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and should be modified to reflect any changed conditions during subsequent meetings. The schedule and resource limitations of participating organizations will be considered in preparing the annual plan.

The plan will identify the organizations having the primary responsibility for performing the reviews:

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(i) CAS will review the technical aspects of contractor operations requiring minimal or no access to contractors' financial and accounting records and will sign reports on these reviews.

(ii) DCAA will review the financial and accounting aspects of contractor operations requiring minimal or no technical considerations and will sign reports on these reviews.

(iii) CAS and DCAA will jointly perform reviews requiring significant CAS and DCA OCAA expertise. Reports resulting from these reviews

will be signed by the heads of the respective local organizations.

Some operations reviews such as the purchasing (CAS) and estimating system reviews (DCAA) are assigned to the responsible reviewing organization by ASPR. These assignments will continue to be recognized. All others will be performed according to the above criteria. The annual plan will be formally approved by both the head of the local CAS organization and the head of the local DCAA resident office.

(c) Joint Review

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(i) Objective. The objectives of joint CAS-DCAA auditor reviews of contractor operations are:

(1) To optimize the utilization of DCAA-CAS personnel in per

forming selected operations reviews.

(2) To generate joint reports of the reviews that contain findings, conclusions, and recommendations mutually agreed upon by the DCAA auditor and the CAS organization to improve the effectiveness and economy of contractor operations.

(ii) Exit Conference with Contractor. During the course of the review, there may be several informal briefings with contractor management personnel to exchange information. Every opportunity should be afforded each party, to either update the information provided or to conduct additional reviews to preclude misconceptions that could develop as a result of obtaining incomplete or inaccurate data. An exit conference with contractor management personnel provides the opportunity to explain CAS/ DCAA findings, conclusions and recommendations. On joint reviews, the ACO or his representative shall arrange the exit conference with the contractor which is consistent with the one face to industry concept. Both CAS and DCAA will be represented at the exit conference.

(d) Reports. All reports prepared separately or jointly by DCAA or CAS personnel will be forwarded through the ACO to the contractor. While these review - sports are advisory to the ACO, the ACO has responsi bility to assure that (1) appropriate recognition is given to the results of such reviews in any contract negotiations and (ii) that the contractor implements appropriate corrective actions. In event of any dispute with the contractor, the ACO has the ultimate responsibility and authority to effect

final settlement.

Case 74-99
Case 74-101

PROPOSED ASPR 7-203.XX.

7-203.XX Notice of Intent to Disallow or Not Recognize Costs

In accordance with 15-206(a), insert the following clause in all costreimbursement type and flexibly priced contracts.

NOTICE OF INTENT TO DISALLOW OR NOT RECOGNIZE COSTS (

(a) Notwithstanding any other provision of this contract,

)

the Contracting Officer may, at any time, issue to the Contractor
a written notice of intent to disallow or not recognize costs.
This notice will indicate the Contracting Officer's intent to
take exception to specified costs being incurred, or planned
for incurrence, which he has determined not to be allowable in
accordance with the terms of this contract.

(b) The Contractor may, within thirty (30) days of receipt of such notification, submit written objections to the Contracting Officer, together with justification therefor, against the proposed cost exception.

(c) In the event the Contractor does not file any such written objection within the thirty (30) day period in (b) above, the notice shall serve as the Contracting Officer's final decision under the provisions of the clause herein entitled "Disputes."

(d) The Contracting Officer shall, within sixty (60) days of receipt of any written objection, either withdraw the notification or issue a final decision thereon under the provisions of the clause herein entitled "Disputes."

96-305 - 77-11

(e) Pending final resolution, the Contractor shall not

be reimbursed or paid for costs which are the subject of this

notice.

(f) Failure to issue a notice pursuant to this clause shall not alter the Government's rights with respect to exception to

incurred costs.

(End of clause)

7-104.XX Notice of Intent to Disallow or Not Recognize Costs Insert the clause in 7-203.XX in all fixed price incentive contracts

and contracts providing for price redetermination.

7-402.XX Notice of Intent to Disallow or Not Recognize Costs.

Insert the clause in 7-203.XX.

7-605.XX Notice of Intent to Disallow or Not Recognize Costs.

Insert the clause in 7-203.XX.

7-702.XX Notice of Intent to Disallow or Not Recognize Costs. Insert the clause in 7-203.XX.

7-703.XX Notice of Intent to Disallow or Not Recognize Costs. Insert the clause in 7-203.XX.

7-704.XX Notice of Intent to Disallow or Not Recognize Costs. Insert the clause in 7-203.XX.

7-706.XX Notice of Intent to Disallow or Not Recognize Costs.

Insert the clause in 7-203.XX.

7-1909.XX Notice of Intent to Disallow or Not Recognize Costs.

Insert the clause in 7-203.XX.

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