[Federal Register: April 21, 2000 (Volume 65, Number 78)]
[Rules and Regulations]
[Page 21371-21376]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ap00-23]
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DEPARTMENT OF ENERGY
48 CFR Part 970
RIN 1991-AB02
Acquisition Regulation: Financial Management Clauses for
Management and Operating (M&O) Contracts
AGENCY: Department of Energy.
ACTION: Final rule.
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SUMMARY: The Department of Energy (DOE) amends its Acquisition
Regulation to designate certain Department of Energy Acquisition
Regulation (DEAR) M&O contract clauses and Federal Acquisition
Regulation (FAR) clauses as Standard Financial Management Clauses to be
included in M&O contracts unless the Chief Financial Officer (CFO)
concurs in a deviation. Additionally, this final rule will revise
selected existing financial management clauses and add financial
management related clauses.
DATES: This final rule is effective May 22, 2000.
FOR FURTHER INFORMATION CONTACT: Michael L. Righi, Office of Policy
(MA-51), Department of Energy, 1000 Independence Avenue, SW.,
Washington, D.C. 20585; 202-586-8175 (phone); 202-586-0545 (facsimile);
or michael.l.righi@pr.doe.gov (Internet).
SUPPLEMENTARY INFORMATION
I. Background
II. Discussion of Public Comments
III. Procedural Requirements
A. Review of Executive Order 12866
B. Review Under Executive Order 12988
C. Review Under the Regulatory Flexibility Act
D. Review Under the Paperwork Reduction Act
E. Review Under Executive Order 13132
F. Review Under the National Environmental Policy Act
G. Unfunded Mandates Reform Act of 1995
H. Review Under Small Business Regulatory Enforcement Fairness
Act of 1996
I. Background
On November 18, 1998, the Department of Energy (DOE or Department)
published in the Federal Register (63 FR 64024) a Notice of Proposed
Rulemaking to amend the DEAR to designate certain Department of Energy
Acquisition Regulation (DEAR) M&O contract clauses and Federal
Acquisition Regulation (FAR) clauses as Standard Financial Management
Clauses to be included in M&O contracts unless the Chief Financial
Officer (CFO) concurs in a deviation. Additionally, this Notice of
Proposed Rulemaking proposed to revise selected existing financial
[[Page 21372]]
management clauses and to add financial management related clauses.
The Notice of Proposed Rulemaking solicited comments on all aspects
of the proposed rulemaking. Today's final rule amends the DEAR as
proposed in the Notice of Proposed Rulemaking. The contracting officer
must apply the changes this rule makes to solicitations issued on or
after the effective date of this rule and may apply the changes to
existing solicitations. Because this rule's changes are already
incorporated in the majority of the Department's management and
operating contracts, the contracting officer should incorporate the
changes into existing contracts as soon as practicable, but in no case
later than one year from the effective date of this rule.
Since publication of the Notice of Proposed Rulemaking, the
President signed the National Nuclear Security Administration Act
(NNSA) Act into law (Pub.L. 106-65). The NNSA Act reorganized DOE by
drawing together various national security-related components of DOE
and placing them under an Administrator who is the new DOE Under
Secretary for Nuclear Security. Existing procurement regulations before
March 1, 2000, including 48 CFR part 970, continue in effect by
operation of law with regard to NNSA (50 U.S.C. 2401, note, 2484).
Consistent with the NNSA Act and various delegations of authority under
the NNSA Act, including the authority to issue procurement regulations
subject to approval by the Secretary, today's final regulatory
amendments to part 970 revise the authority citation to include the
citation for the NNSA Act.
II. Discussion of Public Comments
The Department received 11 comments from three commenters. None of
the issues raised in the comments warrants extended treatment in this
rulemaking. Instead, the Department prepared a comment response
document that addressed each comment and sent a copy to each of the
commenters. A copy of the comment response document is available upon
request from Michael L. Righi, Office of Policy (MA-51), Department of
Energy, 1000 Independence Avenue, SW, Washington, D.C. 20585.
III. Procedural Requirements
A. Review Under Executive Order 12866
Today's regulatory action has been determined not to be a
``significant regulatory action'' under Executive Order 12866,
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993).
Accordingly, today's action was not subject to review under the
Executive Order by the Office of Information and Regulatory Affairs of
the Office of Management and Budget.
B. Review Under Executive Order 12988
With respect to the review of existing regulations and the
promulgation of new regulations, section 3(a) of Executive Order 12988,
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on
Executive agencies the general duty to adhere to the following
requirements: (1) Eliminate drafting errors and ambiguity; (2) write
regulations to minimize litigation; and (3) provide a clear legal
standard for affected conduct rather than a general standard and
promote simplification and burden reduction. With regard to the review
required by section 3(a), section 3(b) of Executive Order 12988
specifically requires that Executive agencies make every reasonable
effort to ensure that the regulation: (1) Clearly specifies the
preemptive effect, if any; (2) clearly specifies any effect on existing
Federal law or regulation; (3) provides a clear legal standard for
affected conduct while promoting simplification and burden reduction;
(4) specifies the retroactive effect, if any; (5) adequately defines
key terms; and (6) addresses other important issues affecting clarity
and general draftsmanship under any guidelines issued by the Attorney
General. Section 3(c) of Executive Order 12988 requires Executive
agencies to review regulations in light of applicable standards in
section 3(a) and section 3(b) to determine whether they are met or it
is unreasonable to meet one or more of them. DOE has completed the
required review and determined that, to the extent permitted by law,
the proposed regulations meet the relevant standards of Executive Order
12988.
C. Review Under the Regulatory Flexibility Act
This rule was reviewed under the Regulatory Flexibility Act of
1980, Pub. L. 96-354, which requires preparation of a regulatory
flexibility analysis for any rule which is likely to have a significant
economic impact on a substantial number of small entities. This rule
would only apply to M&O contractors, which are all large entities. DOE
certifies that this rule will not have a significant economic impact on
a substantial number of small entities and, therefore, no regulatory
flexibility analysis has been prepared.
D. Review Under the Paperwork Reduction Act
No new information collection requirements subject to the Paperwork
Reduction Act, 44 U.S.C. 3501 et seq., are imposed by today's
regulatory action.
E. Review Under Executive Order 13132
Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain
requirements on agencies formulating and implementing policies or
regulations that preempt State law or that have federalism
implications. Agencies are required to examine the constitutional and
statutory authority supporting any action that would limit the
policymaking discretion of the States and carefully assess the
necessity for such actions. DOE has examined today's rule and has
determined that it does not preempt State law and does not have a
substantial direct effect on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. No further
action is required by Executive Order 13132.
F. Review Under the National Environmental Policy Act
Pursuant to the Council on Environmental Quality Regulations (40
CFR Parts 1500-1508), the Department of Energy has established
guidelines for its compliance with the provisions of the National
Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.).
Pursuant to appendix A of subpart D of 10 CFR part 1021, National
Environmental Policy Act Implementing Procedures (57 FR 15122, 15152,
April 24, 1992) (Categorical Exclusion A6), the Department of Energy
has determined that this rule is categorically excluded from the need
to prepare an environmental impact statement or environmental
assessment.
G. Review Under the Unfunded Mandates Reform Act of 1995
Title II of the Unfunded Mandates Reform Act of 1995 requires each
Agency to assess the effects of Federal regulatory action on State,
local, and tribal governments and the private sector. The Department
has determined that today's regulatory action does not impose a Federal
mandate on State, local, or tribal governments or on the private
sector.
H. Review Under Small Business Regulatory Enforcement Fairness Act of
1996
As required by 5 U.S.C. 801, the Department of Energy will report
to
[[Page 21373]]
Congress promulgation of the rule prior to its effective date. The
report will state that it has been determined that the rule is not a
``major rule'' as defined by 5 U.S.C. 804(3).
List of Subjects in 48 CFR Part 970
Government procurement.
Issued in Washington, D.C. on April 7, 2000.
Richard H. Hopf,
Director, Office of Procurement and Assistance Management.
For the reasons set out in the preamble, Chapter 9 of Title 48 of
the Code of Federal Regulations is amended as set forth below.
PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS
1. The authority citation for Part 970 is revised to read as
follows:
Authority: Atomic Energy Act of 1954 (42 U.S.C. 2201);
Department of Energy Organization Act (42 U.S.C. 7101, et seq.);
National Nuclear Security Administration Act (50 U.S.C. 2401, et
seq.).
2. Section 970.3201 is revised to read as follows:
970.3201 General.
It is the policy of the DOE to finance management and operating
contracts through advance payments and the use of special financial
institution accounts.
3. Section 970.3202 is amended by revising paragraphs (b) and (c)
to read as follows:
970.3202 Advance payments.
* * * * *
(b) Advance payments shall be made under a payments cleared
financing arrangement for deposit in a special financial institution
account or, at the option of the Government, by direct payment or other
payment mechanism to the contractor.
(c) Prior to providing any advance payments, the contracting
officer shall enter into an agreement with the contractor and a
financial institution regarding a special financial institution account
where the advanced funds will be deposited by the Government. Such
agreement shall:
(1) Provide that DOE shall retain title to the unexpended balance
of funds in the special financial institution account including
collections, if any, deposited by the contractor;
(2) Provide that the title in paragraph (c)(1) of this section
shall be superior to any claim or lien of the financial institution of
deposit or others; and
(3) Incorporate all applicable requirements, as determined by the
Office of Chief Financial Officer.
* * * * *
4. Section 970.3270 is revised to read as follows:
970.3270 Standard financial management clauses.
(a) The following DEAR and FAR clauses are standard financial
management clauses that shall be included in all management and
operating contracts: DEAR 970.5204-9, Accounts, records, and
inspection; DEAR 970.5204-15, Obligation of funds; DEAR 970.5204-16,
Payments and advances; DEAR 970.5204-20, Management controls; DEAR
970.5204-92, Liability with respect to Cost Accounting Standards; DEAR
970.5204-93, Work for others funding authorization; FAR 52.230-2, Cost
Accounting Standards; and FAR 52.230-6, Administration of Cost
Accounting Standards.
(b) The following clauses are standard financial management clauses
that shall be included in management and operating contracts with
integrated accounting systems: DEAR 970.5204-90, Financial management
system; and DEAR 970.5204-91, Integrated accounting.
(c) Any deviations from the standard financial management clauses
specified in paragraphs (a) and (b) of this section require the
approval of the Head of the Contracting Activity and the written
concurrence of the Department's Chief Financial Officer.
5. Section 970.3271 is removed and reserved.
970.3271 [Removed and Reserved]
6. Section 970.5204-9 is amended by revising the introductory
paragraph; clause title; and paragraphs (a) (including the note), (b),
(d), and (f) to read as follows:
970.5204-9 Accounts, records, and inspection.
As prescribed in 970.0407 and 970.3270, insert the following
clause.
Accounts, Records, and Inspection (May 2000)
(a) Accounts. The contractor shall maintain a separate and
distinct set of accounts, records, documents, and other evidence
showing and supporting: all allowable costs incurred; collections
accruing to the contractor in connection with the work under this
contract, other applicable credits, and fee accruals under this
contract; and the receipt, use, and disposition of all Government
property coming into the possession of the contractor under this
contract. The system of accounts employed by the contractor shall be
satisfactory to DOE and in accordance with generally accepted
accounting principles consistently applied.
Note: If the contract includes the clause for ``Price Reduction
for Defective Cost or Pricing Data'' set forth at FAR 52.215-22,
paragraph (a) above should be modified by adding the words ``or
anticipated to be incurred'' after the words ``allowable costs
incurred.''
(b) Inspection and audit of accounts and records. All books of
account and records relating to this contract shall be subject to
inspection and audit by DOE or its designees in accordance with the
provisions of Clause ____, Access to and ownership of records, at
all reasonable times, before and during the period of retention
provided for in paragraph (d) of this clause, and the contractor
shall afford DOE proper facilities for such inspection and audit.
* * * * *
(d) Disposition of records. Except as agreed upon by the
Government and the contractor, all financial and cost reports, books
of account and supporting documents, system files, data bases, and
other data evidencing costs allowable, collections accruing to the
contractor in connection with the work under this contract, other
applicable credits, and fee accruals under this contract, shall be
the property of the Government, and shall be delivered to the
Government or otherwise disposed of by the contractor either as the
contracting officer may from time to time direct during the progress
of the work or, in any event, as the contracting officer shall
direct upon completion or termination of this contract and final
audit of accounts hereunder. Except as otherwise provided in this
contract, including provisions of Clause ____, Access to and
ownership of records, all other records in the possession of the
contractor relating to this contract shall be preserved by the
contractor for a period of three years after final payment under
this contract or otherwise disposed of in such manner as may be
agreed upon by the Government and the contractor.
* * * * *
(f) Inspections. The DOE shall have the right to inspect the
work and activities of the contractor under this contract at such
time and in such manner as it shall deem appropriate.
* * * * *
7. Section 970.5204-13 is amended by revising the clause date and
clause paragraph (d)(15) to read as follows (note following paragraph
(d)(15) remains unchanged).
970.5204-13 Allowable costs and fixed-fee (management and operating
contracts).
* * * * *
Allowable costs and fixed-fee (management and operating Contracts) (May
2000)
* * * * *
(d) * * *
(15) Establishment and maintenance of financial institution
accounts in connection with the work hereunder, including, but not
limited to, service charges, the cost of disbursing cash, necessary
guards, cashiers, and paymasters. If payments to employees
[[Page 21374]]
are made by check, facilities and arrangements for cashing checks
may be provided without expense to the employees, subject to the
approval of the contracting officer.
* * * * *
8. Section 970.5204-15 is revised to read as follows:
970.5204-15 Obligation of funds.
As prescribed in 970.1508(c) and 970.3270, insert the following
clause.
Obligation of Funds (May 2000)
(a) Obligation of funds. The amount presently obligated by the
Government with respect to this contract is ____ dollars ($____).
Such amount may be increased unilaterally by DOE by written notice
to the contractor and may be increased or decreased by written
agreement of the parties (whether or not by formal modification of
this contract). Estimated collections from others for work and
services to be performed under this contract are not included in the
amount presently obligated. Such collections, to the extent actually
received by the contractor, shall be processed and accounted for in
accordance with applicable requirements imposed by the contracting
officer pursuant to the Laws, regulations, and DOE directives clause
of this contract. Nothing in this paragraph is to be construed as
authorizing the contractor to exceed limitations stated in financial
plans established by DOE and furnished to the contractor from time
to time under this contract.
(b) Limitation on payment by the Government. Except as otherwise
provided in this contract and except for costs which may be incurred
by the contractor pursuant to the clause entitled ``Termination,''
or costs of claims allowable under the contract occurring after
completion or termination and not released by the contractor at the
time of financial settlement of the contract in accordance with the
clause entitled ``Payments and Advances,'' payment by the Government
under this contract on account of allowable costs shall not, in the
aggregate, exceed the amount obligated with respect to this
contract, less the contractor's fee. Unless expressly negated in
this contract, payment on account of those costs excepted in the
preceding sentence which are in excess of the amount obligated with
respect to this contract shall be subject to the availability of:
(1) collections accruing to the contractor in connection with
the work under this contract and processed and accounted for in
accordance with applicable requirements imposed by the contracting
officer pursuant to the Laws, regulations, and DOE directives clause
of this contract, and
(2) other funds which DOE may legally use for such purpose,
provided DOE will use its best efforts to obtain the appropriation
of funds for this purpose if not otherwise available.
(c) Notices--Contractor excused from further performance. The
contractor shall notify DOE in writing whenever the unexpended
balance of available funds (including collections available under
paragraph (a) of this clause), plus the contractor's best estimate
of collections to be received and available during the ____ day
period hereinafter specified, is in the contractor's best judgment
sufficient to continue contract operations at the programmed rate
for only ____ days and to cover the contractor's unpaid fee, and
outstanding encumbrances and liabilities on account of costs
allowable under the contract at the end of such period. Whenever the
unexpended balance of available funds (including collections
available under paragraph (a) of this clause), less the amount of
the contractor's fee then earned but not paid, is in the
contractor's best judgment sufficient only to liquidate outstanding
encumbrances and liabilities on account of costs allowable under
this contract, the contractor shall immediately notify DOE and shall
make no further encumbrances or expenditures (except to liquidate
existing encumbrances and liabilities), and, unless the parties
otherwise agree, the contractor shall be excused from further
performance (except such performance as may become necessary in
connection with termination by the Government) and the performance
of all work hereunder will be deemed to have been terminated for the
convenience of the Government in accordance with the provisions of
the clause entitled ``Termination.''
(d) Financial plans; cost and encumbrance limitations. In
addition to the limitations provided for elsewhere in this contract,
DOE may, through financial plans, such as Approved Funding Programs,
or other directives issued to the contractor, establish controls on
the costs to be incurred and encumbrances to be made in the
performance of the contract work. Such plans and directives may be
amended or supplemented from time to time by DOE. The contractor
agrees
(1) to comply with the specific limitations (ceilings) on costs
and encumbrances set forth in such plans and directives,
(2) to comply with other requirements of such plans and
directives, and
(3) to notify DOE promptly, in writing, whenever it has reason
to believe that any limitation on costs and encumbrances will be
exceeded or substantially underrun.
Note: This paragraph (d) may be omitted in contracts which
expressly or otherwise provide a contractual basis for equivalent
controls in a separate clause.
(e) Government's right to terminate not affected. The giving of
any notice under this clause shall not be construed to waive or
impair any right of the Government to terminate the contract under
the provisions of the clause entitled ``Termination.''
9. Section 970.5204-16 is amended by: Revising the introductory
paragraph; clause title; clause paragraphs (a) (notes remain
unchanged); last sentence of alternate paragraph (a) that follows note
2; paragraphs (c), (d) (including note 3), (e) (including note 4);
adding alternate paragraph (e) following note 4; revising paragraphs
(f) and (i) to read as follows:
970.5204-16 Payments and advances.
As prescribed in 970.3270, insert the following clause.
Payments and Advances (May 2000)
(a) Installments of fixed-fee. The fixed-fee payable under this
contract shall become due and payable in periodic installments in
accordance with a schedule determined by the contracting officer.
Fixed-fee payments shall be made by direct payment or withdrawn from
funds advanced or available under this contract, as determined by
the contracting officer. The contracting officer may offset against
any such fee payment the amounts owed to the Government by the
contractor, including any amounts owed for disallowed costs under
this contract. No fixed-fee payment may be withdrawn against the
payments cleared financing arrangement without prior written
approval of the contracting officer.
* * * * *
(a) * * * No base fee or award fee pool amount earned payment
may be withdrawn against the payments cleared financing arrangement
without prior written approval of the contracting officer.
* * * * *
(c) Special financial institution account--use. All advances of
Government funds shall be withdrawn pursuant to a payments cleared
financing arrangement prescribed by DOE in favor of the financial
institution or, at the option of the Government, shall be made by
direct payment or other payment mechanism to the contractor, and
shall be deposited only in the special financial institution account
referred to in the Special Financial Institution Account Agreement,
which is incorporated into this contract as Appendix____. No part of
the funds in the special financial institution account shall be
commingled with any funds of the contractor or used for a purpose
other than that of making payments for costs allowable and, if
applicable, fees earned under this contract or payments for other
items specifically approved in writing by the contracting officer.
If the contracting officer determines that the balance of such
special financial institution account exceeds the contractor's
current needs, the contractor shall promptly make such disposition
of the excess as the contracting officer may direct.
(d) Title to funds advanced. Title to the unexpended balance of
any funds advanced and of any special financial institution account
established pursuant to this clause shall remain in the Government
and be superior to any claim or lien of the financial institution of
deposit or others. It is understood that an advance to the
contractor hereunder is not a loan to the contractor, and will not
require the payment of interest by the contractor, and that the
contractor acquires no right, title or interest in or to such
advance other than the right to make expenditures therefrom, as
provided in this clause.
Note 3: The following paragraph (e) shall be included in
management and operating contracts with integrated accounting
systems.
(e) Review and approval of costs incurred. The contractor shall
prepare and submit annually as of September 30, a ``Statement of
Costs Incurred and Claimed'' (Cost Statement) for the total of net
expenditures accrued (i.e., net costs incurred) for the
[[Page 21375]]
period covered by the Cost Statement. The contractor shall certify
the Cost Statement subject to the penalty provisions for unallowable
costs as stated in sections 306(b) and (i) of the Federal Property
and Administrative Services Act of 1949 (41 U.S.C. 256), as amended.
DOE, after audit and appropriate adjustment, will approve such Cost
Statement. This approval by DOE will constitute an acknowledgment by
DOE that the net costs incurred are allowable under the contract and
that they have been recorded in the accounts maintained by the
contractor in accordance with DOE accounting policies, but will not
relieve the contractor of responsibility for DOE's assets in its
care, for appropriate subsequent adjustments, or for errors later
becoming known to DOE.
Note 4: The following paragraph (e) shall be included in
management and operating contracts without integrated accounting
systems.
(e) Certification and penalties. The contractor shall prepare
and submit a ``Statement of Costs Incurred and Claimed'' (Cost
Statement) for the total of net expenditures incurred for the period
covered by the Cost Statement. It is anticipated that this will be
an annual submission unless otherwise agreed to by the contracting
officer. The contractor shall certify the Cost Statement subject to
the penalty provisions for unallowable costs as stated in sections
306(b) and (i) of the Federal Property and Administrative Services
Act of 1949 (41 U.S.C. 256), as amended.
(f) Financial settlement. The Government shall promptly pay to
the contractor the unpaid balance of allowable costs and fee upon
termination of the work, expiration of the term of the contract, or
completion of the work and its acceptance by the Government after:
(1) Compliance by the contractor with DOE's patent clearance
requirements, and
(2) The furnishing by the contractor of:
(i) An assignment of the contractor's rights to any refunds,
rebates, allowances, accounts receivable, collections accruing to
the contractor in connection with the work under this contract, or
other credits applicable to allowable costs under the contract;
(ii) A closing financial statement;
(iii) The accounting for Government-owned property required by
the clause entitled ``Property''; and
(iv) A release discharging the Government, its officers, agents,
and employees from all liabilities, obligations, and claims arising
out of or under this contract subject only to the following
exceptions:
(A) Specified claims in stated amounts or in estimated amounts
where the amounts are not susceptible to exact statement by the
contractor;
(B) Claims, together with reasonable expenses incidental
thereto, based upon liabilities of the contractor to third parties
arising out of the performance of this contract; provided that such
claims are not known to the contractor on the date of the execution
of the release; and provided further that the contractor gives
notice of such claims in writing to the contracting officer
promptly, but not more than one (1) year after the contractor's
right of action first accrues. In addition, the contractor shall
provide prompt notice to the contracting officer of all potential
claims under this clause, whether in litigation or not (see also
Contract Clause ____, DEAR 970.5204-31, ``Insurance--Litigation and
Claims'');
(C) Claims for reimbursement of costs (other than expenses of
the contractor by reason of any indemnification of the Government
against patent liability), including reasonable expenses incidental
thereto, incurred by the contractor under the provisions of this
contract relating to patents; and
(D) Claims recognizable under the clause entitled, Nuclear
Hazards Indemnity Agreement.
(3) In arriving at the amount due the contractor under this
clause, there shall be deducted,
(i) any claim which the Government may have against the
contractor in connection with this contract, and
(ii) deductions due under the terms of this contract, and not
otherwise recovered by or credited to the Government. The
unliquidated balance of the special financial institution account
may be applied to the amount due and any balance shall be returned
to the Government forthwith.
* * * * *
(i) Collections. All collections accruing to the contractor in
connection with the work under this contract, except for the
contractor's fee and royalties or other income accruing to the
contractor from technology transfer activities in accordance with
this contract, shall be Government property and shall be processed
and accounted for in accordance with applicable requirements imposed
by the contracting officer pursuant to the Laws, regulations, and
DOE directives clause of this contract and, to the extent consistent
with those requirements, shall be deposited in the special financial
institution account or otherwise made available for payment of
allowable costs under this contract, unless otherwise directed by
the contracting officer.
* * * * *
10. Section 970.5204-20 is amended by revising the introductory
paragraph, clause title, and paragraph (a) to read as follows:
970.5204-20 Management controls.
In accordance with 970.0901 and as prescribed in 970.3270, the
following clause shall be used in management and operating contracts:
Management Controls (May 2000)
(a) The contractor shall be responsible for maintaining, as an
integral part of its organization, effective systems of management
controls for both administrative and programmatic functions.
Management controls comprise the plan of organization, methods, and
procedures adopted by management to reasonably ensure that: the
mission and functions assigned to the contractor are properly
executed; efficient and effective operations are promoted; resources
are safeguarded against waste, loss, mismanagement, unauthorized
use, or misappropriation; all encumbrances and costs that are
incurred under the contract and fees that are earned are in
compliance with applicable clauses and other current terms,
conditions, and intended purposes; all collections accruing to the
contractor in connection with the work under this contract,
expenditures, and all other transactions and assets are properly
recorded, managed, and reported; and financial, statistical, and
other reports necessary to maintain accountability and managerial
control are accurate, reliable, and timely. The systems of controls
employed by the contractor shall be documented and satisfactory to
DOE. Such systems shall be an integral part of the contractor's
management functions, including defining specific roles and
responsibilities for each level of management, and holding employees
accountable for the adequacy of the management systems and controls
in their areas of assigned responsibility. The contractor shall, as
part of the internal audit program required elsewhere in this
contract, periodically review the management systems and controls
employed in programs and administrative areas to ensure that they
are adequate to provide reasonable assurance that the objectives of
the systems are being accomplished and that these systems and
controls are working effectively.
* * * * *
11. Section 970.5204-90 is added to read as follows:
970.5204-90 Financial management system.
As prescribed in 970.3270, insert the following clause.
Financial Management System (May 2000)
The contractor shall maintain and administer a financial
management system that is suitable to provide proper accounting in
accordance with DOE requirements for assets, liabilities,
collections accruing to the contractor in connection with the work
under this contract, expenditures, costs, and encumbrances; permits
the preparation of accounts and accurate, reliable financial and
statistical reports; and assures that accountability for the assets
can be maintained. The contractor shall submit to DOE for written
approval an annual plan for new financial management systems and/or
subsystems and major enhancements and/or upgrades to the currently
existing financial systems and/or subsystems. The contractor shall
notify DOE thirty (30) days in advance of any planned implementation
of any substantial deviation from this plan and, as requested by the
contracting officer, shall submit any such deviation to DOE for
written approval before implementation.
12. Section 970.5204-91 is added to read as follows:
970.5204-91 Integrated accounting.
As prescribed in 970.3270, insert the following clause.
[[Page 21376]]
Integrated Accounting (May 2000)
Integrated accounting procedures are required for use under this
contract. The contractor's financial management system shall include
an integrated accounting system that is linked to DOE's accounts
through the use of reciprocal accounts and that has electronic
capability to transmit monthly and year-end self-balancing trial
balances to the Department's Primary Accounting System for reporting
financial activity under this contract in accordance with
requirements imposed by the contracting officer pursuant to the
Laws, regulations, and DOE directives clause of this contract.
13. Section 970.5204-92 is added to read as follows:
970.5204-92 Liability With respect to cost accounting standards.
As prescribed in 970.3270, insert the following clause.
Liability with Respect to Cost Accounting Standards (May 2000)
(a) The contractor is not liable to the Government for increased
costs or interest resulting from its failure to comply with the
clauses of this contract entitled, ``Cost Accounting Standards,''
and ``Administration of Cost Accounting Standards,'' if its failure
to comply with the clauses is caused by the contractor's compliance
with published DOE financial management policies and procedures or
other requirements established by the Department's Chief Financial
Officer or Procurement Executive.
(b) The contractor is not liable to the Government for increased
costs or interest resulting from its subcontractors' failure to
comply with the clauses at FAR 52.230-2, ``Cost Accounting
Standards,'' and FAR 52.230-6, ``Administration of Cost Accounting
Standards,'' if the contractor includes in each covered subcontract
a clause making the subcontractor liable to the Government for
increased costs or interest resulting from the subcontractor's
failure to comply with the clauses; and the contractor seeks the
subcontract price adjustment and cooperates with the Government in
the Government's attempts to recover from the subcontractor.
14. Section 970.5204-93 is added to read as follows:
970.5204-93 Work for others funding authorization.
As prescribed in 970.3270, insert the following clause.
Work for Others Funding Authorization (May 2000)
Any uncollectible receivables resulting from the contractor
utilizing contractor corporate funding for reimbursable work shall
be the responsibility of the contractor, and the United States
Government shall have no liability to the contractor for the
contractor's uncollected receivables. The contractor is permitted to
provide advance payment utilizing contractor corporate funds for
reimbursable work to be performed by the contractor for a non-
Federal entity in instances where advance payment from that entity
is required under the Laws, regulations, and DOE directives clause
of this contract and such advance cannot be obtained. The contractor
is also permitted to provide advance payment utilizing contractor
corporate funds to continue reimbursable work to be performed by the
contractor for a Federal entity when the term or the funds on a
Federal interagency agreement required under the Laws, regulations,
and DOE directives clause of this contract have elapsed. The
contractor's utilization of contractor corporate funds does not
relieve the contractor of its responsibility to comply with all
requirements for Work for Others applicable to this contract.
[FR Doc. 00-9633 Filed 4-20-00; 8:45 am]
BILLING CODE 6450-01-P