FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.2
FAR 16.201 General.
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 explains that fixed-price contracts set a firm price or, when appropriate, an adjustable price that may include a ceiling price, a target price, or both. It also states that time-and-materials and labor-hour contracts are not fixed-price contracts. For contractors, this matters because it defines what counts as a fixed-price arrangement and limits when ceiling or target prices can be adjusted.
Applies to: Contracting officers and contractors using fixed-price contract types
What it requires
- The contracting officer shall use firm-fixed-price or fixed-price with economic price adjustment contracts when acquiring commercial products and commercial services, except as provided in 12.207(b).
Key terms: firm price · adjustable price · ceiling price · target price · time-and-materials contracts
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) Fixed-price types of contracts provide for a firm price or, in appropriate cases, an adjustable price. Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both. Unless otherwise specified in the contract, the ceiling price or target price is subject to adjustment only by operation of contract clauses providing for equitable adjustment or other revision of the contract price under stated circumstances. The contracting officer shall use firm-fixed-price or fixed-price with economic price adjustment contracts when acquiring commercial products and commercial services, except as provided in 12.207(b).
(b) Time-and-materials contracts and labor-hour contracts are not fixed-price contracts.
Sections it refers to
- 12.207 Contract type.
← 16.105 Solicitation provision. · 16.202 Firm-fixed-price contracts. →
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.