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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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27 sections with “cost incentives”

  • 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…
  • 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 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…
  • 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 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 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 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 16.104 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 16.401 General.
    …ontract is not appropriate and the required supplies or services can be acquired at lower costs and, in certain instances, with improved delivery or technical performance, by relating the amount of profit or fee payable under the contract t…
  • 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 17.105-2 Objectives.
    …r contracting is encouraged to take advantage of one or more of the following: (a) Lower costs. (b) Enhancement of standardization. (c) Reduction of administrative burden in the placement and administration of contracts. (d) Substantial…
  • FAR 30.605 Processing noncompliances.
    (a) General. Prior to making any contract price or cost adjustments under the applicable paragraph(s) addressing noncompliance at 52.230-2, 52.230-3, or 52.230-5, the CFAO shall determine that— (1) The contemplated contract price or cost a…
  • FAR 31.205-6 Compensation for personal services.
    …e following general criteria and additional requirements contained in other parts of this cost principle: (1) Compensation for personal services must be for work performed by the employee in the current year and must not represent a retroa…
  • FAR 35.006 Contracting methods and contract type.
    …applies in R&D contracting only to the extent that goals, objectives, specifications, and cost estimates are sufficient to permit such a preference. The precision with which the goals, performance objectives, and specifications for the work…
  • FAR 48.105 Relationship to other incentives.
    … should not be rewarded both as value engineering shares and under performance, design-to-cost, or similar incentives of the contract. To that end, when performance, design-to-cost, or similar targets are set and incentivized, the targets o…
  • FAR 52.244-2 Subcontracts.
    …asing system, consent to subcontract is required for any subcontract that— (1) Is of the cost-reimbursement, time-and-materials, or labor-hour type; or (2) Is fixed-price and exceeds— (i) For a contract awarded by the Department of Defen…
  • FAR 52.248-1 Value Engineering.
    … same unit. Acquisition savings include— (1) Instant contract savings, which are the net cost reductions on this, the instant contract, and which are equal to the instant unit cost reduction multiplied by the number of instant contract uni…
  • DFARS 215.404-71-3 Contract type risk and working capital adjustment.
    (a) Description. The contract type risk factor focuses on the degree of cost risk accepted by the contractor under varying contract types. The working capital adjustment is an adjustment added to the profit objective for contract type risk.…
  • FAR 16.202-1 Description.
    …ovides for a price that is not subject to any adjustment on the basis of the contractor's cost experience in performing the contract. This contract type places upon the contractor maximum risk and full responsibility for all costs and resul…
  • FAR 42.709-7 Contract clause.
    Use the clause at 52.242-3, Penalties for Unallowable Costs, in all solicitations and contracts over $1 million except fixed-price contracts without cost incentives or any firm-fixed-price contract for the purchase of commercial products or…
  • FAR 12.207 Contract type.
    …tract or order to accurately estimate the extent or duration of the work or to anticipate costs with any reasonable degree of confidence; (iii) Establish that the requirement has been structured to maximize the use of firm-fixed-price or f…
  • FAR 15.203 Requests for proposals.
    …ssued for OMB Circular A-76 studies. See subpart 7.3 for additional information regarding cost comparisons between Government and contractor performance. (c) Electronic commerce may be used to issue RFPs and to receive proposals, modificat…
  • DFARS 216.401-71 Objective criteria.
    …m extent possible to measure contract performance. Objective criteria are associated with cost-plus-incentive-fee and fixed-price-incentive contracts. (2) When objective criteria exist but the contracting officer determines that it is in t…
  • DFARS 219.7102 General.
    …y provide to mentor firms, which include— (1) Reimbursement for developmental assistance costs through— (i) A separately priced contract line item on a DoD contract; or (ii) A separate contract, upon written determination by the Director…
  • FAR 19.708 Contract clauses.
    …s subcontracting as one of the factors to be considered in determining the award fee in a cost-plus-award-fee contract; in such cases, however, the contracting officer shall not use the clause at 52.219-10, Incentive Subcontracting Program.
  • FAR 37.602 Performance work statement.
    … competitive environment to encourage competitors to develop and institute innovative and cost-effective methods of performing the work. (c) Offerors use the SOO to develop the PWS; however, the SOO does not become part of the contract. Th…

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.