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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 (clle standard or standards innolved)

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 & 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, & decrease to NASA of $15,000, and a decreaso 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 “O” 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 “l" and "$5,000."

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column under New cases. Mark with an
(X) under Old cases other cases carried
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tractor has taken an appeal to the Court
of Claims, an “X” will be placed in that
column.

(10) Contracts subject to cost account-
ing 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 con-
tracts subject to cost accounting stand-
ards. In order to generate data reason-
ably consistent among agencies, a con-
tract number should be counted only
when the Cost Accounting Standards
clause (§ 1-3.1204–1) is first included in
the contract. All contract dollars sub-
ject to the clause should be counted.

effect idually

counting Standards Board. On
defense contracts, the head
agency (if he supports the
waiver) must request such a wa
the Cost Accounting Standard
pursuant to 4 CFR 331.30(c).
§ 1-3.1212 Administration of

pliance issues.
(a) Initial finding of compl
noncompliance. The cognizant c
ing officer shall promptly, upor
of a noncompliance report from
ditor, make an initial finding of
ance or noncompliance and ad
auditor.

(b) Notification to contracto
initial finding of noncompliance
the cognizant contracting offic
immediately notify the contra
writing of the exact nature of t
compliance and request him, w
days to agree thereto or to sub
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3. Actions physically completed

during year.
4. Inventory-end of year (1+2-3).

of the

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er this 1 opinto the or recntiated ial data gestions at con

activi. r items

tices are in compliance.

(c) Agreement of contractor contractor agrees, he shall:

(1) Correct the noncompliance

(2) Submit the information by paragraph (a) of the Admin Cost Accounting Standards clar 3.1204–2).

(d) Review of contractor chan receipt of the information reqi paragraph (c) of this section in agreement with the noncomplia cognizant contracting officer sha the accounting change for adequ compliance concurrently in ace with $ 1-3.1205(d). Upon compi the review indicating that the is both adequate and in compli contractor shall be notified and . to submit the cost impact pro quired pursuant to paragraph Administration of Cost Al Standards clause (§ 1-3.1204proposal shall be in sufficient permit evaluation and negotiati cost impact upon each contract contract containing the Cost A Standards clause ($ 1-3.1204-1 contain as a minimum the

139 FR 43058, Dec. 10, 1974, as amended at
40 FR 15880, Apr. 8, 1975; 41 FR 47238,
Oct. 28, 1976)
§ 1-3.1211 Waiver of cost accounting

standards, rules and regulations.
In some instances contractors or sub-
contractors may refuse to accept all or
part of the provisions of the Cost Ac-
counting 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 documenta-
tion required by paragraph 331.30(c) of
Cost Accounting Standards Board regu-
lations (4 CFR 331.30(c)). Such informa-
tion shall be forwarded through chan-
nels to the head of the agency (see $ 1-
1.204) for approval of the proposed
waiver with respect to nondefense con-
tracts, to ensure that the contemplated
contract otherwise contains provisions
adequately protecting the Government's
interests, to provide for consistent treat-
ment of such waivers within the agency
and as between nondefense and national
defense contracts. If a waiver is ap-
proved with respect to nondefense con-
tracts, an information copy of such
approval and the referenced documenta-
tion shall be forwarded to the Cost Ac-

e cases zndards

aken to purt of Claims

et nume before Here ascod covin the

information:

(1) Identification of all cont subcontracts containing the counting Standards clause and

(2) The effect on each con subcontract from the date of comply until the noncomplian rected.

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 noncom

pliance 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). Th. 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 noncompliance, and the contractor refuses to

$ 1-3.1213

Title 41—Public Contracts, Property Management

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 of ficer (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

228

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.) (40 FR 60024, Dec. 31, 1975) § 1-3.1214 Administration of voluntary

changes. (a) Notification of proposed change. When a contractor who has contracts or subcontracts containing the Cost Accounting Standards clause (§ 1-3.1204-1) plans to make a voluntary change to an accounting practice, he must submit the information required by paragraph (a) of the Administration of Cost Accounting Standards clause (§ 1-3.1204–2).

(b) Review of contractor change. Upon receipt of the information required in paragraph (a) of this section, the cognizant contracting officer shall review the accounting 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 furnish the cost impact proposal required pursuant to paragraph (b) of the Administration of Cost Accounting Standards clause. It 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 all contracts and subcontracts containing the Cost Accounting Standards clause, and

(2) The effect on each contract and subcontract from the effective date of the proposed change until completion of the contract or subcontract.

(c) 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 tho auditor to determine whether or not tho proposed change will result in increased costs being paid by the United States. In considering the proposed adjustments to subcontracts containing the. Cost Accounting Standards clause to determine whether increased cost to the United States will result from the change, the

cognizant contracting officer shall not consider the effect of the proposed adjustments upon the prime contracts and subcontracts under which the subcontracts were entered into. If the cognizant contracting officer determines that the proposed adjustments will not result in an increase in the aggregate cost to be paid under the contracts and subcontracts containing the Cost Accounting Standards clause he shall promptly negotiate the contract price adjustments pursuant to § 1-3.1207. If the cognizant contracting officer determines that the proposed adjustments will result in an increase in the aggregate cost to be paid under the contracts and subcontracts containing the Cost Accounting Standards clause, he shall so notify the contractor and advise him that the proposed change will not be recognized unless an agreement can be reached which will prevent an increase in the aggregate cost to be paid under such contracts and subcontracts.

(d) 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, and

(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 of 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 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.) (40 FR 60024, Dec. 31, 1975)

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