[Federal Register Volume 68, Number 99 (Thursday, May 22, 2003)]
[Rules and Regulations]
[Pages 28091-28092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-12302]
[[Page 28091]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 31, 47, and 52
[FAC 2001-14; FAR Case 2001-029; Item II]
RIN 9000-AJ33
Federal Acquisition Regulation; Miscellaneous Cost Principles
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Final rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) have agreed on a final rule
amending the Federal Acquisition Regulation (FAR) to delete the cost
principle concerning transportation costs and to revise the cost
principles concerning cost of money, other business expenses, and
deferred research and development costs.
DATES: Effective Date: June 23, 2003.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC 20405, (202) 501-4755, for information
pertaining to status or publication schedules. For clarification of
content, contact Mr. Edward Loeb at (202) 501-1224. Please cite FAC
2001-14, FAR case 2001-029.
SUPPLEMENTARY INFORMATION:
A. Background
DoD, GSA, and NASA published a proposed rule in the Federal
Register at 67 FR 13072, March 20, 2002, with request for comments. Two
respondents submitted public comments. The Councils considered all
comments and concluded that the proposed rule should be converted to a
final rule with the following changes to the proposed rule:
1. Revise the language at FAR 31.205-10(b)(1) to state that cost of
money ``is measured, assigned, and allocated to contracts in accordance
with 48 CFR 9904.414 or measured and added to the cost of capital
assets under construction in accordance with 48 CFR 9904.417, as
applicable.''
2. Change the word ``cost'' in paragraph 31.205-10(b)(3) to ``cost
of money'' to maintain clarity and consistency at FAR 31.205-10. A
discussion of the comments is provided below:
Comment: Respondent recommends that paragraph (a)(2) of FAR 31.205-
10 be revised to state that cost of money ``shall be treated like an
incurred cost for cost-reimbursement purposes.''
Councils' response: Do not concur. The Councils believe FAR 31.205-
10(a)(1) of the proposed rule clearly specifies that cost of money is
an imputed cost (as opposed to an incurred cost). Paragraph (a)(2)
further states that, for cost-reimbursement purposes, this imputed cost
is an ``incurred cost.'' The Councils do not believe this language
would permit a contractor to argue that cost of money is not an imputed
cost. In fact, the cost principle at FAR 31.205-10 has referred to cost
of money as being, for cost-reimbursement purposes, an ``incurred
cost'' since at least as early as 1984, but has also always
specifically stated that it is actually an ``imputed cost.''
Comment: Respondent recommends revising the language in the
proposed rule at FAR 31.205-10(b)(1) for cost of money that states ``it
is measured, assigned, and allocated to contracts in accordance with 48
CFR 9904.414 or 48 CFR 9904.417, as applicable.'' Respondent notes that
48 CFR 9904.417--Cost of Money as an Element of the Cost of Capital
Assets under Construction (CAS 417), addresses the measurement of cost
of money attributable to assets being constructed rather than contract
costs.
Councils' response: Concur. The Councils revised the rule at
paragraph (b)(1) to state that cost of money ``is measured, assigned,
and allocated to contracts in accordance with 48 CFR 9904.414 or
measured and added to the cost of capital assets under construction in
accordance with 48 CFR 9904.417, as applicable.''
Comment: Respondent recommends revising FAR 31.205-10(b)(1) by
changing the word ``cost'' to ``imputed cost'' or ``cost of money,'' to
make it consistent with the other language in the cost principle.
Councils' response: Concur. The Councils changed the word ``cost''
in paragraph (b)(3) to ``cost of money.''
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not 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., because most contracts awarded
to small entities use simplified acquisition procedures or are awarded
on a competitive, fixed-price basis, and do not require application of
the cost principles discussed in this rule.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.
List of Subjects in 48 CFR Parts 2, 31, 47, and 52
Government procurement.
Dated: May 13, 2003.
Laura G. Smith,
Director, Acquisition Policy Division.
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Therefore, DoD, GSA, and NASA amend 48 CFR parts 2, 31, 47, and 52 as
set forth below:
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1. The authority citation for 48 CFR parts 2, 31, 47, and 52 is revised
to read as follows:
Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
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2. In section 2.101, add the definition ``Facilities capital cost of
money'', in alphabetical order, to read as follows:
2.101 Definitions.
* * * * *
Facilities capital cost of money means ``cost of money as an
element of the cost of facilities capital'' as used at 48 CFR
9904.414--Cost Accounting Standard--Cost of Money as an Element of the
Cost of Facilities Capital.
* * * * *
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
31.001 [Amended]
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3. In section 31.001, remove the definitions ``Cost of capital
committed to facilities'' and ``Facilities capital.''
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4. Revise section 31.205-10 to read as follows:
31.205-10 Cost of money.
(a) General. Cost of money--
(1) Is an imputed cost that is not a form of interest on borrowings
(see 31.205-20);
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(2) Is an ``incurred cost'' for cost-reimbursement purposes under
applicable cost-reimbursement contracts and for progress payment
purposes under fixed-price contracts; and
(3) Refers to--
(i) Facilities capital cost of money (48 CFR 9904.414); and
(ii) Cost of money as an element of the cost of capital assets
under construction (48 CFR 9904.417).
(b) Cost of money is allowable, provided--
(1) It is measured, assigned, and allocated to contracts in
accordance with 48 CFR 9904.414 or measured and added to the cost of
capital assets under construction in accordance with 48 CFR 9904.417,
as applicable;
(2) The requirements of 31.205-52, which limit the allowability of
cost of money, are followed; and
(3) The estimated facilities capital cost of money is specifically
identified and proposed in cost proposals relating to the contract
under which the cost is to be claimed.
(c) Actual interest cost in lieu of the calculated imputed cost of
money is unallowable.
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5. In section 31.205-28, revise the introductory text to read as
follows:
31.205-28 Other business expenses.
The following types of recurring costs are allowable:
* * * * *
31.205-45 [Reserved]
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6. Remove and reserve section 31.205-45.
31.205-48 Research and development costs.
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7. Amend section 31.205-48 by revising the section heading to read as
set forth above; and in the first sentence by removing the word
``section'' and adding ``subsection'' in its place.
PART 47--TRANSPORTATION
47.300 [Amended]
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8. Amend section 47.300 in the introductory text of paragraph (b) by
removing ``(see 31.205-45)''.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
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9. Amend section 52.215-16 by revising the date of the provision and
paragraph (a) to read as follows:
52.215-16 Facilities Capital Cost of Money.
* * * * *
Facilities Capital Cost of Money (June 2003)
(a) Facilities capital cost of money will be an allowable cost
under the contemplated contract, if the criteria for allowability in
FAR 31.205-10(b) are met. One of the allowability criteria requires
the prospective Contractor to propose facilities capital cost of
money in its offer.
* * * * *
[FR Doc. 03-12302 Filed 5-22-03; 8:45 am]
BILLING CODE 6820-EP-P