---
kind: "section"
citation: "48 C.F.R. § 42.709-4"
title: "48"
number: "42.709-4"
heading: "Assessing the penalty."
url: "https://uscodex.org/cfr/48/42.709-4"
---

# §42.709-4. Assessing the penalty.


Unless a waiver is granted pursuant to 42.709-6, the cognizant contracting officer shall—

- (a) Assess the penalty in 42.709-2(a)(1), when the submitted cost is expressly unallowable under a cost principle in the FAR or an executive agency supplement that defines the allowability of specific selected costs; or
- (b) Assess the penalty in 42.709-2(a)(2), when the submitted cost was determined to be unallowable for that contractor prior to submission of the proposal. Prior determinations of unallowability may be evidenced by—
  - (1) A DCAA Form 1, Notice of Contract Costs Suspended and/or Disapproved (see [48 CFR 242.705-2](/cfr/48/242.705-2.md)), or any similar notice which the contractor elected not to appeal and was not withdrawn by the cognizant Government agency;
  - (2) A contracting officer final decision which was not appealed;
  - (3) A prior executive agency Board of Contract Appeals or court decision involving the contractor, which upheld the cost disallowance; or
  - (4) A determination or agreement of unallowability under 31.201-6.
- (c) Issue a final decision (see 33.211) which includes a demand for payment of any penalty assessed under paragraph [(a)](#a) or [(b)](#b) of this section. The letter shall state that the determination is a final decision under the Disputes clause of the contract. (Demanding payment of the penalty is separate from demanding repayment of any paid portion of the disallowed cost.)

## Notes

### Amendments

[60 FR 42658, Aug. 16, 1995. Redesignated and amended 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 and amended at 86 FR 44255, Aug. 11, 2021]