30.603-2 Unilateral and desirable changes.

(a) Unilateral changes.

(1) The contractor may unilaterally change its disclosed or established cost accounting practices, but

the Government shall not pay any increased cost, in the aggregate, as a result of the unilateral

change.

(2) Prior to making any contract price or cost adjustments under the applicable paragraph (s)

addressing a unilateral change at 52.230-2, 52.230-3, or 52.230-5, the CFAO shall determine that-

(i) The contemplated contract price or cost adjustments will protect the Government from the

payment of the estimated increased costs, in the aggregate; and

(ii) The net effect of the contemplated adjustments will not result in the recovery of more than the

increased costs to the Government, in the aggregate.

(b) Desirable changes.

(1) Prior to taking action under the applicable paragraph (s) addressing a desirable change at

52.230-2, 52.230-3, or 52.230-5, the CFAO shall determine the change is a desirable change and not

detrimental to the interests of the Government.

(2) Until the CFAO has determined a change to a cost accounting practice is a desirable change, the

change is a unilateral change.

(3) Some factors to consider in determining if a change is desirable include, but are not limited to,

whether-

(i) The contractor must change the cost accounting practices it uses for Government contract and

subcontract costing purposes to remain in compliance with the provisions of part 31;

(ii) The contractor is initiating management actions directly associated with the change that will

result in cost savings for segments with CAS-covered contracts and subcontracts over a period for

which forward pricing rates are developed or 5 years, whichever is shorter, and the cost savings are

reflected in the forward pricing rates; and

(iii) Funds are available if the determination would necessitate an upward adjustment of contract

cost or price.

(c) Notice and proposal preparation.

(1) When a contractor makes a unilateral change, the clause at 52.230-6, Administration of Cost

Accounting Standards, requires the contractor to-

(i) Submit a description of the change to the CFAO not less than 60 days (or other mutually

agreeable date) before implementation of the change; and

(ii) Submit rationale to support any contractor written statement that the cost impact of the change
is immaterial.

(2) If a contractor implements the change in cost accounting practice without submitting the notice

as required in paragraph (c)(1) of this subsection, the CFAO may determine the change a failure to

follow a cost accounting practice consistently and process it as a noncompliance in accordance with

30.605.

(d) Retroactive changes.

(1) If a contractor requests that a unilateral change be retroactive, the contractor shall submit

supporting rationale.

(2) The CFAO shall promptly evaluate the contractor’s request and shall, as soon as practical, notify

the contractor in writing whether the request is or is not approved.

(3) The CFAO shall not approve a date for the retroactive change that is before the beginning of the

contractor’s fiscal year in which the request is made.

(e) Contractor accounting changes due to external restructuring activities. The requirements for

contract price and cost adjustments do not apply to compliant cost accounting practice changes that

are directly associated with external restructuring activities that are subject to and meet the

requirements of 10 U.S.C. 3761. However, the disclosure requirements in 52.230-6(b) shall be

followed.

Parent topic: 30.603 Changes to disclosed or established cost accounting practices.