Overview
FAR Subpart 31.3 establishes the cost principles used to determine the allowability of costs for research and development (R&D), training, and other services performed by educational institutions under government contracts. Rather than creating a separate set of rules, this subpart explicitly adopts the OMB Uniform Guidance (2 CFR part 200) as the governing standard for these entities.
Key Rules
- Adoption of OMB Uniform Guidance: The allowability of costs for educational institutions is determined specifically by 2 CFR part 200, subpart E and appendix III.
- Definition of Educational Institution: These are defined as "institutions of higher education" as per 2 CFR part 200, subpart A, and 20 U.S.C. 1001.
- Effective Date: The version of the OMB Uniform Guidance in effect on the date of the contract award is the version that governs cost allowability for the duration of that contract.
- Limitation on Agency Restrictions: Federal agencies are directed not to place additional restrictions on individual items of cost beyond what is already established in the OMB Uniform Guidance.
Responsibilities
- Contracting Officers (CO): Responsible for determining the allowability of costs by applying the standards found in 2 CFR part 200.
- Educational Institutions (Contractors): Must maintain accounting systems and cost-allocation methods that comply with the OMB Uniform Guidance to ensure their R&D and training costs are reimbursable.
- Federal Agencies: Tasked with ensuring that their specific agency supplements do not create redundant or conflicting restrictions on costs that are otherwise covered by the Uniform Guidance.
Practical Implications
- Administrative Consistency: This subpart provides a unified framework for universities, allowing them to use the same cost principles for both federal grants and federal contracts. This reduces the administrative burden on university research departments that handle various types of federal funding.
- Precedence of OMB Rules: Because FAR 31.3 defers to 2 CFR 200, contractors and auditors must look outside the FAR (to the Code of Federal Regulations) to resolve disputes regarding indirect cost rates (F&A costs) or specific item allowability (e.g., travel or equipment).
- Audit Preparedness: Educational institutions must ensure their internal controls are aligned with the "Uniform Guidance" rather than the standard FAR Part 31.2 principles used by commercial for-profit contractors.