Clauses · FAR · Pricing and audit
FAR 52.242-1 Notice of Intent to Disallow Costs
Does the regulation require it to flow down?
No
No mandate exists. The clause has only paragraphs (a) and (b) and neither mentions subcontracts, and FAR 42.802 says nothing about insertion in subcontracts. Primes flow it down back-to-back so a Government disallowance at prime level has a contractual path to the sub whose cost caused it — without it, the prime absorbs a disallowance it cannot pass on.
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 2026-08-05 · edition APR 1984 · base v0.9.3 Read the text ↗
What it makes you produce
One item for your checklist.
Something you write
Days to weeks, and nobody outside your company has to agree to it.
- FAR 52.242-1(a)
A written answer to a notice of intent to disallow, giving the justification for allowance and the cost principle relied on — filed within 60 days, which starts the buyer's own 60 days to withdraw the notice in writing or issue a decision
Owed only from the point a written notice of intent to disallow specified costs arrives, and the clause makes the answer optional rather than required
When it is used
FAR 42.802 prescribes it 'in solicitations and contracts when a cost-reimbursement contract, a fixed-price incentive contract, or a contract providing for price redetermination is contemplated.' No dollar threshold, no commercial carve-out, no place-of-performance test in the prescription. On a firm-fixed-price order the clause has nothing to operate on — there are no reimbursable costs to disallow. In a flowed-down copy the prime substitutes itself for the Contracting Officer, and the clause becomes the prime's written notice that it intends not to pay a cost you have incurred or plan to incur. This is the half of the 52.242-1 / 52.242-3 pair that actually reaches a subcontractor; 52.242-3 does not.
Read closely
Let the 60 days pass and no decision is owed; the cost simply sits unresolved until closeout. Paragraph (b) runs the other way — no notice having been issued waives nothing, so silence about a cost is not approval of it and the same cost can be excepted to at final indirect rate settlement.
The 1 template that name it, with the line
Source: acquisition.gov, FAR 52.242-1 and FAR 42.802 (verified 2026-08-05)
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.