(a) Pre-contract cost agreement (also see FAR 31.205-32) may be used when:
(1) the prospective contractor elects to incur costs, at its own risk, before the effective date of a resulting contract in order meet the delivery schedule and requests pre-contract cost recognition; and
(2) the contracting officer agrees the government shall recognize pre-contract costs to the same extent as if incurred after the effective date of any resulting contract.
(b) The following approval authorities apply to pre-contract cost agreements:
(1) For contracting actions at AFFTC, AEDC, and AFNWC/PKE the SCCO is the approval authority for all pre-contract cost agreements.
(2) For all other contracting activities, the COCO is the approval authority for pre-contract cost agreements less than $50M. The SCCO is the approval authority for pre-contract cost agreements $50M or more.
(3) Pre-contract cost agreements must be reviewed for legal sufficiency. Whenever possible, include the request for pre-contract cost agreement in the request for contract clearance.
(c) Obtain legal review before issuing the agreement (see IG 5331.109 for a sample Pre-contract Cost Agreement). As a condition precedent to the use of a pre-contract cost agreement, the correct type of funds must be available upon issuance of the pre-contract cost agreement. While not legally necessary, prudent business acumen would dictate, that to the maximum extent possible, agreement on terms and conditions also be established prior to issuance of a pre-contract agreement.
(d) See 5304.101-90, Early Effective Date, if the contracting officer plans to advise a prospective contractor of the government’s intent to use an effective date before the contract mailing (award) date.
(e) Insert a pre-contract cost clause substantially the same as at 5352.231-9000 in any resulting contract.
