SpendQueryBeta

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

FAR 16.206-3 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 certain contract type can be used. It requires that the contract be for research and development under a specific cost threshold, that the contractor's accounting system is adequate, that price redetermination will occur promptly, and that a high-level official approves its use in writing.

Applies to: Contracting officers and contractors involved in research and development contracts using this contract type

What it requires

  • Ensure the contract is for research and development and the estimated cost is the simplified acquisition threshold or less
  • Ensure the contractor's accounting system is adequate for price redetermination
  • Ensure there is reasonable assurance that price redetermination will take place promptly at the specified time
  • Obtain written approval from the head of the contracting activity (or higher-level official, if required by agency procedures)

Key terms: research and development · simplified acquisition threshold · price redetermination · contracting activity · contract type

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

The text

This contract type shall not be used unless—

(a) The contract is for research and development and the estimated cost is the simplified acquisition threshold or less;

(b) The contractor's accounting system is adequate for price redetermination;

(c) There is reasonable assurance that the price redetermination will take place promptly at the specified time; and

(d) The head of the contracting activity (or a higher-level official, if required by agency procedures) approves its use in writing.

Sections that refer to it

← 16.206-2 Application. · 16.206-4 Contract clause. →

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 16.206-3 Limitations · SpendQuery