Subpart 16.3 -- Cost-Reimbursement Contracts
16.301-3 -- Limitations.
(a) A cost-reimbursement contract may be used only when --
(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
5-202 Preaward Survey of a Prospective Contractor’s Accounting System
a. A preaward survey of a prospective contractor’s accounting system is an examination of the accounting system at either a large or small contractor before contract award. The audit is performed at the request of a contracting officer to determine the acceptability of a contractor's accounting system for accumulating costs under a prospective Government contract... The audit scope should be limited to obtaining an understanding of the design of the prospective accounting system… and those procedures essential to reach an informed opinion on whether or not the design of the prospective contractor’s accounting system is acceptable for accumulating costs under a Government contract.
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.
(ii) Appropriate Government surveillance during performance to provide reasonable assurance that efficient methods and effective cost controls are used;