{"data":{"id":"us/48-cfr-42.709-4","jurisdiction":"us","citation":"48 CFR 42.709-4","heading":"42.709-4 Assessing the penalty.","body":"Unless a waiver is granted pursuant to 42.709-6, the cognizant contracting officer shall—\n(a) Assess the penalty in 42.709-2(a)(1), when the submitted cost is expressly unallowable under a cost principle in the FAR or an executive agency supplement that defines the allowability of specific selected costs; or\n(b) Assess the penalty in 42.709-2(a)(2), when the submitted cost was determined to be unallowable for that contractor prior to submission of the proposal. Prior determinations of unallowability may be evidenced by—\n(1) A DCAA Form 1, Notice of Contract Costs Suspended and/or Disapproved (see 48 CFR 242.705-2), or any similar notice which the contractor elected not to appeal and was not withdrawn by the cognizant Government agency;\n(2) A contracting officer final decision which was not appealed;\n(3) A prior executive agency Board of Contract Appeals or court decision involving the contractor, which upheld the cost disallowance; or\n(4) A determination or agreement of unallowability under 31.201-6.\n(c) Issue a final decision (see 33.211) which includes a demand for payment of any penalty assessed under paragraph (a) or (b) of this section. The letter shall state that the determination is a final decision under the Disputes clause of the contract. (Demanding payment of the penalty is separate from demanding repayment of any paid portion of the disallowed cost.)","path":["Title 48—Federal Acquisition Regulations System","CHAPTER 1—FEDERAL ACQUISITION REGULATION","SUBCHAPTER G—CONTRACT MANAGEMENT","PART 42—CONTRACT ADMINISTRATION AND AUDIT SERVICES","Subpart 42.7—Indirect Cost Rates"],"source_url":"https://www.ecfr.gov/api/versioner/v1/full/2026-08-25/title-48.xml","current_through":"2026-08-25","vintage":"","retrieved_at":"2026-08-27T02:26:29Z","sha256":"5cd217523721c7269d37fb2a7d6049a279d0927daefec6af6bb352cf0c1df1ab","source_id":"us-cfr","stale":true,"prev":"us/48-cfr-42.709-3","next":"us/48-cfr-42.709-5"},"notice":"GroundRules: Original legal text. Not legal advice."}