1. (a) A unit may not enter into a cost-reimbursement contract unless the procurement officer determines that:

   1. (1) a cost-reimbursement contract is likely to be less costly to the State than any other type of contract; or
   2. (2) except for leases of real property, the kind or quality of procurement that the unit requires could not be obtained practicably under any other type of contract.

2. (b) A unit may not enter into a procurement contract that is wholly or partly a cost-reimbursement contract unless the procurement officer determines that the accounting system of the contractor:

   1. (1) will allow timely development of all necessary cost data in the form required by the specific type of procurement contract under consideration; and
   2. (2) is adequate to allocate costs in accordance with generally accepted accounting principles.

3. (c) A cost-reimbursement contract shall provide that costs, including costs for subcontractors, will be reimbursed only if the costs are allowable and allocable under:

   1. (1) the procurement contract; or
   2. (2) the regulations of the Board on cost principles.

4. (d) A contractor under a cost-reimbursement contract shall give notice to and, as required under the contract, obtain approval from a procurement officer before the contractor enters into:

   1. (1) a cost-reimbursement subcontract; or

   2. (2) any subcontract involving more than:

      1. (i) $25,000; or
      2. (ii) 5% of the estimated cost of the procurement contract.

Added by Acts 1988, c. 48, § 2, eff. Oct. 1, 1988.