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FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.2

FAR 16.203-3 Limitations.

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 limits when a fixed-price contract with economic price adjustment may be used. It requires the contracting officer to determine that such a contract is necessary either to protect both parties from significant cost fluctuations or to allow price adjustments if the contractor's established prices change.

Applies to: Contracting officers using fixed-price contracts with economic price adjustment

Key terms: fixed-price contract with economic price adjustment · contracting officer · significant fluctuations · labor or material costs · established prices

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

A fixed-price contract with economic price adjustment shall not be used unless the contracting officer determines that it is necessary either to protect the contractor and the Government against significant fluctuations in labor or material costs or to provide for contract price adjustment in the event of changes in the contractor's established prices.

Sections that refer to it

← 16.203-2 Application. · 16.203-4 Contract clauses. →

Rule changes for FAR Part 16

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 16.203-3 Limitations · SpendQuery