28.307
Insurance under cost-reimbursement contracts
Cost-reimbursement contracts require specific types and minimum amounts of insurance, which must also be extended to applicable subcontracts.
Overview
FAR 28.307 addresses insurance requirements for cost-reimbursement contracts and their subcontracts. It mandates that these contracts typically require specific types of insurance, as detailed in FAR 28.307-2, and sets minimum liability amounts. The section also references FAR 28.308 for situations involving self-insurance. The intent is to ensure that both prime contractors and, where applicable, their subcontractors maintain adequate insurance coverage to protect the government’s interests and mitigate risk during contract performance.
Key Rules
- Insurance Requirement for Cost-Reimbursement Contracts
- Contractors must obtain and maintain the types and minimum amounts of insurance specified in FAR 28.307-2.
- Applicability to Subcontracts
- If the prime contract’s terms are extended to subcontracts, those subcontractors must also comply with the same insurance requirements.
- Reference to Self-Insurance
- Contractors considering self-insurance must refer to FAR 28.308 for additional guidance and requirements.
Responsibilities
- Contracting Officers: Ensure insurance requirements are included in solicitations and contracts, and verify contractor compliance.
- Contractors: Obtain and maintain required insurance coverage and ensure subcontractors comply if applicable.
- Agencies: Oversee compliance and address any exceptions or self-insurance arrangements.
Practical Implications
- This section exists to protect the government and contractors from financial loss due to accidents or liabilities during contract performance.
- Contractors must be diligent in securing and maintaining the required insurance, and in flowing down requirements to subcontractors when necessary.
- Common pitfalls include failing to obtain the correct types or amounts of insurance, or neglecting to ensure subcontractor compliance.