FAR 31.000—Scope of part.
Plain-English Summary
FAR 31.000 explains the scope of FAR Part 31, which is the government’s core set of cost principles and related procedures. It tells readers that Part 31 applies in two main situations: first, when the government is pricing contracts, subcontracts, or contract modifications and performs cost analysis under FAR 15.404-1(c); and second, when a contract clause requires the determination, negotiation, or allowance of costs. In practice, this means Part 31 is the reference point for deciding whether a cost is allowable, allocable, and reasonable in cost-based pricing or in post-award cost determinations. The section matters because it establishes when the cost principles govern, helping contracting officers, contractors, and auditors know when to apply FAR Part 31 rather than relying only on market pricing or other pricing methods. It also signals that these rules are not limited to prime contracts; they can reach subcontracts and modifications whenever cost analysis is part of the pricing process. For contractors, this section is a warning that proposed, billed, and negotiated costs may be scrutinized under Part 31 whenever the contract structure or clause makes cost principles relevant.
Key Rules
Applies to cost analysis pricing
Part 31 governs pricing of contracts, subcontracts, and modifications whenever the government performs cost analysis under FAR 15.404-1(c). If cost analysis is used, the cost principles in Part 31 become part of the pricing framework.
Applies to cost clauses
Part 31 also applies when a contract clause requires costs to be determined, negotiated, or allowed. In those cases, the cost principles control how the parties evaluate whether a cost may be paid or accepted.
Covers contracts and subcontracts
The scope is not limited to prime contracts. It expressly includes subcontracts and modifications to both contracts and subcontracts when the pricing method or clause triggers cost-based review.
Supports allowability determinations
The part provides the standards used to decide whether a cost is allowable, allocable, and reasonable. Those standards are central to negotiating price and to resolving cost questions after award.
Triggered by contract requirements
Part 31 does not apply to every procurement automatically; it applies when the pricing method or a contract clause brings cost principles into play. The contract language and the use of cost analysis determine the reach of the part.
Responsibilities
Contracting Officer
Determine when cost analysis is being used and when a contract clause requires cost determination, negotiation, or allowance. Apply FAR Part 31 cost principles in pricing actions, evaluate proposed costs accordingly, and ensure the contract structure reflects the correct cost-based rules.
Contractor
Prepare cost proposals and supporting data with awareness that Part 31 may govern the evaluation of proposed, negotiated, or allowable costs. Ensure claimed or proposed costs can be supported under the applicable cost principles when cost analysis or a cost clause applies.
Subcontractor
Provide cost information and support for subcontract pricing or cost determinations when the prime contract or subcontract requires cost analysis or cost-based treatment. Align proposed costs with Part 31 standards where applicable.
Auditor/Cost Analyst
Use Part 31 as the benchmark when reviewing cost proposals, incurred costs, or claimed costs under a contract clause. Assess whether costs meet the applicable allowability, allocability, and reasonableness standards.
Agency
Ensure acquisition policies and contract clauses correctly identify when cost principles apply and train personnel to use Part 31 in the appropriate pricing and cost-determination contexts.
Practical Implications
If a procurement uses cost analysis, Part 31 becomes a key pricing tool, so contractors should expect scrutiny of individual cost elements rather than just total price.
A common pitfall is assuming Part 31 only matters after award; in reality, it can affect proposal preparation, negotiations, and later cost allowability disputes.
Contract language matters: a clause that requires cost determination, negotiation, or allowance can bring Part 31 into play even when the overall contract type is not obviously cost-reimbursement.
Subcontracts are not exempt just because they are downstream; if the prime or subcontract pricing process uses cost analysis, Part 31 principles may still be relevant.
Contracting officers should confirm the pricing method and clause structure early, because misidentifying when Part 31 applies can lead to unsupported prices, disputed costs, or avoidable audit findings.
Official Regulatory Text
This part contains cost principles and procedures for- (a) The pricing of contracts, subcontracts, and modifications to contracts and subcontracts whenever cost analysis is performed (see 15.404-1 (c)); and (b) The determination, negotiation, or allowance of costs when required by a contract clause.