FAR 31.205-31—Plant reconversion costs.
Plain-English Summary
FAR 31.205-31 addresses plant reconversion costs, meaning the costs a contractor incurs to restore or rehabilitate its facilities to approximately the condition they were in before the Government contract began, except for normal wear and tear. The section establishes the basic allowability rule: reconversion costs are generally unallowable. It then identifies a narrow exception for the cost of removing Government property and the restoration or rehabilitation costs directly caused by that removal. The rule also allows, in special circumstances where equity requires it, additional reconversion costs if the parties agree to them before the costs are incurred. Finally, it warns against double recovery, including charging the same costs through contingencies, additional profit or fee, or other contracts. In practice, this section matters when a contract ends or Government property must be removed, because it determines whether cleanup, repair, and restoration costs can be billed to the Government and how those costs must be documented and approved.
Key Rules
General unallowability
Plant reconversion costs are generally unallowable. A contractor normally may not charge the Government for restoring its facilities to their pre-contract condition after performance ends.
Limited removal exception
The cost of removing Government property is allowable, along with any restoration or rehabilitation costs that are caused by that removal. This exception is narrow and applies only to damage or work directly tied to removing Government-owned items.
Equitable special circumstances
In special circumstances where equity requires it, additional reconversion costs may be allowed. But those costs must be agreed to before they are incurred, so advance approval or contractual agreement is essential.
No duplicate recovery
Contractors must avoid recovering the same reconversion costs more than once. The rule specifically cautions against duplicating recovery through contingencies, additional profit or fee, or other contracts.
Pre-incurrence agreement required
When additional costs are to be allowed under the equity exception, the agreement must be made before the costs are incurred. Post hoc requests are not enough to create allowability.
Responsibilities
Contracting Officer
Determine whether any reconversion costs are allowable, approve only the narrow exceptions permitted by the rule, and ensure any equitable allowance is agreed to in advance before costs are incurred.
Contractor
Treat plant reconversion costs as unallowable unless they fall within the removal-of-Government-property exception or a pre-agreed equitable allowance, and maintain records showing the costs are not duplicated elsewhere.
Agency
Ensure contract terms and closeout actions do not permit improper reimbursement of reconversion costs and that any special allowance is supported by equity and documented before performance of the work.
Practical Implications
Most facility restoration costs after a Government contract are not billable to the Government, so contractors should plan for them as overhead or business costs unless a specific exception applies.
The most common allowable item is the cost of removing Government property, but only the direct restoration damage caused by that removal is potentially recoverable.
If the parties want to cover unusual reconversion expenses, they need an advance written agreement; waiting until after the work is done usually defeats allowability.
Contractors should watch for double counting, especially where the same costs might be embedded in contingencies, fee proposals, or other contracts.
Contracting officers should scrutinize closeout and property-disposition costs to ensure the Government pays only for costs the regulation actually permits.
Official Regulatory Text
Plant reconversion costs are those incurred in restoring or rehabilitating the contractor’s facilities to approximately the same condition existing immediately before the start of the Government contract, fair wear and tear excepted. Reconversion costs are unallowable except for the cost of removing Government property and the restoration or rehabilitation costs caused by such removal. However, in special circumstances where equity so dictates, additional costs may be allowed to the extent agreed upon before costs are incurred. Care should be exercised to avoid duplication through allowance as contingencies, additional profit or fee, or in other contracts.