Apart from potential liabilities for noncompliance with CAS 405 and cost disallowance under applicable cost principles, the contractor is also subject to penalties if it submits a proposal for settlement of indirect costs containing "expressly unallowable" costs or a cost "determined to be unallowable for that contractor before proposal submittal". FAR Subpart 42.7 covers penalty provisions and they apply to all contracts over $550,000 awarded on or after October 4, 1995 except firm-fixed price contracts without cost incentives and firm-fixed contracts for commercial items. These penalties are in addition to any other penalties and do not require actual payment of the unallowable cost--their inclusion in the proposal is enough to trigger their use. The interested reader is referred to our article "Penalties for Unallowable Costs" in the Fourth Quarter 1999 issue of the GCA DIGEST.

{TAG_FORM_TITLE}