[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR31.204]



[Page 604]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                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 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]