(a) This section implements 10 U.S.C. 2324 (a) through (d) and 41 U.S.C. 4303. It covers the assessment of penalties against contractors which include unallowable indirect costs in—

(1) Final indirect cost rate proposals; or

(2) The final statement of costs incurred or estimated to be incurred under a fixed-price incentive contract.

(b) This section applies to all contracts in excess of $800,000, except fixed-price contracts without cost incentives or any firm-fixed-price contracts for the purchase of commercial items.

[60 FR 42658, Aug. 16, 1995, as amended at 69 FR 76358, Dec. 20, 2004; 71 FR 57368, Sept. 28, 2006; 75 FR 53134, Aug. 30, 2010; 79 FR 24213, Apr. 29, 2014; 80 FR 38298, July 2, 2015. Redesignated at 81 FR 83104, Nov. 18, 2016; 85 FR 62489, Oct. 2, 2020]