42.803
Disallowing costs after incurrence
FAR 42.803 establishes the process for reviewing, suspending, and disputing costs claimed under cost-reimbursement and similar contracts, ensuring only allowable costs are reimbursed.
Overview
FAR 42.803 outlines the procedures for disallowing costs after they have been incurred under certain contract types, including cost-reimbursement, time-and-material, and labor-hour contracts. It details the roles of contracting officers and auditors in reviewing, approving, or disapproving contractor vouchers for reimbursement, and provides a process for suspending or disallowing questionable costs. The regulation also establishes the contractor's right to dispute disallowed costs through written requests or formal claims under the Disputes clause.
Key Rules
- Voucher Review and Approval
- Contracting officers or authorized auditors review contractor vouchers for cost reimbursement, following agency-specific procedures.
- Auditor Authority
- Auditors may receive, approve, or suspend payment of vouchers, and must notify relevant parties if costs are suspended or disapproved.
- Notification of Disallowed Costs
- If costs are questioned, auditors can issue a notice of suspended/disapproved costs to the contractor, disbursing officer, and contracting officer.
- Contractor Dispute Process
- Contractors may contest disallowed costs by submitting a written request to the contracting officer, filing a claim under the Disputes clause, or both.
Responsibilities
- Contracting Officers: Review and approve/disapprove vouchers, address contractor disputes, and follow agency procedures.
- Contractors: Submit accurate vouchers, respond to notices of disallowed costs, and follow dispute procedures if necessary.
- Agencies: Establish and enforce procedures for voucher review, auditor authority, and dispute resolution.
Practical Implications
- Ensures only allowable costs are reimbursed, protecting government funds.
- Provides a clear process for handling questionable costs and contractor disputes.
- Contractors must maintain thorough documentation and be prepared to justify costs or challenge disallowances.