**PART 1831**

# CONTRACT COST PRINCIPLES AND PROCEDURES

**TABLE OF CONTENTS**

**SUBPART 1831.2 CONTRACTS WITH COMMERCIAL ORGANIZATIONS**

1831.205 Selected costs.

1831.205-6 Compensation for personal services.

1831.205-670 Evaluation of contractor and subcontractor compensation for
service contracts.

1831.205-671 Solicitation provision.

1831.205-32 Precontract costs.

[**1831.205-70**](#OLE_LINK31_205_70) Contract clause.

**PART 1831**

# CONTRACT COST PRINCIPLES AND PROCEDURES

**Subpart 1831.2\--Contracts with Commercial Organizations**

**1831.205 Selected costs.**

**1831.205-6 Compensation for personal services.**

**1831.205-670 Evaluation of contractor and subcontractor compensation
for service contracts.**

\(a\) The contracting officer must evaluate the reasonableness of
compensation for service contracts:

\(1\) Prior to the award of a cost reimbursement or non-competitive
fixed-price type contract which has a total potential value in excess of
\$500,000, and

\(2\) Periodically after award for cost reimbursement contracts, but at
least every three years.

\(b\) The contracting officer must ensure the reasonableness of
compensation is evaluated for cost reimbursement or non-competitive
fixed-price type service subcontracts under a prime contract meeting the
criteria in paragraph (a)(1) of this section where:

\(1\) The subcontract has a total potential value in excess of
\$500,000; and

\(2\) The cumulative value of all of a subcontractor\'s service
subcontracts under the prime contract is in excess of 10 percent of the
prime contract\'s total potential value.

(c)(1) Offerors must be required to submit as part of their proposals a
compensation plan addressing all proposed labor categories. Offerors
also must demonstrate in writing that their proposed compensation is
reasonable.

\(2\) Subcontractors meeting the criteria in paragraph (b) of this
section must be required to comply with paragraph (c)(1).

\(d\) The contracting officer\'s preaward evaluation of each offeror\'s
and their subcontractors\' compensation should be done as part of, or in
addition to DCAA audits, price analyses, or any other means deemed to be
necessary.

\(e\) The results of the contracting officer\'s evaluation, including
any excessive compensation found and its planned resolution, must be
addressed in the prenegotiation position memorandum, with the final
resolution discussed in the price negotiation memorandum.

\(f\) The contracting officer must ensure that the reasonableness of
compensation for cost reimbursement subcontracts meeting the criteria in
paragraphs (b)(1) and (2) of this section is periodically reviewed after
award, but at least every three years.

\(g\) The results of the periodic evaluations of contractor and
subcontractor compensation after contract award must be documented in
the contract file.

**1831.205-671 Solicitation provision.**

The contracting officer must insert a provision substantially the same
as the provision at
[**1852.231-71**](http://www.hq.nasa.gov/office/procurement/regs/5227.htm),
Determination of Compensation, in solicitations for services which
contemplate the award of a cost reimbursement or non-competitive
fixed-price type service contract having a total potential value in
excess of \$500,000.

**1831.205-32 Precontract costs.**

**(1)** Precontract costs are applicable only to **\--**

**(i)** Sole source awards, except those resulting in firm-fixed price
or fixed-price with economic price adjustment contracts; or

**(ii)** Awards resulting from broad agency announcements.

**(2)** The procurement officer is the approval authority for the use of
precontract costs. Authorization must be in writing and shall address
the following:

**(i)** the necessity for the contractor to initiate work prior to
contract award.

**(ii)** the start date of such contractor effort.

**(iii)** the total estimated time of the advanced effort.

**(iv)** the cost limitation.

**(3)** Authorization to incur precontract costs must be provided to the
contractor in writing and shall include the following:

**(i)** the start date for incurrence of such costs.

**(ii)** the limitation on the total amount of precontract costs which
may be incurred.

**(iii)** a statement that the costs are allowable only to the extent
they would have been if incurred after formal contract award.

**(iv)** a statement that the Government is under no obligation to
reimburse the contractor for any costs unless a contract is awarded.

[]{#OLE_LINK31_205_70 .anchor}**1831****.205-70 Contract clause.**

The contracting officer must insert the clause at
[**1852.231-70**](http://www.hq.nasa.gov/office/procurement/regs/5228-41.htm#1852.231-70),
Precontract Costs, in contracts for which specific coverage of
precontract costs is authorized.