FAR 9.305—Risk.
Plain-English Summary
FAR 9.305 explains who bears the financial risk when a contractor starts buying materials, components, or production work before first article approval, and how that risk can be reduced or shifted in limited circumstances. It covers the general rule that the contractor acts at its own risk before first article approval, the contracting officer’s duty to build enough time into the delivery schedule for material acquisition and post-approval production, and the exception that allows the Government to authorize early purchase of specific materials/components or early production when schedule needs make that necessary. It also identifies the contract clause alternates that implement this authority—Alternate II of FAR 52.209-3 and 52.209-4—and states the cost treatment for authorized early work. In practice, this section matters because first article contracts often create a timing gap between award and approval, and contractors need to know which pre-approval costs may be recoverable and which remain entirely at their own risk. Contracting officers need to manage schedule realism and, when necessary, use the clause authority carefully to avoid disputes over allowability, allocability, and termination settlement treatment.
Key Rules
Pre-approval work is contractor risk
Before first article approval, buying materials or components or starting production is normally done at the contractor’s sole risk. If the first article is not approved, the contractor may be left with unrecoverable costs unless the Government specifically authorized the work under this section.
Schedule should reduce exposure
The contracting officer must normally allow enough time in the delivery schedule for the contractor to acquire materials and components and then produce after first article approval. The purpose is to avoid forcing the contractor to gamble on early expenditures just to meet the contract delivery date.
Early authorization is limited
If Government requirements make it necessary, the contracting officer may authorize the contractor, before first article approval, to acquire specific materials or components or begin production to the extent essential to meet the delivery schedule. This is not a blanket permission to proceed; it must be tied to the minimum work needed to satisfy schedule needs.
Clause alternates implement authority
The authority to permit early acquisition or production is implemented through Alternate II of FAR 52.209-3, First Article Approval—Contractor Testing, and Alternate II of FAR 52.209-4, First Article Approval—Government Testing. The contracting officer should use the appropriate clause structure when this risk-shifting authority is needed.
Authorized costs are contract allocable
Costs incurred under the contracting officer’s authorization are allocable to the contract for progress payments and for termination settlements if the Government terminates the contract for convenience. This means the contractor can treat those authorized costs as contract-related rather than purely speculative pre-award or pre-approval exposure.
Responsibilities
Contracting Officer
Set a realistic delivery schedule that gives the contractor time to obtain materials/components and complete production after first article approval. When Government needs require early action, issue a clear authorization under the applicable Alternate II clause, limiting it to the specific materials, components, or production effort essential to meet the schedule.
Contractor
Recognize that any materials acquisition or production started before first article approval is normally at its own risk unless the contracting officer has expressly authorized it. Track and segregate authorized costs so they can be properly claimed for progress payments or termination settlement purposes.
Government/Agency
Ensure acquisition planning and schedule requirements do not unnecessarily force contractors to incur unreimbursed pre-approval costs. When early authorization is necessary, ensure the contract file and clause selection support the decision and that the authorization is consistent with the Government’s schedule needs.
Practical Implications
Contractors should not assume pre-approval purchases will be reimbursed; without express authorization, those costs may be unrecoverable if first article approval is delayed or denied.
Contracting officers should avoid unrealistic delivery schedules that effectively require the contractor to start production before approval without a formal authorization.
If early work is authorized, the authorization should be specific and documented so there is no dispute later about what was permitted and what costs are allocable.
Authorized pre-approval costs can matter in both progress payment accounting and convenience termination settlements, so contractors should maintain clean cost records.
A common pitfall is treating all early procurement as authorized; FAR 9.305 only allows early acquisition or production to the extent essential to meet the delivery schedule and only when the contracting officer has acted under the clause authority.
Official Regulatory Text
Before first article approval, the acquisition of materials or components, or commencement of production, is normally at the sole risk of the contractor. To minimize this risk, the contracting officer shall provide sufficient time in the delivery schedule for acquisition of materials and components, and for production after receipt of first article approval. When Government requirements preclude this action, the contracting officer may, before approval of the first article, authorize the contractor to acquire specific materials or components or commence production to the extent essential to meet the delivery schedule (see Alternate II of the clause at 52.209-3 , First Article Approval-Contractor Testing, and Alternate II of the clause at 52.209-4 , First Article Approval-Government Testing). Costs incurred based on this authorization are allocable to the contract for— (a) Progress payments; and (b) Termination settlements if the contract is terminated for the convenience of the Government.