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

FAR 16.207-3 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 firm-fixed-price, level-of-effort contract can be used. It requires that the work cannot be clearly defined, the effort level is agreed in advance, and the price stays at or below the simplified acquisition threshold unless a higher official approves. For contractors, it means this contract type is only available in specific situations and may need special approval if the price is above that threshold.

Applies to: Contracting officers using the firm-fixed-price, level-of-effort contract type

What it requires

  • Ensure the work cannot otherwise be clearly defined
  • Identify and agree on the required level of effort in advance
  • Have reasonable assurance the intended result cannot be achieved with less effort
  • Keep the contract price at or below the simplified acquisition threshold unless the chief of the contracting office approves a higher amount

Key terms: firm-fixed-price, level-of-effort contract · simplified acquisition threshold · chief of the contracting office

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

The text

This contract type may be used only when—

(a) The work required cannot otherwise be clearly defined;

(b) The required level of effort is identified and agreed upon in advance;

(c) There is reasonable assurance that the intended result cannot be achieved by expending less than the stipulated effort; and

(d) The contract price is the simplified acquisition threshold or less, unless approved by the chief of the contracting office.

← 16.207-2 Application. · 16.301 General. →

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 16.207-3 Limitations · SpendQuery