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48 CFR · Federal Acquisition Regulation and Defense supplement

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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.

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27 sections with “unallowable indirect costs”

  • FAR 52.242-3 Penalties for Unallowable Costs.
    As prescribed in 42.709-7, use the following clause: Penalties for Unallowable Costs (DEC 2022) (a) Definition. Proposal, as used in this clause, means either— (1) A final indirect cost rate proposal submitted by the Contractor after the…
  • FAR 31.201-6 Accounting for unallowable costs.
    (a) Costs that are expressly unallowable or mutually agreed to be unallowable, including mutually agreed to be unallowable directly associated costs, shall be identified and excluded from any billing, claim, or proposal applicable to a Gove…
  • FAR 31.110 Indirect cost rate certification and penalties on unallowable costs.
    …arding the certification provisions and the related contract clause prescription. (b) If unallowable costs are included in final indirect cost settlement proposals, penalties may be assessed. See 42.709 for administrative procedures regard…
  • FAR 42.703-2 Certificate of indirect costs.
    …rally should be— (i) Based on audited historical data or other available data as long as unallowable costs are excluded; and (ii) Set low enough to ensure that unallowable costs will not be reimbursed. (d) False certification. The contra…
  • FAR 31.203 Indirect costs.
    …e base all items that would properly be part of the cost input base, whether allowable or unallowable, and these items shall bear their pro rata share of G&A costs. (e) The method of allocating indirect costs may require revision when ther…
  • FAR 31.205-22 Lobbying and political activity costs.
    (a) Costs associated with the following activities are unallowable: (1) Attempts to influence the outcomes of any Federal, State, or local election, referendum, initiative, or similar procedure, through in kind or cash contributions, endor…
  • FAR 52.242-4 Certification of Final Indirect Costs.
    …st rates will apply; and 2. This proposal does not include any costs which are expressly unallowable under applicable cost principles of the FAR or its supplements. (End of clause)
  • FAR 31.205-35 Relocation costs.
    …ate employees to relocate promptly and economically. (3) The costs must not be otherwise unallowable under subpart 31.2. (4) Amounts to be reimbursed shall not exceed the employee's actual expenses, except as provided for in paragraphs (b…
  • FAR 31.205-6 Compensation for personal services.
    …d after it, an opportunity to review the allowability of the changes. (5) Costs that are unallowable under other paragraphs of this Subpart 31.2 are not allowable under this subsection 31.205-6 solely on the basis that they constitute comp…
  • FAR 31.205-13 Employee morale, health, welfare, food service, and dormitory costs and credits.
    …ines, living accommodations; and (ii) Similar types of services. (b) Costs of gifts are unallowable. (Gifts do not include awards for performance made pursuant to 31.205-6(f) or awards made in recognition of employee achievements pursuant…
  • FAR 31.205-18 Independent research and development and bid and proposal costs.
    …Deferred IR&D costs. (1) IR&D costs that were incurred in previous accounting periods are unallowable, except when a contractor has developed a specific product at its own risk in anticipation of recovering the development costs in the sale…
  • FAR 31.205-46 Travel costs.
    …of the lowest priced airfare available to the contractor during normal business hours are unallowable except when such accommodations require circuitous routing, require travel during unreasonable hours, excessively prolong travel, result i…
  • FAR 42.709-6 Waiver of the penalty.
    … audit work on a specific final indirect cost proposal has begun); (b) The amount of the unallowable costs under the proposal which are subject to the penalty is $10,000 or less (i.e., if the amount of expressly or previously determined un…
  • FAR 31.105 Construction and architect-engineer contracts.
    …uipment (see subdivisions (d)(2)(i)(B) and (C) of this section). However, costs otherwise unallowable under this part shall not become allowable through the use of any schedule (see 31.109(c)). For example, schedules need to be adjusted for…
  • FAR 31.205-42 Termination costs.
    …e to the negligent or willful failure of the contractor to discontinue the costs shall be unallowable. (c) Initial costs. Initial costs, including starting load and preparatory costs, are allowable as follows: (1) Starting load costs not …
  • FAR 42.801 Notice of intent to disallow costs.
    …ontractor as early as practicable during contract performance that the cost is considered unallowable under the contract terms and to provide for timely resolution of any resulting disagreement. In the event of disagreement, the contractor …
  • FAR 42.709-1 Scope.
    …d 41 U.S.C. 4303. It covers the assessment of penalties against contractors which include unallowable indirect costs in— (1) Final indirect cost rate proposals; or (2) The final statement of costs incurred or estimated to be incurred unde…
  • FAR 42.709-2 General.
    …alties apply to contracts covered by this section: (1) If the indirect cost is expressly unallowable under a cost principle in the FAR, or an executive agency supplement to the FAR, that defines the allowability of specific selected costs,…
  • FAR 42.709-3 Responsibilities.
    …te coordination of remedies, if there is evidence that the contractor knowingly submitted unallowable costs. (b) The contract auditor, in the review and/or the determination of final indirect cost proposals for contracts subject to this se…
  • FAR 31.001 Definitions.
    … future result in terms of cost, based upon information available at the time. Expressly unallowable cost means a particular item or type of cost which, under the express provisions of an applicable law, regulation, or contract, is specifi…
  • FAR 42.704 Billing rates.
    …l indirect cost rates anticipated for the contractor's fiscal period, as adjusted for any unallowable costs. When the contracting officer (or cognizant Federal agency official) or auditor determines that the dollar value of contracts requir…
  • FAR 2.101 Definitions.
    …parate contract or to a special contract requirement governing their use or disposition. Unallowable cost means any cost that, under the provisions of any pertinent law, regulation, or contract, cannot be included in prices, cost-reimburse…
  • FAR 31.603 Requirements.
    … U.S.C. 3744, 41 U.S.C. 4304, 31 U.S.C. 3730, and 41 U.S.C. 4310, the following costs are unallowable: (1) Costs of entertainment, including amusement, diversion, and social activities, and any costs directly associated with such costs (su…
  • FAR 42.705-1 Contracting officer determination procedure.
    …nce with 42.706. (v) Notify the contractor of the individual costs which were considered unallowable and the respective amounts of the disallowance.
  • FAR 52.215-23 Limitations on Pass-Through Charges.
    … exist; (1) For other than fixed-price contracts, the excessive pass-through charges are unallowable in accordance with the provisions in FAR subpart 31.2; and (2) For applicable DoD fixed-price contracts, as identified in 15.408(n)(2)(i)…
  • FAR 52.216-7 Allowable Cost and Payment.
    …anged from the previous year's submission). (E) Procedures for identifying and excluding unallowable costs from the costs claimed and billed (excludes contractors where the procedures have not changed from the previous year's submission). …
  • DFARS 231.303 Requirements.
    …ents under DoD contracts. (3) Under 10 U.S.C. 4652, the costs cited in 231.205-22(a) are unallowable.

FAR (chapter 1)

DFARS (chapter 2, Defense)

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Rule changes in progress: FAR, DFARS. Terms: glossary.