31.108
Contracts with nonprofit organizations
FAR 31.108 ensures that the correct cost principles are applied to contracts with nonprofit organizations by directing users to the appropriate FAR subpart or federal guidance based on the organization's classification.
Overview
FAR 31.108 clarifies which cost principles apply to contracts with nonprofit organizations. It directs contracting professionals to use Subpart 31.7 for determining allowable costs for nonprofit organizations, except for educational institutions (covered by Subpart 31.3), State and local governments (covered by Subpart 31.6), and nonprofit organizations exempted under the OMB Uniform Guidance at 2 CFR part 200, appendix VIII (for which Subpart 31.2 applies). This section ensures that the correct set of cost principles is used based on the type of nonprofit involved in the contract, preventing confusion and ensuring compliance with federal requirements.
Key Rules
- Applicable Cost Principles
- Use Subpart 31.7 for nonprofit organizations unless they fall under specific exceptions.
- Exceptions
- Educational institutions, State and local governments, and certain exempt nonprofits follow different subparts or federal guidance for cost principles.
Responsibilities
- Contracting Officers: Must identify the correct cost principles based on the type of nonprofit organization and ensure contracts reference the appropriate subpart.
- Contractors: Nonprofit organizations must comply with the cost principles applicable to their classification.
- Agencies: Ensure oversight and correct application of cost principles in contract administration.
Practical Implications
- This section exists to prevent misapplication of cost principles and ensure consistency in federal contracting with nonprofits.
- It impacts daily contracting by requiring careful classification of the nonprofit entity before applying cost rules.
- Common pitfalls include applying the wrong cost principles due to misunderstanding the organization's classification.