[Code of Federal Regulations]
[Title 48, Volume 6]
[Revised as of October 1, 2005]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR1516.303-76]

[Page 33]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
               CHAPTER 15--ENVIRONMENTAL PROTECTION AGENCY
 
PART 1516_TYPES OF CONTRACTS--Table of Contents
 
               Subpart 1516.3_Cost-Reimbursement Contracts
 
Sec. 1516.303-76  Fee on cost-sharing contracts by subcontractors.

    (a) Subcontractors under prime cost-sharing contracts who do not 
have a significant direct interest in the contract or who are not in a 
position to gain long-term benefits from the contract may earn a fee.
    (b) Contracting Officers should be alert to a potential 
vulnerability for the Government under cost-sharing contracts when 
evaluating proposed subcontractors or consenting to a subcontract during 
contract administration, where the subcontractor is a wholly-owned 
subsidiary of the prime. The vulnerability consists of the subsidiary 
earning a large amount of fee, which could be returned to the prime 
through stock dividends or other intercompany transactions. This could 
circumvent the objective of a cost-sharing contract.

[61 FR 14505, Apr. 2, 1996]