30.606
Resolving cost impacts
FAR 30.606 ensures that cost impacts from changes in cost accounting practices or noncompliance are resolved so the government does not pay more in aggregate, with strict procedures for negotiation, contract adjustment, and contractor compliance.
Overview
FAR 30.606 outlines the procedures for resolving cost impacts resulting from changes in cost accounting practices or noncompliance with Cost Accounting Standards (CAS). The section details the responsibilities of the Cognizant Federal Agency Official (CFAO) in negotiating, resolving, and adjusting contracts to address these cost impacts, ensuring the government does not pay more in the aggregate due to such changes or noncompliance. It covers coordination with contracting officers, methods for resolving cost impacts, negotiation procedures, contract adjustments, and the use of alternate methods, with specific rules for different types of changes and noncompliance scenarios.
Key Rules
- CFAO Authority and Coordination
- The CFAO must coordinate with affected contracting officers for cost impacts of $100,000 or more but retains sole authority to negotiate and resolve cost impacts.
- Methods for Resolving Cost Impacts
- The CFAO may resolve cost impacts by adjusting one or more contracts or using other suitable methods, but must not combine certain types of changes or noncompliances unless all result in increased government costs.
- Negotiation and Documentation
- The CFAO negotiates on behalf of all agencies, prepares a negotiation memorandum, and distributes it to auditors and contracting officers.
- Contract Adjustments
- Adjustments must reflect a pro rata share of the cost impact, and upward price adjustments are limited to the amount of downward adjustments across affected contracts. Contractors must correct noncompliance and adjust invoices or payment requests as required.
- Alternate Methods
- Alternate methods may be used if the government does not pay more in aggregate and both parties agree, but cannot be used if it would result in under-recovery or distort contract incentives.
Responsibilities
- Contracting Officers: Coordinate with CFAO on significant cost impacts and implement contract adjustments as directed.
- Contractors: Correct noncompliant practices, adjust records and payment requests, and comply with contract modifications.
- Agencies: Ensure oversight and support CFAO in resolving cost impacts, including providing necessary data and coordination.
Practical Implications
- This section ensures that cost accounting changes or noncompliance do not result in the government paying more than necessary. Contractors must be diligent in correcting noncompliance and maintaining accurate records. Failure to comply can result in unilateral contract adjustments by the CFAO. Common pitfalls include improper combination of cost impacts, inadequate documentation, and failure to timely correct noncompliance.