Page:United States Statutes at Large Volume 124.djvu/3810

 124 STAT. 3784 PUBLIC LAW 111–350—JAN. 4, 2011 § 4301. Definitions In this chapter: (1) COMPENSATION.—The term ‘‘compensation’’, for a fiscal year, means the total amount of wages, salary, bonuses, and deferred compensation for the fiscal year, whether paid, earned, or otherwise accruing, as recorded in an employer’s cost accounting records for the fiscal year. (2) COVERED CONTRACT.—The term ‘‘covered contract’’ means a contract for an amount in excess of $500,000 that is entered into by an executive agency, except that the term does not include a fixed-price contract without cost incentives or any firm fixed-price contract for the purchase of commercial items. (3) FISCAL YEAR.—The term ‘‘fiscal year’’ means a fiscal year established by a contractor for accounting purposes. (4) SENIOR EXECUTIVE.—The term ‘‘senior executive’’, with respect to a contractor, means the 5 most highly compensated employees in management positions at each home office and each segment of the contractor. § 4302. Adjustment of threshold amount of covered contract Effective on October 1 of each year that is divisible by 5, the amount set forth in section 4301(2) of this title shall be adjusted to the equivalent amount in constant fiscal year 1994 dollars. An adjusted amount that is not evenly divisible by $50,000 shall be rounded to the nearest multiple of $50,000. If an amount is evenly divisible by $25,000 but is not evenly divisible by $50,000, the amount shall be rounded to the next higher multiple of $50,000. § 4303. Effect of submission of unallowable costs (a) INDIRECT COST THAT VIOLATES FEDERAL ACQUISITION REGULA- TION COST PRINCIPLE.—An executive agency shall require that a covered contract provide that if the contractor submits to the execu- tive agency a proposal for settlement of indirect costs incurred by the contractor for any period after those costs have been accrued and if that proposal includes the submission of a cost that is unallowable because the cost violates a cost principle in the Federal Acquisition Regulation or an executive agency supplement to the Federal Acquisition Regulation, the cost shall be disallowed. (b) PENALTY FOR VIOLATION OF COST PRINCIPLE.— (1) UNALLOWABLE COST IN PROPOSAL.—If the executive agency determines that a cost submitted by a contractor in its proposal for settlement is expressly unallowable under a cost principle referred to in subsection (a) that defines the allowability of specific selected costs, the executive agency shall assess a pen- alty against the contractor in an amount equal to— (A) the amount of the disallowed cost allocated to covered contracts for which a proposal for settlement of indirect costs has been submitted; plus (B) interest (to be computed based on provisions in the Federal Acquisition Regulation) to compensate the Federal Government for the use of the amount which a contractor has been paid in excess of the amount to which the con- tractor was entitled. (2) COST DETERMINED TO BE UNALLOWABLE BEFORE PROPOSAL SUBMITTED.—If the executive agency determines that a proposal for settlement of indirect costs submitted by a contractor includes a cost determined to be unallowable in the case of