31.001
Definitions
FAR 31.001 defines essential cost and accounting terms that form the foundation for compliance with federal contract cost principles and procedures.
Overview
FAR 31.001 provides definitions for key terms used throughout Part 31, which governs contract cost principles and procedures. These definitions establish a common language for interpreting cost accounting, pension plans, compensation, and related financial concepts in federal contracting. Understanding these terms is essential for both contractors and contracting officers to ensure accurate cost proposals, proper cost allocation, and compliance with federal regulations.
Key Rules
- Defined Terms
- The section defines critical cost accounting and financial management terms, such as actual costs, cost objective, indirect cost pools, pension plan types, and standard cost methods.
- Application to Part 31
- These definitions apply specifically to Part 31 and are referenced throughout the cost principles and procedures, impacting how costs are accumulated, allocated, and reported.
Responsibilities
- Contracting Officers: Must apply these definitions when evaluating cost proposals, negotiating contracts, and determining cost allowability.
- Contractors: Must use these definitions to ensure consistency in cost accounting, reporting, and compliance with contract requirements.
- Agencies: Should ensure training and oversight to promote uniform understanding and application of these terms.
Practical Implications
- This section exists to eliminate ambiguity and promote consistency in cost-related communications and documentation.
- It impacts daily contracting by providing the foundational language for cost allowability, allocation, and reporting.
- Common pitfalls include misinterpretation of terms like "actual costs," "allocable costs," or pension plan definitions, which can lead to compliance issues or disputes.