United States together with interest thereon computed at the rate determined by the Secretary of the Treasury pursuant to Pub. L. 92-41 (50 U.S.C. App.

1215(b)(2)), or 7 percent per annum, whichever is less from the time the payment by the United States was made to the time the adjustment is effected.

(4) Negotiate an equitable adjustment (as provided in the Changes clause of this contract, if any) when the parties agree to a change to either a disclosed cost accounting practice or an established cost accounting practice.

(b) The Contractor shall permit any authorized representatives of the head of the agency, of the Cost Accounting Standards Board, or of the Comptroller General of the United States to examine and make copies of any documents, papers, or records relating to compliance with the requirements of this clause until the expiration of 3 years after final payment under this contract or such lesser time specified in the Federal Procurement Regulations (FPR) Part 1-20.

(c) Unless a subcontract or Subcontractor is exempt under rules or regulations prescribed by the Administrator of General Services, the Contractor shall include the substance of this clause including this paragraph (c) in all negotiated subcontracts under this contract except that it shall include the substance of the cost Accounting Standards-Nondefense Contract clause set forth in $ 1-3.1204-2(a) of the FPR in negotiated subcontracts under this contract with subcontractors that are currently performing a national defense contract or subcontract that contains the clause entitled Cost Accounting Standards and that are currently required to accept that clause in aplicable negotiated national defense contracts. The Contractor may elect to use the substance of the solicitation notice set forth in $ 13.1203-2(b) of the FPR in his determination of applicability of cost accounting standards to subcontracts.

(d) The terms defined in 4 CFR 331.20 and 332.20 shall have the same meanings herein. As there defined, “negotiated subcontract" means “any subcontract except a firm fixedprice subcontract made by a contractor or subcontractor after receiving offers from at least two firms not associated with each other or such contractor or subcontractor, providing (1) the solicitation to all competing firms is identical, (2) price is the only consideration in selecting the subcontractor from among the competing firms solicited, and (3) the lowest offer received in compliance with the solicitation from among those solicited is accepted."

(e) The administration of this clause by the Government shall be accomplished in conjunction with the administration of the Contractor's national defense contracts and subcontracts, if any, subject to rules and regulations of the Cost Accounting Standards Board, pursuant to the Administration of Cost Accounting Standards clause. For the purposes of the Administration of Cost

Accounting Standards clause contained in this contract, references to the Disclosure and Consistency of Cost Accounting Practices clause shall be deemed to include this Consistency of Cost Accounting PracticesNondefense Contract clauses and references to the Cost Accounting Standards clauses shall be deemed to include the Cost ACcounting Standards—Nondefense Contract clause.

(c) Administration of cost account. ing standards clause. The clause set forth in § 1-3.1204-1(b) shall be used in nondefense contracts and subcontracts as well as in negotiated national defense contracts and subcontracts. (43 FR 14116, Apr. 4, 1978, as amended at 43 FR 21039, May 16, 1978)

§ 1-3.1204-3 National defense subcon

tracts. The Cost Accounting Standards clause in § 1-3.1204-1(a)(1) and the Administration of Cost Accounting Standards clause in § 1-3.1204-1(b) require contractors and subcontractors to flow-down the requirement to comply with cost accounting standards in effect on the date of final agreement on price as shown on the subcontractor's signed Certificate of Current Cost or Pricing Data or date of award, whichever is earlier, unless the subcontractor is exempt from CAS requirements or the subcontractor qualifies for and elects to comply with the modified contract coverage clause. (43 FR 21040, May 16, 1978)

Disclosure Statement submissions are not required in connection with the award of nondefense contracts.

(b) Determination of adequacy. The cognizant contract auditor shall perform an initial review of a Disclosure Statement to ascertain whether it adequately describes the offeror's cost accounting practices. In order to be deemed adequate, the Disclosure Statement must be current, accurate, and complete. Upon completion of this initial review the results shall be reported to the cognizant contracting of. ficer. When the cognizant contracting officer determines that adequate disclosure has not been made, he shall identify the areas of inadequacy and request a revised Disclosure Statement from the offeror and so advise the auditor and the procurement contracting officer. When the cognizant contracting officer determines that the Disclosure Statement is adequate, he shall notify the offeror in writing and send a copy to the auditor and the procurement contracting officer. Notification of adequacy or inadequacy shall normally be made within 30 days after receipt of a Disclosure Statement by the cognizant contracting officer. In addition, the notice shall state that a disclosed practice shall not, by virtue of such disclosure, be deemed to be a proper, approved, or agreed to practice for pricing proposals or accumulating and reporting contract performance cost data. The contact may be awarded when it is determined that an adequate disclosure has been made (see § 1-3.1203(b)).

(c) Determination of compliance. Subsequent to the issuance of the above notification, a more detailed review of the Disclosure Statement shall be made by the auditor to ascertain whether the disclosed practices are in compliance with Part 1-15 or ASPR Section XV, as applicable, and the Cost Accounting Standards. The auditor shall advise the cognizant contracting officer of his findings. The cognizant contracting officer shall take action regarding noncompliance with Cost Accounting Standards in accordance with $ 1-3.1212. A revised Disclosure Statement may be required. In addition, adjustment of the prime contract price or cost allowance in ac

81-3.1205 Review of prime contractor

Disclosure Statements and changed

practices.' (a) Contracting officer and auditor support responsibility. When the Department of Defense (DOD) has con tract administration cognizance of a contractor for CASB matters, required Disclosure Statements shall be reviewed by the cognizant administrative contracting officer and contract auditor for all Government agencies including, but not limited to, DOD NASA, DOE, and GSA (see § 1-3.1208 with respect to contract administration by other Government agencies).

'For a document relating to this section, see Appendix—Temporary Regulations, appearing at the end of Chapter 1.

cordance with § 1-3.1207(b) may be re- (39 FR 43058, Dec. 10, 1974, as amended at quired. Noncompliance with Part 1-15 40 FR 60022, Dec. 31, 1975; 41 FR 47238, or Section XV shall be processed sepa

Oct. 28, 1976; 43 FR 14118, Apr. 4, 1978) rately in accordance with normal ad

8 1-3.1206 Administration of CAS require. ministrative practices.

ments on subcontracts.' (d) Review of changed practices. (1) When a change to disclosed practices

(a) The prime contractor or higher is proposed or required, a description

tier subcontractor is responsible for of the changed practices shall be dis

administering the CAS requirements tributed in

contained in the subcontracts awardaccordance with $ 13.1203(c). The cognizant contract audi

ed. However, in recognition of the protor shall review the changed practices

tections provided to subcontractors by

the CAS clauses, subcontractor CAS for adequacy and compliance (as de

reviews will often be performed by the fined in (b) and (c) of this section)

Government. concurrently. Upon completion of the

(1) If the subcontractor has previ. review, the results shall be reported to

ously furnished a Disclosure Statethe cognizant contracting officer.

ment to a cognizant contracting offiWhen the cognizant contracting offi

cer (ACO), the subcontractor may satcer determines that the changed prac

isfy the requirement for submission by tices are adequate and in compliance,

identifying to the prime contractor or he shall so notify the contractor and

higher tier subcontractor the cognisend a copy of the notification to the

zant contracting officer (ACO) to auditor.

whom it was submitted. Disclosure (2) When the cognizant contracting Statement submissions are not reofficer determines that the description quired in connection with the award of of the changed practices is not ade- nondefense subcontracts. quate, or the changed practices are (2) If the subcontractor considers his not in compliance, he shall identify Disclosure Statement to contain privithe deficiencies and so notify the con leged or confidential information, he tractor and send a copy of the notifi- may submit the statement directly to cation to the auditor. This notice shall his cognizant contracting officer require the contractor to advise the (ACO) and auditor and notify the cognizant contracting officer and the prime contractor or higher tier subauditor of the corrective action taken contractor as provided in (1), above. In or to be taken. Resubmission of the such cases a preaward determination changed practices will be required. If of adequacy is not required. Instead, the contractor has submitted an ade the contracting officer (ACO) cogniquate description of the changed prac

zant of the subcontractor shall notify tices but these practices are deter

the contract auditor that the review mined to be in noncompliance and the

for adequacy as well as compliance will contractor does not agree, the cogni

be performed during the postaward

review conducted to ensure that the zant contracting officer shall issue an

subcontractor has complied with his adequacy determination with the stip

disclosed practices, CAS, and the cost ulation that if those changed practices

principles, as applicable in Section XV are implemented for the purpose of

of the ASPR or Part 1-15 of the FPR. pricing or costing Government con

After adequacy review, the contracting tracts, the contractor shall be consid

officer (ACO) cognizant of the subconered in noncompliance and the cogni

tractor shall notify the following of zant contracting officer shall take

the findings: the subcontractor; the action in accordance with § 1-3.1212.

prime or higher tier subcontractor; (3) When a change to established, and the contracting officer (ACO) cogbut not disclosed, practices is proposed

nizant of the prime or higher tier subor required, it shall be processed in ac

contractor. cordance with paragraph (d) (1) and (2) of this section except that no sub

For a document relating to this section, mission is required to be made to the see Appendix-Temporary Regulations, apCost Accounting Standards Board. pearing at the end of Chapter 1.

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