16.301-2 Application
Source: FAR 16.301-2 on acquisition.gov
Cost-reimbursement contracts are only allowed when requirements or costs cannot be clearly defined, and their use must be thoroughly justified and approved at a higher level.
Overview
FAR 16.301-2 outlines when cost-reimbursement contracts are appropriate for use in federal acquisitions. This section specifies that such contracts should only be used when requirements cannot be clearly defined or when uncertainties make it impossible to estimate costs accurately enough for a fixed-price contract. The regulation also mandates that contracting officers must document their rationale for choosing a cost-reimbursement contract in the acquisition plan, and that this plan must be approved and signed by a management official at least one level above the contracting officer. This ensures oversight and justification for using a contract type that places more risk on the government.
Key Rules
- Use of Cost-Reimbursement Contracts
- Only permitted when requirements cannot be sufficiently defined or when performance uncertainties prevent accurate cost estimation for a fixed-price contract.
- Documentation and Approval
- The rationale for selecting a cost-reimbursement contract must be documented in the acquisition plan and approved by a higher authority.
Responsibilities
- Contracting Officers: Must justify and document the use of cost-reimbursement contracts and obtain higher-level approval.
- Contractors: Should be aware that cost-reimbursement contracts are only used under specific circumstances and may require more detailed cost tracking.
- Agencies: Must ensure oversight and proper approval processes are followed for contract type selection.
Practical Implications
- This section exists to prevent inappropriate use of cost-reimbursement contracts, which can expose the government to higher financial risk.
- It impacts daily contracting by requiring thorough justification and oversight for contract type selection.
- Common pitfalls include inadequate documentation or failure to obtain proper approvals, which can delay or invalidate contract awards.
(a) The contracting officer shall use cost-reimbursement contracts only when-
(1) Circumstances do not allow the agency to define its requirements sufficiently to allow for a fixed-price type contract (see 7.105); or
(2) Uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.
(b) The contracting officer shall document the rationale for selecting the contract type in the written acquisition plan and ensure that the plan is approved and signed at least one level above the contracting officer (see 7.103(j) and 7.105).