FAR 31.101—Objectives.
Plain-English Summary
FAR 31.101 explains the organizing principle for the FAR cost principles and procedures in Part 31: they are grouped by organizational type, such as commercial concerns and educational institutions, because different kinds of organizations have different accounting structures and cost practices. The section’s main objective is uniformity — to the extent practicable, organizations of the same type performing similar work should be subject to the same cost principles and procedures. It also establishes the approval framework for deviations from those cost principles, distinguishing between individual deviations and class deviations. Individual deviations require advance approval by the agency head or a designated official, while class deviations require advance approval by the appropriate higher-level authority depending on the agency: the Civilian Agency Acquisition Council for civilian agencies, the Deputy Chief Acquisition Officer for NASA, and the Principal Director, Defense Pricing and Contracting, for DoD. In practice, this section matters because it limits ad hoc departures from the FAR cost rules and ensures that any exception is reviewed at the proper level before it is used in contracting or cost allowability determinations.
Key Rules
Cost rules grouped by organization
The FAR cost principles and procedures are organized by organizational type, such as commercial concerns and educational institutions. This recognizes that different entities have different structures and cost practices.
Uniform treatment for similar entities
The overall objective is to make organizations of the same type doing similar work follow the same cost principles and procedures as consistently as practicable. This promotes fairness, predictability, and comparability in cost treatment.
Individual deviations need advance approval
A deviation from the cost principles for a specific case cannot be used unless it is approved in advance by the agency head or the official the agency head designates. This prevents unilateral exceptions at the contracting office level.
Civilian class deviations require CAC approval
For civilian agencies, a class deviation concerning cost principles must be approved in advance by the Civilian Agency Acquisition Council. This creates a centralized review point for governmentwide consistency in the civilian sector.
NASA class deviations need CAO approval
For NASA, class deviations concerning cost principles require advance approval by the Deputy Chief Acquisition Officer. NASA uses its own designated approval authority for class-wide departures.
DoD class deviations need DP&C approval
For the Department of Defense, class deviations concerning cost principles require advance approval by the Principal Director, Defense Pricing and Contracting, Office of the Under Secretary of Defense for Acquisition and Sustainment. This ensures DoD-level oversight of broad cost-policy exceptions.
Responsibilities
Contracting Officer
Apply the FAR cost principles and procedures as written for the applicable organizational type, and do not authorize deviations on their own authority. If a deviation is needed, route the request through the proper approval chain before using it.
Agency Head or Designee
Provide advance approval for individual deviations from cost principles when justified. Ensure the deviation is reviewed at the appropriate level and documented before it is applied.
Civilian Agency Acquisition Council
Review and approve class deviations concerning cost principles for civilian agencies before they take effect.
Deputy Chief Acquisition Officer, NASA
Review and approve class deviations concerning cost principles for NASA before they are implemented.
Principal Director, Defense Pricing and Contracting, Office of the Under Secretary of Defense for Acquisition and Sustainment
Review and approve class deviations concerning cost principles for the Department of Defense before they are used.
Contractor
Follow the applicable cost principles for its organizational type and contract context, and recognize that any deviation must be formally approved before it can change cost treatment.
Practical Implications
This section is mainly about consistency and control: contractors and contracting personnel should expect the same cost rules to apply to similarly situated organizations unless a formal deviation has been approved.
A common pitfall is treating a local preference or one-off business need as if it were a valid exception; under this section, deviations are not effective unless approved in advance by the correct authority.
Another risk is using the wrong approval channel. Individual deviations and class deviations are handled differently, and the approving authority depends on whether the agency is civilian, NASA, or DoD.
For contractors, this means cost allowability arguments should be grounded in the applicable FAR subpart, not in informal promises or past practice unless a valid deviation exists.
For contracting officers and policy staff, the practical takeaway is to document the need for any deviation early and confirm the proper approval authority before issuing solicitations, negotiating costs, or finalizing contract terms.
Official Regulatory Text
In recognition of differing organizational characteristics, the cost principles and procedures in the succeeding subparts are grouped basically by organizational type; e.g., commercial concerns and educational institutions. The overall objective is to provide that, to the extent practicable, all organizations of similar types doing similar work will follow the same cost principles and procedures. To achieve this uniformity, individual deviations concerning cost principles require advance approval of the agency head or designee. Class deviations for the civilian agencies require advance approval of the Civilian Agency Acquisition Council. Class deviations for the National Aeronautics and Space Administration require advance approval of the Deputy Chief Acquisition Officer. Class deviations for the Department of Defense require advance approval of the Principal Director, Defense Pricing and Contracting, Office of the Under Secretary of Defense for Acquisition and Sustainment.