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FAR Part 31 — Contract Cost Principles and Procedures

FAR Part 31 establishes contract cost principles and procedures for determining allowable costs under government contracts. Subpart 31.2 covers costs applicable to commercial organizations (the most frequently referenced subpart), including 50+ specific cost items from compensation (31.205-6) to travel (31.205-46). Subpart 31.3 covers educational institutions, Subpart 31.6 addresses state and local governments, and Subpart 31.7 covers nonprofit organizations. Each cost must be reasonable, allocable, and in accordance with CAS and FAR provisions.

Why Part 31 Matters

Part 31 is the backbone of cost-reimbursement and flexibly-priced contract administration. Every cost charged to a government contract must pass the tests of allowability, allocability, and reasonableness. Specific unallowable costs — entertainment, lobbying, fines/penalties, certain compensation — are closely audited by DCAA. Mischarging unallowable costs can result in contract penalties, withholds, and False Claims Act exposure.

Key Topics in Part 31

FAR Part 31 addresses several critical areas of the federal acquisition process. Understanding these topics is essential for both contracting officers and contractors working within this regulatory framework.

  • Allowability, allocability, and reasonableness standards
  • Selected costs — compensation, travel, IR&D (Subpart 31.205)
  • Expressly unallowable costs
  • Direct vs. indirect cost allocation
  • Advance agreements on cost treatment (Subpart 31.109)
  • Educational institution cost principles (Subpart 31.3)
  • State/local government cost principles (Subpart 31.6)
  • DCAA audit of incurred costs

How FAR Part 31 Applies

The Federal Acquisition Regulation is organized into 53 parts, each covering a distinct area of the procurement process. Part 31 (Contract Cost Principles and Procedures) is part of this framework and works in conjunction with other FAR parts to create a comprehensive regulatory structure. Contracting officers must comply with all applicable parts when executing procurement actions, and contractors must understand the requirements that flow from these regulations into their contracts.

The requirements in Part 31 may be implemented through specific contract clauses prescribed in FAR Part 52. When a clause references Part 31, the substantive requirements originate here, while Part 52 provides the actual clause language incorporated into contracts and solicitations.

Agency supplements: Individual federal agencies may supplement FAR Part 31 with additional requirements. The most common supplements include the Defense Federal Acquisition Regulation Supplement (DFARS), General Services Administration Acquisition Manual (GSAM), and NASA FAR Supplement (NFS). Always check applicable agency supplements when working on specific procurements.

Subparts

FAR Part 31 is divided into 6 subparts, each addressing a specific aspect of contract cost principles and procedures.

  • 31.1 — Applicability
  • 31.2 — Contracts With Commercial Organizations
  • 31.3 — Contracts With Educational Institutions
  • 31.4-31.5 — Subparts 31.4-31.5 [Reserved]
  • 31.6 — Contracts With State, Local, and Federally Recognized Indian Tribal Governments
  • 31.7 — Contracts With Nonprofit Organizations

Reading FAR Part 31

The full text of FAR Part 31 is available on the Electronic Code of Federal Regulations (eCFR). The eCFR provides the most current version of the regulation, including any recent amendments published through Federal Acquisition Circulars (FACs). For historical versions, use the eCFR's point-in-time search feature.

  • What does FAR Part 31 cover?

    FAR Part 31 covers contract cost principles and procedures within the federal acquisition process. FAR Part 31 establishes contract cost principles and procedures for determining allowable costs under government contracts. Subpart 31.2 covers costs applicable to commercial organizations (the most frequently referenced subpart), including 50+ specific cost items from compensation (31.205-6) to travel (31.205-46). Subpart 31.3 covers educational institutions, Subpart 31.6 addresses state and local governments, and Subpart 31.7 covers nonprofit organizations. Each cost must be reasonable, allocable, and in accordance with CAS and FAR provisions.

  • Who must comply with FAR Part 31?

    FAR Part 31 applies to all executive branch agencies conducting acquisitions, unless a specific exemption exists. Contractors must comply with the requirements that are incorporated into their contracts through prescribed clauses from FAR Part 52. Agency-specific supplements (DFARS, GSAM, etc.) may add additional requirements beyond the base FAR.

  • Where can I read the full text of FAR Part 31?

    The full text is available on the Electronic Code of Federal Regulations (eCFR). You can also access it through acquisition.gov, which is maintained by the General Services Administration. Both sources reflect the most current version of the regulation.

  • How does FAR Part 31 relate to contract clauses?

    FAR Part 31 establishes the substantive policies and procedures. The actual clause language that gets incorporated into contracts is found in FAR Part 52. Each clause in Part 52 includes a "prescription" that references the relevant policy part, creating a direct link between the requirement and its implementation in the contract.

Adjacent Parts

Part 30 — Cost Accounting Standards AdministrationPart 32 — Contract FinancingAll FAR PartsFAR Clause LookupPart 15 — Contracting by NegotiationPart 16 — Types of ContractsPart 30 — Cost Accounting Standards AdministrationPart 32 — Contract FinancingPart 42 — Contract Administration and Audit ServicesPart 52 — Solicitation Provisions and Contract Clauses

Data sourced from eCFR . Federal contracting data is public domain.