48 C.F.R. PART 242—CONTRACT ADMINISTRATION AND AUDIT SERVICES
Title 48 - Federal Acquisition Regulations System
Authority: 41 U.S.C. 421 and 48 CFR chapter 1.
Source: 56 FR 36437, July 31, 1991, unless otherwise noted.
(b)(i) DoD requires reimbursement, at a rate set by the Under Secretary of Defense (Comptroller/Chief Financial Officer), from non-DoD organizations, except for— (A) Quality assurance, contract administration, and audit services provided under a no-charge reciprocal agreement; (B) Services performed under subcontracts awarded by the Small Business Administration under FAR subpart 19.8; and (C) Quality assurance and pricing services performed for the Supply and Services Canada. (ii) Departments and agencies may request an exception from the reimbursement policy in paragraph (b)(i) of this section from the Under Secretary of Defense (Comptroller/Chief Financial Officer). A request must show that an exception is in the best interest of the Government. (iii) Departments and agencies must pay for services performed by non-DoD activities, foreign governments, or international organizations, unless otherwise provided by reciprocal agreements. (S–70)(i) Foreign governments and international organizations may request contract administration services on their direct purchases from U.S. producers. Direct purchase is the purchase of defense supplies in the United States through commercial channels for use by the foreign government or international organization. (ii) Supply and Services Canada (SSC) is permitted to submit its requests for contract administration services directly to the cognizant contract administration office. (iii) Other foreign governments (including Canadian government organizations other than SSC) and international organizations send their requests for contract administration services to the DoD Central Control Point (CCP) at the Headquarters, Defense Contract Management Agency, International and Federal Business Team. Contract administration offices provide services only upon request from the CCP. The CCP shall follow the procedures at PGI 242.002(S–70)(iii). [64 FR 61029, Nov. 9, 1999, as amended at 65 FR 52952, Aug. 31, 2000; 65 FR 63804, Oct. 25, 2000; 70 FR 67920, Nov. 9, 2005] Source: 64 FR 61029, Nov. 9, 1999, unless otherwise noted.
This subpart does not address the contract administration role of a contracting officer's representative (see 201.602). (a)(i) DoD activities shall not retain any contract for administration that requires performance of any contract administration function at or near contractor facilities, except contracts for— (A) The National Security Agency; (B) Research and development with universities; (C) Flight training; (D) Management and professional support services; (E) Mapping, charting, and geodesy services; (F) Base, post, camp, and station purchases; (G) Operation or maintenance of, or installation of equipment at, radar or communication network sites; (H) Communications services; (I) Installation, operation, and maintenance of space-track sensors and relays; (J) Dependents Medicare program contracts; (K) Stevedoring contracts; (L) Construction and maintenance of military and civil public works, including harbors, docks, port facilities, military housing, development of recreational facilities, water resources, flood control, and public utilities; (M) Architect-engineer services; (N) Airlift and sealift services (Air Mobility Command and Military Sealift Command may perform contract administration services at contractor locations involved solely in performance of airlift or sealift contracts); (O) Subsistence supplies; (P) Ballistic missile sites (contract administration offices may perform supporting administration of these contracts at missile activation sites during the installation, test, and checkout of the missiles and associated equipment); (Q) Operation and maintenance of, or installation of equipment at, military test ranges, facilities, and installations; and (R) The Defense Energy Support Center, Defense Logistics Agency. (ii) Contract administration functions for base, post, camp, and station contracts on a military installation are normally the responsibility of the installation or tenant commander. However, the Defense Contract Management Agency (DCMA) shall, upon request of the military department, and subject to prior agreement, perform contract administration services on a military installation. (iii) DCMA shall provide preaward survey assistance for post, camp, and station work performed on a military installation. The contracting office and the DCMA preaward survey monitor should jointly determine the scope of the survey and individual responsibilities. (iv) To avoid duplication, contracting offices shall not locate their personnel at contractor facilities, except— (A) In support of contracts retained for administration in accordance with paragraph (a)(i) of this section; or (B) As permitted under subpart 242.74. (e)(1)(A) In special circumstances, a contract administration office may request support from a component not listed in the Federal Directory of Contract Administration Services Components (available via the Internet at http://home.dcma.mil/casbook/casbook.htm). An example is a situation where the contractor's work site is on a military base and a base organization is asked to provide support. Before formally sending the request, coordinate with the office concerned to ensure that resources are available for, and capable of, providing the support. (B) When requesting support on a subcontract that includes foreign contract military sale (FMS) requirements, the contract administration office shall— (1) Mark “FMS Requirement” on the face of the documents; and (2) For each FMS case involved, provide the FMS case identifier, associated item quantities, DoD prime contract number, and prime contract line/subline item number. [64 FR 61029, Nov. 9, 1999, as amended at 65 FR 52953, Aug. 31, 2000; 66 FR 49861, Oct. 1, 2001; 66 FR 63335, Dec. 6, 2001; 70 FR 52034, Sept. 1, 2005; 70 FR 67920, Nov. 9, 2005] Contract administration services performed outside the U.S. should be performed in accordance with FAR 42.301 unless there are no policies and procedures covering a given situation. In this case, coordinate proposed actions with the appropriate U.S. country teams or commanders of unified and specified commands. (a)(4) Also, review and evaluate— (A) Contractor estimating systems (see FAR 15.407–5); and (B) Contractor material management and accounting systems under subpart 242.72. (7) See 242.7502 for ACO responsibilities with regard to receipt of an audit report identifying significant accounting system or related internal control deficiencies. (9) For additional contract administration functions related to IR&D/B&P projects performed by major contractors, see 242.771–3(a). (12) Also perform all payment administration in accordance with any applicable payment clauses. (13)(A) Do not delegate the responsibility to make payments to the Defense Contract Management Agency (DCMA). (B) Follow the procedures at PGI 242.302(a)(13)(B) for designation of payment offices. (39) See 223.370 for contract administration responsibilities on contracts for ammunition and explosives. (67) Also support program offices and buying activities in precontractual efforts leading to a solicitation or award. (S–70) Serve as the single point of contact for all Single Process Initiative (SPI) Management Council activities. The ACO shall negotiate and execute facilitywide class modifications and agreements for SPI processes, when authorized by the affected components. (S–71) DCMA has responsibility for reviewing earned value management system (EVMS) plans and for verifying initial and continuing contractor compliance with DoD EVMS criteria. The contracting officer shall not retain this function. (b)(S–70) Issue, negotiate, and execute orders under basic ordering agreements for overhaul, maintenance, and repair. [71 FR 44928, Aug. 8, 2006] DD Form 1484, Post-Award Conference Record, may be used in conducting the conference and in preparing the conference report. [70 FR 67920, Nov. 9, 2005] (c)(2) If the agencies cannot agree, refer the matter to the Director of Defense Procurement and Acquisition Policy. [56 FR 36437, July 31, 1991, as amended at 68 FR 7440, Feb. 14, 2003] (a) Applicability and responsibility. (1) The corporate administrative contracting officer and individual administrative contracting officers shall jointly decide how to conduct negotiations. Follow the procedures at PGI 242.705–1(a)(1) when negotiations are conducted on a coordinated basis. [70 FR 67920, Nov. 9, 2005] (b) Procedures. (2)(iii) When agreement cannot be reached with the contractor, the auditor will issue a DCAA Form 1, Notice of Contract Costs Suspended and/or Disapproved, in addition to the advisory report to the administrative contracting officer. [56 FR 36437, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995; 64 FR 61030, Nov. 9, 1999; 70 FR 67920, Nov. 9, 2005] This section implements 10 U.S.C. 2372, Independent research and development and bid and proposal costs: Payments to contractors. [64 FR 8730, Feb. 23, 1999] Defense contractors are encouraged to engage in independent research and development and bid and proposal (IR&D/B&P) activities of potential interest to DoD, including activities cited in 231.205–18(c)(iii)(B). [64 FR 8730, Feb. 23, 1999] (a) The cognizant administrative contracting officer (ACO) or corporate ACO shall— (1) Determine cost allowability of IR&D/B&P costs as set forth in 231.205–18 and FAR 31.205–18. (2) Determine whether IR&D/B&P projects performed by major contractors (see 231.205–18(a)) are of potential interest to DoD; and (3) Notify the contractor promptly of any IR&D/B&P activities that are not of potential interest to DoD. (b) The Defense Contract Management Agency or the military department responsible for performing contract administration functions is responsible for providing the Defense Contract Audit Agency (DCAA) with IR&D/B&P statistical information, as necessary, to assist DCAA in the annual report required by paragraph (c) of this subsection. (c) DCAA is responsible for submitting an annual report to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics (OUSD (AT&L))) setting forth required statistical information relating to the DoD-wide IR&D/B&P program. (d) The Director, Defense Research and Engineering (OUSD(AT&L)DDR&E), is responsible for establishing a regular method for communication— (1) From DoD to contractors, of timely and comprehensive information regarding planned or expected DoD future needs; and (2) From contractors to DoD, of brief technical descriptions of contractor IR&D projects. [64 FR 8730, Feb. 23, 1999, as amended at 65 FR 39706, June 27, 2000; 65 FR 52953, Aug. 31, 2000; 68 FR 7440, Feb. 14, 2003] (a) Contracting officer receipt of vouchers. Contracting officer receipt of vouchers is applicable only for cost-reimbursement contracts with the Canadian Commercial Corporation. See 225.870–5(b) for invoice procedures. (b) Auditor receipt of voucher. (i) The contract auditor is the authorized representative of the contracting officer for— (A) Receiving vouchers from contractors; (B) Approving interim vouchers for provisional payment (this includes approving the fee portion of vouchers in accordance with the contract schedule and administrative contracting officer instructions) and sending them to the disbursing office; (C) Authorizing direct submission of interim vouchers for provisional payment to the disbursing office for contractors with approved billing systems; (D) Reviewing completion/final vouchers and sending them to the administrative contracting officer; and (E) Issuing DCAA Forms 1, Notice of Contract Costs Suspended and/or Disapproved, to deduct costs where allowability is questionable. (ii) The administrative contracting officer— (A) Approves all completion/final vouchers and sends them to the disbursing officer; and (B) May issue or direct the issuance of DCAA Form 1 on any cost when there is reason to believe it should be suspended or disallowed. [61 FR 25409, May 21, 1996, as amended at 61 FR 25409, May 21, 1996; 61 FR 50454, Sept. 26, 1996] (a) The cognizant contract administration office (CAO)— (i) Shall perform production surveillance on all contractors that have Criticality Designator A or B contracts; (ii) Shall not perform production surveillance on contractors that have only Criticality Designator C contracts, unless specifically requested by the contracting officer; and (iii) When production surveillance is required, shall— (A) Conduct a periodic risk assessment of the contractor to determine the degree of production surveillance needed for all contracts awarded to that contractor. The risk assessment shall consider information provided by the contractor and the contracting officer; (B) Develop a production surveillance plan based on the risk level determined during a risk assessment; (C) Modify the production surveillance plan to incorporate any special surveillance requirements for individual contracts, including any requirements identified by the contracting officer; and (D) Monitor contract progress and identify potential contract delinquencies in accordance with the production surveillance plan. Contracts with Criticality Designator C are exempt from this requirement unless specifically requested by the contracting officer. [69 FR 31912, June 8, 2004] (1) Contracting officers shall— (i) Assign criticality designator A to items with a priority 01, 02, 03, or 06 (if emergency supply of clothing) under DoD 4140.1–R, DoD Materiel Management Regulation; and (ii) Ordinarily assign criticality designator C to unilateral purchase orders. (2) Only the contracting officer shall change the assigned designator. [56 FR 36437, July 31, 1991, as amended at 67 FR 61516, Oct. 1, 2002] (a) See DoDI 5000.2, Operation of the Defense Acquisition System, for reporting requirements for defense technology projects and acquisition programs. Table E3.T2. of DoDI 5000.2 specifies the earned value management system (EVMS) thresholds. When an offeror proposes an EVMS plan, follow the review procedures at PGI 242.1106(a). The Defense Acquisition Guidebook provides additional guidance on earned value management and identifies when cost/schedule status reports are applicable. (b)(i) Within four working days after receipt of the contractor's report, the CAO must provide the report and any required comments to the contracting officer and, unless otherwise specified in the contract, the inventory control manager. (ii) If the contractor's report indicates that the contract is on schedule and the CAO agrees, the CAO does not need to add further comments. In all other cases, the CAO must add comments and recommend a course of action. [65 FR 39723, June 27, 2000, as amended at 70 FR 14575, Mar. 23, 2005] (b) When using the clause at FAR 52.242–2, include the following instructions in the contract schedule— (i) Frequency and timing of reporting (normally 5 working days after each reporting period); (ii) Contract line items, exhibits, or exhibit line items requiring reports; (iii) Offices (with addressees/codes) where reports should be sent (always include the contracting office and contract administration office); and (iv) The following requirements for report content— (A) The problem, actual or potential, and its cause; (B) Items and quantities affected; (C) When the delinquency started or will start; (D) Actions taken to overcome the delinquency; (E) Estimated recovery date; and/or (F) Proposed schedule revision. (a) When the Government requires contractor compliance with DoD earned value management system criteria— (1) Use the provision at 252.242–7001, Notice of Earned Value Management System, in solicitations; and (2) Use the clause at 252.242–7002, Earned Value Management System, in solicitations and contracts. (b) Use the clause at 252.242–7005, Cost/Schedule Status Report, in solicitations and contracts that require cost/schedule status reports (i.e., when the Contract Data Requirements List includes DI–MGMT–81467). (c) Use the provision at 252.242–7006, Cost/Schedule Status Report Plans, in solicitations that require cost/schedule status reports. [70 FR 14575, Mar. 23, 2005] The responsible contracting officer shall process and execute novation and change-of-name agreements in accordance with the procedures at PGI 242.1203. [70 FR 67920, Nov. 9, 2005] (i) When a novation agreement is required and the transferee intends to incur restructuring costs as defined at 213.205–70, the cognizant contracting officer shall include the following provision as paragraph (b)(7) of the novation agreement instead of the paragraph (b)(7) provided in the sample format at FAR 42.1204(i):
“(7)(i) Except as set forth in subparagraph (7)(ii) below, the Transferor and the Transferee agree that the Government is not obligated to pay or reimburse either of them for, or otherwise give effect to, any costs, taxes, or other expenses, or any related increases, directly or indirectly arising out of or resulting from the transfer or this Agreement, other than those that the Government in the absence of this transfer or Agreement would have been obligated to pay or reimburse under the terms of the contracts. (ii) The Government recognizes that restructuring by the Transferee incidental to the acquisition/merger may be in the best interests of the Government. Restructuring costs that are allowable under Part 31 of the Federal Acquisition Regulation (FAR) or Part 231 of the Defense Federal Acquisition Regulation Supplement (DFARS) may be reimbursed under flexibily-priced novated contracts, provided the Transferee demonstrates that the restructuring will reduce overall costs to the Department of Defense (DoD) (and to the National Aeronautics and Space Administration (NASA), where there is a mix of DoD and NASA contracts), and the requirements included in DFARS 231.205–70 are met. Restructuring costs shall not be allowed on novated contracts unless there is an audit of the restructuring proposal; a determination by the contracting officer of overall reduced costs to DoD/NASA; and an Advance Agreement setting forth a cumulative cost ceiling for restructuring projects and the period to which such costs shall be assigned.” [60 FR 1749, Jan. 5, 1995, as amended at 61 FR 16882, Apr. 18, 1996; 65 FR 63805, Oct. 25, 2000] (a)(2) In reporting planned and actual volume movements— (A) The contracting officer— (1) Provides production schedules and planned destinations to the servicing transportation office as soon as the information is available to permit the transportation office to determine if volume movements will occur. If a volume movement appears likely, the transportation office reports a planned volume movement in accordance with DoD 4500.9–R, Defense Transportation Regulation, Part II, Chapter 201. (2) Sends a copy of the volume movement report to the contract administration office. (B) The contract administration office submits a volume movement report when— (1) Significant changes are made to the movement requirements; or (2) The contracting office did not submit a report. (C) Include the destination country, freight forwarder, and, if known, port of embarkation on volume movement reports for foreign military sale shipments. [56 FR 36437, July 31, 1991, as amended at 65 FR 50143, Aug. 17, 2000] (a)(i) Procedures for the contractor to obtain Government bills of lading are in the clause at 252.242–7003, Application for U.S. Government Shipping Documentation/Instructions. (ii) The term “commercial bills of lading” includes the use of any commercial form or procedure. [56 FR 36437, July 31, 1991, as amended at 65 FR 50144, Aug. 17, 2000] (b)(1) See DoD 4525.8–M, DoD Official Mail Manual. [56 FR 67220, Dec. 30, 1991] When using FAR 52.213–1, Fast Payment Procedures, do not use FAR clauses 52.242–10, F.o.b. Origin—Government Bills of Lading or Prepaid Postage, or 52.242–11, F.o.b. Origin—Government Bills of Lading or Indicia Mail. Use the clause at 252.242–7003, Application for U.S. Government Shipping Documentation/Instructions, when using the clause at FAR 52.242–10, F.o.b. Origin—Government Bills of Lading or Prepaid Postage, or FAR 52.242–11, F.o.b. Origin—Government Bills of Lading or Indicia Mail. [62 FR 34127, June 24, 1997] (a) See also DoD 4500.9–R, Defense Transportation Regulation, Part II, Chapter 210, for discrepancy procedures. [65 FR 50144, Aug. 17, 2000] (a) Carrier demurrage rules usually allow for a “free time” for loading or unloading cars or for any other purpose, and impose charges for cars held beyond this period. If a contractor detains railroad cars beyond the “free time,” the contractor has to pay the carrier's published tariff charges for demurrage. (b) Detention results when a shipper or consignee holds motor carrier equipment beyond a reasonable period for loading, unloading, forwarding directions, or any other reason. Detention rules and charges are not uniform; they are published in individual carrier or agency tenders. [56 FR 36437, July 31, 1991, as amended at 65 FR 50144, Aug. 17, 2000] A voluntary refund is a payment or credit (adjustment under one or more contracts or subcontracts) to the Government from a contractor or subcontractor that is not required by any contractual or other legal obligation. Follow the procedures at PGI 242.7100 for voluntary refunds. [70 FR 67920, Nov. 9, 2005] Source: 65 FR 77833, Dec. 13, 2000, unless otherwise noted.
(a) This subpart provides policies, procedures, and standards for use in the evaluation of a contractor's material management and accounting system (MMAS). (b) The policies, procedures, and standards in this subpart— (1) Apply only when the contractor has contracts exceeding the simplified acquisition threshold that are not for the acquisition of commercial items and are either— (i) Cost-reimbursement contracts; or (ii) Fixed-price contracts with progress payments made on the basis of costs incurred by the contractor as work progresses under the contract; and (2) Do not apply to small businesses, educational institutions, or nonprofit organizations. Material management and accounting system and valid time-phased requirements are defined in the clause at 252.242–7004, Material Management and Accounting System. DoD policy is for its contractors to have an MMAS that conforms to the standards in paragraph (e) of the clause at 252.242–7004, so that the system— (a) Reasonably forecasts material requirements; (b) Ensures the costs of purchased and fabricated material charged or allocated to a contract are based on valid time-phased requirements; and (c) Maintains a consistent, equitable, and unbiased logic for costing of material transactions. (a) Criteria for conducting reviews. Conduct an MMAS review when— (1) A contractor has $40 million of qualifying sales to the Government during the contractor's preceding fiscal year; and (2) The administrative contracting officer (ACO), with advice from the auditor, determines an MMAS review is needed based on a risk assessment of the contractor's past experience and current vulnerability. (b) Qualifying sales. Qualifying sales are sales for which cost or pricing data were required under 10 U.S.C. 2306a, as implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts. (c) System evaluation. Cognizant contract administration and audit activities must jointly establish and manage programs for evaluating the MMAS systems of contractors and must annually establish a schedule of contractors to be reviewed. In addition, they must— (1) Conduct reviews as a team effort. (i) the ACO— (A) Appoints a team leader; and (B) Ensures that the team includes appropriate functional specialists (e.g., industrial specialist, engineer, property administrator, auditor). (ii) The team leader— (A) Advises the ACO and the contractor of findings during the review and at the exit conference; and (B) Makes every effort to resolve differences regarding questions of fact during the review. (iii) The contract auditor— (A) Participates as a member of the MMAS team or serves as the team leader (see paragraph (c)(1)(i) of this section); and (B) Issues an audit report for incorporation into the MMAS report based on an analysis of the contractor's books, accounting records, and other related data. (2) Tailor reviews to take full advantage of the day-to-day work done by both organizations. (3) Prepare the MMAS report. (d) Disposition of evaluation team findings. The team leader must document the evaluation team findings and recommendations in the MMAS report to the ACO. If there are any significant MMAS deficiencies, the report must provide an estimate of the adverse impact on the Government resulting from those deficiencies. (1) Initial notification to the contractor. The ACO must provide a copy of the report to the contractor immediately upon receipt from the team leader. (i) The ACO must notify the contractor in a timely manner if there are no deficiencies. (ii) If there are any deficiencies, the ACO must request the contractor to provide a written response within 30 days (or such other date as may be mutually agreed to by the ACO and the contractor) from the date of initial notification. (iii) If the contractor agrees with the report, the contractor has 60 days (or such other date as may be mutually agreed to by the ACO and the contractor) to correct any identified deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies. (iv) If the contractor disagrees with the report, the contractor must provide rationale in the written response. (2) Evaluation of the contractor's response. The ACO, in consultation with the auditor, evaluates the contractor's response and determines whether— (i) The MMAS contains any deficiencies and, if so, any corrective action is needed; (ii) The deficiencies are significant enough to result in the reduction of progress payments or disallowance of costs on vouchers; and (iii) Proposed corrective actions (if the contractor submitted them) are adequate to correct the deficiencies. (3) Notification of ACO determination. (i) The ACO must notify the contractor in writing (copy to auditor and functional specialists) of— (A) Any deficiencies and the necessary corrective action; (B) Acceptability of the contractor's corrective action plan (if one was submitted) or the need for a corrective action plan; and (C) Any decision to reduce progress payments or disallow costs on vouchers. (ii) The Government does not approve or disapprove the contractor's MMAS. ACO notifications should avoid any such implications. (iii) From the time the ACO determines that there are any significant MMAS deficiencies until the time the deficiencies are corrected, all field pricing reports for that contractor must contain a recommendation relating to proposed adjustments necessary to protect the Government's interests. (iv) The ACO should consider the effect of any significant MMAS deficiencies in reviews of the contractor's estimating system (see 215.407–5). (4) Reductions or disallowances. (i) When the ACO determines the MMAS deficiencies have a material impact on Government contract costs, the ACO must reduce progress payments by an appropriate percentage based on affected costs (in accordance with FAR 32.503–6) and/or disallow costs on vouchers (in accordance with FAR 42.803). The reductions or disallowances must remain in effect until the ACO determines that— (A) The deficiencies are corrected; or (B) The amount of the impact is immaterial. (ii) The maximum payment adjustment is the adverse material impact to the Government as specified in the MMAS report. The ACO should use the maximum adjustment when the contractor did not submit a corrective action plan with its response, or when the plan is unacceptable. In other cases, the ACO should consider the quality of the contractor's corrective action plan in determining the appropriate percentage. (iii) As the contractor implements its accepted corrective action plan, the ACO should reinstate a portion of withheld amounts commensurate with the contractor's progress in making corrections. However, the ACO must not fully reinstate withheld amounts until the contractor corrects the deficiencies, or until the impact of the deficiencies become immaterial. (5) Monitoring contractor's corrective action. The ACO and the auditor must monitor the contractor's progress in correcting deficiencies. When the ACO determines the deficiencies have been corrected, the ACO must notify the contractor in writing. If the contractor fails to make adequate progress, the ACO must take further action. The ACO may— (i) Elevate the issue to higher level management; (ii) Further reduce progress payments and/or disallow costs on vouchers; (iii) Notify the contractor of the inadequacy of the contractor's cost estimating system and/or cost accounting system; and (iv) Issue cautions to contracting activities regarding the award of future contracts. Use the clause at 252.242–7004, Material Management and Accounting System, in all solicitations and contracts exceeding the simplified acquisition threshold that are not for the acquisition of commercial items and— (a) Are not awarded to small businesses, educational institutions, or nonprofit organizations; and (b) Are either— (1) Cost-reimbursement contracts; or (2) Fixed-price contracts with progress payments made on the basis of costs incurred by the contractor as work progresses under the contract. (a) The administrative contracting officer (ACO) is responsible for determining the allowability of insurance/pension costs in Government contracts and for determining the need for a Contractor/Insurance Pension Review (CIPR). Defense Contract Management Agency (DCMA) insurance/pension specialists and Defense Contract Audit Agency (DCAA) auditors assist ACOs in making these determinations, conduct CIPRs when needed, and perform other routine audits as authorized under FAR 42.705 and 52.215–2. A CIPR is a DCMA/DCAA joint review that— (1) Provides an in-depth evaluation of a contractor's— (i) Insurance programs; (ii) Pension plans; (iii) Other deferred compensation plans; and (iv) Related policies, procedures, practices, and costs; or (2) Concentrates on specific areas of the contractor's insurance programs, pension plans, or other deferred compensation plans. (b) DCMA is the DoD Executive Agency for the performance of all CIPRs. (c) DCAA is the DoD agency designated for the performance of contract audit responsibilities related to Cost Accounting Standards administration as described in FAR Subparts 30.2 and 30.6 as they relate to a contractor's insurance programs, pension plans, and other deferred compensation plans. [71 FR 9273, Feb. 23, 2006] Follow the procedures at PGI 242.7302 to determine if a CIPR is needed. [71 FR 9273, Feb. 23, 2006] Follow the procedures at PGI 242.7303 when conducting a CIPR. [71 FR 9273, Feb. 23, 2006] (a) Program managers may conclude that they need technical representation in contractor facilities to perform non-contract administration service (CAS) technical duties and to provide liaison, guidance, and assistance on systems and programs. In these cases, the program manager may assign technical representatives under the procedures in 242.7401. (b) A technical representative is a representative of a DoD program, project, or system office performing non-CAS technical duties at or near a contractor facility. A technical representative is not— (1) A representative of a contract administration or contract audit component; or (2) A contracting officer's representative (see 201.602). [70 FR 67921, Nov. 9, 2005] When the program, project, or system manager determines that a technical representative is required, follow the procedures at PGI 242.7401. [70 FR 67921, Nov. 9, 2005] Contractors receiving cost-reimbursement or incentive type contracts, or contracts which provide for progress payments based on costs or on a percentage or stage of completion, shall maintain an accounting system and related internal controls throughout contract performance which provide reasonable assurance that— (a) Applicable laws and regulations are complied with; (b) The accounting system and cost data are reliable; (c) Risk of misallocations and mischarges are minimized; and (d) Contract allocations and charges are consistent with invoice procedures. [60 FR 29500, June 5, 1995. Redesignated at 70 FR 67921, Nov. 7, 2005] (a) Upon receipt of an audit report identifying significant accounting system or related internal control deficiencies, the ACO will— (1) Provide a copy of the report to the contractor and allow 30 days, or a reasonable extension, for the contractor to respond; (2) If the contractor agrees with the report, the contractor has 60 days from the date of initial notification to correct any identified deficiencies or submit a corrective action plan showing milestones and actions to eliminate the deficiencies. (3) If the contractor disagrees, the contractor should provide rationale in its written response. (4) The ACO will consider whether it is appropriate to suspend a percentage of progress payments or reimbursement of costs proportionate to the estimated cost risk to the Government, considering audit reports or other relevant input, until the contractor submits a corrective action plan acceptable to the ACO and corrects the deficiencies. (See FAR 32.503–6 (a) and (b) and FAR 42.302(a)(7)). [60 FR 29500, June 5, 1995. Redesignated at 70 FR 67921, Nov. 7, 2005]
Title 48: Federal Acquisition Regulations System
PART 242—CONTRACT ADMINISTRATION AND AUDIT SERVICES
Section Contents
242.002 Interagency agreements.
242.200-70 Scope of subpart.
242.202 Assignment of contract administration.
242.301 General.
242.302 Contract administration functions.
242.503 Postaward conferences.
242.503-2 Post-award conference procedure.
242.602 Assignment and location.
242.705 Final indirect cost rates.
242.705-1 Contracting officer determination procedure.
242.705-2 Auditor determination procedure.
242.771 Independent research and development and bid and proposal costs.
242.771-1 Scope.
242.771-2 Policy.
242.771-3 Responsibilities.
242.803 Disallowing costs after incurrence.
242.1104 Surveillance requirements.
242.1105 Assignment of criticality designator.
242.1106 Reporting requirements.
242.1107 Contract clause.
242.1107-70 Solicitation provisions and contract clauses.
242.1203 Processing agreements.
242.1204 Agreement to recognize a successor in interest (novation agreement).
242.1402 Volume movements within the contiguous United States.
242.1403 Shipping documents covering f.o.b. origin shipments.
242.1404 Shipments by parcel post or other classes of mail.
242.1404-1 Parcel post eligible shipments.
242.1404-2 Contract clauses.
242.1404-2-70 Additional clause.
242.1405 Discrepancies incident to shipment of supplies.
242.1470 Demurrage and detention charges.
242.7100 General.
242.7200 Scope of subpart.
242.7201 Definitions.
242.7202 Policy.
242.7203 Review procedures.
242.7204 Contract clause.
242.7301 General.
242.7302 Requirements.
242.7303 Responsibilities.
242.7400 General.
242.7401 Procedures.
242.7501 Policy.
242.7502 Procedures.
242.002 Interagency agreements.
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Subpart 242.2—Contract Administration Services
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242.200-70 Scope of subpart.
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242.202 Assignment of contract administration.
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Subpart 242.3—Contract Administration Office Functions
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242.301 General.
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242.302 Contract administration functions.
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Subpart 242.5—Postaward Orientation
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242.503 Postaward conferences.
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242.503-2 Post-award conference procedure.
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Subpart 242.6—Corporate Administrative Contracting Officer
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242.602 Assignment and location.
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Subpart 242.7—Indirect Cost Rates
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242.705 Final indirect cost rates.
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242.705-1 Contracting officer determination procedure.
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242.705-2 Auditor determination procedure.
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242.771 Independent research and development and bid and proposal costs.
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242.771-1 Scope.
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242.771-2 Policy.
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242.771-3 Responsibilities.
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Subpart 242.8—Disallowance of Costs
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242.803 Disallowing costs after incurrence.
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Subpart 242.11—Production Surveillance and Reporting
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242.1104 Surveillance requirements.
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242.1105 Assignment of criticality designator.
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242.1106 Reporting requirements.
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242.1107 Contract clause.
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242.1107-70 Solicitation provisions and contract clauses.
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Subpart 242.12—Novation and Change-of-Name Agreements
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242.1203 Processing agreements.
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242.1204 Agreement to recognize a successor in interest (novation agreement).
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Subpart 242.14—Traffic and Transportation Management
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242.1402 Volume movements within the contiguous United States.
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242.1403 Shipping documents covering f.o.b. origin shipments.
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242.1404 Shipments by parcel post or other classes of mail.
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242.1404-1 Parcel post eligible shipments.
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242.1404-2 Contract clauses.
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242.1404-2-70 Additional clause.
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242.1405 Discrepancies incident to shipment of supplies.
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242.1470 Demurrage and detention charges.
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Subpart 242.70 [Reserved]
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Subpart 242.71—Voluntary Refunds
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242.7100 General.
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Subpart 242.72—Contractor Material Management and Accounting System
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242.7200 Scope of subpart.
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242.7201 Definitions.
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242.7202 Policy.
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242.7203 Review procedures.
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242.7204 Contract clause.
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Subpart 242.73—Contractor Insurance/Pension Review
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242.7301 General.
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242.7302 Requirements.
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242.7303 Responsibilities.
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Subpart 242.74—Technical Representation at Contractor Facilities
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242.7400 General.
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242.7401 Procedures.
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Subpart 242.75—Contractor Accounting Systems and Related Controls
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242.7501 Policy.
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242.7502 Procedures.
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