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FAR and DFARS › FAR Part 16: Types of Contracts › Subpart 16.6

FAR 16.603-3 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 letter contract can be used. It requires a written determination by the head of the contracting activity or a designee that no other contract is suitable. It also prohibits certain commitments, such as exceeding available funds or avoiding competition when required.

Applies to: Contracting officers and their agencies using letter contracts

What it requires

  • Obtain a written determination from the head of the contracting activity or a designee that no other contract is suitable before using a letter contract.
  • Ensure the letter contract does not commit the Government to a definitive contract in excess of funds available at the time the letter contract is executed.
  • Ensure the letter contract is not entered into without competition when competition is required by part 6.
  • Ensure any amendment to a letter contract to satisfy a new requirement is only made if that requirement is inseparable from the existing letter contract, and treat such amendment as subject to the same requirements and limitations as a new letter contract.

Key terms: letter contract · head of the contracting activity · definitive contract · funds available · competition

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

The text

A letter contract may be used only after the head of the contracting activity or a designee determines in writing that no other contract is suitable. Letter contracts shall not—

(a) Commit the Government to a definitive contract in excess of the funds available at the time the letter contract is executed;

(b) Be entered into without competition when competition is required by part 6; or

(c) Be amended to satisfy a new requirement unless that requirement is inseparable from the existing letter contract. Any such amendment is subject to the same requirements and limitations as a new letter contract.

← 16.603-2 Application. · 16.603-4 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 16.603-3 Limitations · SpendQuery