# 42.709-1 Scope.

(a) This section implements 10 U.S.C.2324(a) through (d) 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 $750,000, except fixed-price contracts without cost incentives or any firm-fixed-price contracts for the purchase of commercial items.