FAR 30.603—Changes to disclosed or established cost accounting practices.

Required changes.

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.

Unilateral and desirable changes.

FAR 30.603-2 explains how the Government handles contractor cost accounting practice changes under CAS-covered contracts, focusing on unilateral changes, desirable changes, notice and proposal requirements, retroactive changes, and a special rule for changes tied to external restructuring activities under 10 U.S.C. 3761. It tells contractors when they may change disclosed or established practices, what advance notice they must give, and when they must support a claim that a change has no material cost impact. It also tells the CFAO how to decide whether a change is truly “desirable,” how to protect the Government from paying increased costs caused by a unilateral change, and how to avoid over-recovery. In practice, this section is about preserving fairness and consistency in CAS administration: contractors can change accounting practices, but the Government must be protected from paying more than it should, and any beneficial change must be affirmatively approved as desirable before it gets favorable treatment. The section also creates a process for retroactive treatment and clarifies that certain restructuring-related compliant changes are exempt from the usual price/cost adjustment rules, while still requiring disclosure under the CAS administration clause.