FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.1
FAR 16.102 Policies.
The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.
In plain English
This section sets basic rules for choosing contract types. Sealed bidding must lead to firm-fixed-price or fixed-price with economic price adjustment contracts, while negotiated contracts can be many types if they serve the Government's interest. It also bans cost-plus-a-percentage-of-cost contracting and requires certain determinations and findings before award.
Applies to: Contracting officers and contractors involved in sealed bidding or negotiated contracts
What it requires
- Use only firm-fixed-price or fixed-price with economic price adjustment for contracts from sealed bidding
- Do not use cost-plus-a-percentage-of-cost contracting
- Include a clause in non-firm-fixed-price prime contracts prohibiting cost-plus-a-percentage-of-cost subcontracts
- Do not award a contract before any required determination and findings is executed
Key terms: firm-fixed-price contracts · fixed-price contracts with economic price adjustment · cost-plus-a-percentage-of-cost system · determination and findings · letter contracts
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) Contracts resulting from sealed bidding shall be firm-fixed-price contracts or fixed-price contracts with economic price adjustment.
(b) Contracts negotiated under part 15 may be of any type or combination of types that will promote the Government's interest, except as restricted in this part (see 10 U.S.C. 3321(a) and 41 U.S.C. 3901). Contract types not described in this regulation shall not be used, except as a deviation under subpart 1.4.
(c) The cost-plus-a-percentage-of-cost system of contracting shall not be used (see 10 U.S.C. 3322(a) and 41 U.S.C. 3905(a)). Prime contracts (including letter contracts) other than firm-fixed-price contracts shall, by an appropriate clause, prohibit cost- plus-a-percentage-of-cost subcontracts (see clauses prescribed in subpart 44.2 for cost-reimbursement contracts and subparts 16.2 and 16.4 for fixed-price contracts).
(d) No contract may be awarded before the execution of any determination and findings (D&F's) required by this part. Minimum requirements for the content of D&F's required by this part are specified in 1.704.
← 16.101 General. · 16.103 Negotiating contract type. →
Rule changes for FAR Part 16
- Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 16, 17, and 35 ↗ · proposed 2026-09-18 · comments due 2026-10-19
- Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds ↗ · final rule 2025-08-27 · effective 2025-10-01
- Federal Acquisition Regulation: Protests of Orders Under Certain Multiple-Award Contracts ↗ · proposed 2025-06-12
- Federal Acquisition Regulation: Small Business Participation on Certain Multiple-Award Contracts ↗ · proposed 2025-06-12
- Federal Acquisition Regulation: Protests of Orders Under Certain Multiple-Award Contracts ↗ · proposed 2025-01-15 · comments due 2025-03-17
- Federal Acquisition Regulation: Small Business Participation on Certain Multiple-Award Contracts ↗ · proposed 2025-01-15 · comments due 2025-03-17
- Federal Acquisition Regulation: Preventing Organizational Conflicts of Interest in Federal Acquisition ↗ · proposed 2025-01-15 · comments due 2025-03-17
- Federal Acquisition Regulation: Rerepresentation of Size and Socioeconomic Status ↗ · final rule 2025-01-03 · effective 2025-01-17
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.