52.242-4 Certification of Final Indirect Costs
Source: FAR 52.242-4 on acquisition.gov
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.
As prescribed in 42.703-2(f), insert the following clause:
Certification of Final Indirect Costs (Jan 1997)
(a) The Contractor shall-
(1) Certify any proposal to establish or modify final indirect cost rates;
(2) Use the format in paragraph (c) of this clause to certify; and
(3) Have the certificate signed by an individual of the Contractor’s organization at a level no lower than a vice president or chief financial officer of the business segment of the Contractor that submits the proposal.
(b) Failure by the Contractor to submit a signed certificate, as described in this clause, may result in final indirect costs at rates unilaterally established by the Contracting Officer.
(c) The certificate of final indirect costs shall read as follows:
Certificate of Final Indirect Costs
This is to certify that I have reviewed this proposal to establish final indirect cost rates and to the best of my knowledge and belief:
1. All costs included in this proposal (identify proposal and date) to establish final indirect cost rates for (identify period covered by rate) are allowable in accordance with the cost principles of the Federal Acquisition Regulation (FAR) and its supplements applicable to the contracts to which the final indirect cost rates will apply; and
2. This proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR or its supplements.
Firm: _________________________________________
Signature: _____________________________________
Name of Certifying Official: ______________________
Title: _________________________________________
Date of Execution: ______________________________
(End of clause)