1. (a) In determining materiality, the CFAO shall use the criteria in 48 CFR 9903.305.

2. (b) A CFAO determination of materiality—

   1. (1) May be made before or after a general dollar magnitude proposal has been submitted, depending on the particular facts and circumstances; and
   2. (2) Shall be based on adequate documentation.

3. (c) When the CFAO determines the cost impact is immaterial, the CFAO shall—

   1. (1) Make no contract adjustments and conclude the cost impact process;
   2. (2) Document the rationale for the determination; and

   3. (3) In the case of noncompliance issues, inform the contractor that—

      1. (i) The noncompliance should be corrected; and
      2. (ii) If the noncompliance is not corrected, the Government reserves the right to make appropriate contract adjustments should the cost impact become material in the future.
4. (d) For required, unilateral, and desirable changes, and CAS noncompliances, when the amount involved is material, the CFAO shall follow the applicable provisions in 30.603, 30.604, 30.605, and 30.606.

[70 FR 11753, Mar. 9, 2005, as amended at 73 FR 10967, Feb. 28, 2008; 85 FR 67615, Oct. 23, 2020]