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(9) Leases (i) when the rental is subject to adjustment (e.g., a change in the real estate taxes or service costs), or (ii) when the rental is dependent upon actual or estimated costs of construction, alteration, improvements, or repairs.
(b) In some of the contracts listed in paragraph (a) of this section, it may be appropriate to define the specific area of audit such as (1) the use or disposition of Government-furnished property, or (2) variable or other special features of the contract, e.g., price escalation and compliance with the price warranty or price reductions clauses. In these cases, the contract clause in § 5-63.104 may be appropriately modified with the concurrence of the Office of General Counsel or Regional Counsel and the Assistant Inspector General-Auditing, or the Field Audit Office, as appropriate.
(c) Inclusion of the contract clause in § 5-63.104 (whether or not modified) in contracts does not affect in any way the requirements for use of the Examination of Records clause permitting review of contractor books and records by the Comptroller General the clauses audit and records pertaining to the verification of cost or pricing data.
(d) A copy of each contract or modification of the types described in § 563.105-1(a) subject to audit shall be furnished to the Assistant Inspector General for Auditing (JA), General Services Administration, Washington, DC 20405, or to the Field Audit Office, as appropriate, simultaneously with distribution of other copies of the contract.
records of the Contractor involving transactions related to this contract or compliance with any clauses thereunder.
The Contractor further agrees to include in all his subcontracts hereunder a provision to the effect that the subcontractor agrees that the Administrator of General Services or any of his duly authorized representatives shall, until the expiration of 3 years after final payment under the subcontract, or of the time periods for the particular records specified in Part 1-20 of the Federal Procurement Regulations (41 CFR Part 120), whichever expires earlier, have access to and the right to examine any books, documents, papers, and records of such subcontractor, involving transactions related to the subcontract or compliance with any clauses thereunder. This term “subcontract” as used in this clause excludes (a) purchase orders not exceeding $10,000 and (b) subcontracts or purchase orders for public utility services at rates established for uniform applicability to the general public.
(End of Clause)
§ 5-63.105 Payments under contracts sub
ject to audit.
8 5-63.105-1 General.
(a) The contracting officer shall not approve the initial payment invoice or voucher until he has consulted with the Assistant Inspector General-Auditing, or the Field Audit Office regarding cost or other supporting data as required under:
(1) Cost-reimbursement type contracts;
(2) The cost-reimbursement portion of fixed-price type contracts;
(3) Time and materials or labor-hour contracts; or
(4) Fixed-price contracts providing for (i) progress payments based on costs, (ii) advance payments, (iii) guaranteed loans, or (iv) incentives or redetermination.
(b) The contracting officer shall not approve the final payment invoice or voucher for such contracts, nor for the final payment or settlement of other contracts subject to audit (see 563.103) prior to the (1) receipt and review of the contract audit report or (2) consultation with the Contract Audits Division or the Field Audit Office if no audit is to be conducted; provided, that this paragraph (b) shall not apply to fixed-price contracts with
85-63.104 Contract clause.
The following contract clause is prescribed for use as provided in § 563.103:
EXAMINATION OF RECORDS BY GSA The Contractor agrees that the Administrator of General Services or any of his duly authorized representatives shall, until the expiration of 3 years after final payment under this contract, or of the time periods for the particular records specified in Part 1-20 of the Federal Procurement Regulations (41 CFR Part 1-20), whichever expires earlier, have access to and the right to examine any books, documents, papers, and
escalation where no price revision (upward or downward) is to be made.
termine what further action should be taken regarding the items of cost in question. If the contracting officer disagrees with the auditor's recommendations, the contracting officer shall prepare a statement for the contract file to support and justify his decision and shall furnish the auditor with a copy of the statement.
8 5-63.105-2 Submission and processing of
invoices or vouchers. (a) Contractors shall be required to submit invoices or vouchers to the contracting officer. The processing of invoices or vouchers prior to payment for work or services rendered shall include a review by the contracting officer, or his designated representative, to determine that the nature of items and amounts claimed are in consonance with the contract terms, represent prudent business transactions, and are within any stipulated contractual limitations. The contracting officer must ensure that these payments are commensurate with physical and technical progress under the contract. If the contractor has not deducted from his claim amounts which are questionable or which are required to be withheld, the contracting officer shall make the required deduction, except as provided in § 5-63.105-3.
(b) Subject to the provisions of § 563.105-1, approval by the contracting officer of any payment, including any specific approval as to the nature or amount of the cost, shall be noted on (or attached to) the invoice or voucher. The invoice or voucher shall be forwarded to the appropriate accounting center and retained therein after certi. fication and scheduling for payment to a disbursing office. 8 5-63.105-3 Action upon receipt of an
audit report. Audit reports shall be furnished to the contracting officer, with a copy to the appropriate accounting center. Upon receipt of an audit report, the contracting officer shall, pursuant to contract terms, determine the allowability of all costs covered by audit, giving full consideration to the auditor's recommendations. When the contracting officer is in doubt or questions the recommendations of the auditor, deductions need not be made from invoices or vouchers for provisional payments. In these cases, the contracting officer shall confer with the auditor and other appropriate Government personnel (such price specialist or legal counsel) to de
8 5-63.105-4 Suspensions and disapprovals
of amounts claimed. The contracting officer shall notify the appropriate accounting center in writing when amounts claimed for payment are (a) suspended, (b) disapproved as not being allowable according to contract terms, or (c) not reasonably incident or allocable to performance of the contract. This notice by the contracting officer shall be the basis for the issuance by the accounting center of GSA Form 533, Administrative Difference Statement. A copy of GSA Form 533 shall be attached to each copy of the invoice or voucher from which the deduction has been made, including an explanation of the deduction. Control over the issuance of GSA Form 533 shall be maintained by the accounting center.
§ 5-63.106 Additional internal controls.
As a supplement to the contractual right to audit contractor records in cost-reimbursement type, time and materials, labor-hour requirements and indefinite quantity (call-type) contracts, the contracting officer (with the assistance of the Assistant Inspector General-Auditing or the Field Audit Office) shall establish appropriate internal controls or procedures prior to the performance of those contracts with respect to any flexible or variable features. For example, if a time and materials or labor-hour contract is performed (on a Government facility or elsewhere) subject to observation or overall supervision by Government personnel (see § 1-3.406-1(b)), approval of time records may be provided for as incidental to the Government supervision. Any reasonable and reliable method or procedure may be established to account for such matters as the time spent on the job and materials or supplies received which
quate justification for such a waiver (see $ $ 1-3.801-3 and 1-3.809).
will assist the contract auditor and the contracting officer to determine the correctness of the charges to the contract.
8 5-63.107 Limitation.
The contracting officer and the Assistant Inspector General-Auditing, the Director, Field Audit Office, may agree to limit the application of specific contract audit requirements in individual cases, i.e., when the possible cost-benefits of the audit do not warrant the assignment of audit resources or when audit resources are unavailable; provided, that the stated urgency of a proposed procurement or other contract action alone shall not be ade
8 5-63.108 Releasing or withholding of
audit reports. The Freedom of Information Act generally requires the disclosure of Government records subject to certain exceptions. It may be to the benefit or detriment of the Government to release contract audit reports or portions of them depending upon the circumstances. However, because of the complexity of the matter, contracting officers shall consult with both the Assistant Inspector General-Auditing and the Office of General Counsel, prior to the release or withholding of such information.