Overview
FAR 4.1003 establishes the mandatory criteria for organizing contract deliverables into distinct line items based on identification, pricing, funding, and performance parameters. It ensures that contract structures provide the granular detail necessary for accurate tracking, payment, and auditing.
Key Rules
- Separately Identifiable: Supplies must have unique identifiers (e.g., NSN, part number, or description), while services must be tied to a single Statement of Work (SOW) or Performance Work Statement (PWS).
- Pricing Consistency: Each line item must be associated with a single unit price or a single total price.
- Financial Tracking: Generally, each line item must be linked to a single accounting classification (funding source), unless the deliverable is an indivisible effort that cannot be subdivided.
- Performance Parameters: Separate line items are required if there are differences in delivery schedules, destinations, periods of performance, or places of performance.
- Uniform Pricing Type: A single line item cannot mix different contract types; it must be entirely one type (e.g., strictly Fixed-Price or strictly Cost-Reimbursement).
- First Article Requirements: Separate line items must be established for each item requiring separate approval, unless a mixture of items is approved as a single lot.
Practical Implications
- Audit and Payment Accuracy: These rules ensure that when a contractor submits an invoice, the government's automated systems can precisely match the deliverable to a specific funding stream and delivery milestone.
- Administrative Clarity: By prohibiting the mixing of contract types and multiple SOWs within a single line item, the regulation prevents financial and legal ambiguity during contract administration and closeout.