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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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98 sections with “cost or incentive contracts”: the first 40

  • 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…
  • 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 16.402-1 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 16.403 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 31.103 Contracts with commercial organizations.
    …d local governments (see 31.107) and nonprofit organizations (see 31.108) on the basis of cost. (a) The cost principles and procedures in subpart 31.2 and agency supplements shall be used in pricing negotiated supply, service, experimental…
  • 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…
  • 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 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— …
  • 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 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 36.208 Concurrent performance of firm-fixed-price and other types of construction contracts.
    In view of potential labor and administrative problems, cost-plus-fixed-fee, price-incentive, or other types of contracts with cost variation or cost adjustment features shall not be permitted concurrently, at the same work site, with firm-…
  • 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 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 16.204 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 16.601 Time-and-materials contracts.
    …ices for which there is not a labor category specified in the contract; (3) Other direct costs (e.g., incidental services for which there is not a labor category specified in the contract, travel, computer usage charges, etc.); and (4) Ap…
  • 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 31.105 Construction and architect-engineer contracts.
    …his category includes all contracts and contract modifications negotiated on the basis of cost with organizations other than educational institutions (see 31.104), State and local governments (see 31.107), and nonprofit organizations except…
  • 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 32.503-6 Suspension or reduction of payments.
    … the following actions, as necessary, to avoid or correct overpayment: (1) Eliminate the costs of the excessive inventory from the costs eligible for progress payments, with appropriate reduction in progress payments outstanding. (2) Appl…
  • FAR 48.201 Clauses for supply or service contracts.
    …incentive to the remaining areas of the contract. (e) Collateral savings computation not cost-effective. If the head of the contracting activity determines for a contract or class of contracts that the cost of computing and tracking collat…
  • FAR 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity.
    …nment, at its election, may reduce the price of a fixed-price type contract and the total cost and fee under a cost-type contract by the amount of profit or fee determined as set forth in paragraph (b) of this clause if the head of the cont…
  • FAR 52.215-2 Audit and Records—Negotiation.
    … in written form, in the form of computer data, or in any other form. (b) Examination of costs. If this is a cost-reimbursement, incentive, time-and-materials, labor-hour, or price redeterminable contract, or any combination of these, the …
  • 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 52.226-1 Utilization of Indian Organizations and Indian-Owned Economic Enterprises.
    …est an adjustment under the Indian Incentive Program to the following: (i) The estimated cost of a cost-type contract. (ii) The target cost of a cost-plus-incentive-fee prime contract. (iii) The target cost and ceiling price of a fixed-p…
  • 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 52.244-2 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…
  • DFARS 215.404-71-2 Performance risk.
    … of two parts: (1) Technical—the technical uncertainties of performance. (2) Management/cost control—the degree of management effort necessary— (i) To ensure that contract requirements are met; and (ii) To reduce and control costs. (b)…
  • 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.…
  • DFARS 216.601 Time-and-materials contracts.
    …tract or order to accurately estimate the extent or duration of the work or to anticipate costs with any reasonable degree of certainty; (3) Address why a cost-plus-fixed-fee term or other cost-reimbursement, incentive, or fixed-price cont…
  • 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 (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.