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FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.3

FAR 16.304 Cost-plus-incentive-fee 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 defines a cost-plus-incentive-fee contract as a cost-reimbursement contract where an initially negotiated fee can be adjusted later using a formula that compares total allowable costs to total target costs. It points you to other parts of the FAR for a fuller description, application details, and limitations. If you are considering this contract type, you need to look at those cross-referenced sections to understand the rules.

Applies to: Cost-plus-incentive-fee contracts

Key terms: cost-plus-incentive-fee contract · cost-reimbursement contract · initially negotiated fee · total allowable costs · total target costs

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

The text

A cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. Cost-plus-incentive-fee contracts are covered in subpart 16.4, Incentive Contracts. See 16.405-1 for a more complete description and discussion of application of these contracts. See 16.301-3 for limitations.

Sections it refers to

← 16.303 Cost-sharing contracts. · 16.305 Cost-plus-award-fee contracts. →

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 16.304 Cost-plus-incentive-fee contracts · SpendQuery