Guide to Contract Pricing, 5th Edition

CHAPTER 4

Cost Principles and Cost Classifications

FAR Part 31 contains the cost principles and procedures for:

(a) the pricing of contracts, subcontracts, and modifications to contracts and subcontracts whenever cost analysis is performed (see 15.404-1(c)); and (b) the determination, negotiation, or allowance of costs when required by a contract clause. (FAR 31.000)

You use the cost principles and procedures to price contracts, subcontracts, and contract modifications whenever you must use cost analysis. You will use cost analysis any time you cannot depend on price analysis alone to establish a reasonable price. This could happen when you are negotiating a fixed-price contract with a single source or any time you do not have enough reliable ...