Allowability of costs shall be determined in accordance with the cost principles applicable to the type of entity incurring the costs, as follows:

1. (a) For-profit organizations. Allowability of costs incurred by for-profit organizations that are recipients of prime awards from DoD Components, and those that are subrecipients under prime awards to other organizations, is to be determined in accordance with:

   1. (1) The for-profit cost principles in 48 CFR parts 31 and 231 (in the Federal Acquisition Regulation, or FAR, and the Defense Federal Acquisition Regulation Supplement, or DFARS, respectively).
   2. (2) The supplemental information on allowability of audit costs, in § 34.16(f).

2. (b) Other types of organizations. Allowability of costs incurred by other types of organizations that may be subrecipients under a prime award to a for-profit organization is determined as follows:

   1. (1) Institutions of higher education, nonprofit organizations, States, local governments, and Indian tribes. Allowability is determined in accordance with the cost principles in subpart E of OMB guidance in 2 CFR part 200. Note that 2 CFR 200.401(c) provides that a nonprofit organization listed in appendix VIII to 2 CFR part 200 is subject to the FAR and DFARS cost principles specified in paragraph (a)(1) of this section for for-profit organizations.
   2. (2) Hospitals. Allowability is determined in accordance with the cost principles identified in appendix IX to 2 CFR part 200 (currently 45 CFR part 75).

[63 FR 12204, Mar. 12, 1998, as amended at 85 FR 51244, Aug. 19, 2020]