31.205-40
Special tooling and special test equipment costs
Special tooling and special test equipment costs are generally allowable if acquired for a government contract, but must be properly allocated and exceptions apply for pre-existing or excluded items.
Overview
FAR 31.205-40 addresses the allowability and allocation of costs related to special tooling and special test equipment in government contracts. It defines when such costs are allowable, how they should be allocated, and under what circumstances only depreciation or amortization is permitted. The section also clarifies the treatment of items that can be easily adapted for general use, specifying that adaptation and restoration costs are allowable.
Key Rules
- Definitions Reference
- "Special tooling" and "special test equipment" are defined in FAR 2.101 and must be understood in that context.
- Allowability and Allocation
- Costs for special tooling and test equipment used on one or more government contracts are allowable and must be allocated to the specific contract(s) for which they were acquired.
- Depreciation/Amortization Exception
- If items were acquired before the contract's effective date or are specifically excluded by the contract, only depreciation or amortization costs are allowable.
- Adaptable Items
- If items can be converted to general purpose use with minor expense, the costs to adapt them for contract use and to restore them afterward are allowable.
Responsibilities
- Contracting Officers: Ensure proper allocation and allowability of special tooling and test equipment costs; verify compliance with contract terms.
- Contractors: Allocate costs correctly, claim only allowable costs, and maintain documentation for adaptation and restoration expenses.
- Agencies: Oversee compliance and review cost submissions for adherence to these rules.
Practical Implications
- This section ensures that government contracts are charged fairly for special tooling and test equipment, preventing improper cost allocation. Contractors must be diligent in tracking acquisition dates, contract exclusions, and adaptation costs to avoid disallowances. Common pitfalls include misallocating costs or failing to document adaptation/restoration expenses.