Overview
FAR 42.803 establishes the administrative procedures for government officials to review, approve, or disallow costs submitted for reimbursement under cost-type, time-and-materials, and labor-hour contracts. It defines the specific authorities of contracting officers and auditors to suspend or deduct questionable costs from a contractor's current payments.
Key Rules
- Applicability: Applies to cost-reimbursement contracts, T&M/Labor-hour contracts, letter contracts, and the cost-reimbursement portions of fixed-price contracts.
- Auditor Authority: If authorized by agency regulations, contract auditors may directly receive and approve vouchers, or suspend payment on questionable costs.
- Notice of Suspension/Disapproval: When a cost is questioned, the auditor can issue a formal notice simultaneously to the contractor and the disbursing officer to facilitate immediate deduction from current payments.
- Contractor Recourse: If a contractor disagrees with a deduction, they have the right to:
- Request a formal review and discussion with the cognizant contracting officer.
- Submit a claim under the Disputes clause (FAR 52.233-1).
- Pursue both administrative review and a formal claim concurrently.
Practical Implications
- Cash Flow Risk: Contractors may face immediate reductions in cash flow because the government can deduct questioned costs from current vouchers before a final determination of allowability is made.
- Administrative Due Process: The regulation ensures that while the government can protect its interests by withholding funds, the contractor has a clear path to appeal through the contracting officer or the formal legal claims process.