42.703
General
FAR 42.703 establishes the foundational requirements for negotiating and certifying indirect cost rates, ensuring transparency and compliance in government contracting.
Overview
FAR 42.703 provides the general framework for establishing and administering indirect cost rates in government contracts. It references two key subsections: 42.703-1, which outlines the policy for negotiating indirect cost rates, and 42.703-2, which addresses the requirement for a certificate of indirect costs. This section serves as the foundation for ensuring that indirect costs are properly identified, negotiated, and certified in accordance with federal regulations. The purpose is to ensure fair and consistent treatment of indirect costs across contracts, protect government interests, and provide clear guidance to both contracting officers and contractors.
Key Rules
- Indirect Cost Rate Policy
- Establishes the requirement for negotiating indirect cost rates between contractors and the government, ensuring costs are reasonable, allocable, and allowable.
- Certificate of Indirect Costs
- Requires contractors to certify the accuracy and completeness of their indirect cost rate proposals, providing accountability and legal assurance.
Responsibilities
- Contracting Officers: Must ensure indirect cost rates are negotiated and certified as required, and verify compliance with applicable policies.
- Contractors: Must prepare, submit, and certify indirect cost rate proposals in accordance with FAR requirements.
- Agencies: Oversee the negotiation and administration of indirect cost rates, and ensure compliance with federal cost principles.
Practical Implications
- This section exists to standardize the treatment of indirect costs, reducing disputes and ensuring transparency.
- It impacts daily contracting by requiring careful documentation, negotiation, and certification of indirect costs.
- Common pitfalls include incomplete or inaccurate indirect cost proposals and failure to provide required certifications, which can lead to payment delays or contract disputes.