FAR 46.305—Cost-reimbursement service contracts.
Plain-English Summary
FAR 46.305 is a narrow but important prescription rule for cost-reimbursement service contracting. It tells contracting officers when to include the clause at 52.246-5, Inspection of Services—Cost-Reimbursement, in solicitations and contracts. The section applies to services contracts, and also to supplies contracts that include the furnishing of services, when the contemplated contract type is cost-reimbursement. Its purpose is to ensure the Government has an inspection mechanism tailored to cost-reimbursement work, where payment is based on allowable costs rather than fixed deliverables alone. In practice, this means the inspection clause must be inserted up front so the parties understand how service performance will be evaluated, accepted, or rejected under a cost-reimbursement arrangement. The rule matters because inspection rights and acceptance procedures are a core part of managing performance risk, documenting compliance, and supporting payment decisions in service-heavy acquisitions.
Key Rules
Use the prescribed clause
When a cost-reimbursement contract is contemplated, the contracting officer must insert FAR 52.246-5, Inspection of Services—Cost-Reimbursement. This is a mandatory clause prescription, not a discretionary best practice.
Applies to service work
The rule covers solicitations and contracts for services. It also reaches supplies contracts that involve the furnishing of services, so the presence of service performance—not just the contract title—controls.
Trigger is cost-reimbursement
The clause is required when the anticipated contract type is cost-reimbursement. If the acquisition is not cost-reimbursement, this specific prescription does not apply.
Include in both solicitation and contract
The clause must be inserted in the solicitation and the resulting contract. This ensures offerors know the inspection terms before award and that the final contract contains the same requirement.
Responsibilities
Contracting Officer
Determine whether the acquisition is for services or includes the furnishing of services, confirm that a cost-reimbursement contract is contemplated, and insert FAR 52.246-5 in the solicitation and contract.
Agency
Use the prescribed inspection clause framework for cost-reimbursement service acquisitions and support contracting officers in applying the correct clause to the correct contract type.
Contractor
Review the solicitation and contract for the inspection terms governing service performance, and comply with the inspection and acceptance requirements once awarded.
Practical Implications
This section is mainly a clause-selection rule, so the key day-to-day task is making sure the right inspection clause is included before award.
A common pitfall is overlooking service elements in a supply contract; if the contract includes furnishing services and is cost-reimbursement, the clause still applies.
Another risk is using the wrong inspection clause because the contract type changed during acquisition planning or negotiation.
For contractors, the clause affects how service performance will be reviewed and accepted, which can influence payment timing and disputes over whether work met contract requirements.
For contracting officers, failing to include the clause can create contract administration problems and weaken the Government’s ability to enforce service quality under a cost-reimbursement arrangement.
Official Regulatory Text
The contracting officer shall insert the clause at 52.246-5 , Inspection of Services-Cost Reimbursement, in solicitations and contracts for services, or supplies that involve the furnishing of services, when a cost-reimbursement contract is contemplated.