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FAR and DFARS › FAR Part 36: Construction and Architect-engineer Contracts › Subpart 36.2

FAR 36.205 Statutory cost 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

FAR 36.205 sets limits on construction contract costs to the Government, based on statutory cost limitations. It requires solicitations to state these limits and how offers must be priced, and it mandates rejection of offers that exceed the limits or are materially unbalanced. This matters because contractors must ensure their pricing complies with these rules to be eligible for award.

Applies to: Construction contracts and solicitations subject to statutory cost limitations

What it requires

  • In solicitations with items subject to statutory cost limitations, state the applicable cost limitation for each affected item in a separate schedule.
  • State that an offer without separately-priced schedules will not be considered.
  • State that the price on each schedule must include an approximate apportionment of all estimated direct costs, allocable indirect costs, and profit.

Key terms: statutory cost limitations · Government-imposed contingencies · overhead · separately-priced schedules · materially unbalanced

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

The text

(a) Contracts for construction shall not be awarded at a cost to the Government—

(1) In excess of statutory cost limitations, unless applicable limitations can be and are waived in writing for the particular contract; or

(2) Which, with allowances for Government-imposed contingencies and overhead, exceeds the statutory authorization.

(b) Solicitations containing one or more items subject to statutory cost limitations shall state (1) the applicable cost limitation for each affected item in a separate schedule; (2) that an offer which does not contain separately-priced schedules will not be considered; and (3) that the price on each schedule shall include an approximate apportionment of all estimated direct costs, allocable indirect costs, and profit.

(c) The Government shall reject an offer if its prices exceed applicable statutory limitations, unless laws or agency procedures provide pertinent exemptions. However, if it is in the Government's interest, the contracting officer may include a provision in the solicitation which permits the award of separate contracts for individual items whose prices are within or not subject to applicable statutory limitations.

(d) The Government shall also reject an offer if its prices are within statutory limitations only because it is materially unbalanced. An offer is unbalanced if its prices are significantly less than cost for some work, and overstated for other work.

Sections that refer to it

  • 236.570 Additional provisions and clauses.

← 36.204 Disclosure of the magnitude of construction projects. · 36.206 Liquidated damages. →

Rule changes for FAR Part 36

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

FAR 36.205 Statutory cost limitations · SpendQuery