DATE: January 29, 2004

SUBJECT: Federal Acquisition Regulation (FAR); Training and Education Cost Principle

SOURCE: Federal Register, January 29, 2004, Vol. 69, No. 19, page 4435

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that FAR 31.205-44, Training and Education Costs, be amended to increase the clarity of this cost principle.

EDITOR'S NOTE: For more on the earlier proposed rule on training and education costs, see the May 15, 2002, FEDERAL CONTRACTS DISPATCH "Federal Acquisition Regulation (FAR); Training and Education Cost Principle."

DATES: Comments are due on or before March 29, 2004.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, or by e-mail to farcase.2001-021@gsa.gov. Cite "FAR Case 2001-021" in all correspondence related to this proposed rule.


SUPPLEMENTAL INFORMATION: Currently, FAR 31.205-44 is restrictive in that it differentiates between vocational training, part-time college level education, full-time education, and specialized programs with numerous specific limitations on the allowability of costs associated with each of these categories.

On May 15, 2002, a proposed rule was published to make the costs associated with training and education allowable, subject to five public policy exceptions that would be retained from the current cost principle. Except for those five expressly unallowable cost exceptions, the reasonableness of specific contractor training and education costs would be determined by FAR 31.201-3, Determining Reasonableness.

Six respondents submitted comments on the May 15, 2002, proposed rule, and additional changes are being proposed in response to those comments.

The major differences between the two proposed rules involve undergraduate- and graduate-level education. The primary differences between the first proposed rule and this proposed rule are:

  • The current FAR 31.205-44 and the language in the first proposed rule disallow full-time undergraduate level education costs, but implicitly allow part-time undergraduate level education costs. This restriction could induce some employees to slow their education for no useful purpose. Therefore, the disparate treatment of full-time and part-time undergraduate education has been eliminated.

  • One of the original proposed exceptions lumped together full-time undergraduate and graduate education expenses (including salaries of students attending such training) and salaries of students attending undergraduate and graduate training on a part-time basis. To simplify the cost principle, this one exception has been split into two:
          "(c) The cost of salaries for attending undergraduate level classes or part-time graduate level classes during working hours is unallowable, except when unusual circumstances do not permit attendance at such classes outside of regular working hours.
          "(d) Costs of tuition, fees, training materials and textbooks, subsistence, and salary and any other costs in connection with full-time graduate level education are unallowable, except where the course or degree pursued is related to the field in which the employee is working or may reasonably be expected to work and is limited to a total period not to exceed 2 school years or the length of the degree program, whichever is less, for each employee so trained."

    FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

    Copyright 2004 by Panoptic Enterprises. All Rights Reserved.

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