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FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.3

FAR 16.301-3 Limitations.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section limits when the Government may use a cost-reimbursement contract. Before using one, the agency must consider certain factors, have an approved written acquisition plan signed above the contracting officer, confirm the contractor's accounting system is adequate, and ensure enough Government resources exist to award and manage the contract. Cost-reimbursement contracts are also prohibited for commercial products and commercial services.

Applies to: Government contracting officers using cost-reimbursement contracts

What it requires

  • Consider the factors in 16.104
  • Have a written acquisition plan approved and signed at least one level above the contracting officer
  • Ensure the contractor's accounting system is adequate for determining costs applicable to the contract or order
  • Ensure adequate Government resources are available before award to award and manage the contract, including appropriate surveillance during performance

Key terms: cost-reimbursement contract · written acquisition plan · contracting officer · accounting system · commercial products and commercial services

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) A cost-reimbursement contract may be used only when—

(1) The factors in 16.104 have been considered;

(2) A written acquisition plan has been approved and signed at least one level above the contracting officer;

(3) The contractor's accounting system is adequate for determining costs applicable to the contract or order; and

(4) Prior to award of the contract or order, adequate Government resources are available to award and manage a contract other than firm-fixed-priced (see 7.104(e)). This includes appropriate Government surveillance during performance in accordance with 1.602-2, to provide reasonable assurance that efficient methods and effective cost controls are used.

(b) The use of cost-reimbursement contracts is prohibited for the acquisition of commercial products and commercial services (see parts 2 and 12).

Sections it refers to

  • 16.104 Factors in selecting contract types.
  • 7.104 General procedures.
  • 1.602-2 Responsibilities.

Sections that refer to it

← 16.301-2 Application. · 16.302 Cost contracts. →

Rule changes for FAR Part 16

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 16.301-3 Limitations · SpendQuery