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48 CFR · Federal Acquisition Regulation and Defense supplement

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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.

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120 sections with “cost incentive”: the first 40

  • FAR 16.402-1 Cost incentives.
    (a) Most incentive contracts include only cost incentives, which take the form of a profit or fee adjustment formula and are intended to motivate the contractor to effectively manage costs. No incentive contract may provide for other incent…
  • FAR 16.304 Cost-plus-incentive-fee contracts.
    A cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for an initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. Cost-plus-incentiv…
  • FAR 16.405-1 Cost-plus-incentive-fee contracts.
    (a) Description. The cost-plus-incentive-fee contract is a cost-reimbursement contract that provides for the initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs…
  • DFARS 231.205-18 Independent research and development and bid and proposal costs.
    …exceeding the simplified acquisition threshold, except for a fixed-price contract without cost incentives. The term also includes a subcontract for an amount exceeding the simplified acquisition threshold, except for a fixed-price subcontra…
  • FAR 15.403-4 Requiring certified cost or pricing data (10 U.S.C. chapter 271 and 41 U.S.C. chapter 35).
    (a)(1) The contracting officer shall obtain certified cost or pricing data only if the contracting officer concludes that none of the exceptions in 15.403-1(b) applies. However, if the contracting officer has reason to believe exceptional c…
  • FAR 16.306 Cost-plus-fixed-fee contracts.
    (a) Description. A cost-plus-fixed-fee contract is a cost-reimbursement contract that provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. The fixed fee does not vary with actual cost, b…
  • FAR 16.402-4 Structuring multiple-incentive contracts.
    …verall objectives for the acquisition. Because of the interdependency of the Government's cost, the technical performance, and the delivery goals, a contract that emphasizes only one of the goals may jeopardize control over the others. Beca…
  • FAR 16.403 Fixed-price incentive contracts.
    …act price by application of a formula based on the relationship of total final negotiated cost to total target cost. The final price is subject to a price ceiling, negotiated at the outset. The two forms of fixed-price incentive contracts, …
  • FAR 16.403-1 Fixed-price incentive (firm target) contracts.
    (a) Description. A fixed-price incentive (firm target) contract specifies a target cost, a target profit, a price ceiling (but not a profit ceiling or floor), and a profit adjustment formula. These elements are all negotiated at the outset.…
  • FAR 16.403-2 Fixed-price incentive (successive targets) contracts.
    …the following elements, all of which are negotiated at the outset: (i) An initial target cost. (ii) An initial target profit. (iii) An initial profit adjustment formula to be used for establishing the firm target profit, including a ceil…
  • FAR 30.604 Processing changes to disclosed or established cost accounting practices.
    (a) Scope. This section applies to required, unilateral, and desirable changes in cost accounting practices. (b) Procedures. Upon receipt of the contractor's notification and description of the change in cost accounting practice, the CFAO …
  • FAR 30.606 Resolving cost impacts.
    …ll coordinate with the affected contracting officers before negotiating and resolving the cost impact when the estimated cost impact on any of their contracts is at least $100,000. However, the CFAO has the sole authority for negotiating an…
  • FAR 49.115 Settlement of terminated incentive contracts.
    …ered proper (including coordination with the contracting officer), that no portion of the costs considered in the negotiations under the incentive provisions are included in the termination settlement. (b) Cost-plus-incentive-fee contracts…
  • FAR 52.216-10 Incentive Fee.
    …rescribed in 16.307(d), insert the following clause in solicitations and contracts when a cost-plus-incentive-fee contract (other than a facilities contract) is contemplated: Incentive Fee (JUN 2011) (a) General. The Government shall pay …
  • FAR 52.216-16 Incentive Price Revision—Firm Target.
    …s clause shall be identified as such in a modification to this contract. (b) Definition. Costs, as used in this clause, means allowable costs in accordance with part 31 of the Federal Acquisition Regulation (FAR) in effect on the date of t…
  • FAR 52.216-17 Incentive Price Revision—Successive Targets.
    …l target profit of ___ [Contracting Officer insert percent] percent of the initial target cost. Any supplies or services that are to be (1) ordered separately under, or otherwise added to, this contract and (2) subject to price revision in …
  • FAR 52.230-6 Administration of Cost Accounting Standards.
    As prescribed in 30.201-4(d)(1), insert the following clause: Administration of Cost Accounting Standards (JUN 2010) For the purpose of administering the Cost Accounting Standards (CAS) requirements under this contract, the Contractor sha…
  • FAR 52.242-1 Notice of Intent To Disallow Costs.
    …s prescribed in 42.802, insert the following clause in solicitations and contracts when a cost-reimbursement contract, a fixed-price incentive contract, or a contract providing for price redetermination is contemplated: Notice of Intent To…
  • FAR 52.242-3 Penalties for Unallowable Costs.
    As prescribed in 42.709-7, use the following clause: Penalties for Unallowable Costs (DEC 2022) (a) Definition. Proposal, as used in this clause, means either— (1) A final indirect cost rate proposal submitted by the Contractor after the…
  • DFARS 215.404-71-5 Cost efficiency factor.
    (a) This special factor provides an incentive for contractors to reduce costs. To the extent that the contractor can demonstrate cost reduction efforts that benefit the pending contract, the contracting officer may increase the prenegotiati…
  • DFARS 215.407-4 Should-cost review.
    …PGI 215.407-4 for guidance on determining whether to perform a program or overhead should-cost review. (b) Program should-cost review. Major weapon system should-cost program reviews shall be conducted in a manner that is transparent, obje…
  • DFARS 216.405-2 Cost-plus-award-fee contracts.
    …termining official's final evaluation of the contractor's overall performance against the cost, schedule, and performance outcomes specified in the award-fee plan. (3) Limitations. (i) The cost-plus-award-fee contract shall not be used— …
  • DFARS 231.205-70 External restructuring costs.
    …n— (1) Prescribes policies and procedures for allowing contractor external restructuring costs when savings would result for DoD; and (2) Implements 10 U.S.C. 3761. (b) Definitions. As used in this section: (1) Business combination mean…
  • FAR 16.405 Cost-reimbursement incentive contracts.
    See 16.301 for requirements applicable to all cost-reimbursement contracts, for use in conjunction with the following subsections.
  • DFARS 216.405-1 Cost-plus-incentive-fee contracts.
    See PGI 216.405-1 for guidance on the use of cost-plus-incentive-fee contracts.
  • FAR 16.305 Cost-plus-award-fee contracts.
    A cost-plus-award-fee contract is a cost-reimbursement contract that provides for a fee consisting of (a) a base amount (which may be zero) fixed at inception of the contract and (b) an award amount, based upon a judgmental evaluation by th…
  • FAR 42.709-1 Scope.
    …covers the assessment of penalties against contractors which include unallowable indirect costs in— (1) Final indirect cost rate proposals; or (2) The final statement of costs incurred or estimated to be incurred under a fixed-price incen…
  • FAR 46.707 Pricing aspects of fixed-price incentive contract warranties.
    If a fixed-price incentive contract contains a warranty (see 46.708), the estimated cost of the warranty to the contractor should be considered in establishing the incentive target price and the ceiling price of the contract. All costs incu…
  • DFARS 216.405 Cost-reimbursement incentive contracts.
  • FAR 15.305 Proposal evaluation.
    …, and risks supporting proposal evaluation shall be documented in the contract file. (1) Cost or price evaluation. Normally, competition establishes price reasonableness. Therefore, when contracting on a firm-fixed-price or fixed-price wit…
  • FAR 15.404-1 Proposal analysis techniques.
    …evel of detail of the analysis required. (2) Price analysis shall be used when certified cost or pricing data are not required (see paragraph (b) of this subsection and 15.404-3). (3) Cost analysis shall be used to evaluate the reasonable…
  • FAR 15.405 Price negotiation.
    (a) The purpose of performing cost or price analysis is to develop a negotiation position that permits the contracting officer and the offeror an opportunity to reach agreement on a fair and reasonable price. A fair and reasonable price doe…
  • FAR 15.407-2 Make-or-buy programs.
    …anning, placing, and administering subcontracts as necessary to ensure the lowest overall cost and technical risk to the Government. When make-or-buy programs are required, the Government may reserve the right to review and agree on the con…
  • FAR 15.408 Solicitation provisions and contract clauses.
    …te I, if a fixed-price incentive contract is contemplated; or (2) Its Alternate II, if a cost-plus-incentive-fee contract is contemplated. (b) Price Reduction for Defective Certified Cost or Pricing Data. The contracting officer shall, wh…
  • FAR 16.101 General.
    …ding to (1) the degree and timing of the responsibility assumed by the contractor for the costs of performance and (2) the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or…
  • FAR 16.103 Negotiating contract type.
    …onsidered together. The objective is to negotiate a contract type and price (or estimated cost and fee) that will result in reasonable contractor risk and provide the contractor with the greatest incentive for efficient and economical perfo…
  • FAR 16.104 Factors in selecting contract types.
    …vide a realistic pricing standard should be carefully considered. (See 15.404-1(b).) (c) Cost analysis. In the absence of effective price competition and if price analysis is not sufficient, the cost estimates of the offeror and the Govern…
  • FAR 16.203-1 Description.
    …shed prices of specific items or the contract end items. (2) Adjustments based on actual costs of labor or material. These price adjustments are based on increases or decreases in specified costs of labor or material that the contractor ac…
  • FAR 16.204 Fixed-price incentive contracts.
    …the final contract price by a formula based on the relationship of final negotiated total cost to total target cost. Fixed-price incentive contracts are covered in subpart 16.4, Incentive Contracts. See 16.403 for more complete descriptions…
  • FAR 16.307 Contract clauses.
    (a)(1) The contracting officer shall insert the clause at 52.216-7, Allowable Cost and Payment, in solicitations and contracts when a cost-reimbursement contract or a time-and-materials contract (other than a contract for a commercial produ…

FAR (chapter 1)

DFARS (chapter 2, Defense)

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Rule changes in progress: FAR, DFARS. Terms: glossary.