31.205
Selected costs
FAR 31.205 identifies and governs the allowability of specific cost categories, requiring contractors to follow detailed rules for each type of cost claimed under government contracts.
Overview
FAR 31.205, "Selected costs," provides detailed guidance on the allowability, reasonableness, and allocability of specific types of costs that may be incurred by contractors under government contracts. This section lists and references individual cost categories—such as advertising, compensation, depreciation, insurance, legal proceedings, travel, and more—and directs users to the corresponding subsections for rules on whether and how these costs can be charged to government contracts. The purpose is to ensure consistency and compliance in cost accounting and reimbursement, helping both contractors and contracting officers determine which costs are allowable, unallowable, or subject to limitations.
Key Rules
- Cost Category Guidance
- Each cost category (e.g., public relations, bad debts, compensation, travel) has a dedicated subsection specifying its allowability and any special conditions or limitations.
- Reference Structure
- Contractors must consult the relevant subsection (e.g., 31.205-6 for compensation) for detailed requirements and restrictions before including costs in proposals or billings.
Responsibilities
- Contracting Officers: Must review and apply the rules in the relevant 31.205 subsections when evaluating cost proposals, invoices, and audits.
- Contractors: Must ensure all claimed costs comply with the specific requirements and limitations in the applicable 31.205 subsections.
- Agencies: Oversee compliance and may conduct audits or request supporting documentation for claimed costs.
Practical Implications
- This section exists to prevent disputes and inconsistencies regarding cost allowability.
- It impacts daily contract administration, proposal preparation, and audit processes.
- Common pitfalls include claiming unallowable costs, misunderstanding limitations, or failing to document compliance with specific cost rules.