Is this allowable?
There is not a specific limitation in the FAR related to purchasing materials through a contract which will then be installed by government personnel. Another question to ask is whether or not a CLIN already exists on the contract to purchase materials for this purpose. If there is a potential CLIN on the contract being considered, it would probably be a good idea to ensure the Program Manager, Contracting Officer and legal advisor are all in agreement this was how the CLIN was originally intended to be used when the contract was first awarded. If a suitable CLIN is not available on the contract, a new CLIN may need to be added to the contract. If a new CLIN needs to be added, the Contracting Officer must determine (in writing) if making this change to the contract is in scope of the existing contract and should get the scope determination as well as the draft contract modification reviewed by legal.
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