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FAR and DFARS › FAR Part 31: Contract Cost Principles and Procedures › Subpart 31.2

FAR 31.202 Direct costs.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains how contractors must classify costs as either direct or indirect. It prevents the same type of cost from being treated as direct on one contract and indirect on another in similar situations. Contractors may treat small direct costs as indirect only if the accounting is consistent and produces substantially the same result.

Applies to: Contractors accounting for costs on government contracts

What it requires

  • Charge direct costs of the contract directly to the contract
  • Do not charge costs specifically identified with other final cost objectives to the contract directly or indirectly
  • If treating a minor direct cost as indirect, apply the accounting treatment consistently to all final cost objectives
  • If treating a minor direct cost as indirect, ensure it produces substantially the same results as treating it as a direct cost

Key terms: direct cost · indirect cost pool · final cost objective · minor dollar amount

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) No final cost objective shall have allocated to it as a direct cost any cost, if other costs incurred for the same purpose in like circumstances have been included in any indirect cost pool to be allocated to that or any other final cost objective. Direct costs of the contract shall be charged directly to the contract. All costs specifically identified with other final cost objectives of the contractor are direct costs of those cost objectives and are not to be charged to the contract directly or indirectly.

(b) For reasons of practicality, the contractor may treat any direct cost of a minor dollar amount as an indirect cost if the accounting treatment—

(1) Is consistently applied to all final cost objectives; and

(2) Produces substantially the same results as treating the cost as a direct cost.

Sections that refer to it

  • 31.204 Application of principles and procedures.

← 31.201-7 Construction and architect-engineer contracts. · 31.203 Indirect costs. →

Rule changes for FAR Part 31

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 31.202 Direct costs · SpendQuery