81 FR 45852 - Federal Acquisition Regulation; OMB Circular Citation Update

DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

Federal Register Volume 81, Issue 135 (July 14, 2016)

DoD, GSA, and NASA are issuing a final rule amending the Federal Acquisition Regulation (FAR) to update outdated Office of Management and Budget (OMB) Circular citation references.

[Federal Register Volume 81, Number 135 (Thursday, July 14, 2016)]
[Rules and Regulations]
[Pages 45852-45854]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-16246]



[[Page 45852]]

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 2, 15, 16, 31, 42, and 52

[FAC 2005-89; FAR Case 2014-023; Item II; Docket No. 2014-0023, 
Sequence No. 1]
RIN 9000-AN17


Federal Acquisition Regulation; OMB Circular Citation Update

AGENCY: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to update outdated Office of 
Management and Budget (OMB) Circular citation references.

DATES: Effective: August 15, 2016.

FOR FURTHER INFORMATION CONTACT: Ms. Kathlyn J. Hopkins, Procurement 
Analyst, at 202-969-7226, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2005-89, FAR Case 
2014-023.

SUPPLEMENTARY INFORMATION: 

I. Background

    On December 26, 2013, the Office of Management and Budget (OMB) 
published new guidance at 2 CFR part 200 entitled Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards (OMB Uniform Guidance); this became effective on 
December 26, 2014, after Federal agencies adopted the guidance as a set 
of binding regulations. This new OMB Uniform Guidance supersedes and 
streamlines requirements from OMB Circulars A-21, A-87, A-89, A-102, A-
110, A-122, and A-133, and the guidance in Circular A-50 on Audit 
Followup. As such, this final rule replaces OMB citations in the FAR to 
the circulars cited above that have been replaced by this new OMB 
Uniform Guidance, and cross references to new terminology in the OMB 
Uniform Guidance.
    The cost principles under OMB's Uniform Guidance apply to contracts 
with non-profits, educational institutions, state and local 
governments, and Indian tribal governments. All other FAR contractual 
requirements (e.g., contract administration, audit) take precedence 
over the OMB Uniform Guidance when there is a conflict.
    This rule also creates a definition with an abbreviated title in 
FAR section 2.101 for FAR citations to this OMB Uniform Guidance.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is a significant regulatory action and, therefore, was subject to 
review under section 6(b) of E.O. 12866, Regulatory Planning and 
Review, dated September 30, 1993. This rule is not a major rule under 5 
U.S.C. 804.

III. Publication of This Final Rule for Public Comment Is Not Required 
by Statute

    ``Publication of proposed regulations,'' 41 U.S.C. 1707, is the 
statute that applies to the publication of the FAR. Paragraph (a)(1) of 
the statute requires that a procurement policy, regulation, procedure, 
or form (including an amendment or modification thereof) must be 
published for public comment if it relates to the expenditure of 
appropriated funds, and has either a significant effect beyond the 
internal operating procedures of the agency issuing the policy, 
regulation, procedure, or form, or has a significant cost or 
administrative impact on contractors or offerors. This final rule is 
not required to be published for public comment, because it merely 
replaces outdated OMB Circular references in the FAR with current 
references that do not have a significant effect on contractors or 
offerors.

IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act does not apply to this rule because 
this final rule does not constitute a significant FAR revision within 
the meaning of FAR 1.501-1 and 41 U.S.C. 1707 and does not require 
publication for public comment.

V. Paperwork Reduction Act

    The rule does not contain any information collection requirements 
that require the approval of the Office of Management and Budget under 
the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Parts 2, 15, 16, 31, 42, and 52

    Government procurement.

    Dated: June 30, 2016.
William F. Clark,
Director, Office of Government-wide Acquisition Policy, Office of 
Acquisition Policy, Office of Government-wide Policy.

    Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 15, 16, 31, 42, 
and 52 as set forth below:

0
1. The authority citation for 48 CFR parts 2, 15, 16, 31, 42, and 52 
continues to read as follows:

    Authority:  40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 51 
U.S.C. 20113.

PART 2--DEFINITIONS OF WORDS AND TERMS

0
2. Amend section 2.101 in paragraph (b)(2) by adding in alphabetical 
order the definition ``OMB Uniform Guidance at 2 CFR part 200'' to read 
as follows:


2.101   [Amended]

* * * * *
    (b) * * *
    (2) * * *
    OMB Uniform Guidance at 2 CFR part 200 is the abbreviated title for 
Uniform Administrative Requirements, Cost Principles, and Audit 
Requirements for Federal Awards (2 CFR part 200), which supersedes OMB 
Circulars A-21, A-87, A-89, A-102, A-110, A-122, and A-133, and the 
guidance in Circular A-50 on Audit Followup.
* * * * *

PART 15--CONTRACTING BY NEGOTIATION


15.209   [Amended]

0
3. Amend section 15.209 by removing from paragraph (b)(1) introductory 
text, ``OMB Circular No. A-133'' and adding ``Audit Requirements in the 
OMB Uniform Guidance at 2 CFR part 200, subpart F'' in its place.

PART 16--TYPES OF CONTRACTS


16.307   [Amended]

0
4. Amend section 16.307 by removing from paragraph (a)(5) ``OMB 
Circular No. A-122'' and adding ``the OMB Uniform Guidance at 2 CFR 
part 200, appendix VIII'' in its place.

[[Page 45853]]

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

0
5. Amend section 31.104 by revising the introductory text to read as 
follows:


31.104   Contracts with educational institutions.

    This category includes all contracts and contract modifications for 
research and development, training, and other work performed by 
educational institutions (defined as institutions of higher educations 
in the OMB Uniform Guidance at 2 CFR part 200, subpart A, and 20 U.S.C. 
1001).
* * * * *


31.105   [Amended]

0
6. Amend section 31.105 by removing from paragraph (a) ``OMB Circular 
A-122 (see 31-108)'' and adding ``OMB Uniform Guidance at 2 CFR part 
200, appendix VIII (see 31.108)'' in its place.

0
7. Revise section 31.108 to read as follows:


31.108   Contracts with nonprofit organizations.

    Subpart 31.7 provides principles and standards for determining 
costs applicable to contracts with nonprofit organizations other than 
educational institutions (see subpart 31.3), State and local 
governments (see subpart 31.6), and those nonprofit organizations 
exempted under the OMB Uniform Guidance at 2 CFR part 200, appendix 
VIII (see subpart 31.2 for the cost principles applicable to nonprofit 
organizations exempt from the cost principles in the OMB Uniform 
Guidance at 2 CFR part 200).

0
8. Revise section 31.302 to read as follows:


31.302   General.

    The OMB Uniform Guidance at 2 CFR part 200, subpart E and appendix 
III, provides principles for determining the costs applicable to 
research and development, training, and other work performed by 
educational institutions (defined as institutions of higher education 
in the OMB Uniform Guidance at 2 CFR part 200, subpart A, and 20 U.S.C. 
1001) under contracts with the Government.

0
9. Amend section 31.303 by revising paragraph (a) to read as follows:


31.303   Requirements.

    (a) Contracts that refer to this subpart 31.3 for determining 
allowable costs under contracts with educational institutions (defined 
as institutions of higher education in the OMB Uniform Guidance at 2 
CFR part 200, subpart A, and 20 U.S.C. 1001) shall be deemed to refer 
to, and shall have the allowability of costs determined by the 
contracting officer in accordance with, the OMB Uniform Guidance at 2 
CFR part 200, subpart E and appendix III, in effect on the date of the 
contract.
* * * * *


31.602   [Amended]

0
10. Amend section 31.602 by removing ``Office of Management and Budget 
(OMB) Circular No. A-87, Cost Principles for State and Local 
Governments, Revised,'' and adding ``The OMB Uniform Guidance at 2 CFR 
part 200, subpart E and appendices V and VII'' in its place.


31.603   [Amended]

0
11. Amend section 31.603 by removing from paragraph (a) ``the revision 
of OMB Circular A-87 which is'' and adding ``the OMB Uniform Guidance 
at 2 CFR part 200, subpart E and appendices V and VII,'' in its place.

0
12. Revise section 31.702 to read as follows:
    The OMB Uniform Guidance at 2 CFR part 200, subpart E and appendix 
IV, sets forth principles for determining the costs applicable to work 
performed by nonprofit organizations (as defined in the OMB Uniform 
Guidance at 2 CFR part 200) under contracts (as well as grants and 
other agreements) with the Government. See 31.108 for exceptions to the 
cost principles for nonprofit organizations.


31.703   [Amended]

0
13. Amend section 31.703 by removing from paragraph (a) ``the revision 
of OMB circular A-122'' and adding ``the OMB Uniform Guidance at 2 CFR 
part 200, subpart E and appendix IV'' in its place.

PART 42--CONTRACT ADMINISTRATION AND AUDIT SERVICES

0
14. Amend section 42.003 by revising paragraph (a) to read as follows:


42.003   Cognizant Federal agency.

    (a) For contractors other than educational institutions and 
nonprofit organizations, the cognizant Federal agency normally will be 
the agency with the largest dollar amount of negotiated contracts, 
including options. For educational institutions (defined as 
institutions of higher education in the OMB Uniform Guidance at 2 CFR 
part 200, subpart A, and 20 U.S.C. 1001) and nonprofit organizations 
(as defined in the OMB Uniform Guidance at 2 CFR part 200), the 
cognizant Federal agency for indirect costs is established according to 
the OMB Uniform Guidance at 2 CFR part 200, appendices III and IV, 
respectively.
* * * * *

0
15. Amend section 42.101 by revising paragraph (b) to read as follows:


42.101   Contract audit responsibilities.

* * * * *
    (b) Normally, for contractors other than educational institutions 
and nonprofit organizations, the Defense Contract Audit Agency (DCAA) 
is the responsible Government audit agency. However, there may be 
instances where an agency other than DCAA desires cognizance of a 
particular contractor. In those instances, the two agencies shall agree 
on the most efficient and economical approach to meet contract audit 
requirements. For educational institutions (defined as institutions of 
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart 
A, and 20 U.S.C. 1001) and nonprofit organizations (as defined in the 
OMB Uniform Guidance at 2 CFR part 200), audit cognizance will be 
determined according to the provisions of the OMB Uniform Guidance at 2 
CFR part 200, subpart F.

0
16. Amend section 42.703-2 by revising paragraphs (b)(2)(ii) through 
(iv) to read as follows:


42.703-2   Certificate of indirect costs.

* * * * *
    (b) * * *
    (2) * * *
    (ii) A State or local government subject to the OMB Uniform 
Guidance at 2 CFR part 200, subpart E and appendices V and VII;
    (iii) An educational institution (defined as an institution of 
higher education in the OMB Uniform Guidance at 2 CFR part 200, subpart 
A, and 20 U.S.C. 1001) subject to the OMB Uniform Guidance at 2 CFR 
part 200, subpart E and appendix III; and
    (iv) A nonprofit organization (as defined in the OMB Uniform 
Guidance at 2 CFR part 200) subject to the OMB Uniform Guidance at 2 
CFR part 200, subpart E and appendix IV.
* * * * *

0
17. Amend section 42.705-3 by revising paragraphs (a)(2) and (3); and 
adding paragraph (b)(8) to read as follows:


42.705-3   Educational institutions.

    (a) * * *
    (2) The OMB Uniform Guidance at 2 CFR part 200, appendix III 
assigns each educational institution (defined as an institution of 
higher education in the OMB Uniform Guidance at 2 CFR part

[[Page 45854]]

200, subpart A, and 20 U.S.C. 1001) to a single Government agency for 
the negotiation of indirect cost rates and provides that those rates 
shall be accepted by all Federal agencies. Cognizant Government 
agencies and educational institutions are listed in the Directory of 
Federal Contract Audit Offices (see 42.103).
    (3) The cognizant agency for indirect costs shall establish the 
billing rates and final indirect cost rates at the educational 
institution (defined as an institution of higher education in 2 CFR 
200, subpart A, and 20 U.S.C. 1001) consistent with the requirements of 
this subpart, Subpart 31.3, and the OMB Uniform Guidance at 2 CFR part 
200, subpart E and appendix III. The agency shall follow the procedures 
outlined in 42.705-1(b).
* * * * *
    (b) * * *
    (8) The OMB Uniform Guidance at 2 CFR part 200, subpart E and 
appendix III, provides additional guidance on how long predetermined 
rates may be used.
0
18. Revise section 42.705-4 to read as follows:


42.705-4   State and local governments.

    The OMB Uniform Guidance at 2 CFR part 200, subpart E and appendix 
V, concerning cost principles for state and local governments (see 
Subpart 31.6) establishes the cognizant agency concept and the 
procedures for determining a cognizant agency for approving State and 
local government indirect costs associated with federally-funded 
programs and activities. The indirect cost rates negotiated and 
approved by the cognizant agency for indirect costs will be used by all 
Federal agencies that also award contracts to these same State and 
local governments.


42.705-5   [Amended]

0
19. Amend section 42.705-5 by removing ``OMB Circular No. A-122'' and 
adding ``the OMB Uniform Guidance at 2 CFR part 200, subpart E and 
appendix IV; but see appendix VIII for nonprofit organizations exempt 
from subpart E)'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
20. Amend section 52.215-2 by revising the date of Alternate II and 
paragraph (h) to read as follows:


52.215-2   Audit and Records-Negotiation.

* * * * *
    Alternate II (Aug 2016). * * *
    (h) The provisions of the OMB Uniform Guidance at 2 CFR part 200, 
subpart F apply to this contract.
* * * * *

0
21. Amend section 52.230-5 by revising the date of the clause and 
paragraphs (a)(1) and (2) and (a)(4)(iv) to read as follows:


52.230-5   Cost Accounting Standards--Educational Institution.

* * * * *

Cost Accounting Standards--Educational Institution (Aug 2016)

    (a) * * *
    (1) (CAS-covered Contracts only). If a business unit of an 
educational institution (defined as an institution of higher 
education in the OMB Uniform Guidance at 2 CFR part 200, subpart A 
and 20 U.S.C. 1001) is required to submit a Disclosure Statement, 
disclose in writing the Contractor's cost accounting practices as 
required by 48 CFR 9003.202-1 through 9903.202-5, including methods 
of distinguishing direct costs from indirect costs and the basis 
used for accumulating and allocating indirect costs. The practices 
disclosed for this contract shall be the same as the practices 
currently disclosed and applied on all other contracts and 
subcontracts being performed by the Contractor and which contain a 
Cost Accounting Standards (CAS) clause. If the Contractor has 
notified the Contracting Officer that the Disclosure Statement 
contains trade secrets, and commercial or financial information 
which is privileged and confidential, the Disclosure Statement shall 
be protected and shall not be released outside of the Government.
    (2) Follow consistently the Contractor's cost accounting 
practices in accumulating and reporting contract performance cost 
data concerning this contract. If any change in cost accounting 
practices is made for the purposes of any contract or subcontract 
subject to CAS requirements, the change must be applied 
prospectively to this contract and the Disclosure Statement, if 
required, must be amended accordingly. If an accounting principle 
change mandated under OMB Uniform Guidance at 2 CFR part 200, 
subpart E and appendix III, requires that a change in the 
Contractor's cost accounting practices be made after the date of 
this contract award, the change must be applied prospectively to 
this contract and the Disclosure Statement, if required, must be 
amended accordingly. If the contract price or cost allowance of this 
contract is affected by such changes, adjustment shall be made in 
accordance with paragraph (a)(4) or (a)(5) of this clause, as 
appropriate.
* * * * *
    (4) * * *
    (iv) Agree to an equitable adjustment as provided in the Changes 
clause of this contract, if the contract cost is materially affected 
by an accounting principle amendment required under the OMB Uniform 
Guidance at 2 CFR part 200, subpart E and appendix III, which, on 
becoming effective after the date of contract award, requires the 
Contractor to make a change to the Contractor's established cost 
accounting practices.
* * * * *

0
22. Amend section 52.249-5 by revising the date of the clause and 
paragraph (f) to read as follows:


52.249-5   Termination for Convenience of the Government (Educational 
and Other Nonprofit Institutions).

* * * * *

Termination for Convenience of the Government (Educational and Other 
Nonprofit Institutions) (Aug 2016)

* * * * *
    (f) The cost principles and procedures in subpart 31.3 of the 
Federal Acquisition Regulation (FAR), Contracts with Educational 
Institutions (defined as institutions of higher education in the OMB 
Uniform Guidance in 2 CFR part 200, subpart A, and 20 U.S.C. 1001), 
as in effect on the date of the contract, shall govern all costs 
claimed, agreed to, or determined under this clause; however, if the 
Contractor is not an educational institution and is a nonprofit 
organization (as defined in the OMB Uniform Guidance at 2 CFR part 
200), the cost principles and procedures in subpart 31.7 of the FAR, 
Contracts with Nonprofit Organizations, shall apply; unless the 
Contractor is a nonprofit institution listed in the OMB Uniform 
Guidance at 2 CFR part 200, appendix VIII, as exempted from the cost 
principles in subpart E, in which case the cost principles at FAR 
31.2 for commercial organizations shall apply to such contractor.
[FR Doc. 2016-16246 Filed 7-13-16; 8:45 am]
 BILLING CODE 6820-EP-P