FAR 42—Contract Administration and Audit Services

Scope of part.

FAR 42.000 is the scope statement for FAR Part 42, and it tells readers what this part is about: the policies and procedures for assigning and performing contract administration services and contract audit services. In practice, this means Part 42 governs how the Government decides which office or organization will handle post-award administration tasks, and how audit support is provided for contract oversight. It is the gateway to the broader rules in Part 42 on administration responsibilities, surveillance, audits, and related support functions. The section is short, but it is important because it defines the operational reach of the part and signals that the rules that follow are intended to support effective contract management after award. For contracting officers, contractors, and audit personnel, this section matters because it frames who is responsible for monitoring performance, managing contract changes and administration actions, and obtaining audit services when needed.

Subpart 42.1

[Reserved]

Subpart 42.2

Interagency agreements.

FAR 42.002 addresses how federal agencies should coordinate when more than one agency has oversight or audit-type interests in the same contractor or subcontractor. It covers three related topics: avoiding duplicate audits, reviews, inspections, and examinations through interagency agreements; reimbursing a servicing agency for work it performs for another agency under the Economy Act and the agencies’ fiscal rules; and, when an agreement is in place, encouraging the agencies to set up procedures for resolving disputes or other issues that arise under the agreement. In practice, this section is about reducing unnecessary burden on contractors, preventing agencies from duplicating oversight work, and making sure interagency support arrangements are financially and administratively proper. It matters because multiple agencies may otherwise independently request the same information or perform the same oversight activity, which wastes government resources and can create conflicting demands on contractors. The reimbursement requirement also ensures the servicing agency is paid in accordance with law and applicable fiscal controls. Finally, the dispute-resolution encouragement helps agencies manage coordination problems before they disrupt contract administration or oversight.

Cognizant Federal agency.

FAR 42.003 explains how the Government determines the "cognizant Federal agency" for a contractor and how that designation is maintained or transferred over time. It covers two different contractor groups: most contractors, for whom cognizance normally goes to the agency with the largest dollar amount of negotiated contracts including options, and educational institutions and nonprofit organizations, for which cognizance for indirect costs is assigned under the OMB Uniform Guidance at 2 CFR part 200, including the specific appendices that govern those entities. The section also addresses continuity of administration by stating that once an agency assumes cognizance, it should generally keep that role for at least five years. After that period, if another agency has the largest dollar amount of negotiated contracts including options, the agencies must coordinate and decide which one will take cognizance. The rule also allows an earlier transfer when circumstances justify it and the affected agencies agree. In practice, this designation matters because it affects which agency leads certain indirect cost, audit, and administrative oversight functions, so contractors and agencies need to track contract volume, entity type, and interagency coordination carefully.

Subpart 42.3

Subpart 42.4

Subpart 42.5

Subpart 42.6

Subpart 42.7

Subpart 42.8

Subpart 42.9