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Federal Register / Vol. 71, No.

17 / Thursday, January 26, 2006 / Proposed Rules 4335

(2) Document showing membership (15) Services rendered in response to attachment readable in either MS Word
and military record in the Armed Forces requests for classification review of DoD or Corel WordPerfect. Please include
if discharge or release was under classified records, submitted under your name, title, organization, postal
honorable conditions, except as shown Executive Order 12065, ‘‘National address, telephone number, and e-mail
in paragraphs (d)(1) and (d)(4) of this Security Information,’’ and address in the text of the message.
section. implemented by DoD 5200.1–R. Such Comments may also be submitted via
(3) Information relating to a services consist of the work performed facsimile to (202) 395–5105.
decoration or award or required for in conducting the classification review FOR FURTHER INFORMATION CONTACT: Rein
memoralization purposes. or in granting and completing an appeal Abel, Cost Accounting Standards Board
(4) Information relating to the review from a denial of declassification (telephone: 202–395–3254).
or change in type of discharge or following such review. SUPPLEMENTARY INFORMATION:
correction of records. (16) Services of a humanitarian nature
(5) Personal documents, such as birth performed in such emergency situations A. Regulatory Process
certificates, when such documents are as life-saving transportation for non- The Board’s rules, regulations and
required to be furnished by the member. Armed Forces patients, search and Standards are codified at 48 CFR
(6) Services that are furnished free rescue operations, and airlift of Chapter 99. The Office of Federal
according to statutes or Executive personnel and supplies to a disaster site. Procurement Policy Act, 41 U.S.C.
Orders. This does not mean that inter- and intra- 422(g)(1), requires the Board, prior to
(7) Information from or copies of governmental agreements to recover all the establishment of any new or revised
medical and dental records or x-ray or part of costs shall not be negotiated. CAS, to complete a prescribed
films of patients or former patients of Rather, it means the recipients or rulemaking process. The process
military medical or dental facilities, beneficiary will not be assessed a ‘‘user generally consists of the following four
when such information is required for charge.’’ steps:
further medical or dental care, and Dated: January 20, 2006. 1. Consult with interested persons
requests for such data are submitted by L.M. Bynum, concerning the advantages,
an accredited medical facility, Alternate OSD Federal Register Liaison disadvantages and improvements
physician, or dentist, or requested by Officer, Department of Defense. anticipated in the pricing and
the patient, his or her next of kin, or [FR Doc. 06–730 Filed 1–25–06; 8:45 am] administration of government contracts
legal representative. Other requests BILLING CODE 5001–06–M as a result of the adoption of a proposed
subject to the Privacy Act shall be Standard (e.g., prepare and publish a
according to DoD 5400.11–R, ‘‘DoD SDP).
Privacy Act Program’’ (see 2. Promulgate an Advance Notice of
OFFICE OF MANAGEMENT AND
§ 204.3(c)(1)(xi) of this part). Proposed Rulemaking (ANPRM).
BUDGET
(8) Services requested by, and 3. Promulgate a Notice of Proposed
furnished to, a member of Congress for Office of Federal Procurement Policy Rulemaking (NPRM).
official use. 4. Promulgate a Final Rule.
(9) Services requested by state, 48 CFR Part 9904 This SDP is issued by the Board in
territorial, county, or municipal accordance with the requirements of 41
government, or an agency thereof, that Cost Accounting Standards Board; U.S.C. 422(g)(1)(B), and is step one of
is performing a function related to or Accounting for Insurance Costs the four-step process.
furthering a DoD objective.
(10) Services requested by a court, AGENCY: Cost Accounting Standards B. Background and Summary
when such services will serve as a Board, Office of Federal Procurement The Office of Federal Procurement
substitute for personal court appearance Policy, OMB. Policy, Cost Accounting Standards
of a military or civilian employee of the ACTION: Staff discussion paper. Board, is releasing a SDP on the use of
Department of Defense. SUMMARY: The Cost Accounting the term ‘‘catastrophic losses’’ in CAS
(11) Services requested by a nonprofit Standards (CAS) Board, Office of 416–50(b)(1). Section 26(g)(1) of the
organization that is performing a Federal Procurement Policy, invites Office of Procurement Policy Act, 41
function related to or furthering an public comments on the staff discussion U.S.C. 422(g)(1), requires that the Board,
objective of the Federal Government or paper (SDP) regarding CAS 416, prior to the promulgation of any new or
that is in the interest of public health ‘‘Accounting for Insurance Costs.’’ In revised CAS, consult with interested
and welfare, including education. particular, this staff discussion paper persons concerning the advantages,
(12) Services requested by donors in addresses the use of the term disadvantages, and improvements
connection with the conveyance or ‘‘catastrophic losses’’ in CAS 416– anticipated in the pricing and
transfer of a gift to the Department of 50(b)(1). administration of Government contracts
Defense. as a result of the adoption or revision of
(13) Occasional and incidental DATES: Comments must be in writing an existing Standard. The purpose of the
services (including requests from and must be received by March 27, SDP is to solicit public views with
residents of foreign countries), that are 2006. respect to the Board’s consideration of
not requested often, when it is ADDRESSES: Due to delays in OMB’s whether the word ‘‘catastrophic’’ should
determined administratively that a fee receipt and processing of mail, be replaced with a term such as
would be inappropriate for the respondents are strongly encouraged to ‘‘significant’’ or ‘‘very large’’ in 48 CFR
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occasional and incidental services submit comments electronically to 9904.416–50(b)(1) in order to (a) more
rendered. ensure timely receipt. Electronic closely align the Standard with what
(14) Administrative services offered comments may be submitted to was intended by its original
by reference or reading rooms to inspect casb2@omb.eop.gov. Please put the full promulgators and (b) eliminate any
public records, excluding copies of body of your comments in the text of the confusion between 48 CFR 9904.416
records or documents furnished. electronic message and also as an and FAR 31.205–19, Insurance cost.

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4336 Federal Register / Vol. 71, No. 17 / Thursday, January 26, 2006 / Proposed Rules

Respondents are encouraged to identify concurs in this objection; the proposed of the evolution of Generally Accepted
and comment on any issues not Standard now provides that a portion of Accounting Principles, the advent of
addressed in this SDP that they believe catastrophic losses may be allocated to the Acquisition Reform, and experience
home office. gained from implementation of FAR
are important to the subject. This SDP
• On September 20, 1978, the CAS
reflects research accomplished to date Part 31. A series of public meetings was
Board published CAS 416, which
by the staff of the CAS Board in the held during spring 2001 to discuss
included language on catastrophic potential opportunities for revising the
respective subject area and is issued by
losses at CAS 416.50((b)(1). This provisions in FAR Part 31 relating to
the Board in accordance with the
language, which has remained cost measurement, assignment, and
requirements of 41 U.S.C. 422(g)(1)(A).
unchanged since that publication, reads allocation. Attendees included
C. Public Comments as follows: representatives from industry,
Interested persons are invited to (b) Allocation of insurance costs. (1) Where Government, and other interested
participate by submitting data, views or actual losses are recognized as an estimate of parties.
arguments with respect to this SDP, the projected average loss in accordance with The public meetings resulted in a
including but not limited to the 9904.416–50(a)(2), or where actual loss number of recommendations for
experience is determined for the purpose of
questions listed in the SDP. All revising FAR Part 31, including a
developing self-insurance charges by
comments must be in writing or by e- segment, a loss which is incurred by a given recommendation to address the issue of
mail, and submitted to the mailing or e- segment shall be identified with that catastrophic insurance at FAR 31.205–
mail addresses indicated in the segment. However, if the contractor’s home 19, Insurance Costs. One commenter at
ADDRESSES section. office is, in effect, a reinsurer of its segments the public meeting noted that a literal
against catastrophic losses, a portion of such reading of FAR and CAS would result
Joshua B. Bolten, catastrophic losses shall be allocated to, or in the following:
Director. identified with, the home office. Æ In accordance with CAS
Cost Accounting Standards Board Staff • In the September 20, 1978 416.50(b)(1), a contractor can reinsure
Discussion Paper (SDP) CAS 416— publication of CAS 416, paragraph (6) of the losses of a segment at the home
Catastrophic Losses Preamble A included the following office only if these are catastrophic
discussion of the use of the term losses.
Background ‘‘catastrophic losses’’ in the Standard: Æ FAR 31.205–19 disallows self-
Purpose insurance charges for catastrophic
Two respondents asked that the standard
losses.
• The purpose of this SDP is to define or prescribe criteria for determining
Æ Therefore, any reinsurance of
explore whether the word when a loss is considered to be
‘‘catastrophic’’ for purposes of home-office catastrophic losses by the home office
‘‘catastrophic’’ in CAS 416–50(b)(1) under CAS 416 would be unallowable
reinsurance agreements; they were concerned
should be replaced with a term such as about after-the-fact disagreement as to under FAR 31.205–19.
‘‘significant’’ or ‘‘very large’’ to (a) more whether a particular loss was ‘‘catastrophic’’ • On January 30, 2003, in an attempt
closely align the Standard with what and thereby to be allocated in part to the to address the situation raised by the
was intended by its original home office, or ‘‘noncatastrophic’’ and to be public commenter, the FAR Council
promulgators and (b) eliminate any absorbed entirely by the segment. The Board published a proposed rule in the
potential confusion between CAS 416 believes that what constitutes ‘‘catastrophic Federal Register (68 FR 4880). The
and FAR 31.205–19. loss’’ depends on the individual proposed rule was intended to
circumstances of each contractor. The
CAS 416 distinguish the FAR concept of
determination should be made at the time the
internal loss-sharing policy is established catastrophic losses from the reinsurance
• In February, 1976, the CAS Board concepts in CAS 416 by amending FAR
and should be revised, as necessary, for
staff distributed to the public an issues 31.205–19 to define the term
changes in future circumstances. Obviously,
paper on accounting for insurance costs. a catastrophic loss would be one which ‘‘catastrophic losses’’ as ‘‘large dollar
The staff received 59 responses to the would be very large in relation to the average coverage with a very low frequency of
issues paper. An analysis of those loss per occurrence for that exposure, and loss.’’
responses and a draft Standard were losses of that magnitude would be expected Several public commenters objected
presented to the Board at its meeting of to occur infrequently. to the FAR Council’s proposed
December 20, 1976. amendment, asserting that the definition
• On January 13, 1977, the draft FAR 31–205–19
in the proposed rule could be
Standard was distributed to the public. • The language currently at FAR interpreted to include deductibles or
The staff received 64 responses to the 31.205–19(c)(4), which was originally over ceiling amounts for property and
draft Standard. promulgated under DAR Case 78–400– other high dollar insurance policies.
• An analysis of the major issues 07, reads as follows: The public commenters further
raised by the public was addressed in Self-insurance charges for risks of contended that the proposed definition
Staff Technical Paper Number 38, dated catastrophic losses are unallowable. of catastrophic losses would cause
August 23, 1977. The staff technical
• The March 19, 1979 report on DAR contention and uncertainty in the field
paper included the following discussion because it did not account for
Case 78–400–7 stated that the purpose
related to the allocation of catastrophic differences in what constitutes a large
of the language was to assure that the
losses: loss among different sized contractors.
Government did not allow self-
The staff draft standard required that a loss insurance charges for catastrophic The commenters also asserted that
be allocated only to the segment in which it losses, such as earthquakes, which have including ‘‘very low frequency of loss’’
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occurred. Twelve respondents objected to in the definition would cause confusion.


a very small likelihood of occurring for
this provision. They pointed out that the
home office can legitimately act as a re- any particular contractor. The commenters recommended deleting
insurance of a small segment against • In early 2001, the Director of the proposed definition and continuing
catastrophic losses; otherwise, small Defense Procurement requested the the use of existing practices that rely
segments might find it necessary to purchase views of interested parties on potential upon individual circumstances and
outside insurance to protect them. The Staff areas for revising FAR Part 31 in light general reasonableness.

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Federal Register / Vol. 71, No. 17 / Thursday, January 26, 2006 / Proposed Rules 4337

• After analyzing the public and FAR, how does a contractor recover DATES: The finding announced in this
comments, the FAR Council withdrew amounts related to catastrophic losses, document was made on January 19,
the proposed definition. In since the costs cannot be assigned based 2006. You may submit new information
recommending withdrawal of the rule, on actual costs under CAS (and concerning this species for our
the June 26, 2003 report of the FAR Part therefore are not allowable as actual consideration at any time.
31 Streamlining Committee noted the costs), and the costs are unallowable as ADDRESSES: The complete file for this
following: self-insurance charges under FAR? finding is available for public
Upon further review, the Committee 3. How does the insurance industry inspection, by appointment, during
recommends that the proposed definition of use the term ‘‘catastrophic losses?’’ normal business hours at the Utah Fish
catastrophic losses be deleted from the final 4. How does the insurance industry’s and Wildlife Office, U.S. Fish and
rule. The Committee continues to believe that use of the term ‘‘catastrophic losses’’ Wildlife Service, 2369 West Orton
the proposed definition is consistent with the differ from its use in CAS and FAR, if Circle, Suite 50, West Valley City, Utah
intent of the promulgators of the current any? 84119. Submit new information,
language, as evidenced by the March 19, 5. Have there been problems in the materials, comments, or questions
1979 Committee report underlying DAR Case implementation of CAS 416.50(b)(1) as
78–400–7. concerning this species to us at the
a result of the use of the term above address.
The intent of the proposed coverage was to
‘‘catastrophic?’’
distinguish catastrophic losses as used in the FOR FURTHER INFORMATION CONTACT:
cost principle from the type of catastrophic
6. Provide any examples of instances
Henry Maddux, Field Supervisor, Utah
loss anticipated by the illustration at CAS where the use of the term ‘‘catastrophic’’
Fish and Wildlife Office (see
416.60(h). In that illustration, motor vehicle has resulted in contract disputes. For
ADDRESSES) (telephone 801–975–3330,
liability losses in excess of a specified each example provided, include the
extension 124; facsimile 801–975–3331).
amount were absorbed by the home office nature of the dispute and the resolution.
and reallocated to all segments. In the 7. Provide any comments as to SUPPLEMENTARY INFORMATION:
particular case described, the specified whether the language at CAS Background
amount was too low based on loss experience 416.50(b)(1) should be revised. If the
to be considered catastrophic under the recommendation is to revise the Section 4(b)(3)(A) of the Endangered
provisions of CAS 416. However, the language, please provide suggested Species Act (Act) of 1973, as amended
illustration appears to anticipate losses that (16 U.S.C. 1531 et seq.), requires that we
may be catastrophic to a particular segment
revisions.
8. Provide any comments regarding make a finding on whether a petition to
of a company but not necessarily catastrophic list, delist, or reclassify a species
in a more general sense. The Committee does use of the term ‘‘extraordinary item’’ as
used in Generally Accepted Accounting presents substantial scientific or
not believe the drafters of the cost principle
intended to disallow self-insurance charges Principles in lieu of the term commercial information to indicate that
for the type of loss anticipated by the CAS ‘‘catastrophic insurance.’’ the petitioned action may be warranted.
illustration. However, since CAS does not We are to base this finding on
include a definition of catastrophic loss, [FR Doc. E6–975 Filed 1–25–06; 8:45 am] information provided in the petition
defining the term in FAR could cause BILLING CODE 3110–01–P and other information that is readily
confusion by the users of these regulations. available to us (e.g., in our files). To the
As to the commenter’s recommendation maximum extent practicable, we are to
that self-insurance charges for catastrophic DEPARTMENT OF THE INTERIOR make this finding within 90 days of our
losses should be allowable, the Committee
receipt of the petition, and publish our
disagrees. As was noted in the report on DAR Fish and Wildlife Service
Case 78–400–7, the Government should not notice of this finding promptly in the
allow self-insurance charges for catastrophic Federal Register.
50 CFR Part 17 Our standard for substantial scientific
losses, such as earthquakes, which have a
very small likelihood of occurring for any information within the Code of Federal
Endangered and Threatened Wildlife Regulations (CFR) with regard to a 90-
particular contractor.
and Plants; 90-Day Finding on a day petition finding is ‘‘that amount of
Key Questions for Consideration Petition To List the Mussentuchit Gilia information that would lead a
The CAS Board is soliciting as Threatened or Endangered reasonable person to believe that the
comments on this issue from interested AGENCY: Fish and Wildlife Service, measure proposed in the petition may
parties. In particular, the Board is Interior. be warranted’’ (50 CFR 424.14(b)). If we
interested in comments related to the ACTION: Notice of 90-day petition find that substantial scientific
following questions: finding. information was presented, we are
1. Do contractors and contracting required to commence a review of the
agencies currently interpret the term SUMMARY: We, the U.S. Fish and status of the species.
‘‘catastrophic losses’’ differently when Wildlife Service (Service), announce a In making this finding, we relied on
applying CAS 416.50(b)(1) and FAR 90-day finding on a petition to list the information provided by the petitioners,
31.205–19(e)? If so, how does the use of Mussentuchit gilia (Gilia [=Aliciella] and readily available in our files, and
the term differ between the two tenuis) as threatened or endangered evaluated that information in
applications? under the Endangered Species Act of accordance with 50 CFR 424.14(b). Our
2. Under CAS 416.50(b)(1), the 1973, as amended. We find the petition process of coming to a 90-day finding
contractor is required to assign does not provide substantial under section 4(b)(3)(A) of the Act and
insurance costs on the basis of the information indicating that listing Gilia section 424.14(b) of our regulations is
projected average loss. Actual losses [=Aliciella] tenuis may be warranted. limited to a determination of whether
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cannot be used unless they approximate Therefore, we will not be initiating a the information in the petition meets the
the projected average loss. FAR 31.205– further status review in response to this ‘‘substantial scientific information’’
19(c)(4) disallows self-insurance costs petition. The public may submit to us threshold.
for catastrophic losses. Thus, if the term any new information that becomes We added Aliciella tenuis to our list
‘‘catastrophic losses’’ is interpreted as available concerning the status of the of candidate species on September 30,
having the same meaning in both CAS species or threats to it. 1993, as a category 2 candidate species

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