42.701
Definition
A billing rate is a provisional indirect cost rate used for interim reimbursement and is adjusted until final rates are established.
Overview
FAR 42.701 provides the definition of "billing rate" as it applies to Subpart 42.7, which deals with indirect cost rates in government contracts. A billing rate is a provisional indirect cost rate set temporarily to allow for interim reimbursement of incurred indirect costs. This rate is subject to adjustment as more accurate data becomes available and until the final indirect cost rates are established. The definition ensures that contractors and contracting officers have a common understanding of how indirect costs are reimbursed during the contract performance period before final rates are negotiated and settled.
Key Rules
- Billing Rate Definition
- A billing rate is a temporary, provisional indirect cost rate used for interim reimbursement.
- Adjustment of Billing Rate
- The billing rate is adjusted as necessary until the final indirect cost rates are determined.
Responsibilities
- Contracting Officers: Must apply and adjust billing rates for interim payments and ensure final rates are established.
- Contractors: Must use billing rates for interim billings and provide updated cost data for adjustments.
- Agencies: Oversee the establishment and adjustment of billing rates and final indirect cost rates.
Practical Implications
- This section clarifies the use of provisional rates for indirect cost reimbursement, preventing over- or under-payment during contract execution.
- Contractors must monitor and update their billing rates as actual cost data becomes available.
- Misunderstanding or misapplying billing rates can lead to payment disputes or audit findings.