FAR 52.230-7—Proposal Disclosure-Cost Accounting Practice Changes.
Plain-English Summary
FAR 52.230-7 is a solicitation provision used to identify whether award of the contract will require a change in the offeror’s cost accounting practice and, if so, to make sure the proposal is priced on the correct basis. It addresses three main topics: the offeror’s duty to disclose whether the award will result in a required or unilateral cost accounting practice change, including unilateral changes requested to be treated as desirable changes; the requirement to prepare the price proposal using the changed practice for the portion of performance when that practice will apply; and the requirement to submit a description of the changed practice to both the Contracting Officer and the Cognizant Federal Agency Official as pricing support. The provision exists to prevent proposals from being built on an accounting method that will not actually govern performance, which could distort pricing, evaluation, and later cost accounting compliance. In practice, it helps the Government understand whether the offeror’s proposed price reflects an impending accounting change and gives the Government the information needed to evaluate the proposal consistently and document the basis for the price. It is especially important in cost-reimbursement, flexibly priced, or other contracts where cost accounting practices materially affect how costs are accumulated, allocated, and billed.
Key Rules
Disclose required changes
The offeror must indicate whether contract award will result in a required or unilateral change in cost accounting practice. This includes unilateral changes that the contractor has requested be treated as desirable changes.
Use changed practice in pricing
If the answer is yes, the offeror must prepare the price proposal using the changed practice for the period of performance during which that practice will apply. The proposal should therefore reflect the accounting method that will govern the contract, not the pre-change method.
Provide change description
If a change is identified, the offeror must submit a description of the changed cost accounting practice to the Contracting Officer and the Cognizant Federal Agency Official. This submission serves as pricing support and helps the Government evaluate the proposal.
Applies at proposal stage
This is a solicitation provision, so the disclosure and supporting information are required during proposal preparation and submission, before award. It is intended to inform the Government’s price analysis and negotiation.
Covers unilateral and required changes
The provision is not limited to voluntary changes. It also captures changes that are required by regulation or contract, as well as unilateral changes the contractor initiates and seeks to have treated as desirable changes.
Responsibilities
Offeror / Contractor
Determine whether award will trigger a required or unilateral cost accounting practice change, check yes or no accordingly, price the proposal using the changed practice for the applicable performance period if the answer is yes, and provide a description of the changed practice as pricing support.
Contracting Officer
Review the offeror’s disclosure and supporting description, use the information in evaluating the proposal and negotiating price, and ensure the solicitation record reflects the disclosed accounting change.
Cognizant Federal Agency Official
Receive the description of the changed cost accounting practice, use it to support oversight and consistency of cost accounting treatment, and coordinate as needed on the implications of the change.
Practical Implications
Contractors must align their proposal pricing with the accounting practice that will actually apply after award; otherwise, the proposal may be understated or overstated and could be challenged during evaluation.
A common pitfall is failing to recognize that a change is triggered by award, especially when the change is required by CAS compliance, a restructuring of cost pools, or a unilateral change the contractor wants treated as desirable.
The description submitted to the Contracting Officer and CFAO should be clear enough to explain what changed, when it applies, and how it affects pricing; vague descriptions can delay evaluation or raise questions about proposal realism.
This provision can affect both price analysis and negotiations because the Government may need to understand whether differences in proposed cost are driven by the accounting change rather than by efficiency, margin, or technical factors.
Contractors should coordinate early with accounting and pricing teams so the proposal, disclosure, and supporting documentation are consistent and do not create later disputes over cost allowability or pricing basis.
Official Regulatory Text
As prescribed in 30.201-3 (c) , insert the following provision: Proposal Disclosure-Cost Accounting Practice Changes (Apr 2005) The offeror shall check "yes" below if the contract award will result in a required or unilateral change in cost accounting practice, including unilateral changes requested to be desirable changes. □ Yes □ No If the offeror checked "Yes" above, the offeror shall- (1) Prepare the price proposal in response to the solicitation using the changed practice for the period of performance for which the practice will be used; and (2) Submit a description of the changed cost accounting practice to the Contracting Officer and the Cognizant Federal Agency Official as pricing support for the proposal. (End of provision)