48 CFR 970.5242-1 - Penalties for unallowable costs.

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970.5242-1 Penalties for unallowable costs.

As prescribed in 970.4207-03-70, insert the following clause:

Penalties for Unallowable Costs (AUG 2009)

(a) Contractors which include unallowable cost in a submission for settlement for cost incurred, may be subject to penalties.

(b) If, during the review of a submission for settlement of cost incurred, the Contracting Officer determines that the submission contains an expressly unallowable cost or a cost determined to be unallowable prior to the submission, the Contracting Officer shall assess a penalty.

(c) Unallowable costs are either expressly unallowable or determined unallowable.

(1) An expressly unallowable cost is a particular item or type of cost which, under the express provisions of an applicable law, regulation, or this contract, is specifically named and stated to be unallowable.

(2) A cost determined unallowable is one which, for that Contractor -

(i) Was subject to a Contracting Officer's final decision and not appealed;

(ii) The Civilian Board of Contract Appeals or a court has previously ruled as unallowable; or

(iii) Was mutually agreed to be unallowable.

(d) If the Contracting Officer determines that a cost submitted by the Contractor in its submission for settlement of cost incurred is -

(1) Expressly unallowable, then the Contracting Officer shall assess a penalty in an amount equal to the disallowed cost allocated to this contract plus interest on the paid portion of the disallowed cost. Interest shall be computed from the date of overpayment to the date of repayment using the interest rate specified by the Secretary of the Treasury pursuant to Pub. L. 92-41 (85 Stat. 97); or

(2) Determined unallowable, then the Contracting Officer shall assess a penalty in an amount equal to two times the amount of the disallowed cost allocated to this contract.

(e) The Contracting Officer may waive the penalty provisions when -

(1) The Contractor withdraws the submission before the formal initiation of an audit of the submission and submits a revised submission;

(2) The amount of the unallowable costs allocated to covered contracts is $10,000 or less; or

(3) The Contractor demonstrates to the Contracting Officer's satisfaction that -

(i) It has established appropriate policies, personnel training, and an internal control and review system that provides assurances that unallowable costs subject to penalties are precluded from the Contractor's submission for settlement of costs; and

(ii) The unallowable costs subject to the penalty were inadvertently incorporated into the submission.

(End of clause)
[74 FR 36376, July 22, 2009]

Title 48 published on 2015-12-04

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 48 CFR Part 970 after this date.

  • 2016-07-15; vol. 81 # 136 - Friday, July 15, 2016
    1. 81 FR 45974 - Acquisition Regulation: Technical and Administrative Changes to Department of Energy Acquisition Regulation
      GPO FDSys XML | Text
      DEPARTMENT OF ENERGY, Office of Acquisition Management
      Final rule.
      Effective Date: August 15, 2016. Applicability Date: This final rule is applicable to solicitations issued on or after the effective date.
      48 CFR Parts 902, 909, 916, 917, 922, 925, 931, 936, 942, 952, and 970

Title 48 published on 2015-12-04.

The following are only the Rules published in the Federal Register after the published date of Title 48.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2016-07-15; vol. 81 # 136 - Friday, July 15, 2016
    1. 81 FR 45974 - Acquisition Regulation: Technical and Administrative Changes to Department of Energy Acquisition Regulation
      GPO FDSys: XML | Text
      DEPARTMENT OF ENERGY, Office of Acquisition Management
      Final rule.
      Effective Date: August 15, 2016. Applicability Date: This final rule is applicable to solicitations issued on or after the effective date.
      48 CFR Parts 902, 909, 916, 917, 922, 925, 931, 936, 942, 952, and 970