30.603-1 Required changes
Source: FAR 30.603-1 on acquisition.gov
Contractors must promptly disclose and justify any required changes to cost accounting practices, ensuring compliance with CAS and proper notification to the CFAO to avoid delays or disallowed costs.
Overview
FAR 30.603-1 outlines the requirements and procedures for contractors and contracting officers when a contract award or regulatory change necessitates a change to an established cost accounting practice. The section details the responsibilities of offerors, contracting officers, and the Cognizant Federal Agency Official (CFAO) in identifying, disclosing, and administering required changes to cost accounting practices to ensure compliance with Cost Accounting Standards (CAS). It also addresses the process for equitable adjustments when changes are required due to new or modified standards.
Key Rules
- Offeror Disclosure Requirement
- Offerors must state if a contract award would require a change to an established cost accounting practice affecting existing contracts or subcontracts.
- CFAO Determination
- The CFAO must determine whether a required change is necessary to comply with CAS or to maintain compliance before making any equitable adjustment.
- Proposal Preparation and Disclosure
- If a change is required due to contract award, the offeror must prepare the pricing proposal using the changed practice and submit a description of the change to the contracting officer and CFAO.
- For other required changes, the contractor must notify the CFAO at least 60 days before implementation and provide rationale if claiming the cost impact is immaterial.
- Equitable Adjustments
- Equitable adjustments for required changes are only applicable to contracts awarded before the effective date of a new or modified standard. Early implementation is treated as a unilateral change, and increased costs to the Government are generally not allowed unless deemed desirable by the CFAO.
Responsibilities
- Contracting Officers: Notify the CFAO if a required change is disclosed; ensure proper proposal documentation is received.
- Contractors/Offerors: Disclose required changes, prepare proposals using the new practice, submit descriptions and rationale, and adhere to notification timelines.
- CFAO: Determine necessity and compliance of changes, administer equitable adjustments, and manage early implementation as unilateral changes.
Practical Implications
This section ensures transparency and compliance when cost accounting practices must change due to contract awards or regulatory updates. Contractors must be proactive in disclosure and documentation, while agencies must carefully review and approve changes to protect government interests. Failure to follow these procedures can result in noncompliance, delayed awards, or disallowed costs.
(a) General. Offerors shall state whether or not the award of a contract would require a change to an established cost accounting practice affecting existing contracts and subcontracts (see 52.230-1). The contracting officer shall notify the CFAO if the offeror states that a change in cost accounting practice would be required.
(b) CFAO responsibilities. Prior to making an equitable adjustment under the applicable paragraph (s) that address a required change at 52.230-2, Cost Accounting Standards; 52.230-3, Disclosure and Consistency of Cost Accounting Practices; or 52.230-5, Cost Accounting Standards-Educational Institution, the CFAO shall determine that-
(1) The cost accounting practice change is required to comply with a CAS, or a modification or interpretation thereof, that subsequently became applicable to one or more contracts or subcontracts; or
(2) The former cost accounting practice was in compliance with applicable CAS and the change is necessary to remain in compliance.
(c) Notice and proposal preparation.
(1) When the award of a contract would require a change to an established cost accounting practice, the provision at 52.230-7, Proposal Disclosure-Cost Accounting Practice Changes, requires the offeror to-
(i) Prepare the contract pricing proposal in response to the solicitation using the changed cost accounting practice for the period of performance for which the practice will be used; and
(ii) Submit a description of the changed cost accounting practice to the contracting officer and the CFAO as pricing support for the proposal.
(2) When a change is required to remain in compliance (for reasons other than a contract award) or to comply with a new or modified standard, the clause at 52.230-6, Administration of Cost Accounting Standards, requires the contractor to-
(i) Submit a description of the change to the CFAO not less than 60 days (or other mutually agreeable date) before implementation of the change; and
(ii) Submit rationale to support any contractor written statement that the cost impact of the change is immaterial.
(d) Equitable adjustments for new or modified standards.
(1) Required changes made to comply with new or modified standards may require equitable adjustments, but only to those contracts awarded before the effective date of the new or modified standard (see 52.230-2, 52.230-3, or 52.230-5).
(2) When a contractor elects to implement a required change to comply with a new or modified standard prior to the applicability date of the standard, the CFAO shall administer the change as a unilateral change (see 30.603-2). Contractors shall not receive an equitable adjustment that will result in increased costs in the aggregate to the Government prior to the applicability date unless the CFAO determines that the unilateral change is a desirable change.