FAR 31.602—General.
Plain-English Summary
FAR 31.602 is a short but important cross-reference provision that tells readers where to find the cost principles for contracts and subcontracts with State, local, and federally recognized Indian tribal governments. It points to the OMB Uniform Guidance at 2 CFR part 200, subpart E, and appendices V and VII, which govern how allowable costs are determined for those non-Federal entities. The section also clarifies the limited purpose of those principles: they are cost-determination rules, not rules for deciding whether the Federal Government, a State, or a local government should participate in financing a particular contract, or how much each should pay. In practice, this means contracting officers, grant/contract administrators, and contractors must use the Uniform Guidance cost principles when evaluating allowability, but they must look elsewhere for funding-share, matching, or participation decisions. The section helps prevent a common mistake: treating cost allowability rules as if they also establish funding policy or cost-sharing obligations.
Key Rules
Use Uniform Guidance principles
For contracts and subcontracts with State, local, and federally recognized Indian tribal governments, the applicable cost principles are found in 2 CFR part 200, subpart E, and appendices V and VII. FAR 31.602 directs users to those rules rather than creating separate FAR-specific allowability standards for these entities.
Applies to specific government entities
This section is limited to State, local, and federally recognized Indian tribal governments. It does not itself establish cost principles for other types of contractors or subcontractors.
Cost determination only
The referenced principles are intended to determine whether costs are allowable, allocable, and otherwise acceptable for reimbursement or payment. They do not decide the broader financing arrangement for the contract.
No funding-share rule
The section expressly states that the cost principles are not meant to identify the circumstances or dictate the extent of Federal and State or local participation in financing a particular contract. Questions about matching, cost sharing, or funding participation must be resolved under the applicable program, statute, or agreement terms.
Responsibilities
Contracting Officer
Apply the Uniform Guidance cost principles when evaluating proposed or claimed costs for covered contracts and subcontracts. Do not use FAR 31.602 as authority for deciding funding shares, matching requirements, or the extent of Federal versus non-Federal participation.
Contractor or Subcontractor
Prepare and support cost proposals, invoices, and claims using the applicable 2 CFR part 200 cost principles. Ensure claimed costs are allowable under those principles and do not assume that allowability automatically establishes reimbursement percentage or funding participation.
Agency
Use the correct regulatory framework for cost allowability and separately apply any statutory, programmatic, or agreement-based rules governing financing, matching, or cost sharing. Train personnel to distinguish cost principles from funding policy.
State, Local, or Tribal Government Recipient/Partner
Follow the Uniform Guidance cost principles when charging costs to covered contracts or subcontracts. Maintain records and internal controls that support allowability under the referenced guidance.
Practical Implications
This section is mainly a roadmap: it tells you where the real cost rules live for State, local, and tribal government contracts and subcontracts.
A common pitfall is citing FAR Part 31 generally when the applicable authority is actually 2 CFR part 200, subpart E, plus appendices V and VII.
Another frequent mistake is confusing cost allowability with funding participation; a cost may be allowable without the Federal Government being required to pay a particular share.
Contracting officers should verify that the correct regulatory source is being used before negotiating or auditing costs.
Parties should check the underlying statute, program terms, and award documents for any separate matching or cost-sharing requirements, because FAR 31.602 does not supply them.
Official Regulatory Text
The OMB Uniform Guidance at 2 CFR part 200 , subpart E and appendices V and VII sets forth the principles for determining the allowable costs of contracts and subcontracts with State, local, and federally recognized Indian tribal governments. These principles are for cost determination and are not intended to identify the circumstances or dictate the extent of Federal and State or local participation in financing a particular contract.