[Code of Federal Regulations]

[Title 48, Volume 7]

[Revised as of October 1, 2005]

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

[CITE: 48CFR9904.402-50]



[Page 357-358]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

     CHAPTER 99--COST ACCOUNTING STANDARDS BOARD, OFFICE OF FEDERAL 

           PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET

 

PART 9904_COST ACCOUNTING STANDARDS--Table of Contents

 

Sec. 9904.402-50  Techniques for application.



    (a) The Fundamental Requirement is stated in terms of cost incurred 

and is equally applicable to estimates of costs to be incurred as used 

in contract proposals.

    (b) The Disclosure Statement to be submitted by the contractor will 

require that he set forth his cost accounting practices with regard to 

the distinction between direct and indirect costs. In addition, for 

those types of cost which are sometimes accounted for as direct and 

sometimes accounted for as indirect, the contractor will set forth in 

his Disclosure Statement the specific criteria and circumstances for 

making such distinctions. In essence, the Disclosure Statement submitted 

by the contractor, by distinguishing between direct and indirect costs, 

and by describing the criteria and circumstances for allocating those 

items which are sometimes direct and sometimes indirect, will be 

determinative as to whether or not costs are incurred for the same 

purpose. Disclosure Statement as used herein refers to the statement 

required to be submitted by contractors as a condition of contracting as 

set forth in subpart 9903.2.

    (c) In the event that a contractor has not submitted a Disclosure 

Statement, the determination of whether specific costs are directly 

allocable to contracts shall be based upon the contractor's cost 

accounting practices used at the time of contract proposal.

    (d) Whenever costs which serve the same purpose cannot equitably be 

indirectly allocated to one or more final cost objectives in accordance 

with the contractor's disclosed accounting practices, the contractor may 

either:

    (1) Use a method for reassigning all such costs which would provide 

an equitable distribution to all final cost objectives, or

    (2) Directly assign all such costs to final cost objectives with 

which they are specifically identified.



In the event the contractor decides to make a change for either purpose, 

the Disclosure Statement shall be amended to reflect the revised 

accounting practices involved.

    (e) Any direct cost of minor dollar amount may be treated as an 

indirect cost for reasons of practicality where the accounting treatment 

for such cost is consistently applied to all final cost objectives, 

provided that such treatment produces results which are substantially 

the same as the results



[[Page 358]]



which would have been obtained if such cost had been treated as a direct 

cost.