Overview
FAR 42.700 defines the regulatory boundaries of Subpart 42.7, establishing that its primary purpose is to provide the policies and procedures for determining both interim and permanent indirect cost rates.
Key Rules
- Billing Rates: The subpart governs the establishment of temporary rates used for the interim reimbursement of indirect costs during an active performance period.
- Final Indirect Cost Rates: The subpart prescribes the requirements for determining the actual, finalized indirect rates used for cost reconciliation and contract closeout.
Practical Implications
- Contractors must follow the procedures in this subpart to ensure they can accurately invoice the government for indirect expenses throughout the contract lifecycle.
- This section sets the stage for the transition from estimated "billing" rates to audited "final" rates, which is essential for the legal settlement of cost-reimbursement contracts.