[Federal Register: April 21, 2000 (Volume 65, Number 78)]
[Rules and Regulations]               
[Page 21371-21376]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21ap00-23]                         

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DEPARTMENT OF ENERGY

48 CFR Part 970

RIN 1991-AB02

 
Acquisition Regulation: Financial Management Clauses for 
Management and Operating (M&O) Contracts

AGENCY: Department of Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy (DOE) amends its Acquisition 
Regulation to designate certain Department of Energy Acquisition 
Regulation (DEAR) M&O contract clauses and Federal Acquisition 
Regulation (FAR) clauses as Standard Financial Management Clauses to be 
included in M&O contracts unless the Chief Financial Officer (CFO) 
concurs in a deviation. Additionally, this final rule will revise 
selected existing financial management clauses and add financial 
management related clauses.

DATES: This final rule is effective May 22, 2000.

FOR FURTHER INFORMATION CONTACT: Michael L. Righi, Office of Policy 
(MA-51), Department of Energy, 1000 Independence Avenue, SW., 
Washington, D.C. 20585; 202-586-8175 (phone); 202-586-0545 (facsimile); 
or michael.l.righi@pr.doe.gov (Internet).

SUPPLEMENTARY INFORMATION

I. Background
II. Discussion of Public Comments
III. Procedural Requirements
    A. Review of Executive Order 12866
    B. Review Under Executive Order 12988
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under Executive Order 13132
    F. Review Under the National Environmental Policy Act
    G. Unfunded Mandates Reform Act of 1995
    H. Review Under Small Business Regulatory Enforcement Fairness 
Act of 1996

I. Background

    On November 18, 1998, the Department of Energy (DOE or Department) 
published in the Federal Register (63 FR 64024) a Notice of Proposed 
Rulemaking to amend the DEAR to designate certain Department of Energy 
Acquisition Regulation (DEAR) M&O contract clauses and Federal 
Acquisition Regulation (FAR) clauses as Standard Financial Management 
Clauses to be included in M&O contracts unless the Chief Financial 
Officer (CFO) concurs in a deviation. Additionally, this Notice of 
Proposed Rulemaking proposed to revise selected existing financial

[[Page 21372]]

management clauses and to add financial management related clauses.
    The Notice of Proposed Rulemaking solicited comments on all aspects 
of the proposed rulemaking. Today's final rule amends the DEAR as 
proposed in the Notice of Proposed Rulemaking. The contracting officer 
must apply the changes this rule makes to solicitations issued on or 
after the effective date of this rule and may apply the changes to 
existing solicitations. Because this rule's changes are already 
incorporated in the majority of the Department's management and 
operating contracts, the contracting officer should incorporate the 
changes into existing contracts as soon as practicable, but in no case 
later than one year from the effective date of this rule.
    Since publication of the Notice of Proposed Rulemaking, the 
President signed the National Nuclear Security Administration Act 
(NNSA) Act into law (Pub.L. 106-65). The NNSA Act reorganized DOE by 
drawing together various national security-related components of DOE 
and placing them under an Administrator who is the new DOE Under 
Secretary for Nuclear Security. Existing procurement regulations before 
March 1, 2000, including 48 CFR part 970, continue in effect by 
operation of law with regard to NNSA (50 U.S.C. 2401, note, 2484). 
Consistent with the NNSA Act and various delegations of authority under 
the NNSA Act, including the authority to issue procurement regulations 
subject to approval by the Secretary, today's final regulatory 
amendments to part 970 revise the authority citation to include the 
citation for the NNSA Act.

II. Discussion of Public Comments

    The Department received 11 comments from three commenters. None of 
the issues raised in the comments warrants extended treatment in this 
rulemaking. Instead, the Department prepared a comment response 
document that addressed each comment and sent a copy to each of the 
commenters. A copy of the comment response document is available upon 
request from Michael L. Righi, Office of Policy (MA-51), Department of 
Energy, 1000 Independence Avenue, SW, Washington, D.C. 20585.

III. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review,'' (58 FR 51735, October 4, 1993). 
Accordingly, today's action was not subject to review under the 
Executive Order by the Office of Information and Regulatory Affairs of 
the Office of Management and Budget.

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) Eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) Clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. DOE has completed the 
required review and determined that, to the extent permitted by law, 
the proposed regulations meet the relevant standards of Executive Order 
12988.

C. Review Under the Regulatory Flexibility Act

    This rule was reviewed under the Regulatory Flexibility Act of 
1980, Pub. L. 96-354, which requires preparation of a regulatory 
flexibility analysis for any rule which is likely to have a significant 
economic impact on a substantial number of small entities. This rule 
would only apply to M&O contractors, which are all large entities. DOE 
certifies that this rule will not have a significant economic impact on 
a substantial number of small entities and, therefore, no regulatory 
flexibility analysis has been prepared.

D. Review Under the Paperwork Reduction Act

    No new information collection requirements subject to the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq., are imposed by today's 
regulatory action.

E. Review Under Executive Order 13132

    Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined today's rule and has 
determined that it does not preempt State law and does not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

F. Review Under the National Environmental Policy Act

    Pursuant to the Council on Environmental Quality Regulations (40 
CFR Parts 1500-1508), the Department of Energy has established 
guidelines for its compliance with the provisions of the National 
Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.). 
Pursuant to appendix A of subpart D of 10 CFR part 1021, National 
Environmental Policy Act Implementing Procedures (57 FR 15122, 15152, 
April 24, 1992) (Categorical Exclusion A6), the Department of Energy 
has determined that this rule is categorically excluded from the need 
to prepare an environmental impact statement or environmental 
assessment.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 requires each 
Agency to assess the effects of Federal regulatory action on State, 
local, and tribal governments and the private sector. The Department 
has determined that today's regulatory action does not impose a Federal 
mandate on State, local, or tribal governments or on the private 
sector.

H. Review Under Small Business Regulatory Enforcement Fairness Act of 
1996

    As required by 5 U.S.C. 801, the Department of Energy will report 
to

[[Page 21373]]

Congress promulgation of the rule prior to its effective date. The 
report will state that it has been determined that the rule is not a 
``major rule'' as defined by 5 U.S.C. 804(3).

List of Subjects in 48 CFR Part 970

    Government procurement.

    Issued in Washington, D.C. on April 7, 2000.
Richard H. Hopf,
Director, Office of Procurement and Assistance Management.

    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is amended as set forth below.

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

    1. The authority citation for Part 970 is revised to read as 
follows:

    Authority: Atomic Energy Act of 1954 (42 U.S.C. 2201); 
Department of Energy Organization Act (42 U.S.C. 7101, et seq.); 
National Nuclear Security Administration Act (50 U.S.C. 2401, et 
seq.).

    2. Section 970.3201 is revised to read as follows:


970.3201  General.

    It is the policy of the DOE to finance management and operating 
contracts through advance payments and the use of special financial 
institution accounts.

    3. Section 970.3202 is amended by revising paragraphs (b) and (c) 
to read as follows:


970.3202  Advance payments.

* * * * *
    (b) Advance payments shall be made under a payments cleared 
financing arrangement for deposit in a special financial institution 
account or, at the option of the Government, by direct payment or other 
payment mechanism to the contractor.
    (c) Prior to providing any advance payments, the contracting 
officer shall enter into an agreement with the contractor and a 
financial institution regarding a special financial institution account 
where the advanced funds will be deposited by the Government. Such 
agreement shall:
    (1) Provide that DOE shall retain title to the unexpended balance 
of funds in the special financial institution account including 
collections, if any, deposited by the contractor;
    (2) Provide that the title in paragraph (c)(1) of this section 
shall be superior to any claim or lien of the financial institution of 
deposit or others; and
    (3) Incorporate all applicable requirements, as determined by the 
Office of Chief Financial Officer.
* * * * *

    4. Section 970.3270 is revised to read as follows:


970.3270  Standard financial management clauses.

    (a) The following DEAR and FAR clauses are standard financial 
management clauses that shall be included in all management and 
operating contracts: DEAR 970.5204-9, Accounts, records, and 
inspection; DEAR 970.5204-15, Obligation of funds; DEAR 970.5204-16, 
Payments and advances; DEAR 970.5204-20, Management controls; DEAR 
970.5204-92, Liability with respect to Cost Accounting Standards; DEAR 
970.5204-93, Work for others funding authorization; FAR 52.230-2, Cost 
Accounting Standards; and FAR 52.230-6, Administration of Cost 
Accounting Standards.
    (b) The following clauses are standard financial management clauses 
that shall be included in management and operating contracts with 
integrated accounting systems: DEAR 970.5204-90, Financial management 
system; and DEAR 970.5204-91, Integrated accounting.
    (c) Any deviations from the standard financial management clauses 
specified in paragraphs (a) and (b) of this section require the 
approval of the Head of the Contracting Activity and the written 
concurrence of the Department's Chief Financial Officer.

    5. Section 970.3271 is removed and reserved.


970.3271  [Removed and Reserved]

    6. Section 970.5204-9 is amended by revising the introductory 
paragraph; clause title; and paragraphs (a) (including the note), (b), 
(d), and (f) to read as follows:


970.5204-9  Accounts, records, and inspection.

    As prescribed in 970.0407 and 970.3270, insert the following 
clause.

Accounts, Records, and Inspection (May 2000)

    (a) Accounts. The contractor shall maintain a separate and 
distinct set of accounts, records, documents, and other evidence 
showing and supporting: all allowable costs incurred; collections 
accruing to the contractor in connection with the work under this 
contract, other applicable credits, and fee accruals under this 
contract; and the receipt, use, and disposition of all Government 
property coming into the possession of the contractor under this 
contract. The system of accounts employed by the contractor shall be 
satisfactory to DOE and in accordance with generally accepted 
accounting principles consistently applied.

    Note: If the contract includes the clause for ``Price Reduction 
for Defective Cost or Pricing Data'' set forth at FAR 52.215-22, 
paragraph (a) above should be modified by adding the words ``or 
anticipated to be incurred'' after the words ``allowable costs 
incurred.''

    (b) Inspection and audit of accounts and records. All books of 
account and records relating to this contract shall be subject to 
inspection and audit by DOE or its designees in accordance with the 
provisions of Clause ____, Access to and ownership of records, at 
all reasonable times, before and during the period of retention 
provided for in paragraph (d) of this clause, and the contractor 
shall afford DOE proper facilities for such inspection and audit.
* * * * *
    (d) Disposition of records. Except as agreed upon by the 
Government and the contractor, all financial and cost reports, books 
of account and supporting documents, system files, data bases, and 
other data evidencing costs allowable, collections accruing to the 
contractor in connection with the work under this contract, other 
applicable credits, and fee accruals under this contract, shall be 
the property of the Government, and shall be delivered to the 
Government or otherwise disposed of by the contractor either as the 
contracting officer may from time to time direct during the progress 
of the work or, in any event, as the contracting officer shall 
direct upon completion or termination of this contract and final 
audit of accounts hereunder. Except as otherwise provided in this 
contract, including provisions of Clause ____, Access to and 
ownership of records, all other records in the possession of the 
contractor relating to this contract shall be preserved by the 
contractor for a period of three years after final payment under 
this contract or otherwise disposed of in such manner as may be 
agreed upon by the Government and the contractor.
* * * * *
    (f) Inspections. The DOE shall have the right to inspect the 
work and activities of the contractor under this contract at such 
time and in such manner as it shall deem appropriate.
* * * * *

    7. Section 970.5204-13 is amended by revising the clause date and 
clause paragraph (d)(15) to read as follows (note following paragraph 
(d)(15) remains unchanged).


970.5204-13  Allowable costs and fixed-fee (management and operating 
contracts).

* * * * *

Allowable costs and fixed-fee (management and operating Contracts) (May 
2000)

* * * * *
    (d) * * *
    (15) Establishment and maintenance of financial institution 
accounts in connection with the work hereunder, including, but not 
limited to, service charges, the cost of disbursing cash, necessary 
guards, cashiers, and paymasters. If payments to employees

[[Page 21374]]

are made by check, facilities and arrangements for cashing checks 
may be provided without expense to the employees, subject to the 
approval of the contracting officer.
* * * * *

    8. Section 970.5204-15 is revised to read as follows:


970.5204-15  Obligation of funds.

    As prescribed in 970.1508(c) and 970.3270, insert the following 
clause.

Obligation of Funds (May 2000)

    (a) Obligation of funds. The amount presently obligated by the 
Government with respect to this contract is ____ dollars ($____). 
Such amount may be increased unilaterally by DOE by written notice 
to the contractor and may be increased or decreased by written 
agreement of the parties (whether or not by formal modification of 
this contract). Estimated collections from others for work and 
services to be performed under this contract are not included in the 
amount presently obligated. Such collections, to the extent actually 
received by the contractor, shall be processed and accounted for in 
accordance with applicable requirements imposed by the contracting 
officer pursuant to the Laws, regulations, and DOE directives clause 
of this contract. Nothing in this paragraph is to be construed as 
authorizing the contractor to exceed limitations stated in financial 
plans established by DOE and furnished to the contractor from time 
to time under this contract.
    (b) Limitation on payment by the Government. Except as otherwise 
provided in this contract and except for costs which may be incurred 
by the contractor pursuant to the clause entitled ``Termination,'' 
or costs of claims allowable under the contract occurring after 
completion or termination and not released by the contractor at the 
time of financial settlement of the contract in accordance with the 
clause entitled ``Payments and Advances,'' payment by the Government 
under this contract on account of allowable costs shall not, in the 
aggregate, exceed the amount obligated with respect to this 
contract, less the contractor's fee. Unless expressly negated in 
this contract, payment on account of those costs excepted in the 
preceding sentence which are in excess of the amount obligated with 
respect to this contract shall be subject to the availability of:
    (1) collections accruing to the contractor in connection with 
the work under this contract and processed and accounted for in 
accordance with applicable requirements imposed by the contracting 
officer pursuant to the Laws, regulations, and DOE directives clause 
of this contract, and
    (2) other funds which DOE may legally use for such purpose, 
provided DOE will use its best efforts to obtain the appropriation 
of funds for this purpose if not otherwise available.
    (c) Notices--Contractor excused from further performance. The 
contractor shall notify DOE in writing whenever the unexpended 
balance of available funds (including collections available under 
paragraph (a) of this clause), plus the contractor's best estimate 
of collections to be received and available during the ____ day 
period hereinafter specified, is in the contractor's best judgment 
sufficient to continue contract operations at the programmed rate 
for only ____ days and to cover the contractor's unpaid fee, and 
outstanding encumbrances and liabilities on account of costs 
allowable under the contract at the end of such period. Whenever the 
unexpended balance of available funds (including collections 
available under paragraph (a) of this clause), less the amount of 
the contractor's fee then earned but not paid, is in the 
contractor's best judgment sufficient only to liquidate outstanding 
encumbrances and liabilities on account of costs allowable under 
this contract, the contractor shall immediately notify DOE and shall 
make no further encumbrances or expenditures (except to liquidate 
existing encumbrances and liabilities), and, unless the parties 
otherwise agree, the contractor shall be excused from further 
performance (except such performance as may become necessary in 
connection with termination by the Government) and the performance 
of all work hereunder will be deemed to have been terminated for the 
convenience of the Government in accordance with the provisions of 
the clause entitled ``Termination.''
    (d) Financial plans; cost and encumbrance limitations. In 
addition to the limitations provided for elsewhere in this contract, 
DOE may, through financial plans, such as Approved Funding Programs, 
or other directives issued to the contractor, establish controls on 
the costs to be incurred and encumbrances to be made in the 
performance of the contract work. Such plans and directives may be 
amended or supplemented from time to time by DOE. The contractor 
agrees
    (1) to comply with the specific limitations (ceilings) on costs 
and encumbrances set forth in such plans and directives,
    (2) to comply with other requirements of such plans and 
directives, and
    (3) to notify DOE promptly, in writing, whenever it has reason 
to believe that any limitation on costs and encumbrances will be 
exceeded or substantially underrun.

    Note: This paragraph (d) may be omitted in contracts which 
expressly or otherwise provide a contractual basis for equivalent 
controls in a separate clause.

    (e) Government's right to terminate not affected. The giving of 
any notice under this clause shall not be construed to waive or 
impair any right of the Government to terminate the contract under 
the provisions of the clause entitled ``Termination.''


    9. Section 970.5204-16 is amended by: Revising the introductory 
paragraph; clause title; clause paragraphs (a) (notes remain 
unchanged); last sentence of alternate paragraph (a) that follows note 
2; paragraphs (c), (d) (including note 3), (e) (including note 4); 
adding alternate paragraph (e) following note 4; revising paragraphs 
(f) and (i) to read as follows:


970.5204-16  Payments and advances.

    As prescribed in 970.3270, insert the following clause.

Payments and Advances (May 2000)

    (a) Installments of fixed-fee. The fixed-fee payable under this 
contract shall become due and payable in periodic installments in 
accordance with a schedule determined by the contracting officer. 
Fixed-fee payments shall be made by direct payment or withdrawn from 
funds advanced or available under this contract, as determined by 
the contracting officer. The contracting officer may offset against 
any such fee payment the amounts owed to the Government by the 
contractor, including any amounts owed for disallowed costs under 
this contract. No fixed-fee payment may be withdrawn against the 
payments cleared financing arrangement without prior written 
approval of the contracting officer.
* * * * *
    (a) * * * No base fee or award fee pool amount earned payment 
may be withdrawn against the payments cleared financing arrangement 
without prior written approval of the contracting officer.
* * * * *
    (c) Special financial institution account--use. All advances of 
Government funds shall be withdrawn pursuant to a payments cleared 
financing arrangement prescribed by DOE in favor of the financial 
institution or, at the option of the Government, shall be made by 
direct payment or other payment mechanism to the contractor, and 
shall be deposited only in the special financial institution account 
referred to in the Special Financial Institution Account Agreement, 
which is incorporated into this contract as Appendix____. No part of 
the funds in the special financial institution account shall be 
commingled with any funds of the contractor or used for a purpose 
other than that of making payments for costs allowable and, if 
applicable, fees earned under this contract or payments for other 
items specifically approved in writing by the contracting officer. 
If the contracting officer determines that the balance of such 
special financial institution account exceeds the contractor's 
current needs, the contractor shall promptly make such disposition 
of the excess as the contracting officer may direct.
    (d) Title to funds advanced. Title to the unexpended balance of 
any funds advanced and of any special financial institution account 
established pursuant to this clause shall remain in the Government 
and be superior to any claim or lien of the financial institution of 
deposit or others. It is understood that an advance to the 
contractor hereunder is not a loan to the contractor, and will not 
require the payment of interest by the contractor, and that the 
contractor acquires no right, title or interest in or to such 
advance other than the right to make expenditures therefrom, as 
provided in this clause.

    Note 3: The following paragraph (e) shall be included in 
management and operating contracts with integrated accounting 
systems.

    (e) Review and approval of costs incurred. The contractor shall 
prepare and submit annually as of September 30, a ``Statement of 
Costs Incurred and Claimed'' (Cost Statement) for the total of net 
expenditures accrued (i.e., net costs incurred) for the

[[Page 21375]]

period covered by the Cost Statement. The contractor shall certify 
the Cost Statement subject to the penalty provisions for unallowable 
costs as stated in sections 306(b) and (i) of the Federal Property 
and Administrative Services Act of 1949 (41 U.S.C. 256), as amended. 
DOE, after audit and appropriate adjustment, will approve such Cost 
Statement. This approval by DOE will constitute an acknowledgment by 
DOE that the net costs incurred are allowable under the contract and 
that they have been recorded in the accounts maintained by the 
contractor in accordance with DOE accounting policies, but will not 
relieve the contractor of responsibility for DOE's assets in its 
care, for appropriate subsequent adjustments, or for errors later 
becoming known to DOE.

    Note 4: The following paragraph (e) shall be included in 
management and operating contracts without integrated accounting 
systems.

    (e) Certification and penalties. The contractor shall prepare 
and submit a ``Statement of Costs Incurred and Claimed'' (Cost 
Statement) for the total of net expenditures incurred for the period 
covered by the Cost Statement. It is anticipated that this will be 
an annual submission unless otherwise agreed to by the contracting 
officer. The contractor shall certify the Cost Statement subject to 
the penalty provisions for unallowable costs as stated in sections 
306(b) and (i) of the Federal Property and Administrative Services 
Act of 1949 (41 U.S.C. 256), as amended.
    (f) Financial settlement. The Government shall promptly pay to 
the contractor the unpaid balance of allowable costs and fee upon 
termination of the work, expiration of the term of the contract, or 
completion of the work and its acceptance by the Government after:
    (1) Compliance by the contractor with DOE's patent clearance 
requirements, and
    (2) The furnishing by the contractor of:
    (i) An assignment of the contractor's rights to any refunds, 
rebates, allowances, accounts receivable, collections accruing to 
the contractor in connection with the work under this contract, or 
other credits applicable to allowable costs under the contract;
    (ii) A closing financial statement;
    (iii) The accounting for Government-owned property required by 
the clause entitled ``Property''; and
    (iv) A release discharging the Government, its officers, agents, 
and employees from all liabilities, obligations, and claims arising 
out of or under this contract subject only to the following 
exceptions:
    (A) Specified claims in stated amounts or in estimated amounts 
where the amounts are not susceptible to exact statement by the 
contractor;
    (B) Claims, together with reasonable expenses incidental 
thereto, based upon liabilities of the contractor to third parties 
arising out of the performance of this contract; provided that such 
claims are not known to the contractor on the date of the execution 
of the release; and provided further that the contractor gives 
notice of such claims in writing to the contracting officer 
promptly, but not more than one (1) year after the contractor's 
right of action first accrues. In addition, the contractor shall 
provide prompt notice to the contracting officer of all potential 
claims under this clause, whether in litigation or not (see also 
Contract Clause ____, DEAR 970.5204-31, ``Insurance--Litigation and 
Claims'');
    (C) Claims for reimbursement of costs (other than expenses of 
the contractor by reason of any indemnification of the Government 
against patent liability), including reasonable expenses incidental 
thereto, incurred by the contractor under the provisions of this 
contract relating to patents; and
    (D) Claims recognizable under the clause entitled, Nuclear 
Hazards Indemnity Agreement.
    (3) In arriving at the amount due the contractor under this 
clause, there shall be deducted,
    (i) any claim which the Government may have against the 
contractor in connection with this contract, and
    (ii) deductions due under the terms of this contract, and not 
otherwise recovered by or credited to the Government. The 
unliquidated balance of the special financial institution account 
may be applied to the amount due and any balance shall be returned 
to the Government forthwith.
* * * * *
    (i) Collections. All collections accruing to the contractor in 
connection with the work under this contract, except for the 
contractor's fee and royalties or other income accruing to the 
contractor from technology transfer activities in accordance with 
this contract, shall be Government property and shall be processed 
and accounted for in accordance with applicable requirements imposed 
by the contracting officer pursuant to the Laws, regulations, and 
DOE directives clause of this contract and, to the extent consistent 
with those requirements, shall be deposited in the special financial 
institution account or otherwise made available for payment of 
allowable costs under this contract, unless otherwise directed by 
the contracting officer.
* * * * *

    10. Section 970.5204-20 is amended by revising the introductory 
paragraph, clause title, and paragraph (a) to read as follows:


970.5204-20  Management controls.

    In accordance with 970.0901 and as prescribed in 970.3270, the 
following clause shall be used in management and operating contracts:

Management Controls (May 2000)

    (a) The contractor shall be responsible for maintaining, as an 
integral part of its organization, effective systems of management 
controls for both administrative and programmatic functions. 
Management controls comprise the plan of organization, methods, and 
procedures adopted by management to reasonably ensure that: the 
mission and functions assigned to the contractor are properly 
executed; efficient and effective operations are promoted; resources 
are safeguarded against waste, loss, mismanagement, unauthorized 
use, or misappropriation; all encumbrances and costs that are 
incurred under the contract and fees that are earned are in 
compliance with applicable clauses and other current terms, 
conditions, and intended purposes; all collections accruing to the 
contractor in connection with the work under this contract, 
expenditures, and all other transactions and assets are properly 
recorded, managed, and reported; and financial, statistical, and 
other reports necessary to maintain accountability and managerial 
control are accurate, reliable, and timely. The systems of controls 
employed by the contractor shall be documented and satisfactory to 
DOE. Such systems shall be an integral part of the contractor's 
management functions, including defining specific roles and 
responsibilities for each level of management, and holding employees 
accountable for the adequacy of the management systems and controls 
in their areas of assigned responsibility. The contractor shall, as 
part of the internal audit program required elsewhere in this 
contract, periodically review the management systems and controls 
employed in programs and administrative areas to ensure that they 
are adequate to provide reasonable assurance that the objectives of 
the systems are being accomplished and that these systems and 
controls are working effectively.

* * * * *

    11. Section 970.5204-90 is added to read as follows:


970.5204-90  Financial management system.

    As prescribed in 970.3270, insert the following clause.

Financial Management System (May 2000)

    The contractor shall maintain and administer a financial 
management system that is suitable to provide proper accounting in 
accordance with DOE requirements for assets, liabilities, 
collections accruing to the contractor in connection with the work 
under this contract, expenditures, costs, and encumbrances; permits 
the preparation of accounts and accurate, reliable financial and 
statistical reports; and assures that accountability for the assets 
can be maintained. The contractor shall submit to DOE for written 
approval an annual plan for new financial management systems and/or 
subsystems and major enhancements and/or upgrades to the currently 
existing financial systems and/or subsystems. The contractor shall 
notify DOE thirty (30) days in advance of any planned implementation 
of any substantial deviation from this plan and, as requested by the 
contracting officer, shall submit any such deviation to DOE for 
written approval before implementation.

    12. Section 970.5204-91 is added to read as follows:


970.5204-91  Integrated accounting.

    As prescribed in 970.3270, insert the following clause.

[[Page 21376]]

Integrated Accounting (May 2000)

    Integrated accounting procedures are required for use under this 
contract. The contractor's financial management system shall include 
an integrated accounting system that is linked to DOE's accounts 
through the use of reciprocal accounts and that has electronic 
capability to transmit monthly and year-end self-balancing trial 
balances to the Department's Primary Accounting System for reporting 
financial activity under this contract in accordance with 
requirements imposed by the contracting officer pursuant to the 
Laws, regulations, and DOE directives clause of this contract.


    13. Section 970.5204-92 is added to read as follows:


970.5204-92  Liability With respect to cost accounting standards.

    As prescribed in 970.3270, insert the following clause.

Liability with Respect to Cost Accounting Standards (May 2000)

    (a) The contractor is not liable to the Government for increased 
costs or interest resulting from its failure to comply with the 
clauses of this contract entitled, ``Cost Accounting Standards,'' 
and ``Administration of Cost Accounting Standards,'' if its failure 
to comply with the clauses is caused by the contractor's compliance 
with published DOE financial management policies and procedures or 
other requirements established by the Department's Chief Financial 
Officer or Procurement Executive.
    (b) The contractor is not liable to the Government for increased 
costs or interest resulting from its subcontractors' failure to 
comply with the clauses at FAR 52.230-2, ``Cost Accounting 
Standards,'' and FAR 52.230-6, ``Administration of Cost Accounting 
Standards,'' if the contractor includes in each covered subcontract 
a clause making the subcontractor liable to the Government for 
increased costs or interest resulting from the subcontractor's 
failure to comply with the clauses; and the contractor seeks the 
subcontract price adjustment and cooperates with the Government in 
the Government's attempts to recover from the subcontractor.


    14. Section 970.5204-93 is added to read as follows:


970.5204-93  Work for others funding authorization.

    As prescribed in 970.3270, insert the following clause.

Work for Others Funding Authorization (May 2000)

    Any uncollectible receivables resulting from the contractor 
utilizing contractor corporate funding for reimbursable work shall 
be the responsibility of the contractor, and the United States 
Government shall have no liability to the contractor for the 
contractor's uncollected receivables. The contractor is permitted to 
provide advance payment utilizing contractor corporate funds for 
reimbursable work to be performed by the contractor for a non-
Federal entity in instances where advance payment from that entity 
is required under the Laws, regulations, and DOE directives clause 
of this contract and such advance cannot be obtained. The contractor 
is also permitted to provide advance payment utilizing contractor 
corporate funds to continue reimbursable work to be performed by the 
contractor for a Federal entity when the term or the funds on a 
Federal interagency agreement required under the Laws, regulations, 
and DOE directives clause of this contract have elapsed. The 
contractor's utilization of contractor corporate funds does not 
relieve the contractor of its responsibility to comply with all 
requirements for Work for Others applicable to this contract.

[FR Doc. 00-9633 Filed 4-20-00; 8:45 am]
BILLING CODE 6450-01-P