§42.709-2. General.
48 C.F.R. § 42.709-2
The following penalties apply to contracts covered by this section—
If the indirect cost is expressly unallowable under a cost principle in the FAR, or an executive agency supplement to the FAR, that defines the allowability of specific selected costs, the penalty is equal to—
The amount of the disallowed costs allocated to contracts that are subject to this section for which an indirect cost proposal has been submitted; plus
Interest on the paid portion, if any, of the disallowance.
If the indirect cost was determined to be unallowable for that contractor before proposal submission, the penalty is two times the amount in paragraph (a)(1)(i) of this section.
These penalties are in addition to other administrative, civil, and criminal penalties provided by law.
It is not necessary for unallowable costs to have been paid to the contractor in order to assess a penalty.
Notes, amendments, and revision history
Amendments
[60 FR 42658, Aug. 16, 1995. Redesignated at 86 FR 44255, Aug. 11, 2021]
Authority
Authority: 41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113.
Source
Source: 48 FR 42370, Sept. 19, 1983, unless otherwise noted.
Amendments
[60 FR 42658, Aug. 16, 1995. Redesignated at 86 FR 44255, Aug. 11, 2021]