Overview
This section mandates that contractors certify the accuracy of their indirect cost rate proposals for final payment and establishes that financial penalties may be imposed if unallowable costs are included in those proposals.
Key Rules
- Certification Requirement: Contractors are required to certify indirect cost rates proposed for final payment purposes to ensure they only include allowable costs.
- Administrative Oversight: Specific procedures for the certification process and the associated contract clauses are governed by FAR 42.703-2.
- Penalty Assessment: If a contractor includes costs that are expressly unallowable in a final indirect cost settlement proposal, the government may assess financial penalties.
- Penalty Procedures: The guidelines for assessing penalties and the relevant contract clause prescriptions are found in FAR 42.709.
Practical Implications
- Contractors must maintain rigorous accounting controls and conduct thorough internal reviews to strip out unallowable costs (such as entertainment or lobbying) before submission to avoid significant monetary fines.
- The requirement for certification places a legal burden on a company official to verify the proposal's validity, increasing the risk of False Claims Act implications for inaccurate submissions.