Master FAR Part 31 Cost Principles

For negotiated acquisitions, FAR Part 15 generally requires offerors to follow the solicitation’s instructions and provide a proposal that supports the stated evaluation factors. When certified cost or pricing data are required, the proposal must be current, accurate, and complete as of the certification date. Maintain clear cost build-ups, assumptions, indirect-rate support, and records that can support discussions or audit review.

A FAR Part 12 contract is used to acquire commercial products and commercial services. It is intended to rely, where practical, on customary commercial practices and streamlined terms rather than requirements designed solely for government-unique acquisitions. Whether a procurement qualifies depends on the agency’s commerciality determination and solicitation terms. Contractors should still review applicable clauses, pricing requirements, and any flow-down obligations carefully.

FAR Part 31 cost principles provide the framework used to determine whether costs are allowable, allocable, reasonable, and properly supported under government contracts. The rules address many cost categories, including compensation, travel, advertising, interest, and other business expenses. They also distinguish between direct and indirect costs and require contractors to maintain records that substantiate how costs were treated and charged.

FAR Part 31 focuses on the allowability of costs charged to government contracts. Cost Accounting Standards, or CAS, address consistency and disclosure in cost accounting practices for covered contracts and contractors. A cost can require analysis under both frameworks: CAS may govern how it is accumulated or allocated, while FAR Part 31 helps determine whether the amount is allowable for reimbursement or pricing purposes.

Allowability generally requires a cost to be reasonable, allocable to the contract, compliant with applicable cost principles and contract terms, and consistent with the contractor’s established accounting practices. The cost must also be supported by adequate documentation. A review should consider the specific cost category, relevant FAR provisions, the business purpose, timing, approval records, and how the cost was allocated.

Contractors should document the indirect-cost pool, allocation base, accounting methodology, and the rationale for using that base. Records should show that the method is consistently applied, produces an equitable allocation, and aligns with written policies and actual accounting practices. Supporting schedules, general-ledger reconciliations, time records, and explanations of significant changes help make the calculation easier to understand and defend.

FAR Part 31 training is particularly relevant for controllers, CFOs, pricing personnel, contract administrators, accounting staff, program managers, and DCAA-compliance leads at government contractors. Cross-functional participation helps teams connect accounting policies with proposal pricing, contract administration, and supporting documentation. It is especially useful when a business is building internal capability for cost-reimbursable work, CAS coverage, indirect-rate development, or audit preparation.

The Government Contract Accounting & CAS Compliance Pathway is currently enrolling a pilot cohort through QMS Learning. It covers CAS for government contractors and is designed to include FAR Part 31 cost principles, DCAA audit preparation, incurred cost submissions, and indirect rates. A 30-minute demo can help teams review pathway fit, licensing options, available content, and the planned learning experience for their roles.