83_FR_19233 83 FR 19149 - Federal Acquisition Regulations: Audit of Settlement Proposals

83 FR 19149 - Federal Acquisition Regulations: Audit of Settlement Proposals

DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION

Federal Register Volume 83, Issue 84 (May 1, 2018)

Page Range19149-19150
FR Document2018-09169

DoD, GSA, and NASA are issuing a final rule to amend the Federal Acquisition Regulation (FAR) to raise the dollar threshold requirement for the audit of prime contract settlement proposals and subcontract settlements from $100,000 to align with the threshold for obtaining certified cost or pricing data.

Federal Register, Volume 83 Issue 84 (Tuesday, May 1, 2018) 
[Federal Register Volume 83, Number 84 (Tuesday, May 1, 2018)]
[Rules and Regulations]
[Pages 19149-19150]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-09169]


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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 49

[FAC 2005-98, FAR Case 2015-039; Item IV; Docket No. 2015-0039, 
Sequence No. 1]
RIN 9000-AN26


Federal Acquisition Regulations: Audit of Settlement Proposals

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 to amend the 
Federal Acquisition Regulation (FAR) to raise the dollar threshold 
requirement for the audit of prime contract settlement proposals and 
subcontract settlements from $100,000 to align with the threshold for 
obtaining certified cost or pricing data.

DATES: Effective: May 31, 2018.

FOR FURTHER INFORMATION CONTACT: Ms. Zenaida Delgado, Procurement 
Analyst, at 202-969-7207, for clarification of content. For information 
pertaining to status or publication schedules, contact the Regulatory 
Secretariat Division at 202-501-4755. Please cite FAC 2005-98, FAR Case 
2015-039.

SUPPLEMENTARY INFORMATION: 

I. Background

    DOD, GSA, and NASA published a proposed rule in the Federal 
Register at 81 FR 63158 on September 14, 2016, to amend FAR 49.107 to 
increase the dollar threshold for the audit of prime contract 
settlement proposals and subcontract settlements submitted in the event 
of contract termination, from $100,000 to align with the threshold in 
FAR 15.403-4(a)(1) for obtaining certified cost or pricing data, which 
is currently $750,000.

II. Discussion and Analysis

    No public comments were submitted in response to the proposed rule. 
Therefore, there are no changes from the proposed rule made in the 
final rule.

[[Page 19150]]

III. Expected Cost Savings

    This final rule impacts contractors subject to audits of their 
termination settlement proposals. The rule is administrative in nature, 
because it raises a threshold. This rule eliminates termination 
settlements audits between $100,000 and the threshold for obtaining 
certified cost or pricing data, currently $750,000. Contractors will 
save costs associated with the preparation and support for the 
termination settlement audits. This will also enable faster final 
settlement payments to contractors, thereby improving contractor cash 
flow.

IV. Applicability to Contracts at or Below the Simplified Acquisition 
Threshold and for Commercial Items, Including Commercially Available 
Off-the-Shelf Items

    This rule does not add any new solicitation provisions or clauses, 
or impact any existing provisions or clauses.

V. 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 not a significant regulatory action and, therefore, was not 
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.

VI. Executive Order 13771

    Pursuant to E.O. 13771, this rule is a deregulatory action. 
Information on the expected cost savings of this action can be found in 
section III of the preamble.

VII. Regulatory Flexibility Act

    DoD, GSA, and NASA have prepared a final regulatory flexibility 
analysis (FRFA) consistent with the Regulatory Flexibility Act, 5 
U.S.C. 601, et seq. The FRFA is summarized as follows:

    This final rule amends FAR 49.107, Audit of prime contract 
settlement proposals and subcontract settlements, to raise the 
dollar threshold for the audit of prime contract settlement 
proposals and subcontract settlements submitted in the event of 
contract termination from $100,000 to the threshold for obtaining 
certified cost or pricing data set forth in FAR 15.403-4(a)(1), 
which is currently $750,000. The rule is necessary to reduce the 
administrative burdens associated with termination settlement 
proposals.
    No public comments were received in response to the initial 
regulatory flexibility analysis.
    DoD, GSA, and NASA do not expect this rule to have a significant 
economic impact on a substantial number of small entities within the 
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq. 
Since the rule raises the audit threshold, even fewer small 
businesses will be subject to audits of their termination settlement 
proposals. It is estimated that an average of 4 small entities per 
year will be relieved from the requirements of supporting an audit 
of a contract settlement proposal, which is a minute fraction of all 
contracts awarded to small businesses in a typical year.
    The rule imposes no reporting, recordkeeping, or other 
information collection requirements.
    There are no known significant alternatives to the rule. The 
impact of this rule on small business is not expected to be 
significant.

    Interested parties may obtain a copy of the FRFA from the 
Regulatory Secretariat Division. The Regulatory Secretariat Division 
has submitted a copy of the FRFA to the Chief Counsel for Advocacy of 
the Small Business Administration.

VIII. Paperwork Reduction Act

    This 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 Part 49

    Government procurement.

    Dated: April 25, 2018.
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 part 49 as set forth 
below:

PART 49--TERMINATION OF CONTRACTS

0
1. The authority citation for part 49 continues to read as follows:

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


0
2. Amend section 49.107 by revising paragraphs (a) and (b) to read as 
follows:


49.107   Audit of prime contract settlement proposals and subcontract 
settlements.

    (a) The TCO shall refer each prime contractor settlement proposal 
valued at or above the threshold for obtaining certified cost or 
pricing data set forth in FAR 15.403-4(a)(1) to the appropriate audit 
agency for review and recommendations. The TCO may submit settlement 
proposals of less than the threshold for obtaining certified cost or 
pricing data to the audit agency. Referrals shall indicate any specific 
information or data that the TCO considers relevant and shall include 
facts and circumstances that will assist the audit agency in performing 
its function. The audit agency shall develop requested information and 
may make any further accounting reviews it considers appropriate. After 
its review, the audit agency shall submit written comments and 
recommendations to the TCO. When a formal examination of settlement 
proposals valued under the threshold for obtaining certified cost or 
pricing data is not warranted, the TCO will perform or have performed a 
desk review and include a written summary of the review in the 
termination case file.
    (b) The TCO shall refer subcontract settlements received for 
approval or ratification to the appropriate audit agency for review and 
recommendations when--
    (1) The amount exceeds the threshold for obtaining certified cost 
or pricing data; or
    (2) The TCO determines that a complete or partial accounting review 
is advisable. The audit agency shall submit written comments and 
recommendations to the TCO. The review by the audit agency does not 
relieve the prime contractor or higher tier subcontractor of the 
responsibility for performing an accounting review.
* * * * *
[FR Doc. 2018-09169 Filed 4-30-18; 8:45 am]
 BILLING CODE 6820-EP-P

Federal Register / Vol. 83, No. 84 / Tuesday, May 1, 2018 / Rules and Regulations 19149 DOL rate is required by statute (the PART 22—APPLICATION OF LABOR penalty for inflation no later than Inflation Adjustment Act); GSA, DoD, LAWS TO GOVERNMENT January 15 each year. and NASA have no authority to change ACQUISITIONS * * * * * the rate. [FR Doc. 2018–09167 Filed 4–30–18; 8:45 am] ■ 2. Amend section 22.302 by revising BILLING CODE 6820–14–P V. Executive Orders 12866 and 13563 paragraph (a) to read as follows: Executive Orders (E.O.s) 12866 and 22.302 Liquidated damages and overtime 13563 direct agencies to assess all costs pay. DEPARTMENT OF DEFENSE and benefits of available regulatory (a) When an overtime computation alternatives and, if regulation is GENERAL SERVICES discloses underpayments, the necessary, to select regulatory ADMINISTRATION responsible contractor or subcontractor approaches that maximize net benefits must pay the affected employee any (including potential economic, NATIONAL AERONAUTICS AND unpaid wages and pay liquidated environmental, public health and safety SPACE ADMINISTRATION damages to the Government. The effects, distributive impacts, and contracting officer must assess equity). E.O. 13563 emphasizes the 48 CFR Part 49 liquidated damages at the rate specified importance of quantifying both costs at 29 CFR 5.5(b)(2) per affected [FAC 2005–98, FAR Case 2015–039; Item and benefits, of reducing costs, of employee for each calendar day on IV; Docket No. 2015–0039, Sequence harmonizing rules, and of promoting which the employer required or No. 1] flexibility. This is not a significant permitted the employee to work in RIN 9000–AN26 regulatory action and, therefore, was not excess of the standard workweek of 40 subject to review under Section 6(b) of hours without paying overtime wages Federal Acquisition Regulations: Audit E.O. 12866, Regulatory Planning and required by the statute. In accordance of Settlement Proposals Review, dated September 30, 1993. This with the Federal Civil Penalties rule is not a major rule under 5 U.S.C. AGENCY: Department of Defense (DoD), Inflation Adjustment Act of 1990 (28 General Services Administration (GSA), 804. U.S.C. 2461 Note), the Department of and National Aeronautics and Space VI. Executive Order 13771 Labor adjusts this civil monetary Administration (NASA). penalty for inflation no later than This rule is not subject to E.O. 13771, ACTION: Final rule. January 15 each year. because this rule is not a significant regulatory action under E.O. 12866. * * * * * SUMMARY: DoD, GSA, and NASA are issuing a final rule to amend the Federal VII. Regulatory Flexibility Act PART 52—SOLICITATION PROVISIONS Acquisition Regulation (FAR) to raise Because a notice of proposed AND CONTRACT CLAUSES the dollar threshold requirement for the rulemaking and an opportunity for ■ 3. Amend section 52.222–4 by audit of prime contract settlement public comment are not required to be revising the date of the clause and proposals and subcontract settlements given for this rule under 41 U.S.C. paragraph (b) to read as follows: from $100,000 to align with the 1707(a)(1) (see section IV. of this threshold for obtaining certified cost or preamble), the analytical requirements 52.222–4 Contract Work Hours and Safety pricing data. of the Regulatory Flexibility Act (5 Standards—Overtime Compensation. DATES: Effective: May 31, 2018. U.S.C. 601 et seq.) are not applicable. * * * * * FOR FURTHER INFORMATION CONTACT: Ms. Accordingly, no regulatory flexibility Contract Work Hours and Safety Zenaida Delgado, Procurement Analyst, analysis is required and none has been Standards—Overtime Compensation at 202–969–7207, for clarification of prepared. (May, 2018) content. For information pertaining to status or publication schedules, contact VIII. Paperwork Reduction Act * * * * * the Regulatory Secretariat Division at The rule does not contain any (b) Violation; liability for unpaid 202–501–4755. Please cite FAC 2005– information collection requirements that wages; liquidated damages. The 98, FAR Case 2015–039. require the approval of the Office of responsible Contractor and SUPPLEMENTARY INFORMATION: Management and Budget under the subcontractor are liable for unpaid Paperwork Reduction Act (44 U.S.C. wages if they violate the terms in I. Background chapter 35). paragraph (a) of this clause. In addition, DOD, GSA, and NASA published a the Contractor and subcontractor are proposed rule in the Federal Register at List of Subjects in 48 CFR Parts 22 and liable for liquidated damages payable to 81 FR 63158 on September 14, 2016, to 52 the Government. The Contracting amend FAR 49.107 to increase the Government procurement. Officer will assess liquidated damages at dollar threshold for the audit of prime Dated: April 25, 2018. the rate specified at 29 CFR 5.5(b)(2) per contract settlement proposals and William F. Clark, affected employee for each calendar day subcontract settlements submitted in the on which the employer required or event of contract termination, from Director, Office of Government-wide Acquisition Policy, Office of Acquisition permitted the employee to work in $100,000 to align with the threshold in Policy, Office of Government-wide Policy. excess of the standard workweek of 40 FAR 15.403–4(a)(1) for obtaining hours without paying overtime wages certified cost or pricing data, which is Therefore, DoD, GSA, and NASA required by the Contract Work Hours amozie on DSK30RV082PROD with RULES2 currently $750,000. amend 48 CFR parts 22 and 52 as set and Safety Standards statute (found at forth below: 40 U.S.C. chapter 37). In accordance II. Discussion and Analysis ■ 1. The authority citation for parts 22 with the Federal Civil Penalties No public comments were submitted and 52 continues to read as follows: Inflation Adjustment Act of 1990 (28 in response to the proposed rule. Authority: 40 U.S.C. 121(c); 10 U.S.C. U.S.C. 2461 Note), the Department of Therefore, there are no changes from the chapter 137; and 51 U.S.C. 20113. Labor adjusts this civil monetary proposed rule made in the final rule. VerDate Sep<11>2014 18:35 Apr 30, 2018 Jkt 244001 PO 00000 Frm 00007 Fmt 4701 Sfmt 4700 E:\FR\FM\01MYR2.SGM 01MYR2

19150 Federal Register / Vol. 83, No. 84 / Tuesday, May 1, 2018 / Rules and Regulations III. Expected Cost Savings forth in FAR 15.403–4(a)(1), which is recommendations. The TCO may submit currently $750,000. The rule is necessary to settlement proposals of less than the This final rule impacts contractors reduce the administrative burdens associated subject to audits of their termination threshold for obtaining certified cost or with termination settlement proposals. settlement proposals. The rule is pricing data to the audit agency. No public comments were received in administrative in nature, because it response to the initial regulatory flexibility Referrals shall indicate any specific raises a threshold. This rule eliminates analysis. information or data that the TCO termination settlements audits between DoD, GSA, and NASA do not expect this considers relevant and shall include $100,000 and the threshold for rule to have a significant economic impact on facts and circumstances that will assist a substantial number of small entities within the audit agency in performing its obtaining certified cost or pricing data, the meaning of the Regulatory Flexibility Act, function. The audit agency shall currently $750,000. Contractors will 5 U.S.C. 601, et seq. Since the rule raises the save costs associated with the develop requested information and may audit threshold, even fewer small businesses preparation and support for the make any further accounting reviews it will be subject to audits of their termination termination settlement audits. This will settlement proposals. It is estimated that an considers appropriate. After its review, also enable faster final settlement average of 4 small entities per year will be the audit agency shall submit written payments to contractors, thereby relieved from the requirements of supporting comments and recommendations to the improving contractor cash flow. an audit of a contract settlement proposal, TCO. When a formal examination of which is a minute fraction of all contracts settlement proposals valued under the IV. Applicability to Contracts at or awarded to small businesses in a typical year. threshold for obtaining certified cost or Below the Simplified Acquisition The rule imposes no reporting, pricing data is not warranted, the TCO Threshold and for Commercial Items, recordkeeping, or other information will perform or have performed a desk Including Commercially Available Off- collection requirements. There are no known significant alternatives review and include a written summary the-Shelf Items to the rule. The impact of this rule on small of the review in the termination case This rule does not add any new business is not expected to be significant. file. solicitation provisions or clauses, or (b) The TCO shall refer subcontract Interested parties may obtain a copy impact any existing provisions or settlements received for approval or of the FRFA from the Regulatory clauses. ratification to the appropriate audit Secretariat Division. The Regulatory agency for review and recommendations V. Executive Orders 12866 and 13563 Secretariat Division has submitted a when— copy of the FRFA to the Chief Counsel (1) The amount exceeds the threshold Executive Orders (E.O.s) 12866 and for Advocacy of the Small Business for obtaining certified cost or pricing 13563 direct agencies to assess all costs Administration. data; or and benefits of available regulatory alternatives and, if regulation is VIII. Paperwork Reduction Act (2) The TCO determines that a necessary, to select regulatory This rule does not contain any complete or partial accounting review is approaches that maximize net benefits information collection requirements that advisable. The audit agency shall (including potential economic, require the approval of the Office of submit written comments and environmental, public health and safety Management and Budget under the recommendations to the TCO. The effects, distributive impacts, and Paperwork Reduction Act (44 U.S.C. review by the audit agency does not equity). E.O. 13563 emphasizes the chapter 35). relieve the prime contractor or higher importance of quantifying both costs tier subcontractor of the responsibility and benefits, of reducing costs, of List of Subjects in 48 CFR Part 49 for performing an accounting review. harmonizing rules, and of promoting Government procurement. * * * * * flexibility. This is not a significant Dated: April 25, 2018. [FR Doc. 2018–09169 Filed 4–30–18; 8:45 am] regulatory action and, therefore, was not BILLING CODE 6820–EP–P William F. Clark, subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Director, Office of Government-wide Acquisition Policy, Office of Acquisition Review, dated September 30, 1993. This DEPARTMENT OF DEFENSE Policy, Office of Government-wide Policy. rule is not a major rule under 5 U.S.C. 804. Therefore, DoD, GSA, and NASA GENERAL SERVICES amend 48 CFR part 49 as set forth ADMINISTRATION VI. Executive Order 13771 below: Pursuant to E.O. 13771, this rule is a NATIONAL AERONAUTICS AND deregulatory action. Information on the PART 49—TERMINATION OF SPACE ADMINISTRATION expected cost savings of this action can CONTRACTS be found in section III of the preamble. ■ 1. The authority citation for part 49 48 CFR Chapter 1 VII. Regulatory Flexibility Act continues to read as follows: [Docket No. FAR 2018–0001, Sequence Authority: 40 U.S.C. 121(c); 10 U.S.C. No. 2] DoD, GSA, and NASA have prepared a final regulatory flexibility analysis chapter 137; and 51 U.S.C. 20113. Federal Acquisition Regulation: (FRFA) consistent with the Regulatory ■ 2. Amend section 49.107 by revising Federal Acquisition Circular 2005–98; Flexibility Act, 5 U.S.C. 601, et seq. The paragraphs (a) and (b) to read as follows: Small Entity Compliance Guide FRFA is summarized as follows: 49.107 Audit of prime contract settlement AGENCY: Department of Defense (DoD), This final rule amends FAR 49.107, Audit proposals and subcontract settlements. amozie on DSK30RV082PROD with RULES2 of prime contract settlement proposals and General Services Administration (GSA), (a) The TCO shall refer each prime and National Aeronautics and Space subcontract settlements, to raise the dollar threshold for the audit of prime contract contractor settlement proposal valued at Administration (NASA). settlement proposals and subcontract or above the threshold for obtaining ACTION: Small Entity Compliance Guide. settlements submitted in the event of contract certified cost or pricing data set forth in termination from $100,000 to the threshold FAR 15.403–4(a)(1) to the appropriate SUMMARY: This document is issued for obtaining certified cost or pricing data set audit agency for review and under the joint authority of DOD, GSA, VerDate Sep<11>2014 18:35 Apr 30, 2018 Jkt 244001 PO 00000 Frm 00008 Fmt 4701 Sfmt 4700 E:\FR\FM\01MYR2.SGM 01MYR2


Document Created: 2018-05-01 00:24:50
Document Modified: 2018-05-01 00:24:50
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionRules and Regulations
ActionFinal rule.
DatesEffective: May 31, 2018.
ContactMs. Zenaida Delgado, Procurement Analyst, at 202-969-7207, for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite FAC 2005-98, FAR Case 2015-039.
FR Citation83 FR 19149 
RIN Number9000-AN26
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