[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: 48CFR42.703-2]

[Page 770]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 42_CONTRACT ADMINISTRATION AND AUDIT SERVICES--Table of Contents
 
                    Subpart 42.7_Indirect Cost Rates
 
Sec.  42.703-2  Certificate of indirect costs.

    (a) General. In accordance with 10 U.S.C. 2324(h) and 41 U.S.C. 
256(h), a proposal shall not be accepted and no agreement shall be made 
to establish final indirect cost rates unless the costs have been 
certified by the contractor.
    (b) Waiver of certification. (1) The agency head, or designee, may 
waive the certification requirement when--
    (i) It is determined to be in the interest of the United States; and
    (ii) The reasons for the determination are put in writing and made 
available to the public.
    (2) A waiver may be appropriate for a contract with--
    (i) A foreign government or international organization, such as a 
subsidiary body of the North Atlantic Treaty Organization;
    (ii) A state or local government subject to OMB Circular A-87;
    (iii) An educational institution subject to OMB Circular A-21; and
    (iv) A nonprofit organization subject to OMB Circular A-122.
    (c) Failure to certify. (1) If the contractor has not certified its 
proposal for final indirect cost rates and a waiver is not appropriate, 
the contracting officer may unilaterally establish the rates.
    (2) Rates established unilaterally should be--
    (i) Based on audited historical data or other available data as long 
as unallowable costs are excluded; and
    (ii) Set low enough to ensure that unallowable costs will not be 
reimbursed.
    (d) False certification. The contracting officer should consult with 
legal counsel to determine appropriate action when a contractor's 
certificate of final indirect costs is thought to be false.
    (e) Penalties for unallowable costs. 10 U.S.C. 2324(a) through (d) 
and 41 U.S.C. 256 (a) through (d) prescribe penalties for submission of 
unallowable costs in final indirect cost rate proposals (see 42.709 for 
penalties and contracting officer responsibilities).
    (f) Contract clause. (1) Except as provided in paragraph (f)(2) of 
this subsection, the clause at 52.242-4, Certification of Final Indirect 
Costs, shall be incorporated into all solicitations and contracts which 
provide for establishment of final indirect cost rates.
    (2) The Department of Energy may provide an alternate clause in its 
agency supplement for its Management and Operating contracts.

[60 FR 42664, Aug. 16, 1995, as amended at 62 FR 237, Jan. 2, 1997; 62 
FR 10710, Mar. 10, 1997; 63 FR 9064, Feb. 23, 1998]