[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: 48CFR42.709-3]



[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. 42.709-3  Assessing the penalty.



    Unless a waiver is granted pursuant to 42.709-5, the cognizant 

contracting officer shall--

    (a) Assess the penalty in 42.709-1(a)(1), when the submitted cost is 

expressly unallowable under a cost principle in the FAR or an executive 

agency supplement that defines the allowability of specific selected 

costs; or

    (b) Assess the penalty in 42.709-1(a)(2), when the submitted cost 

was determined to be unallowable for that contractor prior to submission 

of the proposal. Prior determinations of unallowability may be evidenced 

by--

    (1) A DCAA Form 1, Notice of Contract Costs Suspended and/or 

Disapproved (see 48 CFR 242.705-2), or any similar notice which the 

contractor elected not to appeal and was not withdrawn by the cognizant 

Government agency;

    (2) A contracting officer final decision which was not appealed;

    (3) A prior executive agency Board of Contract Appeals or court 

decision involving the contractor, which upheld the cost disallowance; 

or

    (4) A determination or agreement of unallowability under 31.201-6.

    (c) Issue a final decision (see 33.211) which includes a demand for 

payment of any penalty assessed under paragraph (a) or (b) of this 

section. The letter shall state that the determination is a final 

decision under the Disputes clause of the contract. (Demanding payment 

of the penalty is separate from demanding repayment of any paid portion 

of the disallowed cost.)



[60 FR 42658, Aug. 16, 1995]