(a) Submit to the cognizant Contracting Officer a description of the accounting change and the general dollar magnitude of the change to reflect the sum of all increases and the sum of all decreases for all contracts containing the Cost Accounting Standards clause or the Disclosure and Consistency of Cost Accounting Practices

clause:

(1) For any change in cost accounting practices required to comply with a new cost accounting standard in accordance with paragraph (a)(3) and (a)(4)(A) of the Cost Accounting Standards clause within 60 days (or such other date as may be mutually agreed to) after award of a contract requiring such change;

(2) For any change to cost accounting practices proposed in accordance with paragraphs (a)(4)(B), (a)(4)(C) of the Cost Accounting Standards clause or with paragraph (a)(3) or (a)(5) of the Disclosure and Consistency of Cost Accounting Practices clause not less than 60 days (or such other date as may be mutually agreed to) prior to the effective date of the Proposed change;

or

(3) For any failure to comply with an applicable Cost Accounting Standard or to follow a disclosed practice as contemplated by paragraph (a)(5) of the Cost Accounting Standards clause or with paragraph (a)(4) of the Disclosure and Consistency of Cost Accounting Practices clause within 60 days (or such other date as may be mutually agreed to) after the date of agreement of such noncompliance by the Contractor.

(b) Submit a cost impact proposal in the form and manner specified by the cognizant Contracting Officer within sixty (60) days (or such other date as may be mutually agreed to) after the date of determination of the adequacy and compliance of a change submitted pursuant to (a) (1), (2), or (3), above.

(c) Agree to appropriate contract and subcontract amendments to reflect adjustments established in accordance with paragraphs (a)(4) and (a)(5) of the Cost Accounting Standards clause or with paragraphs (a)(3), (a)(4), or (a)(5) of the Disclosure and Consistency of Cost Accounting Practices clause.

(d) When the subcontract is subject to either the Cost Accounting Standards clause or the Disclosure and Consistency of Cost Accounting Practice clause so state in the body of the subcontract and/or in the letter of award. Self-deleting clauses shall not be used.

(e) Include the substance of this clause in all negotiated subcontracts containing either the Cost Accounting Standards clause or the Disclosure and Consistency of Cost Accounting Practices clause. In addition, include a provision in these subcontracts which will require such subcontrac

tors, within 30 days after receipt of award (or such other date as may be mutually agreed to) to submit the following information to the Contract Administration Office Cognizant of the subcontractor's facility.

(1) Subcontractor's name and subcontract number.

(2) Dollar amount and date of award.

(3) Name of Contractor making the award. (4) A statement as to whether the subcontractor has made or proposes to make any changes to accounting practices that affect prime contracts or subcontracts containing the Cost Accounting Standards clause or Disclosure and Consistency of Cost Accounting Practices clause unless such changes have already been reported. If award of the subcontract results in making a cost accounting standard(s) effective for the first time, this shall also be reported.

(f) For negotiated subcontracts containing the Cost Accounting Standards clause, require the subcontractor to comply with all 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.

(g) In the event an adjustment is required to be made to any subcontract hereunder, notify the Contracting Officer in writing of such adjustment and agree to an adjustment in the price or estimated cost and fee of this contract, as appropriate, based upon the adjustment established under the subcontract. Such notice shall be given within 30 days after receipt of the proposed subcontract adjustment, and shall include a proposal for adjustment to such higher tier subcontract or prime contract as appropri

ate.

(h) When either the Cost Accounting Standards clause or the Disclosure and Consistency of Cost Accounting Practices clause and this clause are included in subcontracts, the term "Contracting Officer" shall be suitably altered to identify the purchaser.

(End of Clause)

[39 FR 43058, Dec. 10, 1974, as amended at 40 FR 18786, Apr. 30, 1975. Redesignated and amended at 40 FR 60022, Dec. 31, 1975; 43 FR 14115, Apr. 4, 1978; 43 FR 21039, May 16, 1978]

§ 1-3.1204-2 Nondefense contract clauses. (a) Full contract coverage clause.1 COST ACCOUNTING STANDARDS-NONDEFENSE

CONTRACT

(a) Unless the Administrator of General Services has prescribed rules or regulations

For a document relating to this section, see Appendix-Temporary Regulations, appearing 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 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 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 performance 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 Ac

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 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 inIclude 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 accounting 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]

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]

§ 1-3.1205 Review of prime contractor Disclosure Statements and changed practices.1

(a) Contracting officer and auditor support responsibility. When the Department of Defense (DOD) has contract 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.

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 officer. 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

cordance with § 1-3.1207(b) may be required. Noncompliance with Part 1-15 or Section XV shall be processed separately in accordance with normal administrative practices.

(d) Review of changed practices. (1) When a change to disclosed practices is proposed or required, a description of the changed practices shall be distributed in accordance with § 13.1203(c). The cognizant contract auditor shall review the changed practices for adequacy and compliance (as defined in (b) and (c) of this section) concurrently. Upon completion of the review, the results shall be reported to the cognizant contracting officer. When the cognizant contracting officer determines that the changed practices are adequate and in compliance, he shall so notify the contractor and send a copy of the notification to the auditor.

(2) When the cognizant contracting officer determines that the description of the changed practices is not adequate, or the changed practices are not in compliance, he shall identify the deficiencies and so notify the contractor and send a copy of the notification to the auditor. This notice shall require the contractor to advise the cognizant contracting officer and the auditor of the corrective action taken or to be taken. Resubmission of the changed practices will be required. If the contractor has submitted an adequate description of the changed practices but these practices are determined to be in noncompliance and the contractor does not agree, the cognizant contracting officer shall issue an adequacy determination with the stipulation that if those changed practices are implemented for the purpose of pricing or costing Government contracts, the contractor shall be considered in noncompliance and the cognizant contracting officer shall take action in accordance with § 1-3.1212.

(3) When a change to established, but not disclosed, practices is proposed or required, it shall be processed in accordance with paragraph (d) (1) and (2) of this section except that no submission is required to be made to the Cost Accounting Standards Board.

[39 FR 43058, Dec. 10, 1974, as amended at 40 FR 60022, Dec. 31, 1975; 41 FR 47238, Oct. 28, 1976; 43 FR 14118, Apr. 4, 1978]

§ 1-3.1206 Administration of CAS requirements on subcontracts.'

(a) The prime contractor or higher tier subcontractor is responsible for administering the CAS requirements contained in the subcontracts awarded. However, in recognition of the protections provided to subcontractors by the CAS clauses, subcontractor CAS reviews will often be performed by the Government.

(1) If the subcontractor has previously furnished a Disclosure Statement to a cognizant contracting officer (ACO), the subcontractor may satisfy the requirement for submission by identifying to the prime contractor or higher tier subcontractor the cognizant contracting officer (ACO) to whom it was submitted. Disclosure Statement submissions are not required in connection with the award of nondefense subcontracts.

(2) If the subcontractor considers his Disclosure Statement to contain privileged or confidential information, he may submit the statement directly to his cognizant contracting officer (ACO) and auditor and notify the prime contractor or higher tier subcontractor as provided in (1), above. In such cases a preaward determination of adequacy is not required. Instead, the contracting officer (ACO) cognizant of the subcontractor shall notify the contract auditor that the review for adequacy as well as compliance will be performed during the postaward review conducted to ensure that the subcontractor has complied with his disclosed practices, CAS, and the cost principles, as applicable in Section XV of the ASPR or Part 1-15 of the FPR. After adequacy review, the contracting officer (ACO) cognizant of the subcontractor shall notify the following of the findings: the subcontractor; the prime or higher tier subcontractor; and the contracting officer (ACO) cognizant of the prime or higher tier subcontractor.

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