16.301-1 Description
Source: FAR 16.301-1 on acquisition.gov
Cost-reimbursement contracts pay contractors for allowable costs up to a set ceiling, which cannot be exceeded without contracting officer approval.
Overview
FAR 16.301-1 describes the fundamental characteristics of cost-reimbursement contracts. These contracts allow contractors to be paid for allowable incurred costs, as defined in the contract, up to a specified ceiling amount. The contract sets an estimated total cost, which serves both to obligate funds and to establish a maximum amount that the contractor cannot exceed without the contracting officer's approval. If the contractor exceeds this ceiling without approval, they do so at their own risk and may not be reimbursed for additional costs.
Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer.