41 U.S.C. § 422 : US Code - Section 422: Cost Accounting Standards Board

Search 41 U.S.C. § 422 : US Code - Section 422: Cost Accounting Standards Board

(a) Establishment; membership; terms
(1) There is established within the Office of Federal Procurement
Policy an independent board to be known as the "Cost Accounting
Standards Board" (hereinafter referred to as the "Board"). The
Board shall consist of 5 members, including the Administrator, who
shall serve as Chairman, and 4 members, all of whom shall have
experience in Government contract cost accounting, and who shall be
appointed as follows:
(A) two representatives of the Federal Government -
(i) one of whom shall be a representative of the Department
of Defense and be appointed by the Secretary of Defense; and
(ii) one of whom shall be an officer or employee of the
General Services Administration appointed by the Administrator
of General Services; and
(B) two individuals from the private sector, each of whom shall
be appointed by the Administrator and -
(i) one of whom shall be a representative of industry; and
(ii) one of whom shall be particularly knowledgeable about
cost accounting problems and systems.
(2)(A) The term of office of each of the members of the Board,
other than the Administrator for Federal Procurement Policy, shall
be 4 years, except that -
(i) of the initial members, two shall be appointed for terms of
two years, one shall be appointed for a term of three years, and
one shall be appointed for a term of four years;
(ii) any member appointed to fill a vacancy in the Board shall
serve for the remainder of the term for which his predecessor was
appointed; and
(iii) no individual who is appointed under paragraph (1)(A) of
this subsection shall continue to serve after ceasing to be an
officer or employee of the agency from which he or she was
appointed.
(B) A vacancy on the Board shall be filled in the same manner in
which the original appointment was made.
(C) The initial members of the Board shall be appointed within
120 days after November 17, 1988.
(b) Senior staff
The Administrator, after consultation with the Board, may appoint
an executive secretary and two additional staff members without
regard to the provisions of title 5 governing appointments in the
competitive service, and may pay such employees without regard to
the provisions of chapter 51 and subchapter III of chapter 53 of
such title relating to classification and General Schedule pay
rates, except that no individual so appointed may receive pay in
excess of the annual rate of basic pay payable for GS-18 of the
General Schedule.
(c) Other staff
The Administrator may appoint, fix the compensation, and remove
additional employees of the Board under the applicable provisions
of title 5.
(d) Detailed and temporary personnel
(1) The Board may use, without reimbursement, any personnel of a
Federal agency (with the consent of the head of the agency
concerned) to serve on advisory committees and task forces to
assist the Board in carrying out the functions and responsibilities
of the Board under this section.
(2) The Administrator, after consultation with the Board, may
procure temporary and intermittent services under section 3109(b)
of title 5 of personnel for the purpose of serving on advisory
committees and task forces to assist the Board in carrying out the
functions and responsibilities of the Board under this section.
(e) Compensation
Except as otherwise provided in subsection (a) of this section,
the members of the Board who are officers or employees of the
Federal Government, and officers and employees of other agencies of
the Federal Government who are used under subsection (d)(1) of this
section, shall receive no additional compensation for services, but
shall continue to be compensated by the employing Department or
agency of such officer or employee. Each member of the Board
appointed from private life shall receive compensation at a rate
not to exceed the daily equivalent of the rate prescribed for level
IV of the Executive Schedule for each day (including travel time)
in which the member is engaged in the actual performance of duties
vested in the Board. Individuals hired under subsection (d)(2) of
this section may receive compensation at rates fixed by the
Administrator, but not to exceed the daily equivalent of the rate
prescribed for level V of the Federal Executive Salary Schedule
under section 5316 of title 5 for each day (including travel time)
in which such appointees are properly engaged in the actual
performance of duties under this section. While serving away from
homes or the regular place of business, Board members and other
appointees serving on an intermittent basis under this section
shall be allowed travel expenses in accordance with section 5703 of
title 5.
(f) Cost accounting standards authority
(1) The Board shall have the exclusive authority to make,
promulgate, amend, and rescind cost accounting standards and
interpretations thereof designed to achieve uniformity and
consistency in the cost accounting standards governing measurement,
assignment, and allocation of costs to contracts with the United
States.
(2)(A) Cost accounting standards promulgated under this section
shall be mandatory for use by all executive agencies and by
contractors and subcontractors in estimating, accumulating, and
reporting costs in connection with pricing and administration of,
and settlement of disputes concerning, all negotiated prime
contract and subcontract procurements with the United States in
excess of the amount set forth in section 2306a(a)(1)(A)(i) of
title 10, as such amount is adjusted in accordance with applicable
requirements of law.
(B) Subparagraph (A) does not apply to the following contracts or
subcontracts:
(i) Contracts or subcontracts for the acquisition of commercial
items.
(ii) Contracts or subcontracts where the price negotiated is
based on prices set by law or regulation.
(iii) Firm, fixed-price contracts or subcontracts awarded on
the basis of adequate price competition without submission of
certified cost or pricing data.
(iv) A contract or subcontract with a value of less than
$7,500,000 if, at the time the contract or subcontract is entered
into, the segment of the contractor or subcontractor that will
perform the work has not been awarded at least one contract or
subcontract with a value of more than $7,500,000 that is covered
by the cost accounting standards.
(C) In this paragraph, the term "subcontract" includes a transfer
of commercial items between divisions, subsidiaries, or affiliates
of a contractor or subcontractor.
(3) The Administrator, after consultation with the Board, shall
prescribe rules and procedures governing actions of the Board under
this section. Such rules and procedures shall require that any cost
accounting standard promulgated, amended, or rescinded (and
interpretations thereof) shall be adopted by majority vote of the
Board members.
(4) The Board is authorized -
(A) to exempt classes or categories of contractors and
subcontractors from the requirements of this section; and
(B) to establish procedures for the waiver of the requirements
of this section with respect to individual contracts and
subcontracts.
(5)(A) The head of an executive agency may waive the
applicability of the cost accounting standards for a contract or
subcontract with a value less than $15,000,000 if that official
determines in writing that the segment of the contractor or
subcontractor that will perform the work -
(i) is primarily engaged in the sale of commercial items; and
(ii) would not otherwise be subject to the cost accounting
standards under this section, as in effect on or after the
effective date of this paragraph.
(B) The head of an executive agency may also waive the
applicability of the cost accounting standards for a contract or
subcontract under exceptional circumstances when necessary to meet
the needs of the agency. A determination to waive the applicability
of the cost accounting standards under this subparagraph shall be
set forth in writing and shall include a statement of the
circumstances justifying the waiver.
(C) The head of an executive agency may not delegate the
authority under subparagraph (A) or (B) to any official in the
executive agency below the senior policymaking level in the
executive agency.
(D) The Federal Acquisition Regulation shall include the
following:
(i) Criteria for selecting an official to be delegated
authority to grant waivers under subparagraph (A) or (B).
(ii) The specific circumstances under which such a waiver may
be granted.
(E) The head of each executive agency shall report the waivers
granted under subparagraphs (A) and (B) for that agency to the
Board on an annual basis.
(g) Requirements for standards
(1) Prior to the promulgation under this section of cost
accounting standards and interpretations thereof, the Board shall -

(A) take into account, after consultation and discussions with
the Comptroller General and professional accounting
organizations, contractors, and other interested parties -
(i) the probable costs of implementation, including
inflationary effects, if any, compared to the probable
benefits;
(ii) the advantages, disadvantages, and improvements
anticipated in the pricing and administration of, and
settlement of disputes concerning, contracts; and
(iii) the scope of, and alternatives available to, the action
proposed to be taken;
(B) prepare and publish a report in the Federal Register on the
issues reviewed under paragraph (1)(A);
(C)(i) publish an advanced notice of proposed rulemaking in the
Federal Register in order to solicit comments on the report
prepared pursuant to subparagraph (B);
(ii) provide all parties affected a period of not less than 60
days after such publication to submit their views and comments;
and
(iii) during this 60-day period, consult with the Comptroller
General and consider any recommendation the Comptroller General
may make; and
(D) publish a notice of such proposed rulemaking in the Federal
Register and provide all parties affected a period of not less
than 60 days after such publication to submit their views and
comments.
(2) Rules, regulations, cost accounting standards, and
modifications thereof promulgated or amended under this section
shall have the full force and effect of law, and shall become
effective within 120 days after publication in the Federal Register
in final form, unless the Board determines a longer period is
necessary. Implementation dates for contractors and subcontractors
shall be determined by the Board, but in no event shall such dates
be later than the beginning of the second fiscal year of the
contractor or subcontractor after the standard becomes effective.
Rules, regulations, cost accounting standards, and modifications
thereof promulgated or amended under this section shall be
accompanied by prefatory comments and by illustrations, if
necessary.
(3) The functions exercised under this section are excluded from
the operation of sections 551, 553 through 559, and 701 through 706
of title 5.
(h) Implementing regulations
(1) The Board shall promulgate rules and regulations for the
implementation of cost accounting standards promulgated or
interpreted under subsection (f) of this section. Such regulations
shall be incorporated into the Federal Acquisition Regulation and
shall require contractors and subcontractors as a condition of
contracting with the United States to -
(A) disclose in writing their cost accounting practices,
including methods of distinguishing direct costs from indirect
costs and the basis used for allocating indirect costs; and
(B) agree to a contract price adjustment, with interest, for
any increased costs paid to such contractor or subcontractor by
the United States by reason of a change in the contractor's or
subcontractor's cost accounting practices or by reason of a
failure by the contractor or subcontractor to comply with
applicable cost accounting standards.
(2) If the United States and a contractor or subcontractor fail
to agree on a contract price adjustment, including whether the
contractor or subcontractor has complied with the applicable cost
accounting standards, the disagreement will constitute a dispute
under the Contract Disputes Act [41 U.S.C. 601 et seq.].
(3) Any contract price adjustment undertaken pursuant to
paragraph (1)(B) shall be made, where applicable, on relevant
contracts between the United States and the contractor that are
subject to the cost accounting standards so as to protect the
United States from payment, in the aggregate, of increased costs
(as defined by the Board). In no case shall the Government recover
costs greater than the increased cost (as defined by the Board) to
the Government, in the aggregate, on the relevant contracts subject
to the price adjustment, unless the contractor made a change in its
cost accounting practices of which it was aware or should have been
aware at the time of the price negotiation and which it failed to
disclose to the Government.
(4) The interest rate applicable to any contract price adjustment
shall be the annual rate of interest established under section 6621
of title 26 for such period. Such interest shall accrue from the
time payments of the increased costs were made to the contractor or
subcontractor to the time the United States receives full
compensation for the price adjustment.
(i) Omitted
(j) Effect on other standards and regulations
(1) All cost accounting standards, waivers, exemptions,
interpretations, modifications, rules, and regulations promulgated
by the Cost Accounting Standards Board under section 2168 (!1) of
title 50, Appendix, shall remain in effect unless and until
amended, superseded, or rescinded by the Board pursuant to this
section.
(2) Existing cost accounting standards referred to in paragraph
(1) shall be subject to the provisions of this chapter in the same
manner as if promulgated by the Board under this chapter.
(3) The Administrator, under the authority set forth in section
405 of this title, shall ensure that no regulation or proposed
regulation of an executive agency is inconsistent with a cost
accounting standard promulgated or amended under this section by
rescinding or denying the promulgation of any such inconsistent
regulation or proposed regulation and taking such other action
authorized under section 405 of this title as may be appropriate.
(4) Costs which are the subject of cost accounting standards
promulgated under this section shall not be subject to regulations
that are established by another executive agency that differ from
such standards with respect to the measurement, assignment, and
allocation of such costs.
(k) Examinations
For the purpose of determining whether a contractor or
subcontractor has complied with cost accounting standards
promulgated under this section and has followed consistently the
contractor's or subcontractor's disclosed cost accounting
practices, any authorized representative of the head of the agency
concerned, of the offices of inspector general established pursuant
to the Inspector General Act of 1978, or of the Comptroller General
of the United States shall have the right to examine and make
copies of any documents, papers, or records of such contractor or
subcontractor relating to compliance with such cost accounting
standards.
(l) Authorization of appropriations
There are authorized to be appropriated such sums as may be
necessary to carry out the provisions of this section.