FAR 36.518—Work oversight in cost-reimbursement construction contracts.
Plain-English Summary
FAR 36.518 is a very short but important prescription rule for cost-reimbursement construction contracting. It tells contracting officers to include the clause at 52.236-18, Work Oversight in Cost-Reimbursement Construction Contracts, whenever a cost-reimbursement construction contract is contemplated. In practice, this section does not itself describe the contractor’s work-oversight duties or the detailed mechanics of oversight; instead, it directs the government to use the required clause so those duties and expectations are built into the solicitation and contract. The topic covered here is therefore the clause prescription for cost-reimbursement construction work, not the substantive oversight procedures themselves. Its practical significance is that it ensures the government has a contractual basis for monitoring and directing work on construction projects where the final cost is not fixed in advance, which is especially important because cost-reimbursement arrangements require closer administration and clearer oversight controls than fixed-price construction contracts.
Key Rules
Insert the required clause
When a cost-reimbursement construction contract is contemplated, the contracting officer must insert clause 52.236-18, Work Oversight in Cost-Reimbursement Construction Contracts, in both the solicitation and the contract. This is a mandatory prescription, not a discretionary one.
Applies to contemplated awards
The trigger is the anticipation of a cost-reimbursement construction contract. The clause must be included at the solicitation stage so offerors know the oversight terms before award, and it must also appear in the resulting contract.
Construction-specific prescription
This section applies only to construction contracts and only when they are structured on a cost-reimbursement basis. It does not govern fixed-price construction contracts or other non-construction cost-reimbursement acquisitions.
Clause carries the operative terms
FAR 36.518 itself is only the instruction to use the clause; the detailed rights, obligations, and oversight mechanics are contained in 52.236-18. Users must read the clause text to understand the actual work-oversight requirements.
Responsibilities
Contracting Officer
Determine whether a cost-reimbursement construction contract is contemplated and, if so, include clause 52.236-18 in the solicitation and contract. Ensure the solicitation and award documents are consistent so the oversight requirement is properly incorporated.
Agency
Support acquisition planning and contract administration for cost-reimbursement construction work so the required oversight framework is used and enforced. Ensure internal procedures align with the mandatory clause prescription.
Contractor
Review the solicitation and contract for the required oversight clause and understand that work on a cost-reimbursement construction contract will be subject to the clause’s oversight terms. Plan performance and compliance activities accordingly.
Practical Implications
This section is a compliance checkpoint for contracting officers: if the acquisition is cost-reimbursement construction, the clause must be included or the solicitation/contract is incomplete.
Because the rule is only a clause prescription, users should not stop at FAR 36.518; they must review 52.236-18 to understand the actual oversight obligations and limits.
A common pitfall is assuming construction contracts are always fixed-price; when a cost-reimbursement structure is used, the oversight clause becomes mandatory and should be addressed early in acquisition planning.
Contractors should look for the clause during proposal review because it may affect site access, direction channels, documentation expectations, and how work oversight is handled during performance.
Contracting officers should verify the clause is in both the solicitation and the final contract to avoid inconsistencies that can create administration or enforceability problems.
Official Regulatory Text
The contracting officer shall insert the clause at 52.236-18 , Work Oversight in Cost-Reimbursement Construction Contracts, in solicitations and contracts when a cost-reimbursement construction contract is contemplated.