[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.204]

[Page 587-588]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
              (This book contains chapter 1, parts 1 to 51)

                CHAPTER 1--FEDERAL ACQUISITION REGULATION
  --------------------------------------------------------------------
 
PART 31_CONTRACT COST PRINCIPLES AND PROCEDURES--Table of Contents
 
          Subpart 31.2_Contracts With Commercial Organizations
 
Sec. 31.204  Application of principles and procedures.

    (a) Costs are allowable to the extent they are reasonable, 
allocable, and determined to be allowable under 31.201, 31.202, 31.203, 
and 31.205. These criteria apply to all of the selected items that 
follow, even if particular guidance is

[[Page 588]]

provided for certain items for emphasis or clarity.
    (b)(1) For the following subcontract types, costs incurred as 
reimbursements or payments to a subcontractor are allowable to the 
extent the reimbursements or payments are for costs incurred by the 
subcontractor that are consistent with this part:
    (i) Cost-reimbursement.
    (ii) Fixed-price incentive.
    (iii) Price redeterminable (i.e., fixed-price contracts with 
prospective price redetermination and fixed-ceiling-price contracts with 
retroactive price redetermination).
    (2) The requirements of paragraph (b)(1) of this section apply to 
any tier above the first firm-fixed-price subcontract or fixed-price 
subcontract with economic price adjustment provisions.
    (c) Costs incurred as payments under firm-fixed-price subcontracts 
or fixed-price subcontracts with economic price adjustment provisions or 
modifications thereto, for which subcontract cost analysis was performed 
are allowable if the price was negotiated in accordance with 31.102.
    (d) Section 31.205 does not cover every element of cost. Failure to 
include any item of cost does not imply that it is either allowable or 
unallowable. The determination of allowability shall be based on the 
principles and standards in this subpart and the treatment of similar or 
related selected items. When more than one subsection in 31.205 is 
relevant to a contractor cost, the cost shall be apportioned among the 
applicable subsections, and the determination of allowability of each 
portion shall be based on the guidance contained in the applicable 
subsection. When a cost, to which more than one subsection in 31.205 is 
relevant, cannot be apportioned, the determination of allowability shall 
be based on the guidance contained in the subsection that most 
specifically deals with, or best captures the essential nature of, the 
cost at issue.

[48 FR 42301, Sept. 19, 1983, as amended at 53 FR 17858, May 18, 1988; 
62 FR 51271, Sept. 30, 1997; 69 FR 34242, June 18, 2004]