Required changes
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.