Problem:
A contractor completes performance of a $1,000,000 cost-reimbursement contract that includes the contract clause at FAR 52.242-3 and submits (a) its proposal for final indirect cost rates and (b) a certificate of final indirect costs. During analysis of the proposal the administrative contracting officer (ACO) discovers that the proposal includes $10,000of indirect costs that are expressly unallowable under FAR cost principles, but that have not previously been determined to be unallowable. As yet, no part of the unallowable costs has been paid.
What if any dollar amount of penalty must the ACO access the contractor for including the unallowable costs in its final indirect cost rate proposal?