B-236491, Jan 24, 1990, 90-1 CPD ***, Office of General Counsel

B-236491: Jan 24, 1990

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FAR case No. 89-61 is a proposal to amend FAR Subparts 31.3. Each of these subparts provides that the allowability of costs under such contracts is to be determined in accordance with relevant Office of Management and Budget (OMB) circulars that prescribe cost allowability criteria not only for contracts but also for grants and cooperative agreements with these noncommercial entities. Have not been revised to reflect recent statutes that affect the allowability of costs under certain federal contracts. The proposed FAR changes are intended to ensure that the cost principles applicable to contracts with educational institutions. Nonprofit organizations reflect the statutory changes until such time as the necessary revisions are made to the OMB circulars.

B-236491, Jan 24, 1990, 90-1 CPD ***, Office of General Counsel

PROCUREMENT - Socio-Economic Policies - Federal procurement regulations/laws - Revision DIGEST: General Accounting Office has no objection to Federal Acquisition Regulation (FAR) case No. 89-61, a proposal to amend to the cost principles at FAR Subparts 31.3, 31.6, and 31.7, which deal with cost allowability under contracts with, respectively, educational institutions, Indian tribal governments, and nonprofit organizations, to reflect recent statutory changes. PROCUREMENT - Payment/Discharge - Federal procurement regulations/laws - Revision - Prime contractors - Liquidated damages General Accounting Office has no objection to Federal Acquisition Circular 84-50, an interim rule revision Federal Acquisition Regulation (FAR) Subpart 19.7 and adding a contract clause at FAR section 52.219 16 to implement section 304 of the Business Opportunity Development Reform Act of 1988, Pub.L. No. 100-656, which provides for payment of liquidated damages by a prime contractor that fails to make a good faith effort to comply with a required subcontracting plan.

Margaret A. Willis

FAR Secretariat

General Services Administration

Ms. Willis:

This responds to your letter of August 3, 1989, requesting our comments on Federal Acquisition Regulation (FAR) case No. 89-61 and Federal Acquisition Circular (FAC) 84-50.

FAR case No. 89-61 is a proposal to amend FAR Subparts 31.3, 31.6, and 31.7, which deal with cost allowability under contracts with, respectively, educational institutions, Indian tribal governments, and nonprofit organizations. Currently, each of these subparts provides that the allowability of costs under such contracts is to be determined in accordance with relevant Office of Management and Budget (OMB) circulars that prescribe cost allowability criteria not only for contracts but also for grants and cooperative agreements with these noncommercial entities. The circulars, however, have not been revised to reflect recent statutes that affect the allowability of costs under certain federal contracts, including those with noncommercial entities. The proposed FAR changes are intended to ensure that the cost principles applicable to contracts with educational institutions, Indian tribal governments, and nonprofit organizations reflect the statutory changes until such time as the necessary revisions are made to the OMB circulars.

FAC 84-50 is an interim rule that revises FAR Subpart 19.7 and adds a clause at FAR section 52.219-16 to implement section 304 of the Business Opportunity Development Reform Act of 1988, Pub.L. No. 100 656. Section 304 provides for imposing liquidated damages on a prime contractor that fails to make a good faith effort to comply with a required subcontracting plan.

We have no objection to either the proposed rule in FAR case No. 89 61 or the interim rule in FAC 84-50.