PUBLIC LAW 103-355—OCT. 13, 1994 108 STAT. 3309 "(1)(A) The term 'covered contract' means a contract for an amount in excess of $500,000 that is entered into by the head of an agency, except that such term does not include a fixed-price contract without cost incentives or any firm fixedprice contract for the purchase of commercial items. "(B) Effective on October 1 of each year that is divisible by five, the amount set fori;h in subparagraph (A) shall be adjusted to the equivalent amount in constant fiscal year 1994 dollars. An amount, as so adjusted, that is not evenly divisible by $50,000 shall be rounded to the nearest multiple of $50,000. In the case of an amount that 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. "(2) The term 'head of the agency* or 'agency head' does not include the Secretary of a military department. "(3) The term 'agency* means the Department of Defense, the Coast Guard, and the National Aeronautics and Space Administration.". (e) REGULATIONS.—The regulations of the Secretary of Defense 10 USC 2324 implementing section 2324 of title 10, United States Code, shall "°*®- remain in effect until the Federal Acquisition Regulation is revised to implement the amendments made by this section. SEC. 2102. REPEAL OF AUTHORITY FOR CONTRACT PROFIT CONTROLS DURING EMERGENCY PERIODS. (a) REPEAL.— Section 2382 of title 10, United States Code, is repealed. (b) CLERICAL AMENDMENT. —The table of sections at the beginning of chapter 141 of such title is amended by striking out the item relating to section 2382. PART II—CIVILIAN AGENCY ACQUISITIONS SEC. 2151. ALLOWABLE CONTRACT COSTS. Section 306 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 256) is amended to read as follows: "SEC. 306. ALLOWABLE COSTS. "(a) INDIRECT COST THAT VIOLATES A FAR COST PRINCIPLE. — An executive agency shall require that a covered contract provide that if the contractor submits to the executive agency a proposal for settlement of indirect costs incurred by the contractor for any period after such costs have been accrued and if that proposal includes the submission of a cost which is unallowable because the cost violates a cost principle in the Federal Acquisition Regulation (referred to in section 25(c)(1) of the Office of Federal Procurement Policy Act (41 U.S.C. 421(c)(1)) or an executive agency supplement to the Federal Acquisition Regulation, the cost shall be disallowed. "(b) PENALTY FOR VIOLATION OF COST PRINCIPLE. —(1) 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 penalty 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
�
