[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.204]

[Page 609-610]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
Sec. 31.204  Application of principles and procedures.

    (a) Costs are allowable to the extent they are reasonable, 
allocable, and determined to be allowable under 31.201, 31.202, 31.203, 
and 31.205. These criteria apply to all of the selected items that 
follow, even if particular guidance is provided for certain items for 
emphasis or clarity.
    (b)(1) For the following subcontract types, costs incurred as 
reimbursements or payments to a subcontractor are allowable to the 
extent the reimbursements or payments are for costs incurred by the 
subcontractor that are consistent with this part:
    (i) Cost-reimbursement.
    (ii) Fixed-price incentive.
    (iii) Price redeterminable (i.e., fixed-price contracts with 
prospective price redetermination and fixed-ceiling-price contracts with 
retroactive price redetermination).
    (2) The requirements of paragraph (b)(1) of this section apply to 
any tier above the first firm-fixed-price subcontract or fixed-price 
subcontract with economic price adjustment provisions.
    (c) Costs incurred as payments under firm-fixed-price subcontracts 
or fixed-price subcontracts with economic price adjustment provisions or 
modifications thereto, for which subcontract cost analysis was performed 
are allowable if the price was negotiated in accordance with 31.102.
    (d) Section 31.205 does not cover every element of cost. Failure to 
include any item of cost does not imply

[[Page 610]]

that it is either allowable or unallowable. The determination of 
allowability shall be based on the principles and standards in this 
subpart and the treatment of similar or related selected items. When 
more than one subsection in 31.205 is relevant to a contractor cost, the 
cost shall be apportioned among the applicable subsections, and the 
determination of allowability of each portion shall be based on the 
guidance contained in the applicable subsection. When a cost, to which 
more than one subsection in 31.205 is relevant, cannot be apportioned, 
the determination of allowability shall be based on the guidance 
contained in the subsection that most specifically deals with, or best 
captures the essential nature of, the cost at issue.

[48 FR 42301, Sept. 19, 1983, as amended at 53 FR 17858, May 18, 1988; 
62 FR 51271, Sept. 30, 1997; 69 FR 34242, June 18, 2004]