52.230-5
Cost Accounting Standards-Educational Institution
Educational institutions with CAS-covered contracts must disclose, consistently apply, and update their cost accounting practices, comply with all applicable Cost Accounting Standards, and flow down requirements to eligible subcontracts.
Overview
FAR 52.230-5, Cost Accounting Standards-Educational Institution, requires educational institutions performing CAS-covered contracts to comply with Cost Accounting Standards (CAS) as set forth in 48 CFR 9903. The clause mandates disclosure of cost accounting practices, consistent application of those practices, and compliance with all applicable CAS. It also outlines procedures for changes in accounting practices, equitable adjustments, and remedies for noncompliance. The clause requires flow-down to certain negotiated subcontracts and grants the government audit rights to verify compliance.
Key Rules
- Disclosure Statement Requirement
- Educational institutions must submit a Disclosure Statement detailing cost accounting practices if required, and ensure consistency across all CAS-covered contracts.
- Consistency in Cost Accounting Practices
- Institutions must consistently follow disclosed cost accounting practices and amend the Disclosure Statement if changes occur.
- Compliance with CAS
- Institutions must comply with all applicable CAS in effect at contract award or final price agreement, and with any new standards that become applicable.
- Equitable Adjustments for Changes
- Adjustments to contract price or cost allowance are required if changes in accounting practices or standards affect contract costs.
- Remedies for Noncompliance
- If noncompliance results in increased costs to the government, the contract price must be adjusted and interest may be charged.
- Audit and Access to Records
- The government may examine records to verify CAS compliance.
- Flow-down to Subcontracts
- The clause (except the disputes provision) must be included in certain negotiated subcontracts above the CAS threshold, unless exempt.
Responsibilities
- Contracting Officers: Ensure inclusion of the clause, review Disclosure Statements, negotiate adjustments, and enforce compliance.
- Contractors (Educational Institutions): Submit and update Disclosure Statements, maintain consistent practices, comply with CAS, flow down requirements to subcontracts, and provide access to records.
- Agencies: Oversee compliance, conduct audits, and resolve disputes.
Practical Implications
- This clause ensures transparency and consistency in cost accounting for educational institutions on federal contracts, reducing risk of overcharging the government. Failure to comply can result in price adjustments, interest charges, and disputes. Common pitfalls include inconsistent practices, failure to update Disclosure Statements, and not flowing down the clause to subcontracts.