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

FAR 42.705 Final indirect cost rates.

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 final indirect cost rates are set for government contracts, either by a contracting officer or an auditor. It also requires contractors to submit a completion invoice or voucher within 120 days after final rates are settled for all years of a physically complete contract, unless the contracting officer approves a longer period in writing. If the contractor misses that deadline, the contracting officer can determine the amounts due and issue a unilateral modification as a final decision.

Applies to: Contractors with physically complete contracts that have final annual indirect cost rates settled

What it requires

  • Submit a completion invoice or voucher within 120 days after settlement of final annual indirect cost rates for all years of a physically complete contract, unless the contracting officer approves a longer period in writing.

Key terms: final indirect cost rates · contracting officer determination procedure · auditor determination procedure · completion invoice or voucher · unilateral modification

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

The text

(a) Final indirect cost rates shall be established on the basis of—

(1) Contracting officer determination procedure (see 42.705-1) or

(2) Auditor determination procedure (see 42.705-2).

(b) Within 120 days (or longer period, if approved in writing by the contracting officer,) after settlement of the final annual indirect cost rates for all years of a physically complete contract, the contractor must submit a completion invoice or voucher reflecting the settled amounts and rates. To determine whether a period longer than 120 days is appropriate, the contracting officer should consider whether there are extenuating circumstances, such as the following:

(1) Pending closeout of subcontracts awaiting Government audit.

(2) Pending contractor, subcontractor, or Government claims.

(3) Delays in the disposition of Government property.

(4) Delays in contract reconciliation.

(5) Any other pertinent factors.

(c)(1) If the contractor fails to submit a completion invoice or voucher within the time specified in paragraph (b) of this section, the contracting officer may—

(i) Determine the amounts due to the contractor under the contract; and

(ii) Record this determination in a unilateral modification to the contract.

(2) This contracting officer determination must be issued as a final decision in accordance with 33.211.

Sections it refers to

  • 42.705-1 Contracting officer determination procedure.
  • 42.705-2 Auditor determination procedure.
  • 33.211 Contracting officer's decision.

Sections that refer to it

← 42.704 Billing rates. · 42.705-1 Contracting officer determination procedure. →

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 42.705 Final indirect cost rates · SpendQuery