[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: 48CFR42.709-1]



[Page 800]

 

            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 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]