[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: 48CFR42.705-2]



[Page 797]

 

            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]