Contract Administration and Audit Services
FAR Part 42 provides the framework for effective contract administration and audit services, ensuring compliance and accountability throughout the federal contracting process.
Overview
FAR Part 42 establishes the policies and procedures for contract administration and audit services in federal contracting. It covers the assignment and execution of contract administration, audit responsibilities, correspondence, postaward orientation, indirect cost rates, disallowance of costs, bankruptcy procedures, production surveillance, novation and change-of-name agreements, suspension and stop-work orders, contractor performance information, small business contract administration, and forward pricing rate agreements. The part is organized into subparts that address specific aspects of contract administration, ensuring that both government agencies and contractors understand their roles, responsibilities, and compliance obligations throughout the contract lifecycle.
Key Rules
- Contract Audit Services
- Outlines responsibilities and procedures for contract audits, including assignment and directories.
- Contract Administration Services
- Details the assignment and execution of contract administration functions and responsibilities.
- Indirect Cost Rates
- Provides policies for establishing, billing, and finalizing indirect cost rates, including penalties for unallowable costs.
- Postaward Orientation and Correspondence
- Sets procedures for postaward conferences, correspondence, and visits to contractor facilities.
- Special Situations
- Addresses bankruptcy, novation, change-of-name agreements, suspension of work, and stop-work orders.
- Performance and Reporting
- Establishes requirements for contractor performance information and production surveillance.
Responsibilities
- Contracting Officers: Assign and oversee contract administration and audit services, ensure compliance with indirect cost and performance reporting requirements, and manage special contract situations.
- Contractors: Comply with audit requests, provide required cost and performance information, participate in postaward activities, and adhere to contract modifications and reporting.
- Agencies: Monitor contract administration, maintain oversight of audit and performance data, and ensure proper handling of novation, bankruptcy, and other special cases.
Practical Implications
- FAR Part 42 ensures contracts are properly administered and audited, reducing risk and ensuring compliance.
- It impacts daily operations by defining how audits, cost rates, and performance evaluations are handled.
- Common pitfalls include failing to provide timely information, misunderstanding indirect cost requirements, or mishandling contract modifications and special situations.