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10 U.S.C. § 3745 — Required regulations

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10 U.S.C. § 3745 — Required regulations

Page 2541 TITLE 10—ARMED FORCES § 3745 Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. REGULATIONS Pub. L. 99–145, title IX, § 911(b), Nov. 8, 1985, 99 Stat. 685, provided that: ‘‘(1) Not later than 150 days after the date of the en- actment of this Act [Nov. 8, 1985], the Secretary of De- fense shall prescribe the regulations required by sub- sections (e) and (f) of [former] section 2324 of title 10, United States Code [see 10 U.S.C. 3744, 3745], as added by subsection (a). Such regulations shall be published in accordance with section 22 of the Office of Federal Pro- curement Policy Act ([former] 41 U.S.C. 418b) [now 41 U.S.C. 1707]. ‘‘(2) The Secretary shall review such regulations at least once every five years. The results of each such re- view shall be made public.’’ § 3745. Required regulations (a) IN GENERAL.—The Federal Acquisition Reg- ulation shall contain provisions on the allow- ability of contractor costs. Such provisions shall define in detail and in specific terms those costs which are unallowable, in whole or in part, under covered contracts. (b) SPECIFIC ITEMS.—The regulations shall, at a minimum, clarify the cost principles applica- ble to contractor costs of the following: (1) Air shows. (2) Membership in civic, community, and professional organizations. (3) Recruitment. (4) Employee morale and welfare. (5) Actions to influence (directly or indi- rectly) executive branch action on regulatory and contract matters (other than costs in

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Page 2541 TITLE 10—ARMED FORCES § 3745 Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. REGULATIONS Pub. L. 99–145, title IX, § 911(b), Nov. 8, 1985, 99 Stat. 685, provided that: ‘‘(1) Not later than 150 days after the date of the en- actment of this Act [Nov. 8, 1985], the Secretary of De- fense shall prescribe the regulations required by sub- sections (e) and (f) of [former] section 2324 of title 10, United States Code [see 10 U.S.C. 3744, 3745], as added by subsection (a). Such regulations shall be published in accordance with section 22 of the Office of Federal Pro- curement Policy Act ([former] 41 U.S.C. 418b) [now 41 U.S.C. 1707]. ‘‘(2) The Secretary shall review such regulations at least once every five years. The results of each such re- view shall be made public.’’ § 3745. Required regulations (a) IN GENERAL.—The Federal Acquisition Reg- ulation shall contain provisions on the allow- ability of contractor costs. Such provisions shall define in detail and in specific terms those costs which are unallowable, in whole or in part, under covered contracts. (b) SPECIFIC ITEMS.—The regulations shall, at a minimum, clarify the cost principles applica- ble to contractor costs of the following: (1) Air shows. (2) Membership in civic, community, and professional organizations. (3) Recruitment. (4) Employee morale and welfare. (5) Actions to influence (directly or indi- rectly) executive branch action on regulatory and contract matters (other than costs in- curred in regard to contract proposals pursu- ant to solicited or unsolicited bids). (6) Community relations. (7) Dining facilities. (8) Professional and consulting services, in- cluding legal services. (9) Compensation. (10) Selling and marketing. (11) Travel. (12) Public relations. (13) Hotel and meal expenses. (14) Expense of corporate aircraft. (15) Company-furnished automobiles. (16) Advertising. (17) Conventions. (c) ADDITIONAL REQUIREMENTS.— (1) WHEN QUESTIONED COSTS MAY BE RE- SOLVED.—The Federal Acquisition Regulation shall require that a contracting officer not re- solve any questioned costs until he has ob- tained— (A) adequate documentation with respect to such costs; and (B) the opinion of the contract auditor on the allowability of such costs. (2) PRESENCE OF CONTRACT AUDITOR.—The Federal Acquisition Regulation shall provide that, to the maximum extent practicable, the contract auditor be present at any negotiation or meeting with the contractor regarding a de- termination of the allowability of indirect costs of the contractor. (3) SETTLEMENT TO REFLECT AMOUNT OF INDI- VIDUAL QUESTIONED COSTS.—The Federal Acqui- sition Regulation shall require that all cat- egories of costs designated in the report of the contract auditor as questioned with respect to a proposal for settlement be resolved in such a manner that the amount of the individual questioned costs that are paid will be reflected in the settlement. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1832(a), (e), Jan. 1, 2021, 134 Stat. 4218, 4221.) Editorial Notes CODIFICATION The text of subsec. (f) of section 2324 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1832(e), was based on Pub. L. 99–145, title IX, § 911(a)(1), Nov. 8, 1985, 99 Stat. 683; Pub. L. 100–456, div. A, title VIII, § 826(a), Sept. 29, 1988, 102 Stat. 1952; Pub. L. 100–463, title VIII, § 8105(a), Oct. 1, 1988, 102 Stat. 2270–36; Pub. L. 100–526, title I, § 106(a)(2), Oct. 24, 1988, 102 Stat. 2625; Pub. L. 102–484, div. A, title X, § 1052(26)(A), Oct. 23, 1992, 106 Stat. 2500; Pub. L. 103–355, title II, § 2101(a)(6), (c), Oct. 13, 1994, 108 Stat. 3307, 3308, as amended by Pub. L. 104–106, div. D, title XLIII, § 4321(a)(5), Feb. 10, 1996, 110 Stat. 671. Another section 1832(e) of Pub. L. 116–283 amended section 3746 of this title. PRIOR PROVISIONS A prior section 3745 was renumbered section 7275 of this title. AMENDMENTS 2021—Pub. L. 116–283, § 1832(e)(1)(A), transferred sub- sec. (f) of section 2324 of this title to this section and struck out subsec. (f) designation and heading ‘‘Re- quired Regulations’’ at beginning. Subsec. (a). Pub. L. 116–283, § 1832(e)(1)(B), (2), redesig- nated first two sentences of par. (1) of section 2324(f) of this title as subsec. (a) of this section and inserted heading. Third sentence designated subsec. (b). Subsec. (b). Pub. L. 116–283, § 1832(e)(1)(C), (3), des- ignated third sentence of subsec. (a) as subsec. (b), in- serted heading, and redesignated subpars. (A) to (Q) as pars. (1) to (17), respectively. Subsec. (c). Pub. L. 116–283, § 1832(e)(1)(D), (E), (4), re- designated pars. (2) to (4) of section 2324(f) of this title collectively as subsec. (c) of this section and individ- ually as pars. (1) to (3), respectively, thereof, inserted subsec. and par. headings, and realigned margins. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. REGULATIONS For requirement to prescribe and periodically review regulations required by this section (formerly subsec. (f) of section 2324 of this title), see section 911(b) of Pub. L. 99–145, set out as a note under section 3744 of this title. Page 2542 TITLE 10—ARMED FORCES § 3746 § 3746. Applicability of regulations to subcontrac- tors The regulations referred to in sections 3744 and 3745(a) and (b) of this title shall require prime contractors of a covered contract, to the maximum extent practicable, to apply the provi- sions of such regulations to all subcontractors of the covered contract. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1832(a), (e), Jan. 1, 2021, 134 Stat. 4218, 4221.) Editorial Notes CODIFICATION The text of subsec. (g) of section 2324 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1832(e), was based on Pub. L. 99–145, title IX, § 911(a)(1), Nov. 8, 1985, 99 Stat. 684; Pub. L. 103–355, title II, § 2101(a)(7), Oct. 13, 1994, 108 Stat. 3308. Another section 1832(e) of Pub. L. 116–283 amended section 3745 of this title. PRIOR PROVISIONS A prior section 3746 was renumbered section 7276 of this title. AMENDMENTS 2021—Pub. L. 116–283, § 1832(e), transferred subsec. (g) of section 2324 of this title to this section, struck out subsec. (g) designation and heading ‘‘Applicability of Regulations to Subcontractors’’ at beginning, and sub- stituted ‘‘sections 3744 and 3745(a) and (b) of this title’’ for ‘‘subsections (e) and (f)(1)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. § 3747. Contractor certification (a) CONTENT AND FORM.—A proposal for settle- ment of indirect costs applicable to a covered contract shall include a certification by an offi- cial of the contractor that, to the best of the certifying official’s knowledge and belief, all in- direct costs included in the proposal are allow- able. Any such certification shall be in a form prescribed in the Federal Acquisition Regula- tion. (b) WAIVER.—The head of the agency or the Secretary of the military department concerned may, in an exceptional case, waive the require- ment for certification under subsection (a) in the case of any contract if the head of the agen- cy or the Secretary— (1) determines in such case that it would be in the interest of the United States to waive such certification; and (2) states in writing the reasons for that de- termination and makes such determination available to the public. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1832(a), (f), Jan. 1, 2021, 134 Stat. 4218, 4221.) Editorial Notes CODIFICATION The text of subsec. (h) of section 2324 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1832(f), was based on Pub. L. 99–145, title IX, § 911(a)(1), Nov. 8, 1985, 99 Stat. 684; Pub. L. 99–190, § 101(b) [title VIII, § 8112(a)(2)], Dec. 19, 1985, 99 Stat. 1185, 1223; Pub. L. 103–355, title II, § 2101(a)(8), Oct. 13, 1994, 108 Stat. 3308; Pub. L. 104–106, div. D, title XLIII, § 4321(b)(9)(B), Feb. 10, 1996, 110 Stat. 672. PRIOR PROVISIONS A prior section 3746 was renumbered section 7276 of this title. AMENDMENTS 2021—Pub. L. 116–283, § 1832(f)(1)(A), transferred sub- sec. (h) of section 2324 of this title to this section and struck out subsec. (h) designation and heading ‘‘Con- tractor Certification Required’’ at beginning. Subsec. (a). Pub. L. 116–283, § 1832(f)(1)(B), (2), redesig- nated par. (1) of section 2324(h) of this title as subsec. (a) of this section and inserted heading. Subsec. (b). Pub. L. 116–283, § 1832(f)(1)(B), (3), redesig- nated par. (2) of section 2324(h) of this title as subsec. (b) of this section, inserted heading, substituted ‘‘sub- section (a)’’ for ‘‘paragraph (1)’’ in introductory provi- sions, and redesignated subpars. (A) and (B) as pars. (1) and (2), respectively. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed im- plementation and applicability of existing law, see sec- tion 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. § 3748. Penalties for submission of cost known as not allowable The submission to an agency of a proposal for settlement of costs for any period after such costs have been accrued that includes a cost that is expressly specified by statute or regula- tion as being unallowable, with the knowledge that such cost is unallowable, shall be subject to the provisions of section 287 of title 18 and sec- tion 3729 of title 31. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1832(a), (g), Jan. 1, 2021, 134 Stat. 4218, 4222.) Editorial Notes CODIFICATION The text of subsec. (i) of section 2324 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1832(g), was based on Pub. L. 99–145, title IX, § 911(a)(1), Nov. 8, 1985, 99 Stat. 684; Pub. L. 103–355, title II, § 2101(a)(9), Oct. 13, 1994, 108 Stat. 3308. PRIOR PROVISIONS A prior section 3748 was renumbered section 7278 of this title. AMENDMENTS 2021—Pub. L. 116–283, § 1832(g), transferred subsec. (i) of section 2324 of this title to this section and struck out subsec. (i) designation and heading ‘‘Penalties for Submission of Cost Known as Not Allowable’’ at begin- ning.

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Federal law — U.S. Code and appendices · legal_authorities

10 U.S.C. § 3744 — Specific costs not allowable

**(a) Specific Costs.—** The following costs are not allowable under a covered contract: (1) Costs of entertainment, including amusement, diversion, and social activities and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities). (2) Costs incurred to influence (directly or indirectly) legislative action on any matter pending before Congress, a State legislature, or a legislative body of a political subdivision of a State. (3) Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of any false certification) brought by the United States where the contractor is found liable or has pleaded nolo contendere to a charge of fraud or similar proceeding (including filing of a false certification). (4) Payments of fines and penalties resulting from violations of, or failure to comply with, Federal, State, local, or foreign laws and regulations, except when incurred as a result of compliance with specific terms and conditions of the contract or specific written instructions from the contracting officer authorizing in advance such payments in accordance with applicable provisions of the Federal Acquisition Regulation. (5) Costs of membership in any social, dining, or country club or organization. (6) Costs of alcoholic beverages. (7) Contributions or donations, regardless of the recipient. (8) Costs of advertising designed to promote the contractor or its products. (9) Costs of promotional items and memorabilia, including models, gifts, and souvenirs. (10) Costs for travel by commercial aircraft which exceed the amount of the standard commercial fare. (11) Costs incurred in making any payment (commonly known as a “golden parac

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Federal law — U.S. Code and appendices · legal_authorities

10 U.S.C. § 3744 — Specific costs not allowable

Page 2538 TITLE 10—ARMED FORCES § 3744 agency determines that a proposal for settle- ment of indirect costs submitted by a con- tractor includes a cost determined to be unal- lowable in the case of such contractor before the submission of such proposal, the head of the agency shall assess a penalty against the contractor in an amount equal to two times the amount of the disallowed cost allocated to covered contracts for which a proposal for set- tlement of indirect costs has been submitted. (c) WAIVER OF PENALTY.—The Federal Acquisi- tion Regulation shall provide for a penalty under subsection (b) to be waived in the case of a contractor’s proposal for settlement of indi- rect costs when— (1) the contractor withdraws the proposal be- fore the formal initiation of an audit of the proposal by the Federal Government and re- submits a revised proposal; (2) the amount of unallowable costs subject to the penalty is insignificant; or (3) the contractor demonstrates, to the con- tracting officer’s satisfaction, that— (A) it has established appropriate policies and personnel training and an internal con- trol and review system that provide assur- ances that unallowable costs subject to pen- alties are precluded from being included in the contractor’s proposal for settlement of indirect costs; and (B) the unallowable costs subject to the penalty were inadvertently incorporated into the proposal. (d) APPLICABILITY OF CONTRACT DISPUTES PRO- CEDURE TO DISALLOWANCE OF COST AND ASSESS- MENT OF PENALTY.—An action of the head of an agency under subsection (a) or (b)— (1) shall be considered a final decision for the purposes of section 7103 of title 41; and (2) is appealable in the manner provided in section 7104(a) of title 41. (Added and amended Pub. L. 116–283, d

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Federal law — U.S. Code and appendices · legal_authorities

10 U.S.C. § 3745 — Required regulations

**(a) In General.—** The Federal Acquisition Regulation shall contain provisions on the allowability of contractor costs. Such provisions shall define in detail and in specific terms those costs which are unallowable, in whole or in part, under covered contracts. **(b) Specific Items.—** The regulations shall, at a minimum, clarify the cost principles applicable to contractor costs of the following: (1) Air shows. (2) Membership in civic, community, and professional organizations. (3) Recruitment. (4) Employee morale and welfare. (5) Actions to influence (directly or indirectly) executive branch action on regulatory and contract matters (other than costs incurred in regard to contract proposals pursuant to solicited or unsolicited bids). (6) Community relations. (7) Dining facilities. (8) Professional and consulting services, including legal services. (9) Compensation. (10) Selling and marketing. (11) Travel. (12) Public relations. (13) Hotel and meal expenses. (14) Expense of corporate aircraft. (15) Company-furnished automobiles. (16) Advertising. (17) Conventions. **(c) Additional Requirements.—** (1) **When questioned costs may be resolved.—** — The Federal Acquisition Regulation shall require that a contracting officer not resolve any questioned costs until he has obtained— (A) adequate documentation with respect to such costs; and (B) the opinion of the contract auditor on the allowability of such costs. (2) **Presence of contract auditor.—** — The Federal Acquisition Regulation shall provide that, to the maximum extent practicable, the contract auditor be present at any negotiation or meeting with the contractor regarding a determination of the allowability of indirect costs of the contractor. (3) **Settlement to reflect amount of indi

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Federal law — U.S. Code and appendices · legal_authorities

41 U.S.C. § 1707 — Publication of proposed regulations

**(a) Covered Policies, Regulations, Procedures, and Forms.—** (1) **Required comment period.—** — Except as provided in subsection (d), a procurement policy, regulation, procedure, or form (including an amendment or modification thereto) may not take effect until 60 days after it is published for public comment in the Federal Register pursuant to subsection (b) if it— (A) relates to the expenditure of appropriated funds; and (B) (i) has a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure, or form; or (ii) has a significant cost or administrative impact on contractors or offerors. (2) **Exception.—** — A policy, regulation, procedure, or form may take effect earlier than 60 days after the publication date when there are compelling circumstances for the earlier effective date, but the effective date may not be less than 30 days after the publication date. **(b) Publication in Federal Register and Comment Period.—** Subject to subsection (c), the head of the agency shall have published in the Federal Register a notice of the proposed procurement policy, regulation, procedure, or form and provide for a public comment period for receiving and considering the views of all interested parties on the proposal. The length of the comment period may not be less than 30 days. **(c) Contents of Notice.—** Notice of a proposed procurement policy, regulation, procedure, or form prepared for publication in the Federal Register shall include— (1) the text of the proposal or, if it is impracticable to publish the full text of the proposal, a summary of the proposal and a statement specifying the name, address, and telephone number of the officer or employee of the executive agency from whom the full te

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Federal law — U.S. Code and appendices · legal_authorities

41 U.S.C. § 1707 — Publication of proposed regulations

Page 49 TITLE 41—PUBLIC CONTRACTS § 1708 ployees of that agency whose primary duties and responsibilities pertain to the award of con- tracts subject to the provisions of the Small Business and Federal Procurement Competition Enhancement Act of 1984 (Public Law 98–577, 98 Stat. 3066), that the performance appraisal sys- tem applicable to those employees affords ap- propriate recognition to, among other factors, efforts to— (1) increase competition and achieve cost savings through the elimination of procedures that unnecessarily inhibit full and open com- petition; (2) further the purposes of the Small Busi- ness and Federal Procurement Competition Enhancement Act of 1984 (Public Law 98–577, 98 Stat. 3066) and the Defense Procurement Re- form Act of 1984 (Public Law 98–525, title XII, 98 Stat. 2588); and (3) further other objectives and purposes of the Federal acquisition system authorized by law. (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3710.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 1706 ............ 41:414a. Pub. L. 98–577, title V, § 502, Oct. 30, 1984, 98 Stat. 3085. Editorial Notes REFERENCES IN TEXT The Small Business and Federal Procurement Com- petition Enhancement Act of 1984, referred to in text, is Pub. L. 98–577, Oct. 30, 1984, 98 Stat. 3066. For com- plete classification of this Act to the Code, see Short Title of 1984 Act note set out under section 101 of this title and Tables. The Defense Procurement Reform Act of 1984, re- ferred to in par. (2), is Pub. L. 98–525, title XII, Oct. 19, 1984, 98 Stat. 2588. For complete classification of this Act to the Code, see Short Title of 1984 Amendment note set out under section 2302 of Title 10, Armed Forces, and Tables. § 1707

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