[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2002]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR31.204]

[Page 578]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES--Table of Contents
 
          Subpart 31.2--Contracts With Commercial Organizations
 
Sec. 31.204  Application of principles and procedures.

    (a) Costs shall be allowed 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) Costs incurred as reimbursements or payments to a subcontractor 
under a cost-reimbursement, fixed-price incentive, or price 
redeterminable type subcontract of any tier above the first firm-fixed-
price subcontract or fixed-price subcontract with economic price 
adjustment provisions are allowable to the extent that allowance is 
consistent with the appropriate subpart of this part 31 applicable to 
the subcontract involved. Costs incurred as payments under firm-fixed-
price subcontracts or fixed-price subcontracts with economic price 
adjustment provisions or modifications thereto, when cost analysis was 
performed under 15.404-1(c), shall be allowable only to the extent that 
the price was negotiated in accordance with 31.102.
    (c) Section 31.205 does not cover every element of cost. Failure to 
include any item of cost does not imply 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]

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