FAR 31.3—Subpart 31.3

Purpose.

FAR 31.301 states the purpose of the subpart that governs how to determine the cost of research and development, training, and other work performed by educational institutions under Government contracts. In practical terms, it tells contracting officers, auditors, and contractors that this subpart is the cost-principles framework for educational institutions, not a general pricing rule for all contractors. The section is important because educational institutions often have unique accounting structures, indirect cost practices, and mission-driven activities that differ from commercial firms, so the Government needs a specific set of principles to evaluate allowable costs consistently. It covers three broad subject areas: research and development, training, and other work performed by educational institutions. The purpose is to establish the basis for determining what costs are appropriate, allocable, and acceptable when the Government pays for work performed by colleges, universities, and similar institutions under contracts. In practice, this section signals that the detailed rules in the subpart must be used whenever the contract involves these types of institutional activities.

General.

FAR 31.302 is a cross-reference provision that tells readers where to find the cost principles for educational institutions performing work under Government contracts. It covers the OMB Uniform Guidance at 2 CFR part 200, subpart E, and appendix III, and it specifically points to the principles used to determine costs for research and development, training, and other work performed by educational institutions. The section also identifies the institutions covered by using the Uniform Guidance definition of “institutions of higher education” in 2 CFR part 200, subpart A, and 20 U.S.C. 1001. In practical terms, this section does not itself set the detailed cost rules; instead, it directs contracting officers, contractors, and auditors to the applicable education-specific cost principles when a university or similar institution is performing contract work. Its significance is that it separates educational institution cost treatment from the standard FAR Part 31 cost principles used for most other contractors, helping ensure the correct allowability, allocability, and reasonableness framework is applied.

Requirements.

FAR 31.303 explains how allowability of costs is determined for contracts with educational institutions when the contract points to FAR subpart 31.3 for cost allowability. It says those contracts are treated as referring instead to the OMB Uniform Guidance cost principles in 2 CFR part 200, subpart E, and appendix III, and that the contracting officer must apply the version in effect on the date of the contract. The section also states that agencies should not add extra restrictions on individual items of cost beyond those governing principles. In practice, this means educational institution contracts use a specialized cost-allowability framework tied to federal grant-style rules rather than the ordinary FAR cost principles, which affects how contractors propose, document, and claim costs and how contracting officers evaluate them. The section is important because it promotes consistency between federal procurement and higher-education cost accounting rules and limits agency-by-agency variation in cost treatment.