Overview
FAR 31.101 establishes the framework for applying federal cost principles based on organizational type to ensure that similar entities performing similar work are treated uniformly.
Key Rules
- Organizational Grouping: Cost principles are categorized by the type of entity involved, such as commercial concerns or educational institutions.
- Uniformity Requirement: The primary goal is to ensure that, where practicable, all organizations of the same type follow the same cost procedures and principles.
- Deviation Approvals: Deviations from standard cost principles are strictly controlled and require high-level authorization:
- Individual Deviations: Require approval from the agency head or a designated official.
- Civilian Agency Class Deviations: Require approval from the Civilian Agency Acquisition Council (CAAC).
- NASA Class Deviations: Require approval from the Deputy Chief Acquisition Officer.
- DoD Class Deviations: Require approval from the Principal Director, Defense Pricing and Contracting (OUSD A&S).
Practical Implications
- Contractors must ensure they are applying the specific cost principles corresponding to their legal organizational structure (e.g., a commercial firm cannot arbitrarily use rules intended for a non-profit).
- Because deviations require executive-level approval, contractors should expect standard cost principles to be strictly enforced with very little room for negotiation at the Contracting Officer level.