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FAR and DFARS › FAR Part 42: Contract Administration and Audit Services › Subpart 42.7

FAR 42.702 Purpose.

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 the purpose of establishing final indirect cost rates and billing rates. It aims to ensure a consistent approach when multiple contracts or agencies are involved, reduce administrative burden, and allow timely settlement under cost-reimbursement contracts. Billing rates let contractors get interim reimbursement of indirect costs at estimated rates, which are later adjusted when final rates are set.

Applies to: Contractors with cost-reimbursement contracts and multiple contracts or agencies

Key terms: final indirect cost rates · billing rates · cost-reimbursement contracts · interim reimbursement · indirect costs

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

The text

(a) Establishing final indirect cost rates under this subpart provides—

(1) Uniformity of approach with a contractor when more than one contract or agency is involved;

(2) Economy of administration; and

(3) Timely settlement under cost-reimbursement contracts.

(b) Establishing billing rates provides a method for interim reimbursement of indirect costs at estimated rates subject to adjustment during contract performance and at the time the final indirect cost rates are established.

← 42.701 Definition. · 42.703 General. →

Rule changes for FAR Part 42

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

FAR 42.702 Purpose · SpendQuery