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FAR and DFARS › DFARS Part 216: Types of Contracts › Subpart 216.4

DFARS 216.403-1 Fixed-price incentive (firm target) 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 tells contracting officers when and how to use fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production. It directs them to focus on share lines and ceiling prices, using a 120 percent ceiling and a 50/50 share ratio as the starting point. It also points to PGI 216.403-1 for further guidance.

Applies to: Contracting officers using fixed-price incentive (firm target) contracts

What it requires

  • Give particular consideration to using fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production
  • Pay particular attention to share lines and ceiling prices, with a 120 percent ceiling and a 50/50 share ratio as the point of departure for establishing the incentive arrangement
  • See PGI 216.403-1 for guidance on the use of fixed-price incentive (firm target) contracts

Key terms: fixed-price incentive (firm target) contracts · share lines · ceiling prices · 120 percent ceiling · 50/50 share ratio

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

The text

(b) Application.

(1) The contracting officer shall give particular consideration to the use of fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production.

(2) The contracting officer shall pay particular attention to share lines and ceiling prices for fixed-price incentive (firm target) contracts, with a 120 percent ceiling and a 50/50 share ratio as the point of departure for establishing the incentive arrangement.

(3) See PGI 216.403-1 for guidance on the use of fixed-price incentive (firm target) contracts.

Sections that refer to it

  • 225.7301-2 Solicitation approval for sole source contracts.
  • 234.004 Acquisition strategy.

← 216.403 Fixed-price incentive contracts. · 216.403-2 Fixed-price incentive (successive targets) contracts. →

Rule changes for DFARS Part 216

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

DFARS 216.403-1 Fixed-price incentive (firm target) contracts · SpendQuery