KOSEN 한인과학기술자네트워크

Four observations about the specific language in the bill. First, the definition of the amount of fee at risk is unclear. H.R. 723, while eliminating the exemption, provides a limitation on the amount of civil penalties that can be imposed on nonprofit contracors. The bill would limit the amount of any payment for penalties assessed against tax-exempt contractors to a contractor's "discretionary fee." In general, a contractor's total fee consists of a base fee, which is set in the contract, and an incentive fee, which is based on performance. It is not clear whether the term "discretionary fee" applies to all, or only a part of, a contractor's fee. Second, if the Congress decides to limit the amount of fee at risk by specifying that "discretionary fee" means only the incentive fee portion of the total fee, the ability to impose penalties on nonprofit contractors may be limited. Two of the nonprofit contractors receive only a base fee(and no incentive fee) and, therefore, would continue to be exempt from paying civil penalties. Contractors may also try to limit their exposure to penalties by shifting more of their total fee to a base fee and away from an incentive fee. Such an action could undermine both the penalty provision and DOE's emphasis on performance-based contracting because a lower fee will depend on the contractor's performance. If the congress decides to put the entire fee at risk, other statutory provisions already in place give the secretary flexibility in setting penalty amounts by considering factors such as the contractor's ability to pay and, therefore, can be used to limit nonprofit contractors' financial risk. Third, under the proposed bill, limitations on payments for civil penalties would be extended to all tax-exempt nonprofit contractors, not just nonprofit educational institutions. A contractor such as Brookhaven Science Associates, a nonprofit organization but not an educational institution, is now subject to the penalty provisions without limit for its work at brookhaven national laboratory. Under H.R. 723, Brookhaven Science Associates would be able to limit its payments to the amount of any discretionary fee received. This would provide for a more consistent treatment of nonprofit contractors. Fourth, the penalty provisions specified in H.R. 723 would apply to contracts entered into after the date of enactment. Consequently, it could be many years before some of the contractors would have to pay a penalty.