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

FAR 16.204 Fixed-price incentive contracts.

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 describes fixed-price incentive contracts, which are fixed-price contracts where profit is adjusted and the final price is set using a formula comparing final negotiated total cost to total target cost. It points contractors to subpart 16.4 for more detailed descriptions, application, limitations, and prescribed clauses.

Applies to: Fixed-price incentive contracts

Key terms: fixed-price incentive contract · final negotiated total cost · total target cost · profit · final contract price

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

The text

A fixed-price incentive contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by a formula based on the relationship of final negotiated total cost to total target cost. Fixed-price incentive contracts are covered in subpart 16.4, Incentive Contracts. See 16.403 for more complete descriptions, application, and limitations for these contracts. Prescribed clauses are found at 16.406.

Sections it refers to

  • 16.403 Fixed-price incentive contracts.
  • 16.406 Contract clauses.

Sections that refer to it

  • 30.001 Definitions.
  • 31.103 Contracts with commercial organizations.
  • 52.230-6 Administration of Cost Accounting Standards.

← 16.203-4 Contract clauses. · 16.205 Fixed-price contracts with prospective price redetermination. →

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 16.204 Fixed-price incentive contracts · SpendQuery