[Federal Register: March 20, 2002 (Volume 67, Number 54)]
[Proposed Rules]               
[Page 13071-13073]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[[Page 13071]]


Part III

Department of Defense

General Services Administration

National Aeronautics and Space Administration


48 CFR Parts 2, 31, 47, and 52

Federal Acquisition Regulation; Miscellaneous Cost Principles; Proposed 

[[Page 13072]]





48 CFR Parts 2, 31, 47, and 52

[FAR Case 2001-029]
RIN: 9000-AJ33

Federal Acquisition Regulation; Miscellaneous Cost Principles

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

ACTION: Proposed rule.


SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council (Councils) are proposing to amend the 
Federal Acquisition Regulation (FAR) to delete the cost principle 
concerning transportation costs, and to revise the cost principles 
concerning cost of money, other business expenses, and deferred 
research and development costs.

DATES: Interested parties should submit comments in writing on or 
before May 20, 2002 to be considered in the formulation of a final 

ADDRESSES: Submit written comments to: General Services Administration, 
FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie 
Duarte, Washington, DC 20405.
    Submit electronic comments via the Internet to: farcase.2001-
029@gsa.gov. Please submit comments only and cite FAR case 2001-029 in 
all correspondence related to this case.

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 


A. Background

    The Councils are proposing the following changes related to the 
cost principles at FAR 31.205-10, Cost of money; FAR 31.205-28, Other 
business expenses; FAR 31.205-45, Transportation costs; and FAR 31.205-
48, Deferred research and development costs:
    1. Cost of money. Revise the cost principle by deleting--
    a. Portions of the current FAR 31.205-10(a)(i) and (a)(ii) that 
duplicate 48 CFR 9904.414, Cost Accounting Standard-Cost of Money as an 
Element of the Cost of Facilities Capital;
    b. FAR 31.205-10(a)(2)(ii), (a)(3), and (b)(3), because these 
paragraphs duplicate the recordkeeping requirements at 31.201-2(d); and
    c. The definitions of ``Cost of capital committed to facilities'' 
and ``facilities capital'' from FAR 31.001, Definitions, since these 
terms are not used elsewhere in the FAR. In addition, add a definition 
to FAR 2.101, Definitions, for the term ``facilities capital cost of 
money'' which is used in several places in the FAR.
    2. Other business expenses. Delete the term ``when allocated on an 
equitable basis'' from FAR 31.205-28. It is unnecessary to repeat the 
requirement for allocation in this cost principle since it is already 
addressed at FAR 31.201-4, Determining allocability; FAR 31.202, Direct 
costs; and FAR 31.203, Indirect costs.
    3. Transportation. Delete this cost principle in its entirety since 
an affirmative statement of allowability is unnecessary, and the 
allocation statement is already addressed at FAR 31.201-4, 31.202, and 
    4. Deferred research and development. Delete the word ``deferred'' 
from the title to provide a more accurate description of the scope of 
this cost principle. Costs that are unallowable under this cost 
principle are unallowable regardless of whether they are charged in the 
current accounting period or deferred to a future accounting period.
    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 Parts 2, 31, 47, and 52 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 
2001-029), 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 Parts 2, 31, 47, and 52

    Government procurement.

    Dated: March 8, 2002.
Al Matera,
Director, Acquisition Policy Division.
    Therefore, DoD, GSA, and NASA propose amending 48 CFR parts 2, 31, 
47, and 52 as set forth below:
    1. The authority citation for 48 CFR parts 2, 31, 47, and 52 
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).


    2. In section 2.101 add the definition, in alphabetical order, 
``Facilities capital cost of money'' to read as follows:

2.101  Definitions.

* * * * *
    Facilities capital cost of money means ``cost of money as an 
element of the cost of facilities capital'' as used at 48 CFR 9904.414, 
Cost accounting standard-cost of money as an element of the cost of 
facilities capital.
* * * * *


31.001  [Amended]

    3. In section 31.001, remove the definitions ``Cost of capital 
committed to facilities'' and ``facilities capital.''
    4. Revise section 31.205-10 to read as follows:

31.205-10  Cost of money.

    (a) General. Cost of money--
    (1) Is an imputed cost that is not a form of interest on borrowings 
(see 31.205-20);
    (2) Is an ``incurred cost'' for cost-reimbursement purposes under 
applicable cost-reimbursement contracts and for progress payment 
purposes under fixed-price contracts; and
    (3) Refers to--

[[Page 13073]]

    (i) Facilities capital cost of money (48 CFR 9904.414); and
    (ii) Cost of money as an element of the cost of capital assets 
under construction (48 CFR 9904.417).
    (b) Cost of money is allowable provided--
    (1) It is measured, assigned, and allocated to contracts in 
accordance with 48 CFR 9904.414 or 48 CFR 9904.417, as applicable;
    (2) The requirements of 31.205-52, which limit the allowability of 
cost of money, are followed; and
    (3) The estimated facilities capital cost of money is specifically 
identified and proposed in cost proposals relating to the contract 
under which the cost is to be claimed.
    (c) Actual interest cost in lieu of the calculated imputed cost of 
money is unallowable.
    5. In section 31.205-28, revise the introductory text to read as 

31.205-28  Other business expenses.

    The following types of recurring costs are allowable:
* * * * *

31.205-45  [Reserved]

    6. Remove and reserve section 31.205-45.

31.205-48  Research and development costs.

    7. Revise the section heading of section 31.205-48, as set forth 
above; and remove ``section'' and add ``subsection'' in its place.


    8. In section 47.300, revise the introductory text of paragraph (b) 
to read as follows:

47.300  Scope of subpart.

* * * * *
    (b) If a special requirement exists for application of any of these 
terms and conditions to other types of contracts; e.g., cost-
reimbursement contracts, for which transportation arrangements are 
normally the responsibility of the contractor and transportation costs 
are allowable, the contracting officer must use the terms and 
conditions prescribed in this subpart as a guide for--
* * * * *


    9. In section 52.215-16, revise the date of the provision and 
paragraph (a) to read as follows:

52.215-16  Facilities Capital Cost of Money.

* * * * *

Facilities Capital Cost of Money (May 2002)

    (a) Facilities capital cost of money will be an allowable cost 
under the contemplated contract, if the criteria for allowability in 
FAR 31.205-10(b) are met. One of the allowability criteria requires 
the prospective contractor to propose facilities capital cost of 
money in its offer.

* * * * *
[FR Doc. 02-6107 Filed 3-19-02; 8:45 am]