41 U.S.C. § 1501 — Cost Accounting Standards Board

Page 33 TITLE 41—PUBLIC CONTRACTS § 1501 (Added Pub. L. 115–390, title II, § 202(a), Dec. 21, 2018, 132 Stat. 5188; amended Pub. L. 117–263, div. E, title LIX, § 5949(k)(1), Dec. 23, 2022, 136 Stat. 3492.) Editorial Notes AMENDMENTS 2022—Pub. L. 117–263 substituted ‘‘December 31, 2033’’ for ‘‘the date that is 5 years after the date of the enact- ment of the Federal Acquisition Supply Chain Security Act of 2018’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective 90 days after Dec. 21, 2018, and appli- cable to contracts that are awarded before, on, or after that date, see section 202(c) of Pub. L. 115–390, set out as a note under section 1321 of this title. Title II of Pub. L. 115–390 effective 90 days after Dec. 21, 2018, see section 205 of Pub. L. 115–390, set out as a note under section 1321 of this title. CHAPTER 15—COST ACCOUNTING STANDARDS Sec. 1501. Cost Accounting Standards Board. 1502. Cost accounting standards. 1503. Contract price adjustment. 1504. Effect on other standards and regulations. 1505. Examinations. 1506. Authorization of appropriations. § 1501. Cost Accounting Standards Board (a) ORGANIZATION.—The Cost Accounting Standards Board is an independent board in the Office of Federal Procurement Policy. (b) MEMBERSHIP.— (1) NUMBER OF MEMBERS, CHAIRMAN, AND AP- POINTMENT.—The Board consists of 5 members. One member is the Administrator, who serves as Chairman. The other 4 members, all of whom shall have experience in Federal Gov- ernment contract cost accounting, are as fol- lows: (A) 2 representatives of the Federal Gov- ernment— (i) one of whom is a representative of the Department of Defense appointed by the Secretary of Defense; and (ii) one of whom is an officer or em- ployee of the General Services Administra- tion appointed by the Administrator of General Services. (B) 2 individuals from the private sector, each of whom is appointed by the Adminis- trator, and— (i) one of whom is a representative of in- dustry; and (ii) one of whom is particularly knowl- edgeable about cost accounting problems and systems and, if possible, is a represent- ative of a public accounting firm. (2) TERM OF OFFICE.— (A) LENGTH OF TERM.—The term of office of each member, other than the Administrator, is 4 years. The terms are staggered, with the terms of 2 members expiring in the same year, the term of another member expiring the next year, and the term of the last mem- ber expiring the year after that. (B) INDIVIDUAL REQUIRED TO REMAIN WITH APPOINTING AGENCY.—A member appointed under paragraph (1)(A) may not continue to serve after ceasing to be an officer or em- ployee of the agency from which that mem- ber was appointed. (3) VACANCY.—A vacancy on the Board shall be filled in the same manner in which the original appointment was made. A member ap- pointed to fill a vacancy serves for the remain- der of the term for which that member’s pred- ecessor was appointed. (c) DUTIES.—The Board shall— (1) ensure that the cost accounting stand- ards used by Federal contractors rely, to the maximum extent practicable, on commercial standards and accounting practices and sys- tems; (2) within one year after the date of enact- ment of this subsection, and on an ongoing basis thereafter, review any cost accounting standards established under section 1502 of this title and conform such standards, where practicable, to Generally Accepted Accounting Principles; and (3) annually review disputes involving such standards brought to the boards established in section 7105 of this title or Federal courts, and consider whether greater clarity in such standards could avoid such disputes. (d) MEETINGS.—The Board shall meet not less than once each quarter and shall publish in the Federal Register notice of each meeting and its agenda before such meeting is held. (e) REPORT.—The Board shall annually submit a report to the congressional defense commit- tees, the Committee on Oversight and Govern- ment Reform of the House of Representatives, and the Committee on Homeland Security and Governmental Affairs of the Senate describing the actions taken during the prior year— (1) to conform the cost accounting standards established under section 1502 of this title with Generally Accepted Accounting Principles; and (2) to minimize the burden on contractors while protecting the interests of the Federal Government. (f) SENIOR STAFF.—The Administrator, after consultation with the Board— (1) without regard to the provisions of title 5 governing appointments in the competitive service— (A) shall appoint an executive secretary; and (B) may appoint, or detail pursuant to sec- tion 3341 of title 5, two additional staff mem- bers; and (2) may pay those employees without regard to the provisions of chapter 51 and subchapter III of chapter 53 of title 5 relating to classi- fication and General Schedule pay rates, ex- cept that those employees may not receive pay in excess of the maximum rate of basic pay payable for level IV of the Executive Schedule. (g) OTHER STAFF.—The Administrator may ap- point, fix the compensation of, and remove addi- Page 34 TITLE 41—PUBLIC CONTRACTS § 1501 tional employees of the Board under the applica- ble provisions of title 5. (h) DETAILED AND TEMPORARY PERSONNEL.— For service on advisory committees and task forces to assist the Board in carrying out its functions and responsibilities— (1) the Board, with the consent of the head of a Federal agency, may use, without reim- bursement, personnel of that agency; and (2) the Administrator, after consultation with the Board, may procure temporary and intermittent services of personnel under sec- tion 3109(b) of title 5. (i) COMPENSATION.— (1) OFFICERS AND EMPLOYEES OF THE GOVERN- MENT.—Members of the Board who are officers or employees of the Federal Government, and officers and employees of other agencies of the Federal Government who are used under sub- section (h)(1), shall not receive additional compensation for services but shall continue to be compensated by the employing depart- ment or agency of the officer or employee. (2) APPOINTEES FROM PRIVATE SECTOR.—Each member of the Board appointed from the pri- vate sector shall receive compensation at a rate not to exceed the daily equivalent of the rate for level IV of the Executive Schedule for each day (including travel time) in which the member is engaged in the actual performance of duties vested in the Board. (3) TEMPORARY AND INTERMITTENT PER- SONNEL.—An individual hired under subsection (h)(2) may receive compensation at a rate fixed by the Administrator, but not to exceed the daily equivalent of the rate for level V of the Executive Schedule for each day (includ- ing travel time) in which the individual is properly engaged in the actual performance of duties under this chapter. (4) TRAVEL EXPENSES.—While serving away from home or regular place of business, Board members and other individuals serving on an intermittent basis under this chapter shall be allowed travel expenses in accordance with section 5703 of title 5. (Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3695; Pub. L. 114–328, div. A, title VIII, § 820(a)(1), (3), Dec. 23, 2016, 130 Stat. 2273, 2274.) HISTORICAL AND REVISION NOTES Revised Section Source (U.S. Code) Source (Statutes at Large) 1501(a) ........ 41:422(a)(1) (1st sen- tence). Pub. L. 93–400, § 26(a)–(e), as added Pub. L. 100–679, § 5(a), Nov. 17, 1988, 102 Stat. 4058. 1501(b) ........ 41:422(a)(1) (last sen- tence), (2). 1501(c) ........ 41:422(b). 1501(d) ........ 41:422(c). 1501(e) ........ 41:422(d). 1501(f) ........ 41:422(e). In subsection (b)(2), the text of 41:422(a)(2)(C) is omit- ted as obsolete. In subsection (b)(2)(A), the last sentence is sub- stituted for ‘‘of the initial members, two shall be ap- pointed for terms of two years, one shall be appointed for a term of three years, and one shall be appointed for a term of four years’’ because the initial members have already been appointed. In subsection (c)(2), the reference to section 5376 of title 5 is substituted for the reference to grade GS–18 of the General Schedule because of section 529 [title I, § 101(c)(1)] of the Treasury, Postal Service, and General Government Appropriations Act, 1991 (Public Law 101–509, 104 Stat. 1442, 5:5376 note). In subsection (f)(1), the words ‘‘Except as otherwise provided in subsection (a) of this section’’ are omitted because 41:422(a) does not provide any relevant excep- tion. In subsection (f)(2), the words ‘‘private sector’’ are substituted for ‘‘private life’’ for consistency with sub- section (b)(1)(B) of the revised section. In subsection (f)(3), the words ‘‘Executive Schedule’’ are substituted for ‘‘Federal Executive Salary Schedule under section 5316 of title 5’’ for consistency and to eliminate unnecessary words. SENATE REVISION AMENDMENT In subsec. (c)(2), ‘‘for level IV of the Executive Sched- ule’’ substituted for ‘‘under section 5376 of title 5’’ by S. Amdt. 4726 (111th Cong.). See 156 Cong. Rec. 18682 (2010). Editorial Notes REFERENCES IN TEXT The date of enactment of this subsection, referred to in subsec. (c)(2), is the date of enactment of Pub. L. 114–328, which was approved Dec. 23, 2016. Level IV of the Executive Schedule, referred to in subsec. (f)(2), is set out under section 5315 of Title 5, Government Organization and Employees. AMENDMENTS 2016—Subsec. (b)(1)(B)(ii). Pub. L. 114–328, § 820(a)(1)(A), inserted ‘‘and, if possible, is a representa- tive of a public accounting firm’’ after ‘‘systems’’. Subsecs. (c) to (e). Pub. L. 114–328, § 820(a)(1)(C), added subsecs. (c) to (e). Former subsecs. (c) to (e) redesig- nated (f) to (h), respectively. Subsec. (f). Pub. L. 114–328, § 820(a)(1)(B), (D), redesig- nated subsec. (c) as (f) and amended it generally. Prior to amendment, text read as follows: ‘‘The Adminis- trator, after consultation with the Board, may— ‘‘(1) appoint an executive secretary and 2 additional staff members without regard to the provisions of title 5 governing appointments in the competitive service; and ‘‘(2) pay those employees without regard to the pro- visions of chapter 51 and subchapter III of chapter 53 of title 5 relating to classification and General Sched- ule pay rates, except that those employees may not receive pay in excess of the maximum rate of basic pay payable for level IV of the Executive Schedule.’’ Subsecs. (g) to (i). Pub. L. 114–328, § 820(a)(1)(B), redes- ignated subsecs. (d) to (f) as (g) to (i), respectively. Subsec. (i)(1). Pub. L. 114–328, § 820(a)(3)(A), sub- stituted ‘‘subsection (h)(1)’’ for ‘‘subsection (e)(1)’’. Subsec. (i)(3). Pub. L. 114–328, § 820(a)(3)(B), sub- stituted ‘‘subsection (h)(2)’’ for ‘‘subsection (e)(2)’’. Statutory Notes and Related Subsidiaries CHANGE OF NAME Committee on Oversight and Government Reform of House of Representatives changed to Committee on Oversight and Reform of House of Representatives by House Resolution No. 6, One Hundred Sixteenth Con- gress, Jan. 9, 2019. Committee on Oversight and Reform of House of Representatives changed to Committee on Oversight and Accountability of House of Representa- tives by House Resolution No. 5, One Hundred Eight- eenth Congress, Jan. 9, 2023. EFFECTIVE DATE OF 2016 AMENDMENT Pub. L. 114–328, div. A, title VIII, § 820(d), Dec. 23, 2016, 130 Stat. 2276, provided that: ‘‘The amendments made by this section [enacting section 190 of Title 10, Armed Forces, and amending this section and section 1502 of this title] shall take effect on October 1, 2018.’’ Page 35 TITLE 41—PUBLIC CONTRACTS § 1502 § 1502. Cost accounting standards (a) AUTHORITY.— (1) COST ACCOUNTING STANDARDS BOARD.—The Cost Accounting Standards Board has exclu- sive authority to prescribe, amend, and re- scind cost accounting standards, and interpre- tations of the standards, designed to achieve uniformity and consistency in the cost ac- counting standards governing measurement, assignment, and allocation of costs to con- tracts with the Federal Government. (2) ADMINISTRATOR FOR FEDERAL PROCURE- MENT POLICY.—The Administrator, after con- sultation with the Board, shall prescribe rules and procedures governing actions of the Board under this chapter. The rules and procedures shall require that any action to prescribe, amend, or rescind a standard or interpretation be approved by majority vote of the Board. (b) MANDATORY USE OF STANDARDS.— (1) SUBCONTRACT.— (A) DEFINITION.—In this paragraph, the term ‘‘subcontract’’ includes a transfer of commercial products or commercial services between divisions, subsidiaries, or affiliates of a contractor or subcontractor. (B) WHEN STANDARDS ARE TO BE USED.— Cost accounting standards prescribed under this chapter are mandatory for use by all ex- ecutive agencies and by contractors and sub- contractors in estimating, accumulating, and reporting costs in connection with the pricing and administration of, and settle- ment of disputes concerning, all negotiated prime contract and subcontract procure- ments with the Federal Government in ex- cess of the amount set forth in section 3702(a)(1)(A) of title 10 as the amount is ad- justed in accordance with applicable require- ments of law. (C) NONAPPLICATION OF STANDARDS.—Sub- paragraph (B) does not apply to— (i) a contract or subcontract for the ac- quisition of a commercial product or com- mercial service; (ii) a contract or subcontract where the price negotiated is based on a price set by law or regulation; (iii) a firm, fixed-price contract or sub- contract awarded on the basis of adequate price competition without submission of certified cost or pricing data; or (iv) a contract or subcontract with a value of less than $7,500,000 if, when the contract or subcontract is entered into, the segment of the contractor or subcon- tractor that will perform the work has not been awarded at least one contract or sub- contract with a value of more than $7,500,000 that is covered by the standards. (2) EXEMPTIONS AND WAIVERS BY BOARD.—The Board may— (A) exempt classes of contractors and sub- contractors from the requirements of this chapter; and (B) establish procedures for the waiver of the requirements of this chapter for indi- vidual contracts and subcontracts. (3) WAIVER BY HEAD OF EXECUTIVE AGENCY.— (A) IN GENERAL.—The head of an executive agency may waive the applicability of the cost accounting standards for a contract or subcontract with a value of less than $100,000,000 if that official determines in writing that the segment of the contractor or subcontractor that will perform the work— (i) is primarily engaged in the sale of commercial products or commercial serv- ices; and (ii) would not otherwise be subject to the cost accounting standards under this sec- tion. (B) IN EXCEPTIONAL CIRCUMSTANCES.—The head of an executive agency may waive the applicability of the cost accounting stand- ards for a contract or subcontract under ex- ceptional circumstances when necessary to meet the needs of the agency. A determina- tion to waive the applicability of the stand- ards under this subparagraph shall be set forth in writing and shall include a state- ment of the circumstances justifying the waiver. (C) RESTRICTION ON DELEGATION OF AUTHOR- ITY.—The head of an executive agency may not delegate the authority under subpara- graph (A) or (B) to an official in the execu- tive agency below the senior policymaking level in the executive agency. (D) CONTENTS OF FEDERAL ACQUISITION REG- ULATION.—The Federal Acquisition Regula- tion shall include— (i) criteria for selecting an official to be delegated authority to grant waivers under subparagraph (A) or (B); and (ii) the specific circumstances under which the waiver may be granted. (E) REPORT.—The head of each executive agency shall report the waivers granted under subparagraphs (A) and (B) for that agency to the Board on an annual basis. (c) REQUIRED BOARD ACTION FOR PRESCRIBING STANDARDS AND INTERPRETATIONS.—Before pre- scribing cost accounting standards and interpre- tations, the Board shall— (1) take into account, after consultation and discussions with the Comptroller General, pro- fessional accounting organizations, contrac- tors, and other interested parties— (A) the probable costs of implementation, including any inflationary effects, compared to the probable benefits; (B) the advantages, disadvantages, and im- provements anticipated in the pricing and administration of, and settlement of dis- putes concerning, contracts; and (C) the scope of, and alternatives available to, the action proposed to be taken; (2) prepare and publish a report in the Fed- eral Register on the issues reviewed under paragraph (1); (3)(A) publish an advanced notice of proposed rulemaking in the Federal Register to solicit comments on the report prepared under para- graph (2); (B) provide all parties affected at least 60 days after publication to submit their views and comments; and