Don't Want to Certify Your Indirect Rate Proposal? FAR Provides for Waivers

That's right, FAR (Federal Acquisition Regulations) does provide a process for waiving the certification process but don't count on any success. We've never seen a waiver requested, much less granted.

The indirect rate certification requirement is a statutory requirement found in 10 USC 2324(h)(1) for DoD contracts and in 41 USC 256(h)(1) for non-DoD contracts. According to those provisions, a proposal shall not be accepted by the Government, and no agreement shall be made to establish final indirect cost rates unless the costs have been certified by the contractor.

The very next sections of the respective statutes however provides for waivers of the indirect rate certification requirement:

For DoD Contracts:

The head of the agency or the Secretary of the military department concerned may, in an exceptional case, waive the requirement for certification under paragraph (1) in the case of any contract if the head of the agency or the Secretary determines in such case that it would be in the interest of the United States to waive such certification and states in writing the reasons for that determination and makes such determination available to the public.

For non-DoD Contracts:

An executive agency may, in an exceptional case, waive the requirement for certification under paragraph (1) in the case of any contract if the agency determines in such case that it would be in the interest of the United States to waive such certification and states in writing the reasons for that determination and makes such determination available to the public.

The question then is what are "exceptional cases" contemplated by this provision? FAR 42.703-2(b) gives us a clue. The regulations states that waivers may be appropriate for contracts with:

• A foreign government or international organization, such as a subsidiary body of NATO.
• A state or local government subject to OMB Circular A-87.
• An educational institution subject to OMB Circular A-21.
• A nonprofit organization subject to OMB Circular A-122.

We don't see any run-of-the-mill Government contractors in the foregoing listing. So the chances of securing a waiver by the typical Government contractor seems remote. Actually, the mere inquiry by a contractor as to the availability of a waiver would probably raise a red flag among the contracting officer and contract auditor. They might wonder what the contractor was trying to hide.