[Federal Register: July 5, 2011 (Volume 76, Number 128)]
[Rules and Regulations]               
[Page 39242-39243]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05jy11-20]                         

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Part 52

[FAC 2005-53; FAR Case 2009-034; Item VI; Docket 2010-0098, Sequence 1]
RIN 9000-AL73

 
Federal Acquisition Regulation; TINA Interest Calculations

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: DoD, GSA, and NASA are issuing a final rule amending the 
Federal Acquisition Regulation (FAR) to revise the FAR clauses on price 
reduction for defective pricing to require compound interest 
calculations be applied to Government overpayments as a result of 
defective cost or pricing data.

DATES: Effective Date: August 4, 2011.

FOR FURTHER INFORMATION CONTACT: Mr. Edward N. Chambers, Procurement 
Analyst, at (202) 501-3221 for clarification of content. For 
information pertaining to status or publication schedules, contact the 
Regulatory Secretariat at (202) 501-4755. Please cite FAC 2005-53, FAR 
Case 2009-034.

SUPPLEMENTARY INFORMATION:

I. Background

    On September 14, 2009, the U.S. Court of Appeals for the Federal 
Circuit (CAFC) issued a decision regarding the method of interest 
calculation on Cost Accounting Standards (CAS) cost impacts (see GATES 
v. Raytheon Co., 584 F.3d 1062 (Fed. Cir. 2009)). The interest on CAS 
cost impacts is set by reference in the enabling statute to 26 U.S.C. 
6621. The CAFC ruled that the citation led to calculation of the 
interest using daily compounding. The Truth in Negotiation Act (TINA) 
also references 26 U.S.C. 6621 for interest calculation. (See 41 U.S.C. 
3507 and 10 U.S.C. 2306a).
    A proposed rule was published on September 22, 2010, (75 FR 57719) 
with regard to the application of compound interest calculations to 
Government overpayments as a result of defective cost or pricing data. 
This rule replaces the term ``simple interest'' as the requirement for 
calculating interest for Truth in Negotiations Act cost impacts with 
the phrase ``Interest compounded daily as required by 26 U.S.C. 6622.'' 
Thus, compound interest calculations will be applied to Government 
overpayments as a result of defective cost or pricing data. DoD, GSA, 
and NASA received no comments on the proposed rule.

II. Executive Orders 12866 and 13563

    Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess 
all costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). E.O. 
13563 emphasizes the importance of quantifying both costs and benefits, 
of reducing costs, of harmonizing rules, and of promoting flexibility. 
This is not a significant regulatory action and, therefore, was not 
subject to review under section 6(b) of E.O. 12866, Regulatory Planning 
and Review, dated September 30, 1993. This rule is not a major rule 
under 5 U.S.C. 804.

III. Regulatory Flexibility Act

    The Department of Defense, the General Services Administration, and 
the National Aeronautics and Space Administration certify that this 
final rule will not 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 the rule merely 
clarifies the statutory method for calculating interest in the rare 
instances when a contractor is found to be in violation of TINA. Since 
TINA requirements generally do not apply to contracts with small 
entities, and since the numbers of contractors found to have submitted 
defective cost or pricing data are a minute subset of contractors to 
whom TINA applies, the rule is not expected to apply to a substantial 
number of small entities. Furthermore, the differential in interest 
computing methods is not expected to amount to a significant economic 
impact.

IV. Paperwork Reduction Act

    The final rule does not contain any information collection 
requirements that require the approval of the Office of Management and 
Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

List of Subjects in 48 CFR Part 52

    Government procurement.

    Dated: June 28, 2011.
Laura Auletta,
Acting Director, Office of Governmentwide Acquisition Policy, Office of 
Acquisition Policy.
    Therefore, DoD, GSA, and NASA amend 48 CFR part 52 as set forth 
below:

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

0
1. The authority citation for 48 CFR part 52 continues to read as 
follows:

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).


0
2. Amend section 52.214-27 by revising the date of the clause and 
paragraph (e)(1) to read as follows:


52.214-27  Price Reduction for Defective Certified Cost or Pricing 
Data--Modifications--Sealed Bidding.

* * * * *

Price Reduction for Defective Certified Cost or Pricing Data--
Modifications--Sealed Bidding (AUG 2011)

* * * * *
    (e) * * *

    (1) Interest compounded daily, as required by 26 U.S.C. 6622, on 
the amount of such overpayment to be computed from the date(s) of 
overpayment to the Contractor to the date the Government is repaid 
by the Contractor at the applicable underpayment rate effective for 
each quarter prescribed by the Secretary of the Treasury under 26 
U.S.C. 6621(a)(2); and
* * * * *

0
3. Amend section 52.215-10 by revising the date of the clause and 
paragraph (d)(1) to read as follows:


52.215-10  Price Reduction for Defective Certified Cost or Pricing 
Data.

* * * * *

Price Reduction for Defective Certified Cost or Pricing Data (AUG 2011)

* * * * *
    (d) * * *

    (1) Interest compounded daily, as required by 26 U.S.C. 6622, on 
the amount of such overpayment to be computed from the date(s)

[[Page 39243]]

of overpayment to the Contractor to the date the Government is 
repaid by the Contractor at the applicable underpayment rate 
effective for each quarter prescribed by the Secretary of the 
Treasury under 26 U.S.C. 6621(a)(2); and
* * * * *

0
4. Amend section 52.215-11 by revising the date of the clause and 
paragraph (e)(1) to read as follows:


52.215-11  Price Reduction for Defective Certified Cost or Pricing 
Data--Modifications.

* * * * *

Price Reduction for Defective Certified Cost or Pricing Data--
Modifications (AUG 2011)

* * * * *
    (e) * * *

    (1) Interest compounded daily, as required by 26 U.S.C. 6622, on 
the amount of such overpayment to be computed from the date(s) of 
overpayment to the Contractor to the date the Government is repaid 
by the Contractor at the applicable underpayment rate effective for 
each quarter prescribed by the Secretary of the Treasury under 26 
U.S.C. 6621(a)(2); and
* * * * *

[FR Doc. 2011-16677 Filed 7-1-11; 8:45 am]
BILLING CODE 6820-EP-P