41 U.S.C. § 1502

(a) Authority.— (1) Cost accounting standards board .— The Cost Accounting Standards Board has exclusive authority to prescribe, amend, and rescind cost accounting standards, and interpretations of the standards, designed to achieve uniformity and consistency in the cost accounting standards governing measurement, assignment, and allocation of costs to contracts with the Federal Government. (2) Administrator for federal procurement policy .— The Administrator, after consultation 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 executive agencies and by contractors and subcontractors in estimating, accumulating, and reporting costs in connection with the pricing and administration of, and settlement of disputes concerning, all negotiated prime contract and subcontract procurements with the Federal Government in excess 1 1 So in original. Probably should be followed by “of”. $35,000,000, as adjusted in accordance with applicable requirements of law, including requirements relating to inflation in section 1908 of this title . (C) Nonapplication of standards .— Subparagraph (B) does not apply to— (i) a contract or subcontract (or the portion of a contract or subcontract) for the acquisition of a commercial product or commercial service; (ii) a contract or subcontract (or the portion of a contract or subcontract) where the price negotiated is based on a price set by law or regulation; or (iii) a firm, fixed-price contract or subcontract (or the portion of such contract or subcontract) awarded on the basis of adequate price competition without submission of certified cost or pricing data. (2) Exemptions and waivers by board .— The Board may— (A) exempt classes of contractors and subcontractors from the requirements of this chapter; and (B) establish procedures for the waiver of the requirements of this chapter for individual 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, as adjusted for inflation in accordance with section 1908 of this title , 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 services; and (ii) would not otherwise be subject to the cost accounting standards under this section. (B) In exceptional circumstances .— The head of an executive agency may waive the applicability of the cost accounting standards for a contract or subcontract under exceptional circumstances when necessary to meet the needs of the agency. A determination to waive the applicability of the standards under this subparagraph shall be set forth in writing and shall include a statement of the circumstances justifying the waiver. (C) Restriction on delegation of authority .— The head of an executive agency may not delegate the authority under subparagraph (A) or (B) to an official in the executive agency below the senior policymaking level in the executive agency. (D) Contents of federal acquisition regulation .— The Federal Acquisition Regulation 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 prescribing cost accounting standards and interpretations, the Board shall— (1) take into account, after consultation and discussions with the Comptroller General, professional accounting organizations, contractors, and other interested parties— (A) the probable costs of implementation, including any inflationary effects, compared to the probable benefits; (B) the advantages, disadvantages, and improvements anticipated in the pricing and administration of, and settlement of disputes 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 Federal Register on the issues reviewed under paragraph (1); and (3) publish a notice of proposed rulemaking in the Federal Register and provide all parties affected at least 60 days after publication to submit their views and comments. (d) Effective Dates .— Rules, regulations, cost accounting standards, and modifications thereof prescribed or amended under this chapter shall have the full force and effect of law, and shall become effective within 120 days after publication in the Federal Register in final form, unless the Board determines that a longer period is necessary. The Board shall determine implementation dates for contractors and subcontractors. The dates may not be later than the beginning of the second fiscal year of the contractor or subcontractor after the standard becomes effective. (e) Accompanying Material .— Rules, regulations, cost accounting standards, and modifications thereof prescribed or amended under this chapter shall be accompanied by prefatory comments and by illustrations, if necessary. (f) Implementing Regulations .— The Board shall prescribe regulations for the implementation of cost accounting standards prescribed or interpreted under this section. The regulations shall be incorporated into the Federal Acquisition Regulation and shall require contractors and subcontractors as a condition of contracting with the Federal Government to— (1) disclose in writing their cost accounting practices, including methods of distinguishing direct costs from indirect costs and the basis used for allocating indirect costs; and (2) agree to a contract price adjustment, with interest, for any increased costs paid to the contractor or subcontractor by the Federal Government because of a change in the contractor’s or subcontractor’s cost accounting practices or a failure by the contractor or subcontractor to comply with applicable cost accounting standards. (g) Nonapplicability of Certain Sections of Title 5.— Functions exercised under this chapter are not subject to sections 551, 553 to 559, and 701 to 706 of title 5.