FAR 42.800—Scope of subpart.
Plain-English Summary
FAR 42.800 is a scope provision that tells readers what this subpart is about: the policies and procedures for issuing notices of intent to disallow costs and for actually disallowing costs that have already been incurred during contract performance. In practice, this means the subpart governs how the Government alerts a contractor that certain claimed or billed costs may be rejected, and how it formally determines that those costs are unallowable and should not be paid, reimbursed, or retained. The section is important because cost disallowance affects payment, indirect cost recovery, final billing, and potential repayment obligations, especially under cost-reimbursement, time-and-materials, and other contracts where cost allowability matters. It also signals that the Government must follow prescribed procedures before disallowing costs, rather than simply refusing payment informally. For contractors, this section is a warning that questioned costs can become formal disallowances after performance, so records, support, and responsiveness to notices matter. For contracting officers and auditors, it frames the administrative process for protecting the Government’s interests while giving the contractor notice and an opportunity to respond where required by the applicable procedures.
Key Rules
Scope is limited to cost disallowance
This subpart applies specifically to notices of intent to disallow costs and to the disallowance of costs already incurred during performance. It does not itself establish which costs are allowable; it governs the process for challenging and rejecting costs under the applicable contract and cost principles.
Notice before disallowance
The subpart covers the Government’s issuance of a notice of intent to disallow costs, which is the formal step used to advise the contractor that certain costs are being questioned and may be disallowed. This notice function is a key procedural safeguard and a trigger for contractor review and response under the broader subpart procedures.
Disallowance of incurred costs
The subpart also covers the actual disallowance of costs that have already been incurred during contract performance. This means the Government may determine that previously billed, claimed, or recorded costs are not payable or reimbursable, even though the contractor has already spent the money.
Procedural framework only
FAR 42.800 is a scope statement, so it does not provide the detailed steps, timing, or documentation requirements by itself. Instead, it identifies the subject matter for the rest of the subpart, which contains the operative rules and procedures contracting personnel must follow.
Responsibilities
Contracting Officer
Use the subpart’s procedures when issuing notices of intent to disallow costs and when making formal disallowance determinations for costs already incurred. Ensure the contractor is properly informed and that any disallowance action is handled under the applicable FAR procedures and contract terms.
Contractor
Review any notice of intent to disallow costs, identify the affected costs, and provide support, explanation, or correction as appropriate. If costs are ultimately disallowed, adjust billing, accounting, or reimbursement requests and address any repayment or credit issues.
Agency
Apply consistent policies and procedures for cost disallowance across contracting activities and ensure personnel follow the subpart when questioning or rejecting incurred costs. Support oversight, audit coordination, and enforcement of allowability requirements.
Auditor or Reviewing Official
Identify questioned costs and provide findings or recommendations that may lead to a notice of intent to disallow costs or a formal disallowance action. Document the basis for the questioned costs so the contracting officer can act under the subpart.
Practical Implications
This section matters whenever a contractor is billing costs under a contract where allowability is an issue, because it marks the start of the formal disallowance process.
A common pitfall is treating questioned costs as automatically unallowable without following the required notice and decision procedures; the subpart exists to structure that process.
Contractors should keep strong cost documentation and be ready to respond quickly to notices, since incurred costs can be disallowed after the fact and may require repayment or billing adjustments.
Contracting officers should use the subpart consistently to avoid unsupported disallowances, disputes, or payment errors.
Because this is only the scope section, users must read the rest of the subpart for the actual procedural requirements, deadlines, and decision authority.
Official Regulatory Text
This subpart prescribes policies and procedures for- (a) Issuing notices of intent to disallow costs; and (b) Disallowing costs already incurred during the course of performance.