48 CFR § 42.709-4 - 42.709-4 Assessing the penalty.

---
identifier: "/us/cfr/t48/s42.709-4"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "48 CFR § 42.709-4 - 42.709-4   Assessing the penalty."
title_number: 48
title_name: "Federal Acquisition Regulations System"
section_number: "42.709-4"
section_name: "42.709-4   Assessing the penalty."
chapter_number: 1
chapter_name: "FEDERAL ACQUISITION REGULATION"
subchapter_number: "G"
subchapter_name: "CONTRACT MANAGEMENT"
part_number: "42"
part_name: "CONTRACT ADMINISTRATION AND AUDIT SERVICES"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113."
regulatory_source: "48 FR 42370, Sept. 19, 1983, unless otherwise noted."
cfr_part: "42"
---


# 42.709-4 42.709-4   Assessing the penalty.

Unless a waiver is granted pursuant to 42.709-6, the cognizant contracting officer shall—

(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

(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—

(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and/or Disapproved (see 48 CFR 242.705-2), or any similar notice which the contractor elected not to appeal and was not withdrawn by the cognizant Government agency;

(2) A contracting officer final decision which was not appealed;

(3) A prior executive agency Board of Contract Appeals or court decision involving the contractor, which upheld the cost disallowance; or

(4) A determination or agreement of unallowability under 31.201-6.

(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.)

[60 FR 42658, Aug. 16, 1995. Redesignated and amended at 86 FR 44255, Aug. 11, 2021]