42.700
Scope of subpart
FAR 42.700 establishes the framework for setting billing and final indirect cost rates, which are critical for accurate contract payments and cost recovery.
Overview
FAR 42.700 defines the scope of Subpart 42.7, which sets forth the policies and procedures for establishing billing rates and final indirect cost rates in government contracts. This section serves as an introduction, clarifying that the subpart covers how these rates are determined and applied, which is essential for accurate contract billing and cost reimbursement. The section ensures that both contractors and contracting officers understand the regulatory framework for managing indirect costs throughout the contract lifecycle.
Key Rules
- Establishing Billing Rates
- Outlines the process for setting provisional billing rates used for interim contract payments.
- Establishing Final Indirect Cost Rates
- Details the procedures for determining final indirect cost rates after contract performance, ensuring accurate cost recovery and compliance.
Responsibilities
- Contracting Officers: Must follow the prescribed procedures for reviewing, negotiating, and approving billing and final indirect cost rates.
- Contractors: Required to submit necessary documentation and support for proposed rates and comply with established procedures.
- Agencies: Oversee the process to ensure compliance and proper application of indirect cost rates.
Practical Implications
- This section exists to provide a clear regulatory basis for managing indirect costs, which are a significant component of many government contracts.
- It impacts daily contracting by requiring accurate rate proposals, timely submissions, and adherence to established procedures.
- Common issues include delays in rate negotiations, insufficient documentation, and misunderstandings about allowable costs.