FAR 31.702—General.
Plain-English Summary
FAR 31.702 is a short cross-reference provision that tells readers where to find the cost principles that apply to nonprofit organizations performing work for the Government. It states that the Office of Management and Budget’s Uniform Guidance at 2 CFR part 200, subpart E, and appendix IV, provides the rules for determining allowable and allocable costs for nonprofit organizations, and it applies to work performed under contracts as well as grants and other agreements. The section also points readers to FAR 31.108 for exceptions to those nonprofit cost principles, which means the general rule is not absolute and must be read together with any FAR-specific exceptions. In practice, this section matters because it directs contracting officers, auditors, and nonprofit contractors to the correct cost-principles framework instead of the commercial or for-profit cost rules in FAR Part 31. It is a gateway provision: it does not itself establish detailed allowability standards, but it identifies the controlling external standards and signals that special exceptions may apply. For federal contracting, that means nonprofit contractors must evaluate costs under the Uniform Guidance framework, and agencies must apply those principles consistently when negotiating, pricing, or reviewing nonprofit work.
Key Rules
Uniform Guidance governs nonprofits
The cost principles for nonprofit organizations are found in 2 CFR part 200, subpart E, and appendix IV. Those rules determine what costs are applicable to nonprofit work performed for the Government.
Applies beyond contracts
The referenced nonprofit cost principles apply not only to contracts, but also to grants and other agreements with the Government. The section therefore points to a broader cost-accounting framework than procurement contracts alone.
Nonprofit definition controls
The rule applies to organizations that qualify as nonprofit organizations under the OMB Uniform Guidance definition. Whether an entity is covered depends on that regulatory definition, not simply on how the organization describes itself.
FAR exceptions may override
FAR 31.108 identifies exceptions to the nonprofit cost principles. Users must check that section to determine whether any FAR-specific deviation or exception changes the normal Uniform Guidance treatment.
Section is a reference provision
This section does not itself list allowability tests, allocation rules, or documentation standards. Its function is to direct the reader to the controlling cost-principles source and related exceptions.
Responsibilities
Contracting Officer
Identify when a contractor or recipient is a nonprofit organization and apply the Uniform Guidance nonprofit cost principles, along with any FAR exceptions in 31.108, when evaluating proposed or incurred costs.
Nonprofit Contractor
Use 2 CFR part 200, subpart E, and appendix IV to determine whether costs are allowable and properly treated, and ensure internal accounting and proposal practices align with those nonprofit cost principles.
Agency
Apply the correct cost-principles framework for nonprofit work across contracts, grants, and other agreements, and ensure acquisition and assistance personnel do not mistakenly apply for-profit cost rules where nonprofit rules govern.
Auditor/Reviewer
Review nonprofit costs against the Uniform Guidance cost principles and any applicable FAR exceptions, rather than relying solely on FAR Part 31 rules for commercial or for-profit entities.
Practical Implications
This section is mainly a roadmap: if the contractor is a nonprofit, the first stop is the Uniform Guidance, not the standard FAR Part 31 cost principles for for-profit contractors.
A common pitfall is assuming all federal contracts use the same cost rules; nonprofit entities are treated under a different regulatory framework, and that can change allowability, allocation, and documentation expectations.
Contracting officers should confirm nonprofit status early, because it affects pricing analysis, cost realism, and post-award cost review.
Users must also check FAR 31.108, because exceptions can modify the general nonprofit rule and create special treatment for certain costs or situations.
Because the section applies to contracts, grants, and other agreements, organizations that work across multiple federal funding instruments need consistent cost-accounting practices that satisfy the Uniform Guidance across award types.
Official Regulatory Text
The OMB Uniform Guidance at 2 CFR part 200 , subpart E and appendix IV, sets forth principles for determining the costs applicable to work performed by nonprofit organizations (as defined in the OMB Uniform Guidance at 2 CFR part 200 ) under contracts (as well as grants and other agreements) with the Government. See 31.108 for exceptions to the cost principles for nonprofit organizations.