[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR42.704]



[Page 794-795]

 

            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. 42.704  Billing rates.



    (a) The contracting officer (or cognizant Federal agency official) 

or auditor responsible under 42.705 for establishing the final indirect 

cost rates also shall be responsible for determining the billing rates.

    (b) The contracting officer (or cognizant Federal agency official) 

or auditor shall establish billing rates on the basis of information 

resulting from recent review, previous rate audits or experience, or 

similar reliable data or experience of other contracting activities. In 

establishing billing rates, the contracting officer (or cognizant 

Federal agency official) or auditor should ensure that the billing rates 

are as close as possible to the final indirect cost rates anticipated 

for the contractor's fiscal period, as adjusted for any unallowable 

costs. When the contracting officer (or cognizant Federal agency 

official) or auditor determines



[[Page 795]]



that the dollar value of contracts requiring use of billing rates does 

not warrant submission of a detailed billing rate proposal, the billing 

rates may be established by making appropriate adjustments from the 

prior year's indirect cost experience to eliminate unallowable and 

nonrecurring costs and to reflect new or changed conditions.

    (c) Once established, billing rates may be prospectively or 

retroactively revised by mutual agreement of the contracting officer (or 

cognizant Federal agency official) or auditor and the contractor at 

either party's request, to prevent substantial overpayment or 

underpayment. When agreement cannot be reached, the billing rates may be 

unilaterally determined by the contracting officer (or cognizant Federal 

agency official).

    (d) The elements of indirect cost and the base or bases used in 

computing billing rates shall not be construed as determinative of the 

indirect costs to be distributed or of the bases of distribution to be 

used in the final settlement.

    (e) When the contractor provides to the cognizant contracting 

officer the certified final indirect cost rate proposal in accordance 

with 42.705-(b) or 42.705-(b), the contractor and the Government may 

mutually agree to revise billing rates to reflect the proposed indirect 

cost rates, as approved by the Government to reflect historically 

disallowed amounts from prior years' audits, until the proposal has been 

audited and settled. The historical decrement will be determined by 

either the cognizant contracting officer (42.705-1(b)) or the cognizant 

auditor (42.705-2(b)).



[48 FR 42370, Sept. 19, 1983, as amended at 61 FR 69296, Dec. 31, 1996; 

63 FR 9064, Feb. 23, 1998]