31.602
General
Allowable costs for contracts with State, local, and tribal governments are determined by OMB Uniform Guidance at 2 CFR part 200, not by FAR alone.
Overview
FAR 31.602 establishes that the principles for determining allowable costs in contracts and subcontracts with State, local, and federally recognized Indian tribal governments are governed by the OMB Uniform Guidance at 2 CFR part 200, subpart E, and appendices V and VII. These principles provide the framework for cost determination but do not dictate the level or circumstances of Federal, State, or local financial participation in a contract. Contractors and contracting officers must refer to these external regulations to assess which costs are allowable when working with these governmental entities.
Key Rules
- Cost Principles Reference
- Allowable costs for contracts with State, local, and tribal governments are determined by OMB Uniform Guidance (2 CFR part 200, subpart E, and appendices V and VII).
- Scope of Principles
- The principles are for cost determination only and do not set rules for funding participation levels or circumstances.
Responsibilities
- Contracting Officers: Must ensure cost allowability is determined using the referenced OMB Uniform Guidance.
- Contractors (State, local, tribal governments): Must comply with the cost principles in 2 CFR part 200 when claiming costs under Federal contracts.
- Agencies: Should provide oversight to ensure compliance with the referenced cost principles.
Practical Implications
- This section clarifies the regulatory source for cost allowability in contracts with governmental entities, reducing ambiguity.
- Contractors must be familiar with OMB Uniform Guidance to ensure compliance and avoid disallowed costs.
- Common pitfalls include misunderstanding the distinction between cost allowability and funding participation rules.