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FAR and DFARS › DFARS Part 215: Contracting by Negotiation › Subpart 215.4

DFARS 215.404-73 Alternate structured approaches.

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 allows the contracting officer to use an alternate structured approach for determining profit under DFARS 215.404-4(c). The approach must consider performance risk, contract type risk, and facilities capital employed, and must offset facilities capital cost of money by reducing the prenegotiation profit objective. This matters because it affects how profit is calculated and ensures consistent treatment of facilities capital cost of money across DoD contracts.

Applies to: DoD contracts using alternate structured approaches for profit

What it requires

  • Include consideration of performance risk, contract type risk, and facilities capital employed in the alternate structured approach.
  • Reduce the overall prenegotiation profit objective by the amount of facilities capital cost of money under CAS 414.
  • Ensure the profit amount in the negotiation summary of the DD Form 1547 is net of the offset.

Key terms: alternate structured approach · performance risk · contract type risk · facilities capital employed · facilities capital cost of money

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

The text

(a) The contracting officer may use an alternate structured approach under 215.404-4(c).

(b) The contracting officer may design the structure of the alternate, but it shall include—

(1) Consideration of the three basic components of profit—performance risk, contract type risk (including working capital), and facilities capital employed. However, the contracting officer is not required to complete Blocks 21 through 30 of the DD Form 1547.

(2) Offset for facilities capital cost of money.

(i) The contracting officer shall reduce the overall prenegotiation profit objective by the amount of facilities capital cost of money under Cost Accounting Standard (CAS) 414, Cost of Money as an Element of the Cost of Facilities Capital (48 CFR 9904.414). Cost of money under CAS 417, Cost of Money as an Element of the Cost of Capital Assets Under Construction (48 CFR 9904.417), should not be used to reduce the overall prenegotiation profit objective. The profit amount in the negotiation summary of the DD Form 1547 must be net of the offset.

(ii) This adjustment is needed for the following reason: The values of the profit factors used in the weighted guidelines method were adjusted to recognize the shift in facilities capital cost of money from an element of profit to an element of contract cost (see FAR 31.205-10) and reductions were made directly to the profit factors for performance risk. In order to ensure that this policy is applied to all DoD contracts that allow facilities capital cost of money, similar adjustments shall be made to contracts that use alternate structured approaches.

Sections it refers to

Sections that refer to it

← 215.404-72 Modified weighted guidelines method for nonprofit organizations other than FFRDCs. · 215.404-74 Fee requirements for cost-plus-award-fee contracts. →

Rule changes for DFARS Part 215

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

DFARS 215.404-73 Alternate structured approaches · SpendQuery