[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR30.602-2]

[Page 561-562]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 30_COST ACCOUNTING STANDARDS ADMINISTRATION--Table of Contents
 
                     Subpart 30.6_CAS Administration
 
Sec.  30.602-2  Noncompliance with CAS requirements.

    (a) Determination of noncompliance. (1) Within 15 days of the 
receipt of a report of alleged noncompliance from the cognizant auditor, 
the ACO shall make an initial finding of compliance or noncompliance and 
advise the auditor.
    (2) If an initial finding of noncompliance is made, the ACO shall 
immediately notify the contractor in writing of the exact nature of the 
noncompliance and allow the contractor 60 days within which to agree or 
to submit reasons why the existing practices are considered to be in 
compliance.
    (3) If the contractor agrees with the initial finding of 
noncompliance, the ACO shall review the contractor submissions required 
by paragraph (a) of the clause at FAR 52.230-6, Administration of Cost 
Accounting Standards.
    (4) If the contractor disagrees with the initial noncompliance 
finding, the ACO shall review the reasons why the contractor considers 
the existing practices to be in compliance and make a

[[Page 562]]

determination of compliance or noncompliance. If the ACO determines that 
the contractor's practices are in noncompliance, a written explanation 
shall be provided as to why the ACO disagrees with the contractor's 
rationale. The ACO shall notify the contractor and the auditor in 
writing of the determination. If the ACO makes a determination of 
noncompliance, the procedures in (b) through (d), as appropriate, shall 
be followed.
    (b) Accounting changes. (1) The clause at FAR 52.230-6, 
Administration of Cost Accounting Standards, requires the contractor to 
submit a description of any cost accounting practice change needed to 
correct a noncompliance.
    (2) The ACO shall review the proposed change concurrently for 
adequacy and compliance (see 30.202-7). If the description of the change 
meets both tests, the ACO shall notify the contractor and request 
submission of a cost impact proposal in accordance with FAR 30.602.
    (c) Contract price adjustments. (1) The ACO shall request that the 
contractor submit a cost impact proposal within the time specified in 
the clause at FAR 52.230-6, Administration of Cost Accounting Standards.
    (2) Upon receipt of the cost impact proposal, the ACO shall then 
follow the procedures in 30.602-1(c)(1). In accordance with the clause 
at 52.230-2, Cost Accounting Standards, or FAR 52.230-5, Cost Accounting 
Standards--Educational Institution, the ACO shall include and separately 
identify, as part of the computation of the contract price 
adjustment(s), applicable interest on any increased costs paid to the 
contractor as a result of the noncompliance. Interest shall be computed 
from the date of overpayment to the time the adjustment is effected. If 
the costs were incurred and paid evenly over the fiscal years during 
which the noncompliance occurred, then the midpoint of the period in 
which the noncompliance began may be considered the baseline for the 
computation of interest. An alternate equitable method should be used if 
the costs were not incurred and paid evenly over the fiscal years during 
which the noncompliance occurred. Interest under 52.230-2 should be 
computed pursuant to Public Law 100-679.
    (d) Remedies for contractor failure to make required submissions. 
(1) If the contractor does not submit the accounting change description 
or the general dollar magnitude of the change or cost impact proposal 
(in the form and manner specified), the ACO, with the assistance of the 
cognizant auditor, shall estimate the general dollar magnitude of the 
cost impact on CAS-covered contracts and subcontracts. The ACO may then 
withhold an amount not to exceed 10 percent of each subsequent amount 
determined payable related to the contractor's CAS-covered prime 
contracts, up to the estimated general dollar magnitude of the cost 
impact until the required submission is furnished by the contractor.
    (2) If the contractor has not submitted the cost impact proposal 
before the total withheld amount reaches the estimated general dollar 
magnitude and the ACO determines that an adjustment is required (see 
30.602), the ACO shall notify the contractor and request agreement as to 
the cost or price adjustment together with any applicable interest as 
computed in accordance with 30.602-2(c)(2). The contractor shall also be 
advised that in the event no agreement on the cost or price adjustment 
is reached within 20 days, the ACO may make a unilateral adjustment, 
subject to contractor appeal, as provided in the clause at 52.233-1, 
Disputes.
    (3) If the ACO determines that there is no material increase in 
costs as a result of the noncompliance, the ACO shall notify the 
contractor in writing that the contractor is in noncompliance, that 
corrective action should be taken, and that if such noncompliance 
subsequently results in materially increased costs to the Government, 
the provisions of the clause at 52.230-2, Cost Accounting Standards, 
52.230-5, Cost Accounting Standards--Educational Institution, and/or the 
clause at 52.230-3, Disclosure and Consistency of Cost Accounting 
Practices, will be enforced.

[57 FR 39590, Aug. 31, 1992; 57 FR 43409, Sept. 21, 1992, as amended at 
57 FR 47373, Oct. 15, 1992; 59 FR 67043, Dec. 28, 1994; 61 FR 18918, 
Apr. 29, 1996]

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