FAR Part 42

1. FAR Part 42

2. 42.002 Interagency Agreements • Agencies requiring field contract administration or audit services are encouraged to use exiting cross servicing arrangements for the audit of costs incurred under contracts of two or more agencies being performed at the same business entity.

3. 43.003 Cognizant Fed Agency • Contractors other than educational and Nonprofit the agency is the one with the largest dollar amount of negotiated contracts. • Educational – Subsection G.11 OMB Circular A-21, • Non Profit – Attachment A Subsection E OMB Circular A-122

4. 42.101 Contract Audit Responsibilities • The auditor is responsible for submitting information and advice to the requesting activity, based on the auditors analysis of the contractor’s financial and accounting records or other related data as to the acceptability of the contractor’s incurred and estimated costs; and performing other analysis and review that require access to the contractors financial accounting records supporting proposed and incurred costs. • 42.102 Assignment of Contract Audit Services • 42.102 Contract Audit Services Directory

5. 42.2 Contract Administration Services • This prescribes policies and procedures for assigning, retaining, or reassigning contract administration responsibility; withholding normal functions or delegating additional functions when assigning contracts for administration; and requesting and performing supporting contract administration. • Contracting officers must retain for administration any contract not requiring the performance of contract administration functions at or near contractor facilities, or for which retention by the contracting office is prescribed by agency acquisition regulations. However, a contract administration office or a contracting office retaining contract administration may request supporting contract administration from the contract administration office cognizant of the contractor location where performance of specific contract administration functions is required. • 42.201 Contract Administration Responsibilities • 42.202 Assignment of Contract Administration • 42.203 Contract Administration Services Director • 42.505 Postaward Subcontractor Conferences. The Prime contractor is responsible for setting up a Postaward conference with the subcontractors.

6. 42.3 Contract Administration Office Functions • Unless, otherwise agreed to, the CAO will perform the functions listed in FAR 42.203(a) in accordance with the FAR, the contract terms, and the applicable regulations of the servicing agency. CAO’s may also perform the functions delineated in FAR 42.302(b) only when and to the extent specifically authorized by the contracting office. Contract administration functions not listed in FAR 42.302, or not otherwise delegated, remain the responsibility of the contracting office.

7. 42.4 Correspondence and Visits • The contracting officer shall forward correspondence of the contract through the CAO to the contractor and provide a copy for the CAO file. If urgent copy the CAO. • Visiting government personnel to a contractor’s facility will provide the CAO information and advance notice to make arrangements. • Visitors shall inform the CAO of any agreements reached with the contractor or other results of the visit. • Onsite inspections or evaluations of the performance are only under direction of the agency.

8. 42.5 Postaward Orientation • This is designed to achieve a clear and mutual understanding of all contract requirements and to identify/resolve potential problems. Not meant to substitute for contractors fully understanding work requirements at the time offers were submitted or to alter the final agreement. • 42.502 Considerations: nature and extent of preaward survey and other discussions; type, value and complexity of the contract; complexity and acquisition history of product/service; requirements for spare parts and related equipment; urgency of delivery schedule and relationship of the product or service to critical programs; length of planned production cycle; extent of subtracting; contractor’s performance history and experience; contractors size status; contractors performance history with small businesses; safety and complexity of financial arrangements. • 42.503 Postaward Conference Arrangements/ Procedures/ Report • 42.504. Postaward letters may be used in lieu of conference.

9. 42.6 Corporate Administrative Contracting Officer • Contractors with more than one operating location often have corporate-wide policies/procedures requiring government review and approval. For consistency, this is provided by the CACO. • A decision to initiate or discontinue a CACO should be based on the benefits of coordination and liaison at the corporate level; volume of government sales; degree of control the corporate office exercises over government sales division; and the impact of corporate policies and procedures on those divisions. • Responsibilities typically assigned a CACO are: determination of final indirect cost rates for cost reimbursement contracts; establishing advance agreements on corporate/home office expense allocations; and administration of CAS applicable to the corporate level.

10. 42.7 Indirect Cost Rates • Billing rate means an indirect cost rate established temporarily for interim reimbursement of incurred indirect costs and adjusted as necessary pending establishment of final indirect costs rates. • Billing rates and final indirect cost rates are sued in reimbursing indirect costs under cost-reimbursement contracts and in determining progress payments under fixed-price contracts. • 42.703-2 Certificate of Indirect Costs • 42.705-1 CO Determination Procedure • 42.705-2 Auditor Determination Procedure • 42.705-3 Educational Institutions • 42.705-4 State and Local governments • 42.705-5 Nonprofit Organizations other than educational /state/local governments. See OMB Circular A-122

11. 42.7 continued • 42.706 Distribution of Documents • 42.707 Cost Sharing Rates and Limitations on Indirect Cost Rates • 42.708 Quick Closeout Procedures • 42.709 Penalties – in excess of $700,000, except fixed-price without cost incentives or any firm-fixed price for commercial items • Responsibilities/ computing interest/ Waiver

12. 42.8 Disallowance of Costs • At any time during the course of performance of a cost reimbursement, fixed price incentive or fixed price with price redetermination contract, the ACO may issue a notice of intent to disallow specified costs incurred or planned for. In the event of disagreement, the contractor may submit a written response. The ACO must then answer or withdraw the notice within 60 days. • A notice of intent to disallow costs usually results from monitoring contractor costs. The purpose is to notify the contractor that the cost is considered unallowable under contract terms and to provide a timely resolution.

13. 42.9 Bankruptcy • This part prescribes policies and procedures regarding actions to be taken when a contractor enters into proceedings relating to bankruptcy. It establishes a requirement for the contractor to notify the CO upon filing a petition for bankruptcy. It further establishes minimum requirements for agencies to follow in the envent of a bankruptcy.

14. 42.11 Production Surveillance and Reporting • Production surveillance is used to determine contractor progress and identify any factors that may cause delay. It involves Government review and analysis of contractor performance plans, schedules, controls, and industrial processes relative to the contracotrs actual performance. • Extent of surveillance is determined by assessing the criticality of supplies/serives; history of contract performance; experience with the supplies/services; and/or financial capacity.

15. 42.12 Novation and Change of Name Agreements • A novation agreement recognizes a successor of interest to Government contracts when the contractor’s assets are transferred. A change-of-name agreement recognizes a legal change in the contractor’s name. Both of these affected through execution of a modification to the applicable contracts.

16. 42.13 Suspension of Work, Stop-Work Orders, and Govt Delay of Work • Suspension of work may be ordered by the contracting officer for a reasonable period of time; applicable to construction or architectural and engineering contracts. • Stop Work Orders are generally issued only if it is advisable to suspend work pending a decision by the Government; applicable to any negotiated fixed-price or cost-reimbursement supply, research, development, or service contract. • Government delay or work does not authorize the contracting office to order a suspension, delay, or interruption of work not is it to be used as the basis or justification of such an order.