Section 42.709-4 - Assessing the penaltyUnless 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Disapproved (see 48 CFR 242.705-2 ), or any similar notice which the contractor elected not to appeal and was not withdrawn by the cognizant Government agency;(2) A contracting officer final decision which was not appealed;(3) A prior executive agency Board of Contract Appeals or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