Sec. 1806. Matters related to cost accounting standards
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Not later than 180 days after the date of the enactment of this Act, the Administrator for Federal Procurement Policy shall revise the rules and procedures prescribed pursuant to subsections
(a)and
(b)of section 1502 of title 41, United States Code, to the extent necessary to increase the thresholds established in section 9903.201-2 of title 48, Code of Federal Regulation, from $50,000,000 to $100,000,000 (as adjusted for inflation in accordance with section 1908 of title 41, United States Code). Not later than 120 days after the date of the enactment of this Act, the Secretary shall update the Department of Defense Supplement to the Federal Acquisition Regulation to require full compliance with cost accounting standards established under section 1502 of title 41, United States Code, only for an entity or subsidiary of an entity that— received a single contract award under such cost accounting standards with a value equal to or greater than $100,000,000 (as adjusted for inflation in accordance with section 1908 of title 41, United States Code); or received contracts during the cost accounting period that ended preceding the date of the report with a net value equal to or greater than $100,000,000 (as adjusted for inflation in accordance with section 1908 of title 41, United States Code). Subsection
(a)of section 1501 of title 41, United States Code, is amended by striking Office of Federal Procurement Policy and inserting Office of Management and Budget . Subsection
(b)of such section 1501 is amended— by amending paragraph
(1)to read as follows: The Board shall consist of 5 voting members and 2 nonvoting members. One voting member is the Administrator of Federal Procurement Policy, who serves as Chairman. The other 4 members, all of whom shall have experience in Federal Government contract cost accounting, are as follows: 2 representatives of the Federal Government, each of whom has substantial experience in administering and managing covered contracts— one of whom is a representative of the Department of Defense appointed by the Secretary of Defense; and one of whom is an officer or employee of the General Services Administration appointed by the Administrator of General Services. 2 individuals from the private sector, each of whom is appointed by the Director of the Office of Management and Budget— one of whom is a senior employee or retired senior employee of a Government contractor with substantial experience in the private sector involving administration and management of covered contracts; and one member of the accounting profession, with substantial experience as an accountant. There may be up to 2 nonvoting members appointed by the Board from academia, a nonprofit organization, or a private entity with substantial experience in establishing financial accounting and reporting standards in compliance with Generally Accepted Accounting Principles. ; in paragraph (2)— in subparagraph (A), by inserting , which may be extended for an additional 4-year period by the individual who appointed such member under paragraph
(1)after 4 years ; and in subparagraph (B), by striking paragraph (1)(A) and inserting paragraph (1)(A)(i) ; and by adding at the end the following new paragraph: Beginning on January 1, 2028, an individual who is a member of an audit entity of an executive agency is not eligible to serve as a member of the Board. . Subsection
(c)of such section 1501 is amended— in paragraph (2)— by striking within one year and all that follows through conform such standards and inserting the following: not later than 180 days after the date of enactment of this paragraph, and biennially thereafter, review any cost accounting standards established under section 1502 of this title and eliminate or conform such standards ; and by striking and at the end; in paragraph (3), by striking disputes. and inserting the following: disputes, and take necessary action to clarify or improve such standards if misinterpretation or lack of clarity in a standard was a primary component of such dispute; and ; and by adding at the end the following: ensure that any action taken pursuant to paragraph
(3)is not taken solely for the purpose of tailoring such standard to favor a party in the dispute. . Subsection
(e)of such section 1501 is amended— in paragraph (1), by striking and at the end; in paragraph (2), by striking the period at the end and inserting ; and ; and by adding at the end the following new paragraph: including a summary of rulemaking activities related to any changes to such standards and any associated timelines for such activities. . Subsection (f)(1)(B) of such section 1501 is amended— by striking may appoint and inserting shall appoint ; and by striking two and inserting not less than four . Such section 1501 is amended by adding at the end the following new subsection: In this section, the term covered contract means a contract that is subject to the cost accounting standards issued pursuant to section 1502 of this title. . Not later than 90 days after the date of the enactment of this Act, the Director of the Office of Management and Budget, the Secretary of Defense, and the Administrator of General Services shall implement the amendments made by this subsection, including making the appointments under section 1501(b) of title 41, United States Code, as amended by this subsection. The Secretary of Defense and the Cost Accounting Standards Board established under section 1501 of title 41, United States Code (as amended by this section), shall cooperate in full and in a timely manner with the Comptroller General of the United States, including providing any analysis, briefings, or other information requested by the Comptroller General related to requirements of this section and the amendments made by this section. Section 1502(b)(1) of title 41, United States Code, is amended— in subparagraph (B)— by striking of the amount set forth in section 3702(a)(1)(A) of title 10 as the amount is and inserting $35,000,000, as ; and by inserting , including requirements relating to inflation in section 1908 of this title after law ; and in subparagraph (C)— by inserting (or the portion of a contract or subcontract) after a contract or subcontract each place it appears; in clause (ii), by adding or at the end; in clause (iii)— by inserting (or the portion of such contract or subcontract) after a firm, fixed-price contract or subcontract ; and by striking ; or and inserting a period; and by striking clause (iv). in paragraph (3), subparagraph
(A)by inserting , as adjusted for inflation in accordance with section 1908 of this title, after $100,000,000 . Not later than 180 days after the date of the enactment of this Act, the Administrator for Federal Procurement Policy shall issue such regulations as are necessary to implement the amendments made by this subsection. Section 1502(c) of title 41, United States Code, is amended— in paragraph (2), by inserting and at the end; by striking paragraph (3); and by redesignating paragraph
(4)as paragraph (3). Section 1503(b) of title 41, United States Code, is amended to read as follows: A contract price adjustment undertaken under section 1502(f)(2) of this title shall be made, where applicable, on relevant contracts that are subject to the cost accounting standards so as to protect the Federal Government from payment, in the aggregate, of increased costs, as defined by the Cost Accounting Standards Board and in accordance with the following requirements: The Federal Government may not recover costs greater than the aggregate increased cost to the Federal Government, as defined by the Board, on the relevant contracts subject to the price adjustment unless the contractor or subcontractor made a change in its cost accounting practices of which the contractor or subcontractor was aware or should have been aware at the time of the price negotiation and which contractor or subcontractor failed to disclose to the Federal Government. For such changes in cost accounting practices— costs recovered by the Federal Government shall exclude any contract or subcontract (or any portion of such contract or subcontract) that is firm, fixed-price, or that is not price-redeterminable based on costs; and for a fiscal year, for any contract or subcontract (or any portion of such contract or subcontract) that is not a firm, fixed-price contract or subcontract the costs recovered by the Federal Government shall not exceed the net increased costs, if any, paid to the contractor or subcontractor for all changes in cost accounting practices implemented within the same fiscal year. . Not later than 180 days after the date of the enactment of this Act, the Administrator for Federal Procurement Policy shall issue such regulations as are necessary to implement the amendments made by this subsection.