FAR Part 42
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.
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
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
42.2 Contract Administration Services
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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.
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.
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.
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.
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.
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
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
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.
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.
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.
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 changeof-name agreement recognizes a legal change
in the contractor’s name. Both of these
affected through execution of a modification
to the applicable contracts.
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 costreimbursement 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.