52.242-4
Certification of Final Indirect Costs
Contractors must certify final indirect cost proposals using the required format and authorized signature, or risk unilateral rate determination by the government.
Overview
FAR 52.242-4, Certification of Final Indirect Costs, requires contractors to formally certify any proposal to establish or modify final indirect cost rates submitted to the government. The certification must follow a specific format and be signed by a senior official (at least a vice president or chief financial officer) of the contractor's business segment. This certification attests that all costs in the proposal are allowable under the FAR and do not include expressly unallowable costs. Failure to provide a properly signed certificate may result in the contracting officer unilaterally establishing final indirect cost rates, which could be less favorable to the contractor.
Key Rules
- Certification Requirement
- Contractors must certify all proposals to establish or modify final indirect cost rates using the prescribed format.
- Authorized Signatory
- The certificate must be signed by a senior official (no lower than a vice president or CFO) of the business segment submitting the proposal.
- Consequences of Non-Compliance
- If the certificate is not submitted or not properly signed, the contracting officer may set the final indirect cost rates unilaterally.
- Certification Content
- The certificate must confirm that all costs are allowable and that no expressly unallowable costs are included.
Responsibilities
- Contracting Officers: Ensure receipt of a properly executed certificate before negotiating or finalizing indirect cost rates; may establish rates unilaterally if not provided.
- Contractors: Prepare, certify, and submit proposals for final indirect cost rates using the required format and authorized signatory.
- Agencies: Oversee compliance and enforce consequences for non-compliance.
Practical Implications
- This clause ensures accountability and accuracy in indirect cost proposals, reducing the risk of unallowable costs being charged to the government.
- Contractors must have robust internal controls to ensure only allowable costs are included and that the certification is executed by an authorized official.
- Failure to comply can result in less favorable cost rates and potential disputes with the government.