FAR 47.103-2—Contract clause.
Plain-English Summary
FAR 47.103-2 tells contracting officers when they must include the clause at 52.247-67, Submission of Transportation Documents for Audit, in a solicitation or contract. The section applies only when a cost-reimbursement contract is contemplated and the contract, or a first-tier cost-reimbursement subcontract under it, will authorize reimbursement of transportation as a direct charge. In practice, this means the Government is protecting its ability to review transportation-related billing support and audit those charges before paying them as allowable direct costs. The rule is narrow but important: it ties the clause to both the contract type and the way transportation costs will be charged, so the clause is not inserted in every procurement. For contractors and subcontractors, the practical effect is that transportation documents must be retained and made available in a form that supports audit and reimbursement review. For contracting officers, the section is a mandatory clause-selection instruction that helps ensure proper oversight of transportation costs in cost-reimbursement arrangements.
Key Rules
Insert the required clause
When the stated conditions are met, the contracting officer must complete and insert clause 52.247-67, Submission of Transportation Documents for Audit, in the solicitation and contract. This is not discretionary once the rule applies.
Applies to cost-reimbursement contracts
The clause requirement is triggered only when a cost-reimbursement contract is contemplated. It does not apply based solely on the presence of transportation costs; the contract structure must be cost-reimbursement.
Direct-charge transportation costs
The contract must authorize reimbursement of transportation as a direct charge to the contract, or a first-tier cost-reimbursement subcontract must do so. The clause is aimed at transportation costs that will be billed directly rather than absorbed in indirect costs.
Covers first-tier subcontracts
The rule extends beyond the prime contract to first-tier cost-reimbursement subcontracts when those subcontracts authorize direct reimbursement of transportation. This ensures audit rights are preserved at the first subcontract level where the cost is charged.
Audit support purpose
The clause exists so transportation documents can be submitted for audit. Its function is to give the Government a basis to verify the propriety, allowability, and accuracy of transportation charges claimed for reimbursement.
Responsibilities
Contracting Officer
Determine whether the procurement is a contemplated cost-reimbursement contract and whether transportation will be reimbursed as a direct charge. If so, include clause 52.247-67 in the solicitation and contract.
Contractor
Maintain transportation documents and submit them as required by the clause so the Government can audit transportation charges billed as direct costs under the contract.
First-tier Cost-Reimbursement Subcontractor
When the subcontract authorizes direct reimbursement of transportation, preserve and provide transportation documents needed for audit in accordance with the clause flowdown and subcontract requirements.
Agency/Program Office
Support contract administration by ensuring transportation charges are structured and monitored consistently with the cost-reimbursement arrangement and audit requirements.
Practical Implications
This clause is a mandatory inclusion item, so omission can create audit and payment problems later if transportation costs are billed as direct charges.
The key decision point is not just whether transportation is involved, but whether the contract is cost-reimbursement and whether transportation is reimbursable directly; both conditions matter.
Contractors should expect to retain shipping, freight, and related transportation records in a way that supports audit review, not just normal invoicing.
If the clause is needed at the prime level, contracting officers should also consider whether first-tier cost-reimbursement subcontracts need the same audit support requirement.
A common pitfall is assuming transportation costs are covered by general cost principles alone; this section specifically requires the audit-document clause when the stated contract conditions exist.
Official Regulatory Text
Complete and insert the clause at 52.247-67 , Submission of Transportation Documents for Audit, in solicitations and contracts when a cost-reimbursement contract is contemplated and the contract or a first-tier cost-reimbursement subcontract thereunder will authorize reimbursement of transportation as a direct charge to the contract or subcontract.