31.205-31 Plant reconversion costs
Source: FAR 31.205-31 on acquisition.gov
Plant reconversion costs are generally unallowable except for costs related to removing Government property or when specifically agreed upon in advance under special circumstances.
Overview
- FAR 31.205-31 addresses the allowability of plant reconversion costs, which are expenses incurred to restore a contractor’s facilities to their pre-contract condition after government contract performance. The regulation clarifies which reconversion costs are allowable and under what circumstances exceptions may apply.
Key Rules
- General Unallowability
- Plant reconversion costs are generally unallowable, meaning contractors cannot charge these costs to the government contract.
- Allowable Exceptions
- Costs for removing Government property and restoration or rehabilitation directly caused by such removal are allowable.
- Special Circumstances
- Additional reconversion costs may be allowed if equity requires it and if agreed upon in advance, before costs are incurred.
- Avoiding Duplication
- Contractors must ensure reconversion costs are not duplicated as contingencies, additional profit or fee, or in other contracts.
Responsibilities
- Contracting Officers: Must review and approve any allowable reconversion costs, ensure exceptions are justified, and prevent duplication of costs.
- Contractors: Must exclude general reconversion costs from billings, only claim allowable exceptions, and seek prior agreement for any special circumstances.
- Agencies: Should monitor for compliance and ensure costs are not duplicated across contracts.
Practical Implications
- This rule exists to prevent the government from paying for routine facility restoration costs except in limited, justified cases. Contractors must be diligent in identifying and segregating reconversion costs, seeking prior approval for exceptions, and maintaining clear documentation to avoid unallowable charges or duplicate payments.
Plant reconversion costs are those incurred in restoring or rehabilitating the contractor’s facilities to approximately the same condition existing immediately before the start of the Government contract, fair wear and tear excepted. Reconversion costs are unallowable except for the cost of removing Government property and the restoration or rehabilitation costs caused by such removal. However, in special circumstances where equity so dictates, additional costs may be allowed to the extent agreed upon before costs are incurred. Care should be exercised to avoid duplication through allowance as contingencies, additional profit or fee, or in other contracts.