Overview
This section establishes that FAR Part 31 cost principles govern the determination and negotiation of costs for contract termination settlements, ensuring consistency with general termination policies.
Key Rules
- Mandatory Application: For contracts with entities other than educational institutions, FAR Part 31 cost principles must be used to assert, negotiate, or determine all relevant termination costs.
- Guidance for Education: For experimental, developmental, or research work with educational institutions, FAR Part 31 serves as a guide rather than a strict mandate (referencing FAR 31.104).
- Subordination: The application of these cost principles is subject to the general principles of fair compensation outlined in FAR 49.201.
Practical Implications
- Contractors must ensure that all costs claimed in a Termination Settlement Proposal (TSP) are allowable, allocable, and reasonable under FAR Part 31 to avoid disallowance during audit or negotiation.
- While Part 31 provides the framework, the overriding goal is to provide the contractor fair compensation, which may allow for more equitable cost considerations than a standard performance environment.