Season 11: Episode 22: FAR Facts

Hello and thank you for joining us for Episode 21 of Fun with the FAR Season 11!

Our next episode will cover FAR Part 42 (Contract Administration and Audit Services) and Part 43 (Contract Modifications)! As we prepare for our 22nd episode of Season 11, here are a few Episode 22 FAR Facts for us to think about:

  • For contractors other than educational institutions and nonprofit organizations, the “cognizant” Federal agency normally will be the agency with the largest dollar amount of contracts, including options. FAR 42.003(a).
  • Once a Federal agency assumes cognizance for a contractor, it should remain cognizant for at least 5 years to ensure continuity and ease of administration. FAR 42.003(b).
  • “Final rates” are established on the basis of contracting officer determination procedures (see FAR 42.705-1) or auditor determination procedures (see FAR 42.705-2). FAR 42.705(a).
  • Contractors are required to submit final indirect cost rate proposals with the six-month period following the expiration of its fiscal years. FAR 42.705-1(b)(ii).
  • Novation Agreements are usually executed by the U.S. Government after contractors have executed an asset sale agreement. FAR 42.1204.
  • The cognizant Federal agency of the contractor transferring its contracts via a Novation Agreement is generally the party tasked with coordinating the government response and negotiating and executing that agreement on behalf of the U.S. Government. FAR 42.1202.
  • Even after the execution of a Novation Agreement with the Government, the contractor transferring its contracts to another contractor is still responsible for performance of those contracts until they are completed or terminated. Sometimes this is accomplished by a performance modification. See FAR 42.1204(i) (standard Novation Agreement, Article (b)(8)).
  • As a general rule, contracting officers are the only Government employees that have the authority to change the terms of a contract. FAR 43.202.
  • A contractor’s ability to obtain monetary or schedule relief from a Government change order is controlled by the Changes clause in their Government contract. See FAR 52.243-1 through 52.243-5.

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