FAR 30.201-4—Contract clauses.
Plain-English Summary
FAR 30.201-4 tells contracting officers which Cost Accounting Standards (CAS) clauses must be inserted in negotiated contracts, and it ties each clause to a specific type of contractor or contract situation. It covers the standard CAS clause at FAR 52.230-2, the modified coverage clause at FAR 52.230-3, the foreign concerns clause at FAR 52.230-4, the administration clause at FAR 52.230-6, and the educational institution clause at FAR 52.230-5. The section also explains when each clause applies, including exemptions, modified coverage eligibility, foreign concern contracts, and educational institution contracts, and it points to the relevant CAS rules in 48 CFR part 9904 and the coverage/exemption rules in 48 CFR 9903.201-1 and 9903.201-2. In practice, this section is the contracting officer’s roadmap for selecting the correct CAS clause and avoiding a defective solicitation or contract. For contractors, it signals what accounting standards they must follow, whether they must disclose cost accounting practices, and whether those practices must be consistently applied. Because CAS compliance can affect pricing, cost allowability, and post-award administration, getting the clause right at award is critical.
Key Rules
Insert the right CAS clause
The contracting officer must choose the correct CAS clause based on the contract type, dollar value, and contractor status. The default clause is FAR 52.230-2 for negotiated contracts unless an exemption, modified coverage, foreign concern treatment, or educational institution rule applies.
Standard CAS coverage
FAR 52.230-2 applies to negotiated contracts that are CAS-covered and not otherwise exempt or subject to modified coverage. It requires compliance with all applicable CAS in 48 CFR part 9904, disclosure of actual cost accounting practices for CAS-covered contracts, and consistent use of disclosed and established practices.
Modified coverage for smaller awards
FAR 52.230-3 applies in negotiated contracts over $2.5 million but less than $50 million when the offeror certifies it is eligible for and elects modified CAS coverage. Under this clause, the contractor must comply with the specified CAS standards and maintain consistent cost accounting practices, with disclosure requirements where applicable.
Foreign concerns clause
FAR 52.230-4 applies to negotiated contracts with foreign concerns unless the contract is otherwise exempt from CAS. The rule expressly excludes foreign governments and their agents or instrumentalities from the definition of foreign concerns for this purpose.
Administration clause is mandatory with CAS
FAR 52.230-6 must be inserted whenever the contract contains any of the CAS clauses prescribed in paragraphs (a), (b), (c), or (e). This clause governs administration of CAS requirements and the procedures to follow if the contractor fails to comply.
Educational institution coverage
FAR 52.230-5 applies to negotiated contracts awarded to educational institutions unless the contract is exempt, is to be performed by an FFRDC, or another specified provision applies. It requires compliance with all CAS in 48 CFR part 9905, disclosure of actual cost accounting practices as required, and consistent application of those practices.
Responsibilities
Contracting Officer
Determine whether the contract is exempt from CAS, subject to modified coverage, a foreign concern contract, or an educational institution contract, and insert the correct clause accordingly. Also insert FAR 52.230-6 whenever any CAS clause is used.
Contractor
Comply with the CAS standards applicable to the contract, disclose actual cost accounting practices when required, and follow disclosed and established cost accounting practices consistently. If eligible for modified coverage, certify eligibility and elect that coverage when appropriate.
Offeror
For potential modified coverage under FAR 52.230-3, certify that it is eligible and elect to use modified CAS coverage as a condition of receiving that clause.
Educational Institution
When awarded a covered negotiated contract, comply with the CAS applicable to educational institutions, make required disclosures of actual cost accounting practices, and maintain consistency in accounting practice application.
Agency/Contract Administration Function
Administer CAS requirements under FAR 52.230-6 and follow the procedures for addressing noncompliance, including the rules that govern failure to comply.
Practical Implications
This section is mainly about clause selection, and clause selection drives the contractor’s compliance obligations from day one. If the wrong clause is inserted, the contract may not properly reflect the applicable CAS regime and can create downstream disputes or corrective action.
Contracting officers must check exemptions and special categories before defaulting to FAR 52.230-2. Common mistakes include overlooking modified coverage eligibility, missing the educational institution exception, or failing to recognize that a foreign concern is not the same as a foreign government or its instrumentality.
The disclosure requirement is not universal in the same way for every clause; it depends on the clause and whether the contractor meets the stated requirements. Contractors should not assume that all CAS-covered awards require the same level of disclosure.
Consistency matters as much as disclosure. Even when a contractor has disclosed its practices, it must apply those practices consistently, because inconsistent application can trigger administration issues and noncompliance findings.
FAR 52.230-6 is easy to overlook, but it is required whenever a CAS clause is used. Missing it can create administrative gaps in how the government handles CAS compliance and remedies for noncompliance.
Official Regulatory Text
(a) Cost accounting standards. (1) The contracting officer shall insert the clause at FAR 52.230-2 , Cost Accounting Standards, in negotiated contracts, unless the contract is exempted (see 48 CFR 9903.201-1 ), the contract is subject to modified coverage (see 48 CFR 9903.201-2 ), or the clause prescribed in paragraph (c) of this subsection is used. (2) The clause at FAR 52.230-2 requires the contractor to comply with all CAS specified in 48 CFR 9904 , to disclose actual cost accounting practices (applicable to CAS-covered contracts only), and to follow disclosed and established cost accounting practices consistently. (b) Disclosure and consistency of cost accounting practices. (1) Insert the clause at FAR 52.230-3 , Disclosure and Consistency of Cost Accounting Practices, in negotiated contracts when the contract amount is over $2.5 million, but less than $50 million, and the offeror certifies it is eligible for and elects to use modified CAS coverage (see 48 CFR 9903.201-2 ), unless the clause prescribed in paragraph (c) of this subsection is used. (2) The clause at FAR 52.230-3 requires the contractor to comply with 48 CFR 9904.401 , 9904.402, 9904.405, and 9904.406 to disclose (if it meets certain requirements) actual cost accounting practices, and to follow consistently its established cost accounting practices. (c) Disclosure and Consistency of Cost Accounting Practices-Foreign Concerns . (1) The contracting officer shall insert the clause at FAR 52.230-4 , Disclosure and Consistency of Cost Accounting Practices-Foreign Concerns, in negotiated contracts with foreign concerns, unless the contract is otherwise exempt from CAS (see 48 CFR 9903.201-1 ). Foreign concerns do not include foreign governments or their agents or instrumentalities. (2) The clause at 52.230-4 requires the contractor to comply with 48 CFR 9904.401 and 48 CFR 9904.402 to disclose (if it meets certain requirements) actual cost accounting practices, and to follow consistently its disclosed and established cost accounting practices. (d) Administration of cost accounting standards. (1) The contracting officer shall insert the clause at FAR 52.230-6 , Administration of Cost Accounting Standards, in contracts containing any of the clauses prescribed in paragraphs (a), (b), (c), or (e) of this subsection. (2) The clause at FAR 52.230-6 specifies rules for administering CAS requirements and procedures to be followed in cases of failure to comply. (e) Cost accounting standards-educational institutions. (1) The contracting officer shall insert the clause at FAR 52.230-5 , Cost Accounting Standards-Educational Institution, in negotiated contracts awarded to educational institutions, unless the contract is exempted (see 48 CFR 9903.201-1 ), the contract is to be performed by an FFRDC (see 48 CFR 9903.201-2(c)(5) ), or the provision at 48 CFR 9903.201-2(c)(6) applies. (2) The clause at FAR 52.230-5 requires the educational institution to comply with all CAS specified in 48 CFR 9905 , to disclose actual cost accounting practices as required by 48 CFR 9903.202-1(f) , and to follow disclosed and established cost accounting practices consistently.