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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: August 29, 2002

SUBJECT: Federal Acquisition Regulation (FAR); Economic Planning, Employee Morale, and Travel Cost Principles

SOURCE: Federal Register, August 29, 2002, Vol. 67, No. 168, page 55685

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

ACTION: Proposed Rule

SYNOPSIS: It is proposed that three cost principles in the Federal Acquisition Regulation (FAR) be amended to increase clarity and readability: FAR 31.205-12, Economic Planning Costs; FAR 31.205-13, Employee Morale, Health, Welfare, Food Service, and Dormitory Costs and Credits; and FAR 31.205-46, Travel Costs.

DATES: Comments on the proposed rule must be submitted no later than October 28, 2002.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2002-001@gsa.gov. Cite FAR case 2002-001 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Jeremy Olson at 202-501-3221.

SUPPLEMENTAL INFORMATION: The following changes are proposed to the three cost principles:

• Paragraph (a) of FAR 31.205-12 would be revised and simplified, and paragraphs (b) and (c) would be deleted. Paragraph (a) would include the statement "economic planning costs are allowable" (the primary portion of paragraph (b)), and a simplified definition of "economic planning costs" ("the costs of general long-range management planning concerned with the future overall development of the contractor's business"). It would retain the sentence, " Economic planning costs do not include organization or reorganization costs covered by [FAR] 31.205-27 [Organization Costs]." In addition, it would add the sentence, "See [FAR] 31.205-38 [Selling Costs] for determining the allowability of market planning costs other than economic planning costs."
  
  The statement in paragraph (b) that economic planning costs are allowable as "indirect costs to be properly allocated" would be deleted because it duplicates coverage already in FAR 31.202, Direct Costs, FAR 31.203, Indirect Costs, and FAR 31.201-4, Determining Allocability. Paragraph (c), which states that "research and development and engineering costs designed to lead to new products for sale to the general public are not allowable" would be deleted because FAR 31.205-18, Independent Research and Development and Bid and Proposal Costs, clearly applies to these costs, so it is not necessary to state that these costs are not economic planning costs.
  
  
• Paragraph (a) of FAR 31.205-13 would be revised to set out, in a list, the examples of allowable activities covered by the cost principle. Paragraph (d) would be revised to set out, in a list, the examples of losses from operating food and dormitory services that may be allowable. Paragraph (f) would be revised from "contributions...may be included as costs incurred under paragraph (a) of this subsection only to the extent..." to "contributions...are allowable only to the extent..."
  
  
• Paragraphs (b) and (c) of FAR 31.205-46 would be deleted. Paragraph (b) states, "Travel costs incurred in the normal course of overall administration of the business are allowable and shall be treated as indirect costs." Paragraph (c) states, "Travel costs directly attributable to specific contract performance are allowable and may be charged to the contract under [FAR] 31.202." As is the case with the proposed revision to FAR 31.205-12(b), these two paragraphs are adequately addressed in FAR 31.203 and FAR 31.202, respectively.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

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