Direct comparison
FAR Part 31 vs. 2 CFR 200 Cost Principles
FAR Part 31 governs contract cost allowability; 2 CFR 200 Subpart E governs grants. Compare both regimes and see when FAR 31.3 routes you back to 2 CFR 200.
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How do FAR Part 31, 2 CFR 200 Subpart E compare side by side?
The table below compares FAR Part 31, 2 CFR 200 Subpart E across 12 procurement-relevant dimensions, from what it governs through where audit findings cite it.
Side-by-side comparison
| Dimension | FAR Part 31 | 2 CFR 200 Subpart E |
|---|---|---|
| What it governs | Cost allowability on federal procurement contracts — the government is buying a good or service | Cost allowability on federal grants and cooperative agreements — the government is funding a public-purpose activity |
| Codified at | Title 48 CFR Part 31 (the Federal Acquisition Regulation); "FAR Part 31" and "48 CFR Part 31" cite the identical text | Title 2 CFR Part 200, Subpart E, §§200.400–200.475 (the OMB Uniform Guidance) |
| Issuing body | FAR Council (DoD, GSA, NASA) under the Federal Property and Administrative Services Act | Office of Management and Budget (OMB), binding on all federal grant-making agencies |
| Who it applies to | Any organization holding a federal procurement contract — subpart depends on contractor type: 31.2 commercial organizations, 31.3 educational institutions, 31.6 state/local/tribal governments, 31.7 nonprofits | Any non-federal entity (university, nonprofit, state/local government) receiving a federal grant, cooperative agreement, or other federal financial assistance award |
| General allowability test | FAR 31.201-2: reasonableness, allocability, Cost Accounting Standards (or GAAP where CAS doesn't apply), compliance with contract terms, and compliance with any 31.2 limitations — five conditions, all must be met | §200.403: necessary and reasonable, allocable, consistent with how the institution treats like costs, conforming to GAAP and award terms, not double-counted toward cost sharing, and adequately documented — six criteria |
| Burden of proof on reasonableness | FAR 31.201-3: no presumption of reasonableness attaches to a contractor's incurrence of a cost; once challenged, the contractor must prove reasonableness | §200.404 uses a similar "prudent person" reasonableness standard; documentation adequacy is what a sponsored-programs office is typically asked to produce in an audit |
| Allocability test | FAR 31.201-4: incurred specifically for the contract; benefits the contract and other work in reasonably proportionate shares; or necessary to overall business operations — the conceptual basis for indirect cost pools | See CASRAI's allocability dictionary term — a materially similar three-condition test, developed independently for the grants context |
| Selected-cost list | FAR 31.205 ("Selected costs") — applies to Subpart 31.2 commercial-organization contracts; a long, itemized list (advertising, entertainment, bad debts, alcoholic beverages, lobbying, and dozens more) each with its own allowability rule | §§200.420–200.475 ("Selected items of cost") — the grants-context equivalent list, covering many of the same categories (travel, memberships, entertainment) with different specifics |
| Unallowable-cost accounting treatment | FAR 31.201-6: unallowable costs, and any directly associated costs they trigger, must be identified and excluded from billings/claims/proposals, following CAS 405 (48 CFR 9904.405) | §200.410 requires the same wall-off-and-exclude treatment for costs identified as unallowable under the award or applicable law |
| Cost Accounting Standards (CAS) applicability | CAS can apply directly to large negotiated contracts (48 CFR Part 9903/9904) — a separate, more rigorous cost-measurement regime layered on top of Part 31 allowability | CAS does not apply to grants; §200.419 addresses cost accounting standards for educational institutions through a Uniform Guidance-specific mechanism, not full CAS coverage |
| The exception that collapses the split | FAR 31.303(a): for contracts under Subpart 31.3 (educational institutions), the contracting officer must determine allowability "in accordance with" 2 CFR Part 200, Subpart E and Appendix III — not the 31.2/31.205 rules | Subpart E becomes the operative cost-principles text even though the instrument is a FAR-governed contract, not a grant — only non-cost terms (deliverables, IP/data rights, disputes) stay purely FAR-governed |
| Where audit findings cite it | DCAA/agency contract audits, incurred-cost submissions, contract closeout on procurement instruments | Single Audit (Uniform Guidance Subpart F) findings, cost-disallowance letters on grant awards |
Common questions
Common questions about FAR Part 31 vs 2 CFR 200 Subpart E
Does FAR Part 31 or 2 CFR 200 apply to my award?
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It depends on the instrument, not the funding agency. If the award document is a procurement contract, start with FAR Part 31 — but check which subpart it invokes. If it's a grant or cooperative agreement, 2 CFR 200 Subpart E applies. Read the cost-principles clause the award actually cites rather than assuming from the agency or the subject matter.
Why would a university ever be subject to FAR Part 31?
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Universities sometimes hold federal procurement contracts — for example, a deliverable-based R&D contract rather than a grant. In that case FAR Subpart 31.3 (Contracts with Educational Institutions) applies, and FAR 31.303 directs the contracting officer to determine cost allowability using 2 CFR 200 Subpart E and Appendix III — the same cost principles the institution already applies to its grant portfolio.
Is FAR 31.205 the same list as 2 CFR 200's selected items of cost?
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They cover many of the same categories — travel, entertainment, memberships, alcoholic beverages — but are separately numbered, separately worded regulatory texts (FAR 31.205-x versus 2 CFR 200.42x-200.47x) with their own specific allowability conditions. Don't assume a rule under one automatically carries over to the other; check the actual cited text for the instrument in front of you.
What's the practical risk of using the wrong cost-principles regime?
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Applying FAR 31.2 commercial-organization rules to a Subpart 31.3 educational-institution contract (or vice versa) can misstate which costs are allowable, which documentation is required, and which unallowable-cost wall-off obligations apply — exactly the kind of mismatch an incurred-cost audit or Single Audit finding is built to catch.
Going deeper
