[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: 48CFR42.705-2]

[Page 773]
 
            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.  42.705-2  Auditor determination procedure.

    (a) Applicability and responsibility. (1) The cognizant Government 
auditor shall establish final indirect cost rates for business units not 
covered in 42.705-1(a).
    (2) In addition, auditor determination may be used for business 
units that are covered in 42.705-1(a) when the contracting officer (or 
cognizant Federal agency official) and auditor agree that the indirect 
costs can be settled with little difficulty and any of the following 
circumstances apply:
    (i) The business unit has primarily fixed-price contracts, with only 
minor involvement in cost-reimbursement contracts.
    (ii) The administrative cost of contracting officer determination 
would exceed the expected benefits.
    (iii) The business unit does not have a history of disputes and 
there are few cost problems.
    (iv) The contracting officer (or cognizant Federal agency official) 
and auditor agree that special circumstances require auditor 
determination.
    (b) Procedures. (1) The contractor shall submit to the cognizant 
contracting officer (or cognizant Federal agency official) and auditor a 
final indirect cost rate proposal in accordance with 42.705-1(b)(1).
    (2) Upon receipt of a proposal, the auditor shall--
    (i) Audit the proposal and seek agreement on indirect costs with the 
contractor;
    (ii) Prepare an indirect cost rate agreement conforming to the 
requirements of the contracts. The agreement shall be signed by the 
contractor and the auditor;
    (iii) If agreement with the contractor is not reached, forward the 
audit report to the contracting officer (or cognizant Federal agency 
official) identified in the Directory of Contract Administration 
Services Components (see 42.203), who will then resolve the 
disagreement; and
    (iv) Distribute resulting documents in accordance with 42.706.

[48 FR 42370, Sept. 19, 1983, as amended at 59 FR 67052, Dec. 28, 1994; 
62 FR 51258, Sept. 30, 1997; 63 FR 9065, Feb. 23, 1998]