Subpart 31.1
Applicability
FAR Subpart 31.1 clarifies which cost principles apply to different contract types and organizations, ensuring proper cost treatment and compliance in government contracting.
Overview
- FAR Subpart 31.1 establishes the applicability of cost principles and procedures for various types of government contracts. It outlines which cost principles apply to different contract types and organizations, such as commercial organizations, educational institutions, construction and architect-engineer contracts, state and local governments, Indian tribal governments, and nonprofit organizations. The subpart also addresses advance agreements and requirements for indirect cost rate certification and penalties for unallowable costs.
Key Rules
- Scope of Subpart
- Defines the boundaries and applicability of cost principles in Part 31.
- Objectives
- States the goals for applying cost principles to ensure fair and reasonable contract pricing.
- Applicability to Contract Types and Organizations
- Specifies which cost principles apply to fixed-price contracts, commercial organizations, educational institutions, construction and architect-engineer contracts, state/local/tribal governments, and nonprofit organizations.
- Advance Agreements
- Provides for advance agreements on specific cost items to avoid disputes.
- Indirect Cost Rate Certification and Penalties
- Requires certification of indirect cost rates and outlines penalties for claiming unallowable costs.
Responsibilities
- Contracting Officers: Must determine and apply the correct cost principles based on contract type and contractor organization; ensure compliance with certification and advance agreement requirements.
- Contractors: Must comply with applicable cost principles, provide required certifications, and avoid claiming unallowable costs.
- Agencies: Oversee compliance and enforce penalties for violations.
Practical Implications
- This subpart ensures that all parties understand which cost principles apply to their contracts, reducing disputes and promoting consistency. It impacts daily contracting by requiring careful identification of applicable rules and documentation. Common pitfalls include misapplying cost principles or failing to certify indirect cost rates.