Monday, September 29, 2014

2014 Version of the FAR Cost Principles Guide

The FAR (Federal Acquisition Regulation) Cost Principles Guide has now been updated through FAC (Federal Acquisition Circular) 2005-76 (September 2014) and is available for download here. The previous update was January 2013 (through FAC 2005-65).

The FAR Cost Principles Guide traces all the changes to FAR cost principles since the inception of the FAR system in 1984. It is useful for determining the precise cost principle in effect at the time a particular contract was awarded. While some cost principles have not changed in the ensuing years (e.g. bad debt expense, alcoholic beverages) most have undergone some form of revision and some have even been eliminated (ADP equipment). The Compensation cost principle (FAR 31.205-6), for example, has been revised 39 times. Six of those changes were effective in 2013 and 2014. By contrast, FAR 31.205-51, Cost of Alcoholic Beverages, has never changed since its first introduction in 1986.

The Government's contract auditors are busy clearing up its backlog of old incurred cost submissions. These audits, going back to 2006 in some cases (and perhaps earlier), must evaluate costs based on the cost principles in effect during that year or, in some cases, when the contract was awarded. Any challenges to claimed costs must cite not only the correct cost principle, but the correct version of that cost principle. This guide will help ensure accuracy on everyone's part.

Thanks to a reader who alerted us that the "Guide" had been recently updated.

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