§4310 — Title 41 Public Contracts | U.S. Code

Summary

Says that costs a contractor, subcontractor, or personal services contractor spends on a government criminal, civil, or administrative case (or an investigation) are generally not billable back to a covered contract when the case is about breaking a federal or state law or the kinds of wrongdoing listed in section 4712, and the case ends with a bad result. "Costs" here means things like admin and clerical charges, legal fees (including in-house lawyers), accountants and consultants, and pay for company officers or employees for time spent on the case. The word "penalty" does not cover money ordered as restitution, reimbursement, or compensatory damages. There are a few exceptions. If the federal government started the case and the settlement agreement with the contractor lets the contractor recover costs, those costs can be allowed. If a state started the case, the agency that awarded the contract can allow costs if it finds the costs came from a specific contract term or from written agency instructions. In other cases started by the federal government or a state, costs may be paid back only if they are not barred by the rule above and only up to 80% of the allowable amount under the Federal Acquisition Regulation. Costs are also barred if the case repeats the same alleged misconduct as another case whose costs are not allowed.

Title 41, §4310

Public Contracts — Source: USLM XML via OLRC

(a)In this section:

(1)The term “costs”, with respect to a proceeding, means all costs incurred by a contractor, subcontractor, or personal services contractor, whether before or after the commencement of the proceeding, including—

(A)administrative and clerical expenses;

(B)the cost of legal services, including legal services performed by an employee of the contractor, subcontractor, or personal services contractor;

(C)the cost of the services of accountants and consultants retained by the contractor, subcontractor, or personal services contractor; and

(D)the pay of directors, officers, and employees of the contractor, subcontractor, or personal services contractor for time devoted by those directors, officers, and employees to the proceeding.

(2)The term “penalty” does not include restitution, reimbursement, or compensatory damages.

(3)The term “proceeding” includes an investigation.

(b)Except as otherwise provided in this section, costs incurred by a contractor, subcontractor, or personal services contractor in connection with a criminal, civil, or administrative proceeding commenced by the Federal Government, by a State, or by a contractor, subcontractor, or personal services contractor or grantee employee submitting a complaint under section 4712 of this title are not allowable as reimbursable costs under a covered contract, subcontract, or personal services contract if the proceeding—

(1)relates to a violation of, or failure to comply with, a Federal or State statute or regulation or to any other activity described in section 4712(a)(1) of this title; and

(2)results in a disposition described in subsection (c).

(c)A disposition referred to in subsection (b)(2) is any of the following:

(1)In a criminal proceeding, a conviction (including a conviction pursuant to a plea of nolo contendere) by reason of the violation or failure referred to in subsection (b).

(2)In a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a determination of contractor, subcontractor, or personal services contractor liability on the basis of the violation or failure referred to in subsection (b).

(3)In any civil or administrative proceeding, the imposition of a monetary penalty or an order to take corrective action under section 4712 of this title by reason of the violation or failure referred to in subsection (b).

(4)A final decision to do any of the following, by reason of the violation or failure referred to in subsection (b):

(A)Debar or suspend the contractor, subcontractor, or personal services contractor.

(B)Rescind or void the contract, subcontract, or personal services contract.

(C)Terminate the contract, subcontract, or personal services contract for default.

(5)A disposition of the proceeding by consent or compromise if the disposition could have resulted in a disposition described in paragraph (1), (2), (3), or (4).

(d)In the case of a proceeding referred to in subsection (b) that is commenced by the Federal Government and is resolved by consent or compromise pursuant to an agreement entered into by a contractor, subcontractor, or personal services contractor and the Federal Government, the costs incurred by the contractor, subcontractor, or personal services contractor in connection with the proceeding that are otherwise not allowable as reimbursable costs under subsection (b) may be allowed to the extent specifically provided in that agreement.

(e)In the case of a proceeding referred to in subsection (b) that is commenced by a State, the executive agency that awarded the covered contract, subcontract, or personal services contract involved in the proceeding may allow the costs incurred by the contractor, subcontractor, or personal services contractor in connection with the proceeding as reimbursable costs if the executive agency determines, in accordance with the Federal Acquisition Regulation, that the costs were incurred as a result of—

(1)a specific term or condition of the contract, subcontract, or personal services contract; or

(2)specific written instructions of the executive agency.

(f)(1)Except as provided in paragraph (3), costs incurred by a contractor, subcontractor, or personal services contractor in connection with a criminal, civil, or administrative proceeding commenced by the Federal Government or a State in connection with a covered contract, subcontract, or personal services contract may be allowed as reimbursable costs under the contract, subcontract, or personal services contract if the costs are not disallowable under subsection (b), but only to the extent provided in paragraph (2).

(2)(A)The amount of the costs allowable under paragraph (1) in any case may not exceed the amount equal to 80 percent of the amount of the costs incurred, to the extent that the costs are determined to be otherwise allowable and allocable under the Federal Acquisition Regulation.

(B)Regulations issued for the purpose of subparagraph (A) shall provide for appropriate consideration of the complexity of procurement litigation, generally accepted principles governing the award of legal fees in civil actions involving the Federal Government as a party, and other factors as may be appropriate.

(3)In the case of a proceeding referred to in paragraph (1), contractor, subcontractor, or personal services contractor costs otherwise allowable as reimbursable costs under this subsection are not allowable if—

(A)the proceeding involves the same contractor, subcontractor, or personal services contractor misconduct alleged as the basis of another criminal, civil, or administrative proceeding; and

(B)the costs of the other proceeding are not allowable under subsection (b).

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 4310(a)41:256(k)(6).June 30, 1949, ch. 288, title III, § 306(k), as added Pub. L. 100–700, § 8(a)(1), Nov. 19, 1988, 102 Stat. 4634; Pub. L. 103–355, title II, § 2151, Oct. 13, 1994, 108 Stat. 3313. 4310(b)41:256(k)(1). 4310(c)41:256(k)(2). 4310(d)41:256(k)(3). 4310(e)41:256(k)(4). 4310(f)41:256(k)(5).

Editorial Notes

Amendments

2016—Pub. L. 114–261, § 1(b)(2)(A)(i), (ii), inserted “, subcontractor, or personal services contractor” after “contractor” and “, subcontract, or personal services contract” after “contract” wherever appearing. Subsec. (b)(1). Pub. L. 114–261, § 1(b)(2)(A)(iii), inserted “or to any other activity described in section 4712(a)(1) of this title” after “statute or regulation”. 2013—Subsec. (b). Pub. L. 112–239, § 828(d)(1), substituted “commenced by the Federal Government, by a State, or by a contractor or grantee employee submitting a complaint under section 4712 of this title” for “commenced by the Federal Government or a State”. Subsec. (c)(3). Pub. L. 112–239, § 828(d)(2), substituted “the imposition of a monetary penalty or an order to take corrective action under section 4712 of this title” for “the imposition of a monetary penalty”.

§4310 Proceeding Costs Not Allowable