10 U.S.C. § 3748 — Penalties for submission of cost known as

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. Page 2543 TITLE 10—ARMED FORCES § 3750 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. § 3749. Burden of proof on contractor In a proceeding before the Armed Services Board of Contract Appeals, the United States Court of Federal Claims, or any other Federal court in which the reasonableness of indirect costs for which a contractor seeks reimburse- ment from the Department of Defense is in issue, the burden of proof shall be upon the con- tractor to establish that those costs are reason- able. (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1832(a), (h), Jan. 1, 2021, 134 Stat. 4218, 4222.) Editorial Notes CODIFICATION The text of subsec. (j) of section 2324 of this title, which was transferred to this section and amended by Pub. L. 116–283, § 1832(h), was based on Pub. L. 100–370, § 1(f)(3)(A), July 19, 1988, 102 Stat. 846; Pub. L. 103–355, title II, § 2101(a)(10), Oct. 13, 1994, 108 Stat. 3308. PRIOR PROVISIONS A prior section 3749 was renumbered section 7279 of this title. AMENDMENTS 2021—Pub. L. 116–283, § 1832(h), transferred subsec. (j) of section 2324 of this title to this section and struck out subsec. (j) designation and heading ‘‘Contractor To Have Burden of Proof’’ at beginning. 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. § 3750. Proceeding costs not allowable (a) DEFINITIONS.—In this section: (1) COSTS.—The term ‘‘costs’’, with respect to a proceeding— (A) means all costs incurred by a con- tractor or subcontractor, or personal serv- ices contractor, whether before or after the commencement of any such proceeding; and (B) includes— (i) administrative and clerical expenses; (ii) the cost of legal services, including legal services performed by an employee of the contractor or subcontractor, or per- sonal services contractor; (iii) the cost of the services of account- ants and consultants retained by the con- tractor or subcontractor, or personal serv- ices contractor; and (iv) the pay of directors, officers, and employees of the contractor or subcon- tractor, or personal services contractor for time devoted by such directors, officers, and employees to such proceeding. (2) PENALTY.—The term ‘‘penalty’’ does not include restitution, reimbursement, or com- pensatory damages. (3) PROCEEDINGS.—The term ‘‘proceeding’’ in- cludes an investigation. (b) IN GENERAL.—Except as otherwise provided in this section, costs incurred by a contractor or subcontractor, or personal services contractor in connection with any criminal, civil, or ad- ministrative proceeding commenced by the United States, by a State, or by a contractor or subcontractor, or personal services contractor employee submitting a complaint under section 4701 of this title are not allowable as reimburs- able costs under a covered contract, sub- contract, or personal services contract if the proceeding— (1) relates to a violation of, or failure to comply with, a Federal or State statute or regulation or to any other activity described in section 4701(a)(1) of this title; and (2) results in a disposition described in sub- section (c). (c) COVERED DISPOSITIONS.—A disposition re- ferred to in subsection (b)(2) is any of the fol- lowing: (1) In the case of a criminal proceeding, a conviction (including a conviction pursuant to a plea of nolo contendere) by reason of the vio- lation or failure referred to in subsection (b). (2) In the case of a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of con- tractor or subcontractor, or personal services contractor liability on the basis of the viola- tion or failure referred to in subsection (b). (3) In the case of any civil or administrative proceeding, the imposition of a monetary pen- alty or an order to take corrective action under section 4701 of this title by reason of the violation or failure referred to in subsection (b). (4) A final decision— (A) to debar or suspend the contractor or subcontractor, or personal services con- tractor; (B) to rescind or void the contract, sub- contract, or personal services contract; or (C) to terminate the contract, subcontract, or personal services contract for default; by reason of the violation or failure referred to in subsection (b). (5) A disposition of the proceeding by con- sent or compromise if such action could have resulted in a disposition described in para- graphs (1), (2), (3), or (4). (d) COSTS ALLOWED BY SETTLEMENT AGREE- MENT IN PROCEEDING COMMENCED BY UNITED STATES.—In the case of a proceeding referred to in subsection (b) that is commenced by the United States and is resolved by consent or com- promise pursuant to an agreement entered into by a contractor or subcontractor, or personal services contractor and the United States, the costs incurred by the contractor or subcon- tractor, or personal services contractor in con-