[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: 48CFR42.709-1]

[Page 775-776]
 
            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.  42.709-1  General.

    (a) The following penalties apply to contracts covered by this 
section:
    (1) If the indirect cost is expressly unallowable under a cost 
principle in the FAR, or an executive agency supplement to the FAR, that 
defines the

[[Page 776]]

allowability of specific selected costs, the penalty is equal to--
    (i) The amount of the disallowed costs allocated to contracts that 
are subject to this section for which an indirect cost proposal has been 
submitted; plus
    (ii) Interest on the paid portion, if any, of the disallowance.
    (2) If the indirect cost was determined to be unallowable for that 
contractor before proposal submission, the penalty is two times the 
amount in paragraph (a)(1)(i) of this section.
    (b) These penalties are in addition to other administrative, civil, 
and criminal penalties provided by law.
    (c) It is not necessary for unallowable costs to have been paid to 
the contractor in order to assess a penalty.

[60 FR 42658, Aug. 16, 1995]