42.302 Contract administration functions.

(a) The contracting officer normally delegates the following contract administration functions to a

CAO. The contracting officer may retain any of these functions, except those in paragraphs (a)(5),

(a)(9), (a)(11) and (a)(12) of this section, unless the cognizant Federal agency (see 2.101) has

designated the contracting officer to perform these functions.

(1) Review the contractor’s compensation structure.

(2) Review the contractor’s insurance plans.

(3) Conduct post-award orientation conferences.

(4) Review and evaluate contractors’ proposals under subpart 15.4 and, when negotiation will be

accomplished by the contracting officer, furnish comments and recommendations to that officer.

(5) Negotiate forward pricing rate agreements (see 15.407-3).

(6) Negotiate advance agreements applicable to treatment of costs under contracts currently

assigned for administration (see 31.109).

(7) Determine the allowability of costs suspended or disapproved as required (see subpart 42.8),

direct the suspension or disapproval of costs when there is reason to believe they should be

suspended or disapproved, and approve final vouchers.

(8) Issue Notices of Intent to Disallow or not Recognize Costs (see subpart 42.8).

(9) Establish final indirect cost rates and billing rates for those contractors meeting the criteria for

contracting officer determination in subpart 42.7.

(10) Attempt to resolve issues in controversy, using ADR procedures when appropriate (see subpart 

33.2); prepare findings of fact and issue decisions under the Disputes clause on matters in which the

administrative contracting officer (ACO) has the authority to take definitive action.

(11) In connection with Cost Accounting Standards (see 30.601 and 48 CFR chapter 99)-

(i) Determine the adequacy of the contractor’s disclosure statements;

(ii) Determine whether disclosure statements are in compliance with Cost Accounting Standards and

part 31;

(iii) Determine the contractor’s compliance with Cost Accounting Standards and disclosure

statements, if applicable; and

(iv) Negotiate price adjustments and execute supplemental agreements under the Cost Accounting

Standards clauses at 52.230-2, 52.230-3, 52.230-4, 52.230-5, and 52.230-6.

(12) Determine the adequacy of the contractor’s accounting system. The contractor’s accounting

system should be adequate during the entire period of contract performance. The adequacy of the

contractor’s accounting system and its associated internal control system, as well as contractor

compliance with the Cost Accounting Standards (CAS), affect the quality and validity of the

contractor data upon which the Government must rely for its management oversight of the
contractor and contract performance.

(13) Review and approve or disapprove the contractor’s requests for payments under the progress

payments or performance-based payments clauses.

(14) Make payments on assigned contracts when prescribed in agency acquisition regulations.

(15) Manage special bank accounts.

(16) Ensure timely notification by the contractor of any anticipated overrun or underrun of the

estimated cost under cost-reimbursement contracts.

(17) Monitor the contractor’s financial condition and advise the contracting officer when it

jeopardizes contract performance.

(18) Analyze quarterly limitation on payments statements and take action in accordance with

subpart 32.6 to recover overpayments from the contractor.

(19) Issue tax exemption forms.

(20) Ensure processing and execution of duty-free entry certificates.

(21) For classified contracts, administer those portions of the applicable industrial security program

delegated to the CAO (see subpart 4.4).

(22) Issue work requests under maintenance, overhaul, and modification contracts.

(23) Negotiate prices and execute supplemental agreements for spare parts and other items selected

through provisioning procedures when prescribed by agency acquisition regulations.

(24) Negotiate and execute contractual documents for settlement of partial and complete contract

terminations for convenience, except as otherwise prescribed by part 49.

(25) Negotiate and execute contractual documents settling cancellation charges under multiyear

contracts.

(26) Process and execute novation and change of name agreements under subpart 42.12.

(27) Perform property administration (see part 45).

(28) Perform necessary screening, redistribution, and disposal of contractor inventory.

(29) Issue contract modifications requiring the contractor to provide packing, crating, and handling

services on excess Government property. When the ACO determines it to be in the Government’s

interests, the services may be secured from a contractor other than the contractor in possession of

the property.

(30) When contractors request Government property-

(i) Evaluate the contractor’s requests for Government property and for changes to existing

Government property and provide appropriate recommendations to the contracting officer;

(ii) Ensure required screening of Government property before acquisition by the contractor;
(iii) Evaluate the use of Government property on a non-interference basis in accordance with the

clause at 52.245-9, Use and Charges;

(iv) Ensure payment by the contractor of any rental due; and

(v) Modify contracts to reflect the addition of Government-furnished property and ensure

appropriate consideration.

(31) Perform production support, surveillance, and status reporting, including timely reporting of

potential and actual slippages in contract delivery schedules.

(32) Perform preaward surveys (see subpart 9.1).

(33) Advise and assist contractors regarding their priorities and allocations responsibilities and

assist contracting offices in processing requests for special assistance and for priority ratings for

privately owned capital equipment.

(34) Monitor contractor industrial labor relations matters under the contract; apprise the

contracting officer and, if designated by the agency, the cognizant labor relations advisor, of actual

or potential labor disputes; and coordinate the removal of urgently required material from the

strikebound contractor’s plant upon instruction from, and authorization of, the contracting officer.

(35) Perform traffic management services, including issuance and control of Government bills of

lading and other transportation documents.

(36) Review the adequacy of the contractor’s traffic operations.

(37) Review and evaluate preservation, packaging, and packing.

(38) Ensure contractor compliance with contractual quality assurance requirements (see part 46).

(39) Ensure contractor compliance with contractual safety requirements.

(40) Perform engineering surveillance to assess compliance with contractual terms for schedule,

cost, and technical performance in the areas of design, development, and production.

(41) Evaluate for adequacy and perform surveillance of contractor engineering efforts and

management systems that relate to design, development, production, engineering changes,

subcontractors, tests, management of engineering resources, reliability and maintainability, data

control systems, configuration management, and independent research and development.

(42) Review and evaluate for technical adequacy the contractor’s logistics support, maintenance,

and modification programs.

(43) Report to the contracting office any inadequacies noted in specifications.

(44) Perform engineering analyses of contractor cost proposals.

(45) Review and analyze contractor-proposed engineering and design studies and submit comments

and recommendations to the contracting office, as required.

(46) Review engineering change proposals for proper classification, and when required, for need,

technical adequacy of design, producibility, and impact on quality, reliability, schedule, and cost;

submit comments to the contracting office.
(47) Assist in evaluating and make recommendations for acceptance or rejection of waivers and

deviations.

(48) Evaluate and monitor the contractor’s procedures for complying with procedures regarding

restrictive markings on data.

(49) Monitor the contractor’s value engineering program.

(50) Review, approve or disapprove, and maintain surveillance of the contractor’s purchasing system

(see part 44).

(51) Consent to the placement of subcontracts.

(52) Review, evaluate, and approve plant or division-wide small, small disadvantaged, women-owned,

veteran-owned, HUBZone, and service-disabled veteran-owned small business master

subcontracting plans.

(53) Obtain the contractor’s currently approved company- or division-wide plans for small, small

disadvantaged, women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small

business subcontracting for its commercial products, or, if there is no currently approved plan,

assist the contracting officer in evaluating the plans for those products.

(54) Assist the contracting officer, upon request, in evaluating an offeror’s proposed small, small

disadvantaged women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small

business subcontracting plans, including documentation of compliance with similar plans under

prior contracts.

(55) By periodic surveillance, ensure the contractor’s compliance with small, small disadvantaged,

women-owned, veteran-owned, HUBZone, and service-disabled veteran-owned small business

subcontracting plans and any labor surplus area contractual requirements; maintain documentation

of the contractor’s performance under and compliance with these plans and requirements; and

provide advice and assistance to the firms involved, as appropriate.

(56) Maintain surveillance of flight operations.

(57) Assign and perform supporting contract administration.

(58) Ensure timely submission of required reports.

(59) Issue administrative changes, correcting errors or omissions in typing, contractor address,

facility or activity code, remittance address, computations which do not require additional contract

funds, and other such changes (see 43.101).

(60) Cause release of shipments from contractor’s plants according to the shipping instructions.

When applicable, the order of assigned priority shall be followed; shipments within the same priority

shall be determined by date of the instruction.

(61) Obtain contractor proposals for any contract price adjustments resulting from amended

shipping instructions. Review all amended shipping instructions on a periodic, consolidated basis to

ensure that adjustments are timely made. Except when the ACO has settlement authority, the ACO

shall forward the proposal to the contracting officer for contract modification. The ACO shall not

delay shipments pending completion and formalization of negotiations of revised shipping

instructions.
(62) Negotiate and/or execute supplemental agreements, as required, making changes in packaging

subcontractors or contract shipping points.

(63) Cancel unilateral purchase orders when notified of nonacceptance by the contractor. The CAO

shall notify the contracting officer when the purchase order is canceled.

(64) Negotiate and execute one-time supplemental agreements providing for the extension of

contract delivery schedules up to 90 days on contracts with an assigned Criticality Designator of C

(see 42.1105). Notification that the contract delivery schedule is being extended shall be provided to

the contracting office. Subsequent extensions on any individual contract shall be authorized only

upon concurrence of the contracting office.

(65) Accomplish administrative closeout procedures (see 4.804-5).

(66) Determine that the contractor has a drug-free workplace program and drug-free awareness

program (see subpart 23.5).

(67) Support the program, product, and project offices regarding program reviews, program status,

program performance and actual or anticipated program problems.

(68) Monitor the contractor’s environmental practices for adverse impact on contract performance

or contract cost, and for compliance with environmental requirements specified in the contract. ACO

responsibilities include-

(i) Requesting environmental technical assistance, if needed;

(ii) Monitoring contractor compliance with specifications or other contractual requirements

requiring the delivery or use of environmentally preferable products, energy-efficient products,

products containing recovered materials, and biobased products. This must occur as part of the

quality assurance procedures set forth in part 46; and

(iii) As required in the contract, ensuring that the contractor complies with the reporting

requirements relating to recovered material content utilized in contract performance (see subpart 

23.4).

(69) Administer commercial financing provisions and monitor contractor security to ensure its

continued adequacy to cover outstanding payments, when on-site review is required.

(70) Deobligate excess funds after final price determination.

(71) Ensure that the contractor has implemented the requirements of 52.203-13, Contractor Code of

Business Ethics and Conduct.

(b) The CAO shall perform the following functions only when and to the extent specifically

authorized by the contracting office:

(1) Negotiate or negotiate and execute supplemental agreements incorporating contractor proposals

resulting from change orders issued under the Changes clause. Before completing negotiations,

coordinate any delivery schedule change with the contracting office.

(2) Negotiate prices and execute priced exhibits for unpriced orders issued by the contracting officer

under basic ordering agreements.
(3) Negotiate or negotiate and execute supplemental agreements changing contract delivery

schedules.

(4) Negotiate or negotiate and execute supplemental agreements providing for the deobligation of

unexpended dollar balances considered excess to known contract requirements.

(5) Issue amended shipping instructions and, when necessary, negotiate and execute supplemental

agreements incorporating contractor proposals resulting from these instructions.

(6) Negotiate changes to interim billing prices.

(7) Negotiate and definitize adjustments to contract prices resulting from exercise of an economic

price adjustment clause (see subpart 16.2).

(8) Issue change orders and negotiate and execute resulting supplemental agreements under

contracts for ship construction, conversion, and repair.

(9) Execute supplemental agreements on firm-fixed-price supply contracts to reduce required line

item quantities and deobligate excess funds when notified by the contractor of an inconsequential

delivery shortage, and it is determined that such action is in the best interests of the Government,

notwithstanding the default provisions of the contract. Such action will be taken only upon the

written request of the contractor and, in no event, shall the total downward contract price

adjustment resulting from an inconsequential delivery shortage exceed $250.00 or 5 percent of the

contract price, whichever is less.

(10) Execute supplemental agreements to permit a change in place of inspection at origin specified

in firm-fixed-price supply contracts awarded to nonmanufacturers, as deemed necessary to protect

the Government’s interests.

(11) Prepare evaluations of contractor performance in accordance with subpart 42.15.

(c) Any additional contract administration functions not listed in 42.302(a) and (b), or not otherwise

delegated, remain the responsibility of the contracting office.

Parent topic: Subpart 42.3 - Contract Administration Office Functions