FAR 31.303—Requirements.
Plain-English Summary
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.
Key Rules
Use Uniform Guidance for schools
If a contract with an educational institution refers to FAR subpart 31.3 for allowable costs, the contract is treated as referring to the OMB Uniform Guidance cost principles instead. The controlling rules are 2 CFR part 200, subpart E, and appendix III.
Apply the contract-date version
The contracting officer must determine allowability using the Uniform Guidance provisions in effect on the date the contract was awarded. Later changes do not automatically apply unless the contract or other authority says otherwise.
Educational institution definition controls
This rule applies to contracts with educational institutions as defined by the Uniform Guidance and 20 U.S.C. 1001. The special allowability treatment depends on the contractor fitting that definition.
No extra item-by-item restrictions
Agencies are not expected to impose additional restrictions on individual cost items beyond the governing Uniform Guidance rules. This limits agency discretion to create separate, stricter allowability rules for schools.
Responsibilities
Contracting Officer
Determine cost allowability for covered educational institution contracts under 2 CFR part 200, subpart E, and appendix III, using the version in effect on the contract date. Avoid adding unauthorized extra restrictions on individual cost items.
Agency
Follow the Uniform Guidance framework for these contracts and refrain from imposing additional agency-specific restrictions on individual items of cost unless another valid authority applies.
Educational Institution Contractor
Identify and apply the correct allowability rules from the Uniform Guidance, maintain supporting documentation, and ensure claimed costs comply with the contract-date version of the applicable cost principles.
Practical Implications
For contractors, this means cost proposals and incurred-cost support should be built around the Uniform Guidance rules, not the ordinary FAR 31.2/31.3 framework used for many other contractors.
A common pitfall is assuming the latest version of the Uniform Guidance applies automatically; under this section, the relevant version is the one in effect on the contract date.
Contracting officers should verify that the contractor is actually an educational institution under the cited definitions before applying this rule.
Agencies should be careful not to create local or solicitation-specific cost restrictions that conflict with the Uniform Guidance treatment for these contracts.
Because allowability is tied to a specialized rule set, both sides should document the governing version and the basis for any cost allowability decision to reduce disputes later.
Official Regulatory Text
(a) Contracts that refer to this subpart 31.3 for determining allowable costs under contracts with educational institutions (defined as institutions of higher education in the OMB Uniform Guidance at 2 CFR part 200 , subpart A, and 20 U.S.C. 1001 ) shall be deemed to refer to, and shall have the allowability of costs determined by the contracting officer in accordance with, the OMB Uniform Guidance at 2 CFR part 200 , subpart E and appendix III, in effect on the date of the contract. (b) Agencies are not expected to place additional restrictions on individual items of cost.