DOE Revises Standards for Legal Management and Cost Allowance

June 17, 2013

DOE Revises Standards for Legal Management and Cost Allowance

On May 3, 2013, the Department of Energy (DOE) issued a final rule that substantially revised the regulations governing how contractors must manage legal matters and related costs for certain contracts. Under the final rule, contractors must now submit a legal management plan that describes the resources of the contractor’s in-house counsel and a description of the types of matters in-house counsel is expected to handle. The plan must also describe the contractor’s strategy for keeping DOE counsel in the loop on relevant legal matters. The final rule also eliminates DOE’s ability to prevent a contractor for initiating or defending litigation, requiring only that the contractor notify DOE before litigation is initiated. However, the final rule does require DOE approval of settlements exceeding $25,000. Additionally, the final rule retains the previous rule’s clarification that while compliance with these requirements is a prerequisite for the allowability of related legal costs, such compliance does not guarantee reimbursement. The final rule applies to all DOE Management and Operating (M&O) contractors, all non-M&O contractors holding cost-reimbursement contracts in excess of $100 million, and all non-M&O contractors holding contracts in excess of $100 million with a cost-reimbursement element in excess of $10 million. The final rule takes effect July 5, 2013. (78 Fed. Reg. 25795, 5/3/2013.)  






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