30.605
Processing noncompliances
FAR 30.605 establishes strict procedures and timelines for addressing CAS noncompliance, ensuring the government is protected from increased costs and contractors are held accountable for corrective actions and cost impact reporting.
Overview
FAR 30.605 outlines the procedures for processing noncompliances with Cost Accounting Standards (CAS) in government contracts. It details the steps the Cognizant Federal Agency Official (CFAO) and contractors must follow when a noncompliance is reported, including notification, evaluation, correction, and calculation of cost impacts. The regulation ensures that the government is protected from paying increased costs due to contractor noncompliance and that any contract adjustments are fair and limited to actual increased costs incurred by the government.
Key Rules
- Determination Before Adjustment
- The CFAO must ensure that any contract price or cost adjustments protect the government from increased costs and do not result in over-recovery.
- Notice and Determination Process
- The CFAO must notify the contractor and auditor of potential noncompliance within 15 days of receiving an auditor’s report and allow the contractor 60 days to respond.
- Correcting Noncompliances
- Contractors must submit a description of corrective actions within 60 days of agreement or notification of noncompliance.
- Cost Impact Proposals
- Contractors must submit a General Dollar Magnitude (GDM) or Detailed Cost Impact (DCI) proposal to quantify the cost impact, including all affected contracts and subcontracts.
- Evaluation and Negotiation
- The CFAO evaluates proposals, negotiates cost impacts, and may request additional data or a DCI proposal if needed.
- Interest Calculation
- Interest on increased costs paid by the government must be separately identified and calculated per IRS rates.
- Remedies for Non-Submission
- If the contractor fails to correct noncompliance or submit required proposals, the CFAO follows further enforcement procedures.
Responsibilities
- Contracting Officers (CFAO): Must promptly process noncompliance reports, notify parties, evaluate contractor responses, determine compliance, and negotiate cost impacts.
- Contractors: Must respond to notices, correct noncompliances, and submit required cost impact proposals with supporting data.
- Agencies: Oversee compliance, ensure fair contract adjustments, and protect government interests.
Practical Implications
- This section ensures that the government is not financially disadvantaged by contractor CAS noncompliance and that contractors have clear procedures for addressing and correcting such issues. Timely communication, accurate cost impact calculations, and proper documentation are critical. Common pitfalls include late submissions, inadequate proposals, and failure to properly calculate or document cost impacts.