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subpart 242.7--indirect cost rates

(Revised August 31, 2000)



 242.704 Billing rates.
 242.705 Final indirect cost rates.
 242.705-1 Contracting officer determination procedure.
 242.705-2 Auditor determination procedure.
 242.705-3 Educational institutions.
 242.770 Reserved.
 242.771 Independent research and development and bid and proposal costs.
 242.771-1 Scope.
 242.771-2 Policy.
 242.771-3 Responsibilities.

242.704  Billing rates.


      (c)  The administrative contracting officer or auditor shall periodically review billing rates for continued applicability.  Billing rates should be established on a year-to-year basis.


242.705  Final indirect cost rates.


242.705-1  Contracting officer determination procedure.


      (a)  Applicability and responsibility.


              (1)  The corporate administrative contracting officer (CACO) and individual administrative contracting officers (ACOs) shall jointly decide whether negotiations will be conducted on a coordinated or centralized basis.  When they are conducted on a coordinated basis, individual ACOs are responsible for coordinating with the CACO to ensure consistency of cost determinations.


242.705-2  Auditor determination procedure.


      (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.  The DCAA Form 1 details the items of exception and advises the contractor that requests for reconsideration should be submitted in writing to the administrative contracting officer.


242.705-3  Educational institutions.


      (b)  Predetermined final indirect cost rates.


              (4)(i)  Predetermined indirect cost rate proposals may cover a period of two to four years when the cognizant Contracting Officer determines that the educational institution’s cost experience and other pertinent facts available are sufficient to enable the parties to reach an informed judgment on the probable levels of indirect costs and allocation base costs for the applicable future accounting periods.  Predetermined rates covering two to four year periods are expected to be the norm in those situations.


              (6)  Predetermined indirect cost rates may be established to cover up to four years.


242.770  Reserved.


242.771  Independent research and development and bid and proposal costs.


242.771-1  Scope.

This section implements 10 U.S.C. 2372, Independent research and development and bid and proposal costs: payments to contractors.


242.771-2  Policy.

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).


242.771-3  Responsibilities.


      (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, 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.




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