FAR 42.709-1
Scope.
(a) This section implements 10 U.S.C. 3743 and 41 U.S.C. 4303 . It covers the assessment of penalties against contractors which include unallowable indirect costs in- (1) Final indirect cost rate proposals; or (2) The final statement of costs incurred or estimated to be incurred under a fixed-price incentive contract. (b) This section applies to all contracts in excess of $1 million, except fixed-price contracts without cost incentives or any firm-fixed-price contracts for the purchase of commercial products or commercial services.
Source: acquisition.gov — FAR
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