FAR 46.303—Cost-reimbursement supply contracts.
Plain-English Summary
FAR 46.303 is a narrow but important inspection-clause prescription for cost-reimbursement buying. It tells contracting officers when to include the clause at 52.246-3, Inspection of Supplies—Cost-Reimbursement, in solicitations and contracts for supplies, and also in service contracts that include the furnishing of supplies, whenever the contemplated contract type is cost-reimbursement. The section exists to make sure the Government’s inspection rights are clearly stated in contracts where the contractor is reimbursed for allowable costs rather than paid a fixed price, which affects how acceptance, correction of defects, and payment risk are handled. In practice, this means the contracting officer must identify cost-reimbursement arrangements that involve supplies and ensure the proper inspection clause is inserted at the solicitation stage and carried into the contract. The rule matters because inspection terms are not optional boilerplate; they shape the Government’s ability to examine, test, and reject nonconforming supplies and to require correction or replacement under the contract’s quality framework. It also matters for mixed service/supply acquisitions, where the supply component can trigger this clause even though the overall procurement is for services. For contractors, the clause affects quality control planning, delivery obligations, and the risk of having to repair, replace, or otherwise address defective supplies at their own expense or under contract terms.
Key Rules
Use the prescribed clause
When a cost-reimbursement contract is contemplated, the contracting officer must insert clause 52.246-3, Inspection of Supplies—Cost-Reimbursement. This is a mandatory prescription, not a discretionary choice, for the covered acquisitions.
Applies to supplies and supply-bearing services
The rule covers solicitations and contracts for supplies, and also services that involve furnishing supplies. A service contract does not avoid the clause if the contractor will provide supplies as part of performance.
Trigger is cost-reimbursement
The clause is required only when the contemplated contract type is cost-reimbursement. If the acquisition is not cost-reimbursement, this section does not itself require use of 52.246-3.
Insert in both solicitation and contract
The prescription expressly requires inclusion in solicitations and contracts. This means the clause should be present in the solicitation so offerors know the inspection terms up front, and in the resulting contract so the terms are enforceable.
Inspection rights must be clear
The purpose of the clause is to establish the Government’s inspection framework for supplies under a cost-reimbursement arrangement. It ensures the contract clearly addresses examination, testing, and acceptance-related rights for the supplies being furnished.
Responsibilities
Contracting Officer
Determine whether the contemplated acquisition is cost-reimbursement and whether it includes supplies or services involving supplies. If so, insert clause 52.246-3 in the solicitation and resulting contract.
Contractor
Review the inspection clause and plan performance accordingly, including quality control, testing, and readiness to address nonconforming supplies under the contract’s inspection and acceptance terms.
Agency
Support acquisition planning and contract drafting so the correct inspection clause is used for cost-reimbursement supply acquisitions and mixed service/supply requirements.
Practical Implications
This section is a drafting checkpoint: if the acquisition is cost-reimbursement and includes supplies, the clause must be included early, not added later as an afterthought.
A common pitfall is overlooking service contracts that still require furnishing supplies; those contracts can still trigger 52.246-3.
Contractors should expect Government inspection rights to be expressly stated and should align internal quality assurance and testing processes with those rights.
Contracting officers should verify the contract type before award, because using the wrong inspection clause can create disputes over acceptance, correction, and payment.
Because the rule is specific to cost-reimbursement contracts, teams should not assume the same inspection clause applies automatically to fixed-price buys or other contract types.
Official Regulatory Text
The contracting officer shall insert the clause at 52.246-3 , Inspection of Supplies-Cost-Reimbursement, in solicitations and contracts for supplies, or services that involve the furnishing of supplies, when a cost-reimbursement contract is contemplated.