FAR 52.204-1—Approval of Contract.
Plain-English Summary
FAR 52.204-1, Approval of Contract, is a very short but important clause that addresses one issue: whether a contract is legally binding before a designated agency official gives written approval. The clause is prescribed by FAR 4.103 and is used when an agency wants the contract to be subject to an additional internal approval step after execution by the contracting parties. In practice, the clause means the contract is not effective until the named approving official signs off in writing, so the government is not bound and the contractor should not treat the agreement as fully awarded until that approval occurs. This section therefore covers the approval condition itself, the requirement to identify the approving official by title, and the legal consequence that no binding contract exists until approval is obtained. For contracting officers and contractors, the practical significance is that performance, funding commitments, and reliance on the agreement must be managed carefully to avoid starting work before the contract becomes binding.
Key Rules
Written approval required
The contract is expressly subject to written approval by the designated agency official. Oral approval, informal concurrence, or assumed acceptance is not enough to make the contract binding under this clause.
No binding contract yet
Until the required approval is given, the contract is not binding. This means the government has not yet assumed contractual obligations, and the contractor should not rely on the document as an enforceable award until approval is complete.
Approving official must be identified
The clause requires insertion of the title of the designated agency official who must approve the contract. The approval authority is therefore specific and limited to the official named in the contract.
Clause used when prescribed
FAR 52.204-1 is inserted when required by FAR 4.103. It is not a general-purpose clause for every contract; it applies when the agency’s procedures call for post-signature approval as a condition of contract effectiveness.
Responsibilities
Contracting Officer
Insert the clause when prescribed, identify the correct approving official by title, and ensure the contract is not treated as binding until the required written approval is obtained.
Designated Agency Official
Review the contract and provide the required written approval if the contract is to become effective. Without this approval, the contract remains nonbinding.
Contractor
Recognize that the signed document is not yet a binding contract until approval occurs, avoid commencing performance prematurely, and confirm that the required approval has been issued before relying on the award.
Agency
Maintain internal approval controls and ensure the designated official has the authority and opportunity to approve the contract before performance or other obligations are allowed to proceed.
Practical Implications
Do not start performance too early: if the contractor begins work before written approval, it may do so at its own risk because the government is not yet bound.
Check the named approver carefully: the clause depends on the title of the designated official, so an incorrect or missing title can create confusion about who must approve.
Treat approval as a condition precedent: award documents, notices, and internal workflows should make clear that the contract is not effective until the approval step is completed.
Coordinate funding and administrative actions: agencies should avoid issuing directions to proceed or allowing performance before approval, since that can create disputes over whether a binding obligation existed.
Watch for authority issues: the approving official must be the one designated in the contract; approval by someone else may not satisfy the clause.
Official Regulatory Text
As prescribed in 4.103 , insert the following clause: Approval of Contract (Dec 1989) This contract is subject to the written approval of [ identify title of designated agency official here ] and shall not be binding until so approved. (End of clause)