FAR 30.603-1—Required changes.
Plain-English Summary
FAR 30.603-1 explains how required changes to a contractor’s established cost accounting practices are identified, reported, reviewed, and adjusted when those changes affect existing contracts and subcontracts subject to Cost Accounting Standards (CAS). It covers the offeror’s duty to disclose whether award of a contract will require a practice change, the contracting officer’s duty to notify the cognizant Federal agency official (CFAO), and the CFAO’s role in deciding whether a change is truly required to comply with CAS or to remain in compliance. The section also addresses how offerors and contractors must prepare and submit notice and supporting information for required changes, including proposal disclosure and advance notice requirements. Finally, it explains when equitable adjustments may be made for new or modified standards, and when a contractor’s early implementation of a required change must be treated as a unilateral change rather than a compensable adjustment. In practice, this section is important because it controls when a contractor can recover cost impacts from CAS-related changes, how those changes are documented, and which contracts are affected by the timing of a new or revised standard.
Key Rules
Offeror disclosure required
Offerors must state whether award of the contract would require a change to an established cost accounting practice that affects existing contracts and subcontracts. This disclosure is made under the solicitation provision at 52.230-1 and is the trigger for government review.
CO must notify CFAO
If the offeror says a change would be required, the contracting officer must notify the CFAO. This ensures the cognizant CAS official is aware of a potential practice change before award and can evaluate the cost accounting implications.
CFAO must confirm required change
Before allowing an equitable adjustment under the applicable CAS clauses, the CFAO must determine that the change is required either because a new or modified CAS, modification, or interpretation became applicable, or because the prior practice was already compliant and the change is needed to stay compliant.
Use changed practice in proposal
When award itself would require a practice change, the offeror must prepare its pricing proposal using the changed practice for the period of performance in which that practice will apply. The offeror must also submit a description of the changed practice as pricing support to both the contracting officer and the CFAO.
Advance notice for compliance changes
When a change is needed to remain in compliance for reasons other than a contract award, or to comply with a new or modified standard, the contractor must give the CFAO a description of the change at least 60 days before implementation, unless another mutually agreeable date is set. The contractor must also support any claim that the cost impact is immaterial.
Equitable adjustments limited by timing
Required changes made to comply with new or modified standards may justify equitable adjustments, but only for contracts awarded before the standard’s effective date. Contracts awarded after the effective date are generally not eligible for that adjustment because they are expected to be priced under the new requirement.
Early implementation treated as unilateral
If a contractor chooses to implement a required change before the standard becomes applicable, the CFAO must administer it as a unilateral change. The contractor cannot receive an equitable adjustment that increases aggregate Government costs before the applicability date unless the CFAO determines the unilateral change is desirable.
Responsibilities
Offeror
Disclose in the proposal whether award would require a change to an established cost accounting practice affecting existing contracts and subcontracts. If a change is required, prepare the pricing proposal using the changed practice for the relevant performance period and submit a description of the changed practice as pricing support.
Contracting Officer
Review the offeror’s disclosure and notify the CFAO if the offeror indicates that a cost accounting practice change would be required. The contracting officer also receives the pricing support describing the changed practice.
CFAO
Determine whether the change is required to comply with a new or modified CAS, modification, or interpretation, or whether the former practice was compliant and the change is necessary to remain compliant. Administer required changes, evaluate equitable adjustment entitlement, review advance notices and immateriality support, and treat early implementation as a unilateral change when applicable.
Contractor
When a change is required to remain in compliance or to comply with a new or modified standard, submit a description of the change to the CFAO at least 60 days before implementation or by another mutually agreeable date. Provide rationale supporting any assertion that the cost impact is immaterial.
Government
Apply equitable adjustments only where permitted by the timing and applicability rules, and avoid paying increased aggregate costs before the standard’s applicability date unless the CFAO determines the unilateral change is desirable.
Practical Implications
This section is a timing and documentation rule set: whether a change is compensable often depends on when the standard becomes applicable and when the contractor implements the change.
Contractors should not assume every CAS-related change is automatically reimbursable; the CFAO must first confirm that the change is required and that the adjustment fits the applicable clause.
A common pitfall is failing to disclose that a new award will force a practice change, which can delay review and create pricing or compliance problems after award.
Another frequent issue is treating an early implementation as if it were a normal required change; before the applicability date, the Government may treat it as unilateral and deny increased aggregate cost recovery unless it is deemed desirable.
Contractors should maintain clear written support for the nature of the change, its effective date, and any claim that the cost impact is immaterial, because those records are central to CFAO review and any later equitable adjustment.
Official Regulatory Text
(a) General . Offerors shall state whether or not the award of a contract would require a change to an established cost accounting practice affecting existing contracts and subcontracts (see 52.230-1 ). The contracting officer shall notify the CFAO if the offeror states that a change in cost accounting practice would be required. (b) CFAO responsibilities . Prior to making an equitable adjustment under the applicable paragraph (s) that address a required change at 52.230-2 , Cost Accounting Standards; 52.230-3 , Disclosure and Consistency of Cost Accounting Practices; or 52.230-5 , Cost Accounting Standards-Educational Institution, the CFAO shall determine that- (1) The cost accounting practice change is required to comply with a CAS, or a modification or interpretation thereof, that subsequently became applicable to one or more contracts or subcontracts; or (2) The former cost accounting practice was in compliance with applicable CAS and the change is necessary to remain in compliance. (c) Notice and proposal preparation. (1) When the award of a contract would require a change to an established cost accounting practice, the provision at 52.230-7 , Proposal Disclosure-Cost Accounting Practice Changes, requires the offeror to- (i) Prepare the contract pricing proposal in response to the solicitation using the changed cost accounting practice for the period of performance for which the practice will be used; and (ii) Submit a description of the changed cost accounting practice to the contracting officer and the CFAO as pricing support for the proposal. (2) When a change is required to remain in compliance (for reasons other than a contract award) or to comply with a new or modified standard, the clause at 52.230-6 , Administration of Cost Accounting Standards, requires the contractor to- (i) Submit a description of the change to the CFAO not less than 60 days (or other mutually agreeable date) before implementation of the change; and (ii) Submit rationale to support any contractor written statement that the cost impact of the change is immaterial. (d) Equitable adjustments for new or modified standards. (1) Required changes made to comply with new or modified standards may require equitable adjustments, but only to those contracts awarded before the effective date of the new or modified standard (see 52.230-2 , 52.230-3 , or 52.230-5 ). (2) When a contractor elects to implement a required change to comply with a new or modified standard prior to the applicability date of the standard, the CFAO shall administer the change as a unilateral change (see 30.603-2 ). Contractors shall not receive an equitable adjustment that will result in increased costs in the aggregate to the Government prior to the applicability date unless the CFAO determines that the unilateral change is a desirable change.