Wednesday, February 17, 2016

New Prohibition on Costs Related to Congressional Investigations or Inquiries Proposed

The Fiscal Year 2015 National Defense Authorization Act included a provision  to amend 10 USC 2324(e)(1) to disallow costs incurred by a contractor in connection with a Congressional investigation or inquiry into issues where legal costs are unallowable. Although the "Act" applies only to Defense, NASA, and Coast Guard, the FAR Councils are proposing to apply the requirements to all Federal contracts in order to promote consistency in the accounting systems of Federal Contractors.

Examples of proceeding where legal costs are unallowable and where related Congressional investigation and/or inquiry costs are also unallowable include:

  1. In a criminal proceeding, a conviction
  2. In a civil or administrative proceeding, either a finding of contractor liability where the proceeding involves an allegation of fraud or similar misconduct or imposition of a monetary penalty , or an order issued by the agency head to the contractor to take corrective action
  3. A final decision by an appropriate official of an executive agency to debar or suspend the contract, rescind or void a contract or terminate a contract for default by reason of a violation oor failure to comply with a law or regulation
  4. Disposition of the matter by consent or compromise if the proceeding could have led to any of the outcomes listed above.
The proposed revision would add a new section to 31.205-47(f) to read:
A Congressional investigation or inquiry into an issue that is the subject matter of a proceeding resulting in a disposition as described in paragraphs (b)(1) through (5) of this section (see 10 USC 2324(e)(1)(Q)).

So, if you do something bad and a Congressional Committee (or two) wants to haul you in front of the American public to set an example or make it look like they're doing something, you will need to go at your own expense. The Government is not going to reimburse those costs.

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