This part of the report will give a numeric count of the disclosed practices and Cost Accounting Standards by Disclosure Statement item number and Standard, respectively, involved in the noncompliance determinations issued during the year. Each Disclosure Statement item number and each Standard for each issue cited in the noncompliance determination will be identified and counted. The following two exampes illustrate how the noncompliance determination should be counted.

EXAMPLE 1-A contracting officer receives an audit report on a proposal indicating a noncompliance with Standard 402 and Item 3.2.3. of the contractor's Disclosure Statement. The contracting officer makes a determination of noncompliance. The contracting officer should record a noncompliance with Item 3.2.3. of disclosed practices under the preaward column. He should also include the noncompliance in the Totals under "Less: Number Also Involving Standards." In addition, he should record a noncompliance with Standard 402 in the preaward column.

It shall also include any amounts recovered as indicated in the record of price negotiation prepared by the contracting officer pursuant to § 1-3.811.

(6) Substance of determinations of noncompliance with CASB Standards. This part of the report will consist of a summary of the noncompliances with CASB Standards cited in the contracting officer's determinations. Determinations which cite substantially the same manner of noncompliance will be reported only once. Each entry should state the substance of the noncompliance being reported and should be grouped with other noncompliances relating to the same Standard; e.g.,

4 CFR 401

(1) (State substance of first noncompliance)

(11) (Continue for each additional noncompliance)

Only those noncompliances cited by contracting officers in determinations which have been furnished to contractors in writing shall be included in the report. Contract administration activities will furnish the data required by § 1-3.1210 (c) (2) through (c) (6) for this report.

(7) Equitable adjustments. This part of the report is to show for each Federal agency the number and value of equitable adjustments completed during the reporting period covering new standards which resulted in cost increases and the number and value of equitable adjustments which resulted in cost decreases. A separate report shall be prepared for each standard. In addition, when the equitable adjustments involve more than one standard, an additional consolidated report shall be prepared citing the standards involved. The final result of each negotiated agreement shall be shown as a net increase or net decrease for each agency affected.

STANDARD (cite standard or standards involved)

The following two examples indicate how the reports from cognizant contracting officers relating to equitable adjustments shall be consolidated by the cognizant agency and reported to CASB pursuant to paragraph (b) of this § 1-3.1210:

EXAMPLE 1. One cognizant contracting offcer reports a negotiated agreement with a contractor to recognize Standard 4 CFR 403. Numerous contracts of DOD and NASA are involved. Some NASA contracts are increased, others are decreased for a net decrease to NASA of $100,000. In the case of DOD there is a net increase of $85,000. A second cognizant contracting officer reports a negotiated agreement involving 4 CFR 403 in which there is a net increase to NASA of $90,000 and a net decrease to DOD of $90,000. In a third negotiated agreement a cognizant contracting officer reports a decrease to NASA of $10,000 and an increase to DOD of $10,000. No other negotiated agreements involving only 4 CFR 403 are reported.

Using the above format, Standard 4 CFR 403 would be cited. For DOD, under the head "Cost increase," the figure "2" and the dollar figure "$95,000" ($85,000 plus $10,000) would be inserted. Under "Cost decrease" the figure "1" and the dollar figure "$90,000" would be inserted. For NASA the figure "1" and "$90,000" would be shown under "Cost increase" and under "Cost decrease" the figure "2" and "$110,000" would be shown.

EXAMPLE 2. One cognizant contracting offcer reports a negotiated agreement involving Standards 4 CFR 403 and 4 CFR 404. There is a net increase to DOD of $25,000, a decrease to NASA of $15,000, and a decrease to ERDA of $5,000. A second cognizant contracting officer reports a negotiated agreement involving 4 CFR 404 and 4 CFR 405. There is a net decrease to DOD of $20,000 and a decrease to NASA of $10,000. A third cognizant contracting officer reports a negotlated agreement involving 4 CFR 403 and 4 CFR 405. There is a net decrease to DOD of $10,000 and an increase to ERDA of $15,000. Using the above format, Standards 4 CFR 403, 404, and 405 would be cited. For DOD the figure under "Cost increase" would be "1" and "$25,000," respectively. The figures under "Cost decrease" would be "2" and "$30,000." For NASA the figure "0" would be inserted for both the numbers and dollars under "Cost increase." The "Cost decrease" figures would be "2" and "$25,000." For ERDA under "Cost increase" the figures would be "1" and "$15,000." The figures under "Cost decrease" would be "1" and "$5,000."

(8) Comments on CASB promulgations. (i) Comment on the effect of the Disclosure Statement requirement and standards issued with respect to: (A) Contractors' proposals; (B) Cost estimation;

(C) Contract negotiation;
(D) Contract administration;

(E) Audit of contract proposals; and (F) Audits of incurred costs. Comments shall deal with the effect of CASB publications both individually and in total. For example, there may be improvements noted in contractors' proposals, or there may be information required that is not useful or necessary. Comments of any other type may be furnished. Cognizant contracting officers and purchasing activities shall provide comments for items (A) through (D). Cognizant contract auditors shall provide comments for items (E) and (F).

(ii) Suggestions and recommendations for revising CASB standards, rules. or regulations to:

(A) Improve their effectiveness;

(B) Facilitate the conduct of negotiations;

(C) Facilitate the effectiveness of the procurement function; and

(D) Facilitate the effectiveness of the audit function.

All information required under this § 1-3.1210 (c) (8) involves personal opinion and judgment. However, to the extent possible each comment or recommendation should be substantiated through use of examples and actual data to support the logic of the suggestions and recommendations. Cognizant contracting officers and purchasing activities shall provide comments for items (A) through (D).

(9) Docket numbers of dispute cases involving Cost Accounting Standards Board promulgations.

column under New cases. Mark with an (X) under Old cases other cases carried over from previous periods. When a contractor has taken an appeal to the Court of Claims, an "X" will be placed in that column.

(10) Contracts subject to cost accounting standards. To the extent such data are readily available or can be estimated with reasonable accuracy by the agency preparing the report, this portion of the report will be included to indicate the number and dollar amount of contracts subject to cost accounting standards. In order to generate data reasonably consistent among agencies, a contract number should be counted only when the Cost Accounting Standards clause (§ 1-3.1204-1) is first included in the contract. All contract dollars subject to the clause should be counted.

§ 1-3.1211

Waiver of cost accounting standards, rules and regulations.

In some instances contractors or subcontractors may refuse to accept all or part of the provisions of the Cost Accounting Standards clause (§ 1-3.1204). If the contracting officer determines that it is impractical to obtain the materials, supplies or services from any other source, he shall prepare the documentation required by paragraph 331.30 (c) of Cost Accounting Standards Board regulations (4 CFR 331.30 (c)). Such information shall be forwarded through channels to the head of the agency (see § 11.204) for approval of the proposed waiver with respect to nondefense contracts, to ensure that the contemplated contract otherwise contains provisions adequately protecting the Government's interests, to provide for consistent treatment of such waivers within the agency and as between nondefense and national defense contracts. If a waiver is approved with respect to nondefense contracts, an information copy of such approval and the referenced documentation shall be forwarded to the Cost Ac

counting Standards Board. On national defense contracts, the head of the agency (if he supports the proposed waiver) must request such a waiver from the Cost Accounting Standards Board pursuant to 4 CFR 331.30 (c).

§ 1-3.1212 Administration of noncompliance issues.

(a) Initial finding of compliance or noncompliance. The cognizant contracting officer shall promptly, upon receipt of a noncompliance report from the auditor, make an initial finding of compliance or noncompliance and advise the auditor.

(b) Notification to contractor. If an initial finding of noncompliance is made, the cognizant contracting officer shall immediately notify the contractor in writing of the exact nature of the noncompliance and request him, within 30 days to agree thereto or to submit reasons why he considers his existing practices are in compliance.

(c) Agreement of contractor. If the contractor agrees, he shall:

(1) Correct the noncompliance, and (2) Submit the information required by paragraph (a) of the Administration Cost Accounting Standards clause (§ 13.1204-2).

(d) Review of contractor change. Upon receipt of the information required in paragraph (c) of this section indicating agreement with the noncompliance, the cognizant contracting officer shall review the accounting change for adequacy and compliance concurrently in accordance with § 1-3.1205(d). Upon completion of the review indicating that the change is both adequate and in compliance, the contractor shall be notified and requested to submit the cost impact proposal required pursuant to paragraph (b) of the Administration of Cost Accounting Standards clause (§ 1-3.1204-2). The proposal shall be in sufficient detail to permit evaluation and negotiation of the cost impact upon each contract and subcontract containing the Cost Accounting Standards clause (§ 1-3.1204-1). It shall contain as a minimum the following information:

(1) Identification of all contracts and subcontracts containing the Cost Accounting Standards clause and

(2) The effect on each contract and subcontract from the date of failure to comply until the noncompliance is corrected.

(e) Receipt of cost impact proposal. Upon receipt of an acceptable proposal from the contractor, the cognizant contracting officer shall promptly analyze the proposal with the assistance of the auditor and negotiate the contract price adjustments pursuant to § 1-3.1207.

(f) Failure to submit cost impact proposal. If the contractor fails to furnish the cost impact proposal in the form and time specified, the cognizant contracting officer shall take action in accordance with paragraph (h) of this section.

(g) Disagreement of contractor. The cognizant contracting officer shall review the contractor's submission in paragraph (b) of this section and make a determination of compliance or noncompliance.

(h) Decision of cognizant contracting officer. (1) If the cognizant contracting officer makes a determination of compliance, he shall so notify the contractor and send a copy to the auditor;

(2) If the cognizant contracting officer makes a determination of noncompliance, or if the contractor fails to furnish the cost impact proposal, the cognizant contracting officer with the assistance of the auditor shall estimate the cost impact of the noncompliance on contracts and subcontracts containing the Cost Accounting Standards clause;

(3) If the cognizant contracting officer's estimate indicates increased costs to the Government, he shall notify the contractor and request agreement as to the cost or price adjustment, together with any applicable interest. The contractor shall also be advised that in the event no agreement on the cost or price adjustment is reached within 20 days, action may be taken in accordance with paragraph (b) of the Cost Accounting Standards clause. If a DOD cognizant contracting officer subsequently takes such action, he shall also consider appropriate action to protect the interests of the Government, pursuant to ASPR Appendix E, Part 6 (32 CFR Part 163, Subpart F) regarding any cost adjustment demanded by the United States. Cognizant contracting officers of civilian executive agencies shall consider the appropriateness of similar actions in regard to collection of contract debts with respect to their affected contracts and subcontracts; (See also § 1-30.206.)

(4) If the cognizant contracting officer's estimate indicates there are no increased costs as a result of the noncom pliance, and the contractor refuses to

take corrective action, the cognizant contracting officer shall notify the contractor in writing that he is in noncompliance, that corrective action should be taken, and that if such noncompliance subsequently results in increased costs to the Government, the provisions of the Cost Accounting Standards clause shall be enforced.

[40 FR 60023, Dec. 31, 1975]

§ 1-3.1213

Administration of equitable adjustments for new cost accounting standards.

(a) Solicitation notice. When the notice "Additional Cost Accounting Standards Applicable To Existing Contracts Certification" is in the solicitation (see § 1-3.1203 (i) (2)), the procurement contracting officer shall ensure that the contractor's response to the notice is made known to the cognizant contracting officer (see § 1-3.1208(a)). This may be accomplished by attaching a copy of the response to the copy of the contract provided to the cognizant contracting officer.

(b) Requirement for equitable adjustment. Contracts and subcontracts containing the Cost Accounting Standards clause (§ 1-3.1204-1) may require equitable adjustments to comply with new cost accounting standards (see paragraph (a) (4) (A) of the clause). Such adjustments are limited to contracts and subcontracts awarded prior to the effective date of each new standard. A new standard becomes applicable prospectively to these contracts and subcontracts when a new contract or subcontract containing the clause is awarded on or after the effective date of such new standard. Contractors are encouraged to submit to the cognizant contracting officer any change in accounting practice in anticipation of complying with a new standard as soon as praticable after the new standard has been finally promulgated by the Cost Accounting Standards Board. Equitable adjustment is limited to those circumstances when a change in cost accounting practices is required to implement a new standard.

(c) Review of contractor change. Upon receipt of information required pursuant to paragraph (a) of the Administration of Cost Accounting Standards clause (§ 1-3.1204-2) from the contractor indicating an accounting change is required to comply with a new standard, the cognizant contracting officer shall re

view the proposed change concurrently for adequacy and compliance in accordance with § 1-3.1205(d). Upon completion of the review indicating that the change is both adequate and in compliance, the contractor shall be notified and requested to submit the cost impact proposal required pursuant to paragraph (b) of the Administration of Cost Accounting Standards clause. The proposal shall be in sufficient detail to permit evaluation and negotiation of the cost impact upon each contract and subcontract containing the Cost Accounting Standards clause. It shall contain as a minimum the following information:

(1) Identification of each additional standard, together with those contracts and subcontracts containing the Cost Accounting Standards clause having an award date prior to the effective date of such standard and

(2) The effect on each contract and subcontract from the date the contractor is required to follow the standard until completion of the contract or subcontract.

(d) Receipt of cost impact proposal. Upon receipt of an acceptable proposal from the contractor, the cognizant contracting officer shall promptly analyze the proposal with the assistance of the auditor and negotiate the contract price adjustments pursuant to § 1-3.1207.

(e) Failure to submit cost impact proposal or reach agreement concerning cost impact. (1) If the contractor does not submit a proposal in the form and time specified or if the parties fail to agree concerning the cost impact, the cognizant contracting officer, with the assistance of the auditor, shall estimate the cost impact on contracts and subcontracts containing the Cost Accounting Standards clause:

(2) Upon completion of the estimate indicating the effect on contract costs. the cognizant contracting officer shall request agreement from the contractor as to the cost or price adjustment. The contractor shall also be advised that in the event no agreement on the cost or price adjustment is reached within 20 days, action may be taken in accordance with paragraph (b) of the Cost Accounting Standards clause. If a DOD cognizant contracting officer subsequently takes such action, he shall also consider appropriate action to protect the interests of the Government pursuant to ASPR Appendix E, Part 6 (32 CFR Part