[Federal Register: August 29, 2002 (Volume 67, Number 168)]
[Proposed Rules]
[Page 55685-55687]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29au02-28]
[[Page 55685]]
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Part X
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 Part 31
Federal Acquisition Regulation; Economic Planning, Employee Morale, and
Travel Cost Principles; Proposed Rule
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Part 31
[FAR Case 2002-001]
RIN 9000-AJ46
Federal Acquisition Regulation; Economic Planning, Employee
Morale, and Travel Cost Principles
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) by revising three cost principles:
(1) Economic planning costs; (2) Employee morale, health, welfare, food
service, and dormitory costs and credits; and (3) Travel costs. The
changes are to increase clarity and readability.
DATES: Interested parties should submit comments in writing on or
before October 28, 2002 to be considered in the formulation of a final
rule.
ADDRESSES: Submit written comments to--General Services Administration,
FAR Secretariat (MVA), 1800 F Street, NW., Room 4035, ATTN: Laurie
Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to--farcase.2002-
001@gsa.gov.
Please submit comments only and cite FAR case 2002-001 in all
correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Jeremy Olson at (202) 501-3221. Please cite FAR case
2002-001.
SUPPLEMENTARY INFORMATION:
A. Background
The proposed rule amends FAR 31.205-12 by eliminating paragraphs
(b) and (c). Paragraph (b) states that economic planning costs are
allowable as ``indirect costs to be properly allocated.'' In the
Councils' opinion, it duplicates coverage already at 31.202, Direct
costs; 31.203, Indirect costs; and 31.201-4, Determining allocability.
Paragraph (c) provides that Independent Research and Development (IR&D)
costs are not allowable economic planning costs. We believe 31.205-18,
Independent research and development and bid and proposal costs,
clearly applies to IR&D costs, and that it is not necessary to state
that economic planning costs do not include IR&D costs. The intent of
the elimination of paragraphs (b) and (c) is to eliminate duplication
and not to change the meaning of the current cost principle.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Councils do not expect this proposed rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because most contracts awarded to small entities use simplified
acquisition procedures or are awarded on a competitive, fixed-price
basis and do not require application of the cost principles discussed
in this rule. An Initial Regulatory Flexibility Analysis has,
therefore, not been performed. We invite comments from small businesses
and other interested parties. The Councils will consider comments from
small entities concerning the affected FAR Part 31 in accordance with 5
U.S.C. 610. Interested parties must submit such comments separately and
should cite 5 U.S.C. 601, et seq. (FAR case 2002-001), in
correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the proposed
changes to the FAR do not impose information collection requirements
that require the approval of the Office of Management and Budget under
44 U.S.C. 3501, et seq.
List of Subjects in 48 CFR Part 31
Government procurement.
Dated: August 20, 2002.
Al Matera,
Director, Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose amending 48 CFR part 31 as
set forth below:
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES
1. The authority citation for 48 CFR part 31 continues to read as
follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c). U.S.C. 2473(c).
31.205-6 [Amended]
2. Amend section 31.205-6 in paragraph (m)(2) by removing ``(see
31.205-46(f))'' and adding ``(see 31.205-46(d))'' in its place.
3. Revise section 31.205-12 to read as follows:
31.205-12 Economic planning costs.
Economic planning costs are allowable. Economic planning costs are
the costs of general long-range management planning concerned with the
future overall development of the contractor's business. Economic
planning costs do not include organization or reorganization costs
covered by 31.205-27. See 31.205-38 for determining the allowability of
market planning costs other than economic planning costs.
4. Amend section 31.205-13 by revising paragraphs (a), (d), and (f)
to read as follows:
31.205-13 Employee morale, health, welfare, food service, and
dormitory costs and credits.
(a) Aggregate costs incurred on activities designed to improve
working conditions, employer-employee relations, employee morale, and
employee performance (less income generated by these activities) are
allowable, subject to the limitations contained in this subsection.
Some examples of allowable activities are--
(1) House publications;
(2) Health clinics;
(3) Wellness/fitness centers;
(4) Employee counseling services; and
(5) Food and dormitory services for the contractor's employees at
or near the contractor's facilities. These services include--
(i) Operating or furnishing facilities for cafeterias, dining
rooms, canteens, lunch wagons, vending machines, living accommodations;
and
(ii) Similar types of services.
* * * * *
(d)(1) The allowability of food and dormitory losses are determined
by the following factors:
(i) Losses from operating food and dormitory services are allowable
only if the contractor's objective is to operate such services on a
break-even basis.
(ii) Losses sustained because food services or lodging
accommodations are furnished without charge or at prices or rates which
obviously would not be conducive to the accomplishment of the objective
in paragraph (d)(1)(i) of this subsection are not allowable, except as
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described in paragraph (d)(1)(iii) of this subsection.
(iii) A loss may be allowed to the extent that the contractor can
demonstrate that unusual circumstances exist such that even with
efficient management, operating the services on a break-even basis
would require charging inordinately high prices, or prices or rates
higher than those charged by commercial establishments offering the
same services in the same geographical areas. The following are
examples of unusual circumstances:
(A) The contractor must provide food or dormitory services at
remote locations where adequate commercial facilities are not
reasonably available.
(B) The contractor's charged (but unproductive) labor costs would
be excessive if the services were not available.
(C) If cessation or reduction of food or dormitory operations will
not otherwise yield net cost savings.
(2) Costs of food and dormitory services shall include an allocable
share of indirect expenses pertaining to these activities.
* * * * *
(f) Contributions by the contractor to an employee organization,
including funds from vending machine receipts or similar sources, are
allowable only to the extent that the contractor demonstrates that an
equivalent amount of the costs incurred by the employee organization
would be allowable if directly incurred by the contractor.
31.205-46 [Amended]
5. Amend section 31.205-46 as follows:
a. Remove paragraphs (b) and (c), and redesignate paragraphs (d),
(e), and (f) as (b), (c), and (d), respectively; and
b. In the introductory text of newly designated paragraph (c)(2),
remove ``paragraph (d)'' each time it appears (twice) and add
``paragraph (b)'' in their place; and remove ``paragraph (e)(3)'' and
add ``paragraph (c)(3)'' in its place.
[FR Doc. 02-21620 Filed 8-28-02; 8:45 am]
BILLING CODE 6820-EP-P