FAR 31.703—Requirements.
Plain-English Summary
FAR 31.703 explains how to determine the allowability of costs when a contract points to FAR subpart 31.7 for cost allowability. It says that such contracts are treated as if they refer to the OMB Uniform Guidance at 2 CFR part 200, subpart E, and appendix IV, as those provisions existed on the contract date, and that the contracting officer must use those standards to decide whether costs are allowable. The section also addresses agency policy limits, stating that agencies generally should not add extra restrictions on individual cost items beyond the governing allowability rules. At the same time, it preserves statutory prohibitions by making clear that the costs listed in FAR 31.603(b) are unallowable under 10 U.S.C. 3744 and 41 U.S.C. 4304. In practice, this section matters because it tells contractors and contracting officers which allowability framework controls, prevents agencies from layering on ad hoc cost restrictions, and reinforces that certain costs are barred by law regardless of contract wording.
Key Rules
Uniform Guidance controls allowability
If a contract refers to FAR subpart 31.7 for allowable costs, the allowability determination is made under the OMB Uniform Guidance at 2 CFR part 200, subpart E, and appendix IV. The applicable version is the one in effect on the date of the contract.
Contract date fixes the standard
The governing allowability rules are locked to the Uniform Guidance in effect when the contract is awarded or otherwise dated for this purpose. Later changes to the guidance do not automatically change the allowability standard for that contract.
No extra item-by-item restrictions
Agencies are generally not expected to impose additional restrictions on specific cost items beyond the established allowability framework. This helps keep cost allowability consistent and prevents agency-specific overlays that could conflict with the governing rules.
Statutory unallowables remain barred
Even if a contract or agency practice might suggest otherwise, the costs identified in FAR 31.603(b) are unallowable because federal statutes prohibit them. Contract language cannot override these legal prohibitions.
Responsibilities
Contracting Officer
Apply the OMB Uniform Guidance allowability rules in effect on the contract date when determining whether costs are allowable under contracts that refer to FAR subpart 31.7. Do not impose extra restrictions on individual cost items unless authorized by law or regulation, and ensure statutory unallowables are treated as unallowable.
Agency
Avoid creating additional agency-specific restrictions on individual items of cost that go beyond the governing allowability rules. Ensure internal policy and contract administration practices align with the Uniform Guidance and statutory prohibitions.
Contractor
Charge and support costs using the allowability standards incorporated into the contract, and verify that claimed costs comply with the Uniform Guidance version applicable on the contract date. Exclude costs that are statutorily unallowable, including those listed in FAR 31.603(b).
Practical Implications
Contractors should check the contract date and the incorporated allowability framework before submitting costs, because the applicable Uniform Guidance version is fixed at award and may differ from later revisions.
Contracting officers should use the correct regulatory version and avoid informal or agency-specific cost disallowance rules that are not supported by the governing authorities.
A common pitfall is assuming that a newer version of 2 CFR part 200 automatically applies; under this section, the contract date controls the version used for allowability.
Another risk is overlooking statutory unallowables: even if a cost might otherwise seem reasonable or customary, it must still be rejected if it falls within the prohibited categories referenced in FAR 31.603(b).
This section promotes consistency across procurements, so disputes often turn on whether the contract actually incorporates subpart 31.7 and whether the claimed cost is allowed under the correct version of the Uniform Guidance.
Official Regulatory Text
(a) Contracts which refer to this subpart 31.7 for determining allowable costs 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 IV in effect on the date of the contract. (b) Agencies are not expected to place additional restrictions on individual items of cost. However, under 10 U.S.C. 3744 and 41 U.S.C.4304 , the costs cited in 31.603 (b) are unallowable.