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Clauses · FAR · Pricing and audit

FAR 52.216-7 Allowable Cost and Payment

Does the regulation require it to flow down?

No

No flow-down paragraph in the text (verified); the prime includes it in every cost-type subcontract because it needs the sub's costs to be allowable under FAR 31 and to close the voucher and final-rates cycle — without it, the sub's cost becomes disallowance risk in the prime's own audit

A clause can reach your subcontract without a mandate. Once it is in your document, it is a contract term all the same. The missing mandate is a fact about the regulation. It is not a ruling on your order.

Checked against acquisition.gov on 2026-08-04 · edition AUG 2018 (Basic; Alt I FEB 1997, Alt II–IV AUG 2012) · base v0.9.3 Read the text ↗

What it makes you produce

2 items for your checklist, slowest first.

  1. Something you write

    Days to weeks, and nobody outside your company has to agree to it.

    • An adequate final indirect cost rate proposal within the six months following the expiration of each of your fiscal years

      FAR 52.216-7(d)(2)(i)

  2. Something you fill in and send back

    Hours, once you know which one is missing.

When it is used

Enters every cost-reimbursement contract (prescribed at 16.307(a)), with no dollar threshold. Flows down when the prime issues a cost-type subcontract — not by FAR mandate, but because the prime can only bill the government for sub costs that follow the same allowability rules and the same final-rates cycle.

Read closely

No paragraph of this clause asks for an accounting system. What it asks for is the proposal at (d)(2)(i); the schedules listed at (d)(2)(iii) — claimed rates, pools and bases, expenses by cost element, direct and indirect cost by contract and subcontract, and a reconciliation to your accounting records — are drawn out of the books you already keep. Missing the six-month deadline is the standard failure for a small company on cost-type work, and paragraph (g) is the audit right behind all of it.

The 11 templates that name it, with the line
155CORPDOC 4A — FAR/DFARS Flowdown Provisions for Cost-Reimbursement/T&M Subcontracts under a DoD Prime ContractLockheed Martinline 161233RTX Flowdown of U.S. Government Contract Clauses Under U.S. Government ContractsRTXline 1163105Raytheon TC-002 — Supplement 1: Government Contract Provisions from the FARRTXline 23712Boeing GP4 — General Provisions, Cost Reimbursement Contract under U.S. Government Prime ContractBoeingline 1846Boeing GP9 — General Provisions, Labor Hour/T&M Contract under U.S. Government Prime ContractBoeingline 171166Northrop Grumman CTM-P-ST-003 — U.S. Government T&M Order (Not for Commercial Products and Services)Northrop Grummanline 2179168Northrop Grumman CTM-P-ST-004 — U.S. Government Cost Reimbursement Order (Not for Commercial Products and Services)Northrop Grummanline 244243GD Mission Systems SCM-TMP-048 — T&M Purchase Orders for Non-Commercial Items in Support of a U.S. Government ContractGeneral Dynamicsline 1874240L3Harris LGL-50.F1 — General T&C and Flowdown Clauses for Other Than Commercial Products/Services under a U.S. Government ContractL3Harrisline 1509273BAE Systems Inc. USGOVA — FAR/DFARS Flow Down Provisions for Subcontracts/Purchase Orders under a U.S. Government (DoD) Prime ContractBAE Systemsline 294178AAR Component Services NY — U.S. Government Contract FAR and DFARS Clauses Incorporated by ReferenceAAR Corpline 496

Source: acquisition.gov, FAR 52.216-7 and 16.307(a) (verified 2026-08-04)

This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.