16.603-4 Contract clauses
Source: FAR 16.603-4 on acquisition.gov
Contracting officers must include specific FAR clauses in letter contracts to ensure compliance and proper contract administration, tailoring them as required by contract type and circumstances.
Overview
FAR 16.603-4 outlines the mandatory contract clauses that must be included in letter contracts. The section specifies that contracting officers are responsible for incorporating all clauses required by regulation for the type of definitive contract anticipated, as well as any additional relevant clauses. It further mandates the inclusion of specific FAR clauses—52.216-23 (Execution and Commencement of Work), 52.216-24 (Limitation of Government Liability), and 52.216-25 (Contract Definitization)—with instructions for their completion and use. Special provisions are included for contracts based on price competition or those not requiring certified cost or pricing data. Additionally, if a cost-reimbursement definitive contract is planned (excluding ship conversion, alteration, or repair), clause 52.216-26 (Payments of Allowable Costs Before Definitization) must be included.
Key Rules
- Required Clauses for Letter Contracts
- Contracting officers must include all clauses required for the definitive contract type and any other appropriate clauses.
- Mandatory FAR Clauses
- Clauses 52.216-23, 52.216-24, and 52.216-25 must be included, with specific instructions for their completion and use based on contract circumstances.
- Special Clause for Cost-Reimbursement Contracts
- Clause 52.216-26 is required for cost-reimbursement definitive contracts, except for ship-related acquisitions.
Responsibilities
- Contracting Officers: Ensure all required and appropriate clauses are included and properly completed in letter contracts; apply exceptions and alternates as specified.
- Contractors: Review and comply with all included clauses and their requirements.
- Agencies: Oversee compliance with clause inclusion and proper contract formation.
Practical Implications
- This section ensures that letter contracts are structured to protect both parties and facilitate smooth transition to definitive contracts. Failure to include required clauses can result in noncompliance, payment issues, or disputes. Contracting officers must pay close attention to the specific instructions for clause completion and exceptions, especially regarding pricing data and contract type.
(a) The contracting officer shall include in each letter contract the clauses required by this regulation for the type of definitive contract contemplated and any additional clauses known to be appropriate for it.
(b) In addition, the contracting officer shall insert the following clauses in solicitations and contracts when a letter contract is contemplated:
(1) The clause at 52.216-23, Execution and Commencement of Work, except that this clause may be omitted from letter contracts awarded on https://www.gsa.gov/forms-library/awardcontract" target="_blank">SF 26;
(2) The clause at 52.216-24, Limitation of Government Liability, with dollar amounts completed in a manner consistent with 16.603-2(d); and
(3) The clause at 52.216-25, Contract Definitization, with its paragraph (b) completed in a manner consistent with 16.603-2(c). If at the time of entering into the letter contract, the contracting officer knows that the definitive contract will be based on adequate price competition or will otherwise meet the criteria of 15.403-1 for not requiring submission of certified cost or pricing data, the words "and certified cost or pricing data in accordance with FAR 15.408, Table 15-1 supporting its proposal" may be deleted from paragraph (a) of the clause. If the letter contract is being awarded on the basis of price competition, the contracting officer shall use the clause with its Alternate I.
(c) The contracting officer shall also insert the clause at 52.216-26, Payments of Allowable Costs Before Definitization, in solicitations and contracts if a cost-reimbursement definitive contract is contemplated, unless the acquisition involves conversion, alteration, or repair of ships.