[Code of Federal Regulations]
[Title 23, Volume 1]
[Revised as of April 1, 2008]
From the U.S. Government Printing Office via GPO Access
[CITE: 23CFR172.7]

[Page 21-22]
 
                           TITLE 23--HIGHWAYS
 
 CHAPTER I--FEDERAL HIGHWAY ADMINISTRATION, DEPARTMENT OF TRANSPORTATION
 
PART 172_ADMINISTRATION OF ENGINEERING AND DESIGN RELATED SERVICE CONTRACTS--Table of Contents
 
Sec. 172.7  Audits.

    (a) Performance of audits. When State procedures call for audits of 
contracts or subcontracts for engineering design services, the audit 
shall be performed to test compliance with the requirements of the cost 
principles contained in 48 CFR part 31. Other procedures may be used if 
permitted by State statutes that were enacted into law prior to June 9, 
1998.
    (b) Audits for indirect cost rate. Contracting agencies shall use 
the indirect cost rate established by a cognizant agency audit for the 
cost principles contained in 48 CFR part 31 for the consultant, if such 
rates are not under dispute. A lower indirect cost rate may be used if 
submitted by the consultant firm, however the consultant's offer of a 
lower indirect cost rate shall not be a condition of contract award. The 
contracting agencies shall apply these indirect cost rates for the 
purposes of contract estimation, negotiation, administration, reporting, 
and contract payment and the indirect cost rates shall not be limited by 
any administrative or de facto ceilings. The consultant's indirect cost 
rates for its one-year applicable accounting period shall be applied to 
the contract, however once an indirect cost rate is established for a 
contract it may be extended beyond the one year applicable accounting 
period provided all concerned parties agree. Agreement to the extension 
of the one-year applicable period shall not be a condition of contract 
award. Other procedures may be used if permitted by State statutes that 
were enacted into law prior to June 9, 1998.
    (c) Disputed audits. If the indirect cost rate(s) as established by 
the cognizant audit in paragraph (b) of this section are in dispute, the 
parties of any proposed new contract must negotiate a provisional 
indirect cost rate or perform an independent audit to establish a rate 
for the specific contract. Only the consultant and the parties involved 
in performing the indirect cost audit may dispute the established 
indirect cost rate. If an error is discovered in the established 
indirect cost rate, the rate may be disputed by any prospective user.
    (d) Prenotification; confidentiality of data. The FHWA and 
recipients and subrecipients of Federal-aid highway funds may share the 
audit information in complying with the State or subrecpient's 
acceptance of a consultant's overhead rates pursuant to 23 U.S.C. 112 
and this part provided that the consultant is given notice of each use 
and transfer. Audit information shall not be provided to other 
consultants or any other government agency not sharing the cost data, or 
to any firm or government agency for purposes other than complying with 
the State or subrecpient's acceptance of a consultant's overhead rates 
pursuant

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to 23 U.S.C. 112 and this part without the written permission of the 
affected consultants. If prohibited by law, such cost and rate data 
shall not be disclosed under any circumstance, however should a release 
be required by law or court order, such release shall make note of the 
confidential nature of the data.