U.S. Department of Defense memo – cost-reimbursement contracts

Tom Reynolds


On February 2, 2023, U.S Department of Defense (DoD) released a memo to provide guidance on proper file documentation and coordination with DCMA or other planned contract administration office personnel when using cost-reimbursement contracts. This memo implements recommendations from a recent DoD Inspector General report that identified inconsistencies in contract file documentation in connection with the award of certain cost-reimbursement contracts. DoD included certain reminders in the February 2nd memo, including that FAR 16.103(d) addresses contract type selection documentation, Contracting Officers should address whether a future acquisition for the same requirement can be transitioned to a firm-fixed-price contract, and discussions should be conducted to avoid protracted use of cost-reimbursement contracts over the life of a program.

This memo creates an interesting dynamic in light of the October 2022 final rule that repealed DoD’s preference for fixed-price contracts as stated in the NDAA for FY 2017.

The February 2nd DoD memo can be found here.

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