Sec. 1832. ALLOWABLE COSTS

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## SEC. 1832 ALLOWABLE COSTS ###

(a)New Chapter **[**[10 U.S.C. 3741](/us/usc/t10/s3741)**]** Part V of subtitle A of title 10, United States Code, as added by section 801 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (Public Law 115-232), is amended by striking chapter 273 and inserting the following:”. > > ## “CHAPTER 273 **ALLOWABLE COSTS** > > **[**[10 U.S.C. 3741](/us/usc/t10/s3741)**]** > > > ### “Subchapter I GENERAL > > > ## “SEC. 3741 Definitions > > **[**[10 U.S.C. 3741](/us/usc/t10/s3741)**]** > > In this subchapter: > > > ## “SEC. 3742 Adjustment of threshold amount of covered contract > > **[**[10 U.S.C. 3742](/us/usc/t10/s3742)**]** > > > ## “SEC. 3743 Effect of submission of unallowable costs > > **[**[10 U.S.C. 3743](/us/usc/t10/s3743)**]** > > > ## “SEC. 3744 Specific costs not allowable > > **[**[10 U.S.C. 3744](/us/usc/t10/s3744)**]** > > > ## “SEC. 3745 Required regulations > > **[**[10 U.S.C. 3745](/us/usc/t10/s3745)**]** > > > ## “SEC. 3746 Applicability of regulations to subcontractors > > **[**[10 U.S.C. 3746](/us/usc/t10/s3746)**]** > > > ## “SEC. 3747 Contractor certification > > **[**[10 U.S.C. 3747](/us/usc/t10/s3747)**]** > > > ## “SEC. 3748 Penalties for submission of cost known as not allowable > > **[**[10 U.S.C. 3748](/us/usc/t10/s3748)**]** > > > ## “SEC. 3749 Burden of proof on contractor > > **[**[10 U.S.C. 3749](/us/usc/t10/s3749)**]** > > > ## “SEC. 3750 Proceeding costs not allowable” > > **[**[10 U.S.C. 3750](/us/usc/t10/s3750)**]** > . ###

(b)Transfer of Definition Paragraphs From Subsection

(l)of Section 2324 ####

(1)Paragraph

(4)of section 2324(l) of title 10, United States Code, is transferred to section 3741 of such title, as added by subsection (a), inserted at the end, redesignated as paragraph (1), and amended by inserting “Compensation.—” before “The term”. ####

(2)Subparagraph

(A)of paragraph

(1)of such section 2324(l) is transferred to section 3741 of such title, as added by subsection (a), inserted after paragraph (1), as transferred and redesignated by paragraph (1), redesignated as paragraph (2), and amended by inserting “Covered contract.—” before “The term”. ####

(3)#####

(A)Paragraphs (6), (2), and

(3)of such section 2324(l) are transferred to section 3741 of such title, as added by subsection (a), inserted (in that order) after paragraph (2), as transferred and redesignated by paragraph (2), and redesignated as paragraphs (3), (4), and (5), respectively. #####

(B)The paragraphs transferred and redesignated by subparagraph

(A)are amended— ######

(i)by inserting “Fiscal year.—” before “The term” in paragraph (3), as so redesignated; ######

(ii)by inserting “Head of the agency.—” before “The term” in paragraph (4), as so redesignated; and ######

(iii)by inserting “Agency.—” before “The term” in paragraph (5), as so redesignated. ####

(4)Subparagraph

(B)of paragraph

(1)of such section 2324(l) is transferred to section 3742 of such title, as added by subsection (a), inserted after the section heading, and amended— #####

(A)by realigning the text 2 ems to the left; #####

(B)by striking the subparagraph designation; and #####

(C)by striking “subparagraph (A)” and inserting “section 3741(2) of this title”. ###

(c)Transfer of Subsections (a)-(d) of Section 2324 ####

(1)Transfer Subsections (a), (b), (c), and

(d)of section 2324 of title 10, United States Code, are transferred to section 3743 of such title, as added by subsection (a), and inserted after the section heading. ####

(2)Amendments to new 3743(b) Such subsection

(b)is amended— #####

(A)by striking “ Principle.—(1) If the ” and inserting > “ Principle.— > > > #### “(1) > > If the” > ; and #####

(B)by realigning paragraph

(2)2 ems to the right and inserting “Cost determined to be unallowable before proposal submitted.—” before “If the”. ###

(d)Transfer of Subsection

(e)of Section 2324 ####

(1)Transfer Subsection

(e)of section 2324 of title 10, United States Code, is transferred to section 3744 of such title, as added by subsection (a), inserted after the section heading, and amended— #####

(A)by striking the subsection designation and subsection heading; #####

(B)by redesignating paragraphs (1), (2), (3), and

(4)as subsections (a), (d), (b), and (c), respectively; and #####

(C)by transferring subsection (d), as so redesignated, to the end of such section, after subsection (c), as so redesignated. ####

(2)Amendments to new 3744(a) Subsection

(a)of such section, as so redesignated, is amended— #####

(A)by inserting “Specific Costs.—” before “The following costs”; #####

(B)by redesignating subparagraphs

(A)through

(Q)as paragraphs

(1)through (17), respectively (including redesignating both subparagraphs

(P)as paragraph (16)); #####

(C)in paragraph (15), as so redesignated, by striking “subsection (k)” and inserting “section 3750 of this title”; and #####

(D)in paragraph (17), as so redesignated, by striking “subsection (k)(2)” and inserting “section 3750(c) of this title”. ####

(3)Amendments to new 3744(b) Subsection

(b)of such section, as so redesignated, is amended— #####

(A)by striking “

(A)Pursuant to ” and inserting > “ Waiver of Severance Pay Restrictions for Foreign Nationals.— > > > #### “(1) Head of an agency determination > > Pursuant to” > ; #####

(B)by redesignating subparagraphs

(B)and

(C)as paragraphs

(2)and (3), respectively; #####

(C)in paragraph (1), as designated by subparagraph (A)— ######

(i)by striking “paragraph (2)” and inserting “subsection (d)”; ######

(ii)by striking “paragraphs (1)(M) and (1)(N)” and inserting “subsections (a)(13) and (a)(14)”; and ######

(iii)by redesignating clauses (i), (ii), and

(iii)as subparagraphs (A), (B), and (C), respectively; #####

(D)in paragraph (2), as so redesignated by subparagraph (B)— ######

(i)by realigning that paragraph 2 ems to the right; ######

(ii)by inserting “Solicitation to include statement about waiver.—” before “The head of”; ######

(iii)by redesignating clauses

(i)and

(ii)as subparagraphs

(A)and (B), respectively; and ######

(iv)in subparagraph (A), as so redesignated, by striking “subparagraph (A)” and inserting “paragraph (1)”; and #####

(E)in paragraph (3), as so redesignated by subparagraph (B)— ######

(i)by realigning that paragraph 2 ems to the right; ######

(ii)by inserting “Determination to be made before contract awarded.—” before “The head of”; and ######

(iii)by striking “subparagraph (A)” and inserting “paragraph (1)”. ####

(4)Amendments to new 3744(c) Subsection

(c)of such section, as so redesignated, is amended— #####

(A)by inserting “Establishment of Definitions, Exclusions, Limitations, and Qualifications.—” before “The provisions of”; and #####

(B)by striking “this section” and inserting “this subchapter”. ####

(5)Amendments to new 3744(d) Subsection

(d)of such section, as so redesignated and transferred, is amended— #####

(A)by striking “

(A)The Secretary ” and inserting > “ Specific Costs Under Military Banking Contracts Relating to Foreign Nationals.— > > > #### “(1) Authority > > The Secretary” > ; #####

(B)by redesignating subparagraphs

(B)and

(C)as paragraphs

(2)and (3), respectively, and realigning those paragraph 2 ems to the right; #####

(C)in paragraph (1), as designated by subparagraph (A), by striking “paragraphs (1)(M) and (1)(N)” and inserting “subsections (a)(13) and (a)(14)”; #####

(D)in paragraph (2), as so redesignated by subparagraph (B)— ######

(i)by inserting “Definitions.—” before “In”; ######

(ii)by striking “subparagraph (A)” and inserting “paragraph (1)”; ######

(iii)by redesignating clauses

(i)and

(ii)as subparagraphs

(A)and (B), respectively; ######

(iv)in subparagraph (A), as so redesignated, by inserting “Military banking contract.—” before “The term”; and ######

(v)in subparagraph (B), as so redesignated, by inserting “Mandated foreign national severance pay.—” before “The term”; and #####

(E)in paragraph (3), as so redesignated by subparagraph (B)— ######

(i)by inserting “Exception for foreign-owned financial institutions.—” after the paragraph designation; and ######

(ii)by striking “Subparagraph (A)” and inserting “Paragraph (1)”. ###

(e)Transfer of Subsection

(f)of Section 2324 ####

(1)Transfer Subsection

(f)of section 2324 of title 10, United States Code, is transferred to section 3745 of such title, as added by subsection (a), inserted after the section heading, and amended— #####

(A)by striking the subsection designation and subsection heading; #####

(B)by redesignating paragraph

(1)as subsection (a); #####

(C)by designating the third sentence of such subsection as subsection (b); #####

(D)by redesignating paragraph

(2)as subsection (c); and #####

(E)by redesignating paragraphs

(3)and

(4)as paragraphs

(2)and (3), respectively, and realigning those paragraphs 2 ems to the right. ####

(2)Amendment to new 3745(a) Subsection

(a)of such section, as so redesignated, is amended by inserting “In General.—” before “The Federal”. ####

(3)Amendments to new 3745(b) Subsection

(b)of such section, as so designated by paragraph (1)(C), is amended— #####

(A)by inserting “Specific Items.—” before “The regulations”; and #####

(B)by redesignating subparagraphs

(A)through

(Q)as paragraphs

(1)through (17), respectively. ####

(4)Amendments to new 3745(c) Subsection

(c)of such section, as so redesignated by paragraph (1)(D), is amended— #####

(A)by striking “ The Federal ” and inserting > “ Additional Requirements.— > > > #### “(1) When questioned costs may be resolved > > The Federal” > ; #####

(B)in paragraph (2), as so redesignated by paragraph (1)(E), by inserting “Presence of contract auditor.—” before “The Federal”; and #####

(C)in paragraph (3), as so redesignated by paragraph (1)(E), by inserting “Settlement to reflect amount of individual questioned costs.—” before “The Federal”. ###

(e)Transfer of Subsection

(g)of Section 2324 Subsection

(g)of section 2324 of title 10, United States Code, is transferred to section 3746 of such title, as added by subsection (a), inserted after the section heading, and amended— ####

(1)by striking the subsection designation and subsection heading; and ####

(2)by striking “subsections

(e)and (f)(1)” and inserting “sections 3744 and 3745(a) and

(b)of this title”. ###

(f)Transfer of Subsection

(h)of Section 2324 ####

(1)Transfer Subsection

(h)of section 2324 of title 10, United States Code, is transferred to section 3747 of such title, as added by subsection (a), inserted after the section heading, and amended— #####

(A)by striking the subsection designation and subsection heading; and #####

(B)by redesignating paragraphs

(1)and

(2)as subsections

(a)and (b), respectively. ####

(2)Amendment to new 3747(a) Subsection

(a)of such section, as so redesignated, is amended by inserting “Content and Form.—” before “A proposal”. ####

(3)Amendments to new 3747(b) Subsection

(b)of such section, as so redesignated, is amended— #####

(A)by inserting “Waiver.—” before “The head”; #####

(B)by striking “paragraph (1)” and inserting “subsection (a)”; and #####

(C)by redesignating subparagraphs

(A)and

(B)as paragraphs

(1)and (2), respectively. ###

(g)Transfer of Subsection

(i)of Section 2324 Subsection

(i)of section 2324 of title 10, United States Code, is transferred to section 3748 of such title, as added by subsection (a), inserted after the section heading, and amended by striking the subsection designation and subsection heading. ###

(h)Transfer of Subsection

(j)of Section 2324 Subsection

(j)of section 2324 of title 10, United States Code, is transferred to section 3749 of such title, as added by subsection (a), inserted after the section heading, and amended by striking the subsection designation and subsection heading. ###

(i)Transfer of Subsection

(k)of Section 2324 ####

(1)Transfer of paragraph

(6)of 2324(k) #####

(A)Transfer Paragraph

(6)of Subsection

(k)of section 2324 of title 10, United States Code, is transferred to section 3750 of such title, as added by subsection (a), inserted after the section heading, redesignated as subsection (a), and amended by striking “In this subsection” and inserting “Definitions.—In this section”. #####

(B)Redesignation of subparagraphs Such subsection (a), as so transferred and redesignated, is further amended by redesignating subparagraphs (A), (B), and

(C)as paragraphs (3), (1), and (2), respectively, and transferring paragraph (3), as so redesignated to the end of such subsection so as to appear after paragraph (2), as so redesignated. #####

(C)Amendments to new 3750(a)(1) Paragraph

(1)of such subsection, as so redesignated, is amended— ######

(i)by inserting “Costs.—” before “The term”; ######

(ii)by redesignating clauses

(i)and

(ii)as subparagraphs

(A)and (B), respectively; and ######

(iii)in subparagraph (B), as so redesignated, by redesignating subclauses (I), (II), (III), and

(IV)as clauses (i), (ii), (iii), and (iv), respectively. #####

(D)Amendment to new 3750(a)(2) Paragraph

(2)of such subsection, as so redesignated, is amended by inserting “Penalty.—” before “The term”. #####

(E)Amendment to new 3750(a)(3) Paragraph

(3)of such subsection, as so redesignated and transferred, is amended by inserting “Proceedings.—” before “The term”. ####

(2)Transfer of paragraphs (1)-(5) of 2324(k) Subsection

(k)of section 2324 of title 10, United States Code (other than the portion transferred by paragraph (1)), is transferred to section 3750 of such title, as added by subsection (a), inserted after subsection (a), as transferred and redesignated by paragraph (1), and amended by striking the subsection designation and heading and by redesignating paragraphs (1), (2), (3), (4), and

(5)as subsections (b), (c), (d), (e), and (f), respectively. ####

(3)Amendments to new 3750(b) Subsection

(b)of such section, as so transferred and redesignated, is amended— #####

(A)by inserting “In General.—” before “Except as”; #####

(B)by striking “this subsection” and inserting “this section”; #####

(C)by striking “section 2409” and inserting “section 4701”; #####

(D)by striking “ if the proceeding

(A)relates to ” and inserting > “if the proceeding— > > > #### “(1) > > relates to” > ; #####

(E)by striking “in subparagraphs

(A)through

(C)of section 2409(a)(1)” and inserting “in section 4701(a)(1)”; #####

(F)by striking “ this title, and

(B)results in ” and inserting > “this title; and > > > #### “(2) > > results in” > ; and #####

(G)by striking “paragraph (2)” and inserting “subsection (c)”. ####

(4)Amendments to new 3750(c) Subsection

(c)of such section, as so transferred and redesignated, is amended— #####

(A)by inserting “Covered Dispositions.—” before “A disposition”; #####

(B)by striking “paragraph (1)(B)” and inserting “subsection (b)(2)”; #####

(C)by striking “paragraph (1)” each place it appears and inserting “subsection (b)”; #####

(D)by redesignating subparagraphs (A), (B), (C), (D), and

(E)as paragraphs (1), (2), (3), (4), and (5), respectively; #####

(E)in paragraph (3), as so redesignated, by striking “section 2409” and inserting “section 4701”; #####

(F)in paragraph (4), as so redesignated, by redesignating clauses (i), (ii), and

(iii)as subparagraphs (A), (B), and (C), respectively; and #####

(G)in paragraph (5), as so redesignated, by striking “subparagraph (A), (B), (C), or (D)” and inserting “paragraphs (1), (2), (3), or (4)”. ####

(5)Amendments to new 3750(d) Subsection

(d)of such section, as so transferred and redesignated, is amended— #####

(A)by inserting “Costs Allowed by Settlement Agreement in Proceeding Commenced by United States.—” before “In the case of”; #####

(B)by striking “paragraph (1)” and inserting “subsection (b)”; and #####

(C)by striking “such paragraph” and inserting “such subsection”. ####

(6)Amendments to new 3750(e) Subsection

(e)of such section, as so transferred and redesignated, is amended— #####

(A)By inserting “Costs Specifically Authorized in Proceeding Commenced by State.—” before “In the case of”; #####

(B)by striking “paragraph (1)” and inserting “subsection (b)”; and #####

(C)by striking “(A)” and “(B)” and inserting “(1)” and “(2)”, respectively. ####

(7)Amendments to new 3750(f) Subsection

(f)of such section, as so transferred and redesignated, is amended— #####

(A)by striking “

(A)Except as provided in ” and inserting > “ Other Allowable Costs.— > > > #### “(1) In general > > Except as provided in” > ; #####

(B)by redesignating subparagraphs

(B)and

(C)as paragraphs

(2)and (3), respectively, and realigning those paragraphs 2 ems to the right; #####

(C)in paragraph (1), as designated by subparagraph (A)— ######

(i)by striking “subparagraph (C)” and inserting “paragraph (3)”; ######

(ii)by striking “paragraph (1)” and inserting “subsection (b)”; and ######

(iii)by striking “subparagraph (B)” and inserting “paragraph (2)”; #####

(D)in paragraph (2), as redesignated by subparagraph (B)— ######

(i)by striking “

(i)The amount of ” and inserting > “ Amount of Allowable Costs.— > > > ##### “(A) Maximum amount allowed > > The amount of” > ; ######

(ii)by redesignating clause

(ii)as subparagraph (B); ######

(iii)in subparagraph (A), as designated by clause (i), by striking “subparagraph (A)” and inserting “paragraph (1)”; and ######

(iv)in subparagraph (B), as redesignated by clause (ii)— ######

(I)by inserting “Content of regulations.—” before “Regulations issued”; ######

(II)by striking “clause (i)” and inserting “subparagraph (A)”; ######

(III)by striking “ consideration of the complexity of ” and inserting > “consideration of— > > > ###### “(i) > > the complexity of” > ; ######

(IV)by striking “ procurement litigation, generally accepted ” and inserting > “procurement litigation; > > > ### “(ii) > > generally accepted” > ; and #####

(E)by striking “ as a party and such other ” and inserting > “as a party; and > > > ### “(iii) > > such other” > ; and #####

(F)in paragraph (3), as redesignated by subparagraph (B)— ######

(i)by inserting “When otherwise allowable costs are not allowable.—” before “In the case of”; ######

(ii)by striking “subparagraph (A)” and inserting “paragraph (1)”; ######

(iii)by striking “under this paragraph” and inserting “under this subsection”; ######

(iv)by striking “ not allowable if

(i)such proceeding ” and inserting > “not allowable if— > > > ##### “(A) > > such proceeding” > ; ######

(v)by striking “ proceeding, and

(ii)the costs ” and inserting > “proceeding; and > > > ##### “(B) > > the costs” > ; and ######

(vi)in subparagraph

(B)(as so redesignated), by striking “paragraph (1)” and inserting “subsection (b)”. ###

(j)Additional Allowable Cost Provisions ####

(1)In general Chapter 273 of title 10, United States Code, as added by subsection (a), is amended by adding at the end the following new subchapter: > > ### “Subchapter II **Other Allowable Cost Provisions** > > **[**[10 U.S.C. 3761](/us/usc/t10/s3761)**]** > ####

(2)Transfer of sections on restructuring costs, allowability of independent research and development costs, and allowability of bid and proposal costs Sections 2325, 2372, and 2372a of title 10, United States Code, are transferred to subchapter II of chapter 273 of such title, as added by paragraph (1), inserted (in that order) after the table of sections, and redesignated as sections 3761, 3762, and 3763, respectively. ####

(3)Amendments to new 3761 Section 3761 of title 10, United States Code, as so transferred and redesignated, is amended— #####

(A)by redesignating subsection

(b)as subsection (c); #####

(B)in subsection (a)— ######

(i)by striking “(1)” before “The Secretary”; and ######

(ii)by striking “section 2324 of this title” and inserting “subchapter I”: #####

(C)by redesignating paragraph

(2)as subsection (b); #####

(D)in subsection (b), as so redesignated— ######

(i)by inserting “Limitation on Delegation.—” before “The Secretary may not”; and ######

(ii)by striking “paragraph (1)” and inserting “subsection (a)”; and #####

(E)in each of such subsections

(a)and (b), by redesignating subparagraphs

(A)and

(B)as paragraphs

(1)and (2), respectively. ####

(4)Amendments to new 3763 Section 3763 of such title, as so transferred and redesignated by paragraph (2), is amended by striking “section 2324(l)” in subsection

(b)and inserting “section 3741”.

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