Part 31 Contract Cost Principles and Procedures

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Section 1. General Deviation from FAR Part 31. This deviation applies to Government contracts awarded in conjunction with the conveyance of a utility system under 10 U.S.C. § 2688 provided all of the conditions listed in this section are met.  This deviation permits, but does not require, the Head of the Contracting Activity (HCA) to waive the requirements of FAR Part 31.

The HCA may exclude from the contract some or all of the requirements of FAR Part 31 provided all of the following conditions are met:

a.  The contract is one of the following types:

(i)  Firm fixed price contracts (FFP);

(ii)  Fixed price contracts with economic price adjustment (where the price adjustment is based on an index or established prices, not based on actual costs incurred) (FPEPA); or

(iii)  Fixed price contracts with prospective price redetermination (where the price adjustment is based on actual costs incurred) (FPPPR).

b.  The contract either:

(i)  Is exempt from the application of the Cost Accounting Standards (CAS); or

(ii)  Meets all the requirements of the CAS Board waiver of September 2, 2004, related to contracts entered into under the authority of 10 U.S.C. § 2688 (erroneously referred to as section 2686).

c.  The contract requires that the actual costs used for purposes of establishing the initial fixed price and any subsequent price submittals:

(i)  Meet the limitations specified in Section 2 for any deviation granted from FAR 31.205-20, Interest and other financial costs;

(ii)  Meet the limitations specified in Section 3 for any deviation granted from FAR 31.205-41, Taxes;

(iii)  Exclude the types of costs listed at 10 U.S.C. § 2324(e) (as it exists on the date of contract award). Any reasonable method of estimating such costs is sufficient to meet this requirement; and

(iv)  Exclude the types of costs that are not normally considered as reimbursable by the applicable regulatory body that oversees the utility rate determinations of the business segment performing the contract.

 d.  The contract provides the Government with access to all records related to the accounting practices used to determine the costs and the supporting data for any estimates of unallowable costs.