49.113
Cost principles
FAR 49.113 requires the use of FAR Part 31 cost principles for termination settlements, ensuring consistency and fairness, with special guidance for educational institutions.
Overview
FAR 49.113 establishes that the cost principles and procedures found in FAR Part 31 must be applied when asserting, negotiating, or determining costs related to termination settlements. For contracts with entities other than educational institutions, these cost principles are mandatory. For contracts with educational institutions involving experimental, developmental, or research work, the cost principles serve as a guide, with specific reference to FAR 31.104 for further details. This ensures consistency and fairness in the treatment of costs during contract termination settlements.
Key Rules
- Application of FAR Part 31 Cost Principles
- Cost principles in FAR Part 31 are required for termination settlements for all contracts except those with educational institutions.
- Guidance for Educational Institutions
- For contracts with educational institutions (specifically for experimental, developmental, or research work), the cost principles are used as a guide, not a strict requirement, and FAR 31.104 should be consulted for additional guidance.
Responsibilities
- Contracting Officers: Must apply the appropriate cost principles from FAR Part 31 when negotiating or determining termination settlement costs, and reference FAR 31.104 for educational institutions.
- Contractors: Must prepare and support cost claims in accordance with the applicable cost principles.
- Agencies: Ensure oversight and compliance with the use of correct cost principles during termination settlements.
Practical Implications
- This section ensures that cost settlements after contract termination are handled consistently and fairly.
- Contractors must be familiar with the relevant cost principles to support their claims.
- Misapplication of cost principles can lead to disputes, delays, or disallowed costs during settlement negotiations.