submission requirements under 4 CFR Part 351.

(b) National defense awards. The filing of disclosure statements by certain large business concerns is required in connection with the award of certain negotiated national defense contracts and subcontracts in accordance with CASB rules (see 4 CFR Part 351 et seq.). A summary of those rules follow:

(1) A disclosure statement, when required to be submitted, covers the practices of a company's profit centers, divisions, or similar organizational units whose costs are included in the total price of a negotiated national defense "covered" contract. The requirement extends to each corporate or group office whose costs are allocated to such performing units of the company.

(2) Any company, other than a small business concern, which received company-wide net awards of negotiated national defense prime contracts and subcontracts subject to cost accounting standards totaling more than $10 million in its most recent completed cost accounting period, must submit a disclosure statement within 90 days after the end of that period.

(3) Any company, other than a small business concern, that receives a negotiated national defense contract or subcontract award which is subject to cost accounting standards and is for $10 million or more must submit a completed disclosure statement as a condition of award.

(c) Preaward submission of disclosure statement(s). Each offeror submitting an offer which could result in a national defense CAS covered contract shall furnish copies of his disclosure statement(s) to the offices listed in paragraph (d) of this section concurrently with the submission of his proposal to the contracting officer except when the offeror has executed the certificate of monetary exemption, the certificate of interim exemption, or the certificate of previously submitted disclosure statement (see § 13.1203-(a)(1)). More than one disclosure statement may be required in connection with the award of a contract (see 4 CFR 351.40(a)). Award of a contract shall not be made until a de

termination has been made by the cognizant contracting officer (ACO) that a disclosure statement is adequate (see § 1-3.1205(b)) unless, in order to protect the interests of the Government, the contracting officer waives this requirement. In this event, a determination shall be made as soon as possible after the award.

(d) Distribution of disclosure statement(s). The offeror shall distribute his disclosure statement(s) as follows:

(1) Original and one copy to the cognizant contracting officer (Contract Administration Office (Attn: ACO), see DOD Directory of Contract Administration Components, DOD 4105.59H) unless otherwise specified in accordance with § 1-3.1208(c).

(2) One copy to the cognizant contract auditor; and

(3) One copy to the Cost Accounting Standards Board, 441 G Street NW., Washington, D.C. 20548, within 10 days after the determination of adequacy pursuant to § 1-3.1205(b).

(e) Postward submission of disclosure statement(s). Postward submission of disclosure statement(s) may be authorized only when the contracting officer has made a written determination that such authorization is essential: (i) To the national defense, (ii) because of the public exigency, or (iii) to avoid undue hardship. Each determination shall set forth facts which clearly support the determination to authorize postaward submission, and a copy of the determination shall be included in the contract file. Authorization issued pursuant to this paragraph shall specify the period of time, not to to exceed 90 days after contract award, within which disclosure must be made.

(f) Determination by agency head that it is impractical to secure disclosure statement(s). If the head of the agency (see § 1-1.204) or his designee; the cognizant Assistant Secretary for a Military Department; or the Director of the Defense Logistics Agency, the Defense Communications Agency, the Defense Nuclear Agency, or the Defense Mapping Agency determines that it is impractical to secure the disclosure statement(s) in accordance with the clause(s) in § 1-3.1204-1 and

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this Subpart 1-3.12 or ASPR 7104.83(a) and ASPR Part 12 of section III, he may authorize award of such contract without obtaining such statement(s). This authority shall not be delegated. He shall, within 30 days thereafter, submit a report to the Cost Accounting Standards Board, setting forth all material facts.

(g) Privileged and confidential information in disclosure statement(s). If the offeror or contractor notified the contracting officer that the disclosure statement contains trade secrets and commercial or financial information which is privileged and confidential, the disclosure statement will be protected and will not be released outside the Government (see paragraph (a)(1) of the cost accounting standards clause or paragraph (a)(2) of the disclosure and consistency of cost accounting practices clause).

(h) Amendment of disclosure statements. Amendments of a disclosure statement after contract award shall be processed in accordance with 4 CFR 351.120 and §§ 1-3.1205(d) and 13.1207. Normally the cognizant contracting officer should require resubmission of a complete, updated disclosure statement pursuant to 4 CFR 351.120 only when the number of amended pages or the nature of the amendments are so extensive that the review process would be substantially expedited as a result of the resubmission.

(i) Responsibility to maintain accuracy of disclosure statement(s). The contractor or subcontractor who has contracts containing either the cost accounting standards clause or the disclosure and consistency of cost accounting practices clause has a responsibility to maintain an accurate disclosure statements(s) and comply with those disclosed practices if: (1) He was awarded a negotiated national defense contract in his current cost accounting period of $10 million or more, or (2) he is, or is a part of, a company which, together with its subsidiaries, received net awards of negotiated national defense prime contracts and subcontracts subject to cost accounting standards totaling more than $10 million in his most recent completed cost accounting period. Should his obliga

tion to maintain the disclosure statement cease because he no longer meets or exceeds the financial thresholds, he will be required to follow consistently the disclosed practices for those contracts awarded during a period in which he was obligated to submit a disclosure statement(s). A change to such practices may be proposed by either the contractor or the Government and negotiated by the contractor and his CAS cognizant contracting officer.

[43 FR 14111, Apr. 4, 1978]

§ 1-3.1203-2 Applicability of cost accounting standards.1

(a) Small business concerns. All contracts and subcontracts with small business concerns are wholly exempt from cost accounting standards.

(b) National defense contracts with other than small business concerns. (1) The applicability of cost accounting standards to a negotiated national defense contract is implemented by incorporation of a clause in the contract as required by CASB rules, 4 CFR Part 331 or 332. These national defense CAS awards consist of the first negotiated national defense contract or subcontract of more than $500,000 received by a contractor business unit and subsequent negotiated national defense prime contracts and subcontracts of more than $100,000 received by that business unit. Whenever a business unit completes all contracts subject to a CAS clause required by CASB regulations, its obligation to follow CAS requirements ends and is not reinstated until it again receives an award in excess of $500,000. Award and sales data of the preceding cost accounting period are used to determine type of contract coverage for the current period. There are two types of CAS coverage: Full coverage under 4 CFR Part 331 and modified coverage under 4 CFR Part 332.

(2) Full coverage applies to contractor business units which: (i) Receive a national defense CAS award of $10 million or more, (ii) received national

1 See Temporary Regulation 44 published at 43 FR 14108, April 4, 1978, for temporary changes to § 1-3.1203-2.

defense CAS awards during the preceding cost accounting period of $10 million or more, or (iii) received national defense CAS awards during the preceding cost accounting period of less than $10 million but such CAS awards accounted for 10 percent or more of the business unit's sales for the preceding period. These dollar thresholds apply to contractor busi

ness

units, irrespective of companywide award dollar totals.

(3) Modified coverage applies to contractor business units which received national defense CAS awards during the preceding period of less than $10 million and such CAS awards accounted for less than 10 percent of the business unit's sales of the preceding period. Modified coverage requires the contractor to comply only with requirements of standard 401, consistency in estimating, accumulating, and reporting costs (4 CFR Part 401) and standard 402, consistency in allocating costs incurred for the same purpose (4 CFR Part 402).

(4) CAS coverage is extended to national defense subcontract awards under CAS covered contracts under the same provisions; thus, a subcontractor could be required to comply with full coverage even though the prime contractor is required to comply only with modified coverage.

(5) Certain exemptions and waivers to applicability of CAS standards, rules, and regulations apply to national defense contracts. Cost accounting standards are applicable to negotiated national defense contracts exceeding $100,000 except when:

(i) The price is: (A) Based on established catalog or market prices of commercial items sold in substantial quantities to the general public, or (B) set by law or regulation;

(ii) The contract is awarded to a small business concern;

(iii) The contract is to be executed and performed in its entirety outside the United States, its territories and possessions; or

(iv) The CASB has otherwise approved a waiver or exemption.

NOTE 1.-Under certain circumstances as prescribed in 4 CFR 331.30(b)(8), the CASB has provided an exemption for national defense contracts and subcontracts of $500,000

or less (see also paragraph (b)(1) of this § 13.1203-2). This exemption is also applicable to nondefense contract and subcontract awards.

NOTE 2.-Two blanket exemptions are applicable to national defense subcontracts under CAS covered contracts: (a) When the subcontract is awarded to a small business concern, and (b) when the subcontract is awarded on a firm, fixed-price basis after the contractor or subcontractor making the award received 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. These blanket exemptions are also applicable to nondefense subcontract awards.

(c) Nondefense contracts with other than small business concerns. (1) The applicability of cost accounting standards to a negotiated nondefense contract is implemented by a clause in the contract (substantially similar to the CASB clauses) as required by this Subpart 1-3.12. These nondefense CAS awards consist of the first negotiated nondefense contract or subcontract over $500,000 received by a contractor business unit in the event the business unit is not performing a CAS covered contract or subcontract. Otherwise, cost accounting standards are applicable to negotiated nondefense contracts and subcontracts over $100,000 received by that business unit. Whenever a contractor business unit completes the performance of all CAS covered contracts, the obligation to follow cost accounting standards ends and is not reinstated until it again receives an award in excess of $500,000. National defense CAS covered award and sales data of the preceding cost accounting period (normally, the contractor's fiscal year) for the business unit receiving the award are used to determine the type of contract coverage for the current period. Nondefense CAS covered award data is not used. There are two types of nondefense CAS coverage; namely full coverage and modified coverage.

(2) Full coverage applies to negotiated nondefense contracts and subcontracts of over $100,000 awarded to con

tractor business units which: (i) Are performing a national defense CAS covered award of $10 million or more, (ii) received national defense CAS covered awards during the preceding cost accounting period of $10 million or more, or (iii) received national defense CAS covered wards during the preceding cost accounting period of under $10 million but such CAS awards accounted for 10 percent or more of the business unit's sales for the preceding period. These national defense dollar thresholds apply to contractor business units, irrespective of companywide national defense award dollar totals (see § 1-3.1203-2(c)(4) for exemptions).

(3) Modified coverage applies to the first negotiated nondefense contract or subcontract over $500,000 received by a contractor business unit in the event the business unit is not performing a CAS covered contract or subcontract. Otherwise, cost accounting standards are applicable to negotiated nondefense contracts and subcontracts over $100,000 received by that business unit, unless full coverage in accordance with paragraph (2) of this § 13.1203-2(c) applies (see § 1-3.12032(c)(4) for exemptions).

(4) The exemptions and waivers which apply to national defense contracts and subcontracts with large business concerns also apply to nondefense contracts and subcontracts. These provisions are contained in paragraph (b)(5) of this § 1-3.1203-2. Deviations in subcontract flowdown requirements granted pursuant ASPR 3-1204.2(b) or § 1-3.1204-3(b) are also applicable to subcontracts under nondefense contracts. In addition to the exemptions and waivers in paragraphs (a) and (b)(5) of this § 13.1203-2, the following nondefense procurements are exempt:

to

(i) Contracts with educational institutions subject to Subpart 1-15.3;

(ii) Contracts with State and local Governments subject to Subpart 1

15.7;

(iii) Contracts with hospitals;

(iv) Firm fixed-price contracts to be awarded after receiving offers from at least two firms not associated with each other, providing that: (A) The solicitation to all competing firms is

identical, (B) price is the only consideration in selecting the contractor from among the competing firms solicited, (C) the lowest offer received in compliance with the solicitation from among those solicited is accepted, and (D) the profit center, division, or similar organizational unit of a company to which the contract is to be awarded is not on the date of such award performing under a CAS covered national defense contract or subcontract. Under (D), performance of a contract or subcontract extends from the date of award of a contract or subcontract to the date when the work required by the contract or subcontract is completed; and

(v) Contracts where a waiver under § 1-3.1211 has been approved or to the extent a modification or withdrawal under § 1-3.1218 is applicable.

NOTE.-FPR temporary regulations 40 and 43 are currently applicable in this regard. [43 FR 14111, Apr. 4, 1978]

§ 1-3.1203-3 Solicitation notices.1

(a) National defense contracts. (1) The notice entitled disclosure statement-cost accounting practices and certification in this § 1-3.1203–3(a)(1) shall be inserted in all national defense solicitations which are likely to result in the award of a negotiated contract exceeding $100,000 on and after March 10, 1978, except when the price is: (i) Based on established catalog or market prices of commercial items sold in substantial quantities to the general public, or (ii) set by law or regulation. The notice shall not be inserted if the solicitation is limited to small business concerns. The notice should also be excluded from solicitations sent to the Canadian Commercial Corp. or from solicitations which will result in contracts executed and performed in their entirety outside the United States, its territories and possessions.

1 See Temporary Regulation 44 published at 43 FR 14108, April 4, 1978, for temporary changes to § 1-3.1203-3.

DISCLOSURE STATEMENT-COST ACCOUNTING

PRACTICES AND CERTIFICATION

Any contract in excess of $100,000 resulting from this solicitation except: (i) When the price negotiated is based on: (A) Established catalog or market prices of commercial items sold in substantial quantities to the general public, or (B) prices set by law or regulation: (ii) contracts awarded to small business concerns (as defined in 1701.1 of the Armed Services procurement regulations or FPR § 1-1.701-1); or (iii) contracts which are otherwise exempt (see 4 CFR 331.30(b)) shall be subject to the requirements of the Cost Accounting Standards Board. Any offeror submitting a proposal, which, if accepted, will result in a contract subject to the requirements of the Cost Accounting Standards Board must, as a condition of contracting, submit a disclosure statement as required by regulations of the Board. The disclosure statement must be submitted as a part of the offeror's proposal under this solicitation (see (I), below) unless: (i) The offeror, together with all divisions, subsidiaries, and affiliates under common control, did not receive net awards exceeding the monetary exemption for disclosure as established by the Cost Accounting Standards Board (see (II), below); (ii) the offeror exceeded the monetary exemption in his cost accounting period immediately preceding the cost accounting period in which this proposal was submitted but, in accordance with the regulations of the Cost Accounting Standards Board, is not yet required to submit a disclosure statement (see (III), below); (iii) the offeror has already submitted a disclosure statement disclosing the practices used in connection with the pricing of this proposal (see (IV), below); or (iv) post-award submission has been authorized by the Contracting Officer. See 4 CFR 351.70 for submission of copy of disclosure statement to the Cost Accounting Standards Board.

CAUTION.-A practice disclosed in a disclosure statement 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.

Check the appropriate box below.

Name(s) and address(es) of cognizant ACO(s) where filed:

The offeror further certifies that practices used in estimating costs in pricing this proposal are consistent with the cost accounting practices disclosed in the disclosure statement(s).

II. Certificate of monetary exemption. The offeror hereby certified that he, together with all divisions, subsidiaries, and affiliates under common control, did not receive net awards of negotiated national defense prime contracts and subcontracts subject to cost accounting standards totaling more than $10 million in his cost accounting period immediately preceding the period in which this proposal was submitted. The offeror further certifies that if his status changes prior to an award resulting from this proposal he will advise the contracting officer immediately.

CAUTION.-Offerors who submitted a Disclosure Statement under the filing requirements previously established by the Cost Accounting Standards Board may claim this exemption only if the dollar volume of CAS covered national defense prime contract and subcontract awards in their preceding cost accounting period did not exceed the $10 million threshold and the amount of this award will be less than $10 million. Such offerors will continue to be responsible for maintaining the disclosure statement and following the disclosed practices on CAS covered prime contracts and subcontracts awarded during the period in which a disclosure statement was required.

III. Certificate of interim exemption. The offeror hereby certifies that: (i) He first exceeded the monetary exemption for disclosure, as defined in (II) above, in his cost accounting period immediately preceding the cost accounting period in which this proposal was submitted, and (ii) in accordance with the regulations of the Cost Accounting Standards Board (4 CFR 351.40(f)), he is not yet required to submit a disclosure statement. The offeror further certifies that if an award resulting from this proposal has not been made within 90 days after the end of that period, he will immediately submit a revised certificate to the contracting officer, in the form specified under (I), above or (IV), below, as appropriate, to verify his submission of a completed disclosure statement.

CAUTION.-Offerors may not claim this exemption if they are currently required to disclose because they were awarded a CAS covered national defense prime contract or subcontract of $10 million or more in the current cost accounting period. Further, the