Overview
FAR 42.800 defines the scope of Subpart 42.8, which outlines the policies and procedures for the government to notify contractors of potentially unallowable costs and to formally disallow costs that have already been incurred.
Key Rules
- Notice of Intent: Establishes the framework for the government to issue formal notices indicating an intent to disallow specific costs.
- Disallowance of Incurred Costs: Governs the process for the formal rejection of costs that a contractor has already charged to a contract during its performance.
- Performance Phase Focus: Applies specifically to cost monitoring and management while the contract is active, rather than only at final closeout.
Practical Implications
- Contractors must maintain rigorous cost accounting standards because the government has the authority to proactively challenge and reject expenses at any point during the period of performance.
- The formal "notice of intent" serves as a critical warning system, allowing contractors to provide justification for costs or adjust their billing practices before a final disallowance occurs.