The Federal Acquisition Regulatory Council, comprising the Office of Federal Procurement Policy (OFPP), Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA), has issued a notice and request for public comments. This action pertains to proposed revisions to information collection requirements under the Paperwork Reduction Act (PRA), specifically those stemming from FAR Case 2026-006, titled "Revolutionary Federal Acquisition Regulation Overhaul Parts 16, 17, and 35." The primary objective of these changes is to reduce the administrative burden associated with contractor reporting, particularly concerning indirect cost rate proposals.
Context of Regulatory Reform
Federal acquisition regulations are subject to continuous review and reform to adapt to evolving economic conditions, technological advancements, and policy priorities. The PRA of 1995 mandates that federal agencies minimize the paperwork burden on the public resulting from the collection of information. This notice from the FAR Council signals a focused effort to align existing information collection practices with the PRA's goals, particularly within the framework of a larger, more comprehensive overhaul of key FAR parts. The "Revolutionary Federal Acquisition Regulation Overhaul" suggests a significant reevaluation of procurement processes, and the current notice details a crucial, burden-reducing component of that broader initiative. By soliciting public input, the FAR Council seeks to ensure that any regulatory changes are practical, effective, and responsive to the needs of both government and industry.
Detailed Analysis of Proposed Changes
The proposed revisions center on OMB Control No. 9000-0069, which governs "Indirect Cost Rate Proposals, Payments to Small Business Subcontractors, and Bankruptcy Notifications." The changes primarily affect two critical clauses: FAR 52.216-7, "Allowable Cost and Payment," and FAR 52.216-15, "Predetermined Indirect Cost Rates." Each modification is designed to reduce the volume and granularity of data that contractors must submit to the federal government.
Under FAR 52.216-7, several key adjustments are proposed:
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Reduced Data for Indirect Cost Rate Proposals: Paragraph (d)(2)(iii) has been edited to decrease the data required to support an adequate indirect cost rate proposal. This aims to streamline the initial determination of proposal adequacy.
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Limited Subcontract Information: Paragraph (j), concerning subcontract information, will now be limited to only those subcontracts exceeding the threshold for requiring certified cost or pricing data, as prescribed in FAR 15.403-3. This narrows the scope of detailed reporting for subcontracts.
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Streamlined Time-and-Materials and Labor-Hour Contracts: The detailed information previously mandated by paragraph (k) for time-and-materials and labor-hour contracts, such as labor rates, labor hours, and other detailed cost elements, has been removed and relocated. Only summary-level information will now be required under paragraph (h).
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Elimination of Payroll Reconciliation: Paragraph (l), which required the submission of a reconciliation of total payroll per IRS Form 941 to total labor costs distribution, has been removed entirely. This eliminates a significant and often redundant reporting requirement.
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Simplified Physically Completed Contracts Reporting: Information previously required by paragraph (o) for contracts physically completed in a fiscal year has been relocated to paragraph (h). This reporting is now limited to level-of-effort information, contract ceiling amount, and an indication of whether the contract is ready to close. Crucially, contract fee computations are no longer required.
FAR 52.216-15, "Predetermined Indirect Cost Rates," reiterates the requirement for contractors to submit an adequate final indirect cost rate proposal, as found in FAR 52.216-7, paragraph (d). However, the notice clarifies that this clause does not impose any additional reporting requirements beyond what is stipulated in FAR 52.216-7.
Expected Impact and Rationale
The overarching goal of these changes is a significant reduction in the public reporting burden for federal contractors. The FAR Council explicitly states that the proposed modifications, if finalized, are expected to decrease the overall burden related to the preparation and submission of incurred cost proposals. Industry input, particularly in response to the Office of Information and Regulatory Affairs' (OIRA) Request for Information, suggests an estimated 10 percent reduction in time contractors spend preparing these submissions.
Beyond reducing contractor effort, the revisions are also anticipated to promote efficiency for both contractors and the government. By eliminating the submission of information deemed to provide little value to the initial adequacy determination of indirect cost proposals, both parties will spend less time reviewing and discussing unnecessary data. This streamlined process is expected to foster greater efficiency in the crucial activity of setting final indirect cost rates, which are fundamental to the financial management of federal contracts.
Public Comment Period
The FAR Council has invited public comments on these proposed changes, emphasizing four key areas for feedback: the necessity and practical utility of the information collection, the accuracy of the estimated burden, ways to enhance the quality and clarity of collected information, and methods to further minimize the burden on respondents, including the use of automated collection techniques. Interested parties have until November 23, 2026, to submit their feedback via regulations.gov. This public comment period is a critical step in the federal rulemaking process, allowing stakeholders to directly influence the final shape of these important regulatory amendments.
