42.802
Contract clause
Contracting officers must include the 52.242-1 clause in contracts where cost-reimbursement, fixed-price incentive, or price redetermination is used to ensure proper notification of disallowed costs.
Overview
FAR 42.802 requires contracting officers to include the clause at 52.242-1, Notice of Intent to Disallow Costs, in certain types of contracts. This clause is mandatory for solicitations and contracts involving cost-reimbursement, fixed-price incentive, or price redetermination arrangements. The purpose of the clause is to formally notify contractors when the government intends to disallow specific costs, ensuring transparency and providing contractors with an opportunity to respond or justify the costs in question.
Key Rules
- Clause Inclusion Requirement
- The 52.242-1 clause must be inserted in solicitations and contracts for cost-reimbursement, fixed-price incentive, or price redetermination contracts.
- Notification of Disallowed Costs
- The clause ensures contractors are formally notified if the government intends to disallow certain costs, supporting fair contract administration.
Responsibilities
- Contracting Officers: Must ensure the 52.242-1 clause is included in applicable contracts and solicitations.
- Contractors: Should be aware that this clause allows the government to notify them of costs that may be disallowed and provides a process for response.
- Agencies: Must oversee compliance with clause inclusion and proper notification procedures.
Practical Implications
- This section exists to ensure cost disputes are handled transparently and fairly.
- It impacts daily contracting by requiring a standard notification process for disallowed costs, reducing misunderstandings and disputes.
- Common pitfalls include failing to include the clause in eligible contracts, which can lead to administrative complications or disputes over cost allowability.