What is Federal Acquisition Regulation (FAR) Part 31?
It’s important for all government contractors to understand the Federal Acquisition Regulation (FAR) Part 31 principle.
This principle explains what costs are reimbursable for contractors and which aren’t.
Failing to understand will this part of the law will bite contractors in the pocket, either because they’ll end up missing out on reimbursements or because they’ll falsely claim reimbursements and attract penalties.
The Importance of FAR Part 31
If a contract requires cost analysis or states that costs need to be determined, FAR Part 31 will apply. If there are no statements like this in the contact, it’s likely the job doesn’t fall under the jurisdiction of FAR Part 31.
Without such legislation in place, there’d be no consistency between the principles and procedures followed by government contractors, and some would receive more reimbursements than others. The fact that FAR Part 31 exists makes it easier for the government to verify and reimburse expenses for contractors.
The Key Points Contained in FAR Part 31
Below is a beginner’s guide to the key points contained in this legislation. If you’re affected by this rule, it’s almost definitely going to be worth your while reading up on the full rules or hiring an accountant, who will definitely be clued up everything you’d need to know on reimbursable expenses for contractors.
A key point to remember is that all reimbursed costs should be necessary and reasonable. If you buy unnecessary equipment or pay an extremely over-inflated price for it, then you may not receive a full reimbursement. Your contract will usually state which items are necessary to buy, and usually what items aren’t. There are some general guidelines to what costs won’t be reimbursed within FAR Part 31 too.
FAR Part 1 states that all costs need to be recorded and submitted using the accounting standards set for government contractors in pamphlet no. 7641.90.
Keep in mind that costs qualifying as reimbursable can vary across individual projects, so it’s always worth reading your contract and looking out for specific clauses. Failing to do so could results in errors being made, reimbursements being delayed, and penalties being applied.
Don’t leave money on the table. Get acquainted with FAR Part 31 today and keep more of your hard-earned money in your pocket.
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