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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.5

FAR 32.503-11 Adjustments for price reduction.

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 explains how the government handles adjustments when a contract's price is reduced after the fact. If a retroactive price reduction happens on a contract with progress payments, the contracting officer must get back any overpayment for delivered items and adjust the unliquidated progress payments. The same adjustment applies if the contractor voluntarily lowers the price.

Applies to: Contracts with progress payments that have a retroactive or voluntary price reduction

What it requires

  • Determine the refund due and obtain repayment for excess payments made for delivered items
  • Increase the unliquidated progress payments amount for overdeductions from billings
  • Increase the unliquidated progress payments amount for interim or voluntary price reductions

Key terms: retroactive downward price reduction · redeterminable contract · progress payments · unliquidated progress payments · overdeductions

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

The text

(a) If a retroactive downward price reduction occurs under a redeterminable contract that provides for progress payments, the contracting officer shall—

(1) Determine the refund due and obtain repayment from the contractor for the excess of payments made for delivered items over amounts due as recomputed at the reduced prices; and

(2) Increase the unliquidated progress payments amount for overdeductions made from the contractor's billings for items delivered.

(b) The contracting officer shall also increase the unliquidated progress payments amount if the contractor makes an interim or voluntary price reduction under a redeterminable or incentive contract.

← 32.503-10 Establishing alternate liquidation rates. · 32.503-12 Maximum unliquidated amount. →

Rule changes for FAR Part 32

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

FAR 32.503-11 Adjustments for price reduction · SpendQuery