Self-auditing Timekeeping is a crucial step to ensure your organization’s compliance. It helps mitigate the risk of labor costs disallowance.

The Big Three: Allowability, Reasonableness, Allocability
The FAR, specifically Part 31.201, lays out the holy trinity of cost principles that govern federal contracts. They’re the guardrails that ensure recipients spend taxpayer dollars wisely. Get them right, and you’re in the clear. You get them wrong and invite a government (Defense Contract Audit Agency (DCAA)) audit.

FAR Part 31.2, “Contracts with Commercial Organizations,” outlines the cost principles that govern how for-profit entities, like most SBIR/STTR recipients, manage and claim costs on federal contracts. It applies primarily to cost-reimbursement agreements, common in SBIR/STTR Phase II, but also impacts fixed-price contracts during audits or financial reviews. The goal? Ensure taxpayer dollars are spent on allowable, reasonable, and allocable costs, protecting the government and your bottom line.

FAR 31 may seem like a maze, but it’s your roadmap to getting paid and staying compliant. For SBIR/STTR newbies, mastering allowability, reasonableness, and allocability is the foundation for turning your innovation into impact. Start small: set up timekeeping, review FAR 31.205, and document every cost. With these basics, you’re not just surviving—you’re building a business that thrives in the federal arena.

Your intellectual property processes must be robust, especially if you fund your research and development via the Small Business Innovation Research (SBIR) and Technology Transfer (STTR) programs.

This MBA internship program offers significant value to SBIR/STTR-funded small businesses by providing cost-effective talent and fresh perspectives. However, lacking direct NDAs, clear sharing boundaries, and robust training, the current structure creates unacceptable confidentiality and IP protection risks.

FAR Part 31.2, “Contracts with Commercial Organizations,” outlines the cost principles that govern how for-profit entities, like most SBIR/STTR recipients, manage and claim costs on federal contracts. It applies primarily to cost-reimbursement agreements, common in SBIR/STTR Phase II, but also impacts fixed-price contracts during audits or financial reviews. The goal? Ensure taxpayer dollars are spent on allowable, reasonable, and allocable costs, protecting the government and your bottom line.

FAR 31 may seem like a maze, but it’s your roadmap to getting paid and staying compliant. For SBIR/STTR newbies, mastering allowability, reasonableness, and allocability is the foundation for turning your innovation into impact. Start small: set up timekeeping, review FAR 31.205, and document every cost. With these basics, you’re not just surviving—you’re building a business that thrives in the federal arena.

Timekeeping compliance requires actual hours worked be recorded same or next day.