108 STAT. 3310 PUBLIC LAW 103-355 —OCT. 13, 1994 "(B) interest (to be computed based on provisions in the Federal Acquisition Regulation) to compensate the United States for the use of any funds which a contractor has been paid in excess of the amount to which the contractor was entitled. "(2) 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 such contractor before the submission of such proposal, the executive agency shall assess a penalty against the contractor in an amount equal to two times the amount of the disallowed cost allocated to covered contracts for which a proposal for settlement of indirect costs has been submitted. "(c) WAIVER OF PENALTY. —The Federal Acquisition Regulation shall provide for a penalty under subsection (b) to be waived in the case of a contractor's proposal for settlement of indirect costs when— "(1) the contractor withdraws the proposal before the formal initiation of an audit of the proposal by the Federal Government and resubmits a revised proposal; "(2) the amount of unallowable costs subject to the penalty is insignificant; or "(3) the contractor demonstrates, to the contracting officer's satisfaction, that— "(A) it has established appropriate policies and personnel training and an internal control and review system that provide assurances that imallowable costs subject to penalties are precluded from being included in the contractor's proposal for settlement of indirect costs; and (B) the unallowable costs subject to the penalty were inadvertently incorporated into the proposal. "(d) APPLICABILITY OF CONTRACT DISPUTES PROCEDURE TO DIS- ALLOWANCE OF COST AND ASSESSMENT OF PENALTY. —An action of an executive agency under subsection (a) or (b)— "(1) shall be considered a final decision for the purposes of section 6 of the Contract Disputes Act of 1978 (41 U.S.C. 605); and "(2) is appealable in the manner provided in section 7 of such Act (41 U.S.C. 606). " (e) SPECIFIC COSTS NOT ALLOWABLE. —(1) The following costs are not allowable under a covered contract: "(A) Costs of entertainment, including amusement, diversion, and social activities, and any costs directly associated with such costs (such as tickets to shows or sports events, meals, lodging, rentals, transportation, and gratuities). "(B) Costs incurred to influence (directly or indirectly) legislative action on any matter pending before Congress, a State legislature, or a legislative body of a political subdivision of a State. "(C) Costs incurred in defense of any civil or criminal fraud proceeding or similar proceeding (including filing of any false certification) brought by the United States where the contractor is found liable or had pleaded nolo contendere to a charge of fraud or similar proceeding (including filing of a false certification). "(D) Payments of fines and penalties resulting from violations of, or failure to comply with. Federal, State, local, or
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