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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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60 sections with “fixed-price incentive contracts”: the first 40

  • FAR 16.403 Fixed-price incentive contracts.
    (a) Description. A fixed-price incentive contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by application of a formula based on the relationship of total final negotiated cost to…
  • FAR 16.204 Fixed-price incentive contracts.
    A fixed-price incentive contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by a formula based on the relationship of final negotiated total cost to total target cost. Fixed-price …
  • DFARS 216.403 Fixed-price incentive contracts.
  • FAR 16.403-2 Fixed-price incentive (successive targets) contracts.
    (a) Description. (1) A fixed-price incentive (successive targets) contract specifies 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 ad…
  • FAR 49.115 Settlement of terminated incentive contracts.
    (a) Fixed-price incentive contracts. The TCO shall settle terminated fixed-price incentive (FPI) contracts under the provisions of paragraph (j) of the clause at 52.216-16, Incentive Price Revision—Firm Target, and 52.249-2, Termination for…
  • DFARS 216.403-1 Fixed-price incentive (firm target) contracts.
    …plication. (1) The contracting officer shall give particular consideration to the use of fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production. (2) The contracting officer shall p…
  • 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.…
  • DFARS 216.403-2 Fixed-price incentive (successive targets) contracts.
    See PGI 216.403-2 for guidance on the use of fixed-price incentive (successive targets) contracts.
  • FAR 46.302 Fixed-price supply contracts.
    The contracting officer shall insert the clause at 52.246-2, Inspection of Supplies—Fixed-Price, in solicitations and contracts for supplies, or services that involve the furnishing of supplies, when a fixed-price contract is contemplated a…
  • FAR 16.404 Fixed-price contracts with award fees.
    Award-fee provisions may be used in fixed-price contracts when the Government wishes to motivate a contractor and other incentives cannot be used because contractor performance cannot be measured objectively. Such contracts shall establish …
  • FAR 36.208 Concurrent performance of firm-fixed-price and other types of construction contracts.
    …adjustment features shall not be permitted concurrently, at the same work site, with firm-fixed-price, lump sum, or unit price contracts except with the prior approval of the head of the contracting activity.
  • FAR 52.230-6 Administration of Cost Accounting Standards.
    …prohibition provisions of CAS-covered contracts and subcontracts affected by the change. Fixed-price contracts and subcontracts means— (1) Fixed-price contracts and subcontracts described at FAR 16.202, 16.203, (except when price adjustme…
  • FAR 15.305 Proposal evaluation.
    …ally, competition establishes price reasonableness. Therefore, when contracting on a firm-fixed-price or fixed-price with economic price adjustment basis, comparison of the proposed prices will usually satisfy the requirement to perform a p…
  • FAR 30.001 Definitions.
    …prohibition provisions of CAS-covered contracts and subcontracts affected by the change. Fixed-price contracts and subcontracts means— (1) Fixed-price contracts and subcontracts described at 16.202, 16.203 (except when price adjustments a…
  • FAR 31.103 Contracts with commercial organizations.
    …ermining costs under terminated contracts (see 49.103 and 49.113); (4) Price revision of fixed-price incentive contracts (see 16.204 and 16.403); (5) Price redetermination of price redetermination contracts (see 16.205 and 16.206); and (…
  • FAR 31.105 Construction and architect-engineer contracts.
    …ing, negotiating, or determining costs under terminated contracts; (4) Price revision of fixed-price incentive contracts; and (5) Pricing changes and other contract modifications. (d) Except as otherwise provided in this paragraph (d), t…
  • FAR 52.244-2 Subcontracts.
    … and changes and modifications to purchase orders. (b) When this clause is included in a fixed-price type contract, consent to subcontract is required only on unpriced contract actions (including unpriced modifications or unpriced delivery…
  • FAR 12.207 Contract type.
    (a) Except as provided in paragraph (b) of this section, agencies shall use firm-fixed-price contracts or fixed-price contracts with economic price adjustment for the acquisition of commercial products or commercial services. (b)(1) A time…
  • FAR 15.408 Solicitation provisions and contract clauses.
    …cant value, the contracting officer shall use the clause with— (1) Its Alternate 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 …
  • FAR 16.103 Negotiating contract type.
    …tractor with the greatest incentive for efficient and economical performance. (b) A firm-fixed-price contract, which best utilizes the basic profit motive of business enterprise, shall be used when the risk involved is minimal or can be pr…
  • FAR 16.104 Factors in selecting contract types.
    …ce competition. Normally, effective price competition results in realistic pricing, and a fixed-price contract is ordinarily in the Government's interest. (b) Price analysis. Price analysis with or without competition, may provide a basis …
  • FAR 16.401 General.
    (a) Incentive contracts as described in this subpart are appropriate when a firm-fixed-price contract is not appropriate and the required supplies or services can be acquired at lower costs and, in certain instances, with improved delivery …
  • FAR 30.604 Processing changes to disclosed or established cost accounting practices.
    …es multiplied by the total estimated base computed for each of the following groups: (A) Fixed-price contracts and subcontracts. (B) Flexibly-priced contracts and subcontracts. (iii) Any other method that provides a reasonable approximat…
  • FAR 31.204 Application of principles and procedures.
    …d by the subcontractor that are consistent with this part: (i) Cost-reimbursement. (ii) Fixed-price incentive. (iii) Price redeterminable (i.e., fixed-price contracts with prospective price redetermination and fixed-ceiling-price contrac…
  • FAR 35.006 Contracting methods and contract type.
    …ng the recommendations of technical personnel. Although the Government ordinarily prefers fixed-price arrangements in contracting, this preference applies in R&D contracting only to the extent that goals, objectives, specifications, and cos…
  • FAR 46.710 Contract clauses.
    …pplies of a Noncomplex Nature, in solicitations and contracts for noncomplex items when a fixed-price supply contract is contemplated and the use of a warranty clause has been approved under agency procedures. If the contractor's design rat…
  • FAR 52.248-1 Value Engineering.
    … the term does not include quantities funded after VECP acceptance. If this contract is a fixed-price contract with prospective price redetermination, the term refers to the period for which firm prices have been established. Instant unit …
  • DFARS 212.7002 Policy.
    …e reasonably anticipated. (b) Notwithstanding FAR 12.207, contracting officers shall use fixed-price type contracts, including fixed-price incentive contracts, for awards resulting from a CSO. When using a fixed-price incentive contract, s…
  • DFARS 216.601 Time-and-materials contracts.
    …y; (3) Address why a cost-plus-fixed-fee term or other cost-reimbursement, incentive, or fixed-price contract or order is not appropriate; for contracts (including indefinite-delivery contracts) and orders for other than commercial product…
  • FAR 15.404-1 Proposal analysis techniques.
    … of the cost realism analysis. (3) Cost realism analyses may also be used on competitive fixed-price incentive contracts or, in exceptional cases, on other competitive fixed-price-type contracts when new requirements may not be fully under…
  • FAR 30.605 Processing noncompliances.
    …act and subcontract incentives, fees, and profits, for each of the following groups: (A) Fixed-price contracts and subcontracts. (B) Flexibly-priced contracts and subcontracts. (ii) The increased or decreased costs to the Government for …
  • FAR 30.606 Resolving cost impacts.
    …es, the CFAO shall— (i) To the maximum extent practical, not adjust the price upward for fixed-price contracts; (ii) If contract adjustments are made, preclude payment of aggregate increased costs by taking one or both of the following ac…
  • DFARS 215.404-71-3 Contract type risk and working capital adjustment.
    …is an adjustment added to the profit objective for contract type risk. It only applies to fixed-price contracts that provide for progress payments. Though it uses a formula approach, it is not intended to be an exact calculation of the cost…
  • DFARS 234.004 Acquisition strategy.
    …would not be practicable to reduce program risk to a level that would permit the use of a fixed-price type contract; and (2) The complexity and technical challenge of the program is not the result of a failure to meet the requirements of 1…
  • DFARS 246.710 Contract clauses.
    … (i) Use the basic clause in solicitations and contracts that are not firm-fixed price or fixed-price incentive. (ii) Use alternate I in fixed-price-incentive solicitations and contracts. (iii) Use alternate II in firm-fixed-price solicit…
  • FAR 17.106-3 Special procedures applicable to DoD, NASA, and the Coast Guard.
    …anceled or terminated. (d) Contracts awarded under the multiyear procedure shall be firm-fixed-price, fixed-price with economic price adjustment, or fixed-price incentive. (e) Recurring costs in cancellation ceiling. The inclusion of recu…
  • FAR 32.503-6 Suspension or reduction of payments.
    …ent contract price used in progress payment computations (the current ceiling price under fixed-price incentive contracts) to include the not-to-exceed amount for any pending change orders and unpriced orders. (ii) Divide the revised contr…
  • FAR 35.007 Solicitations.
    …criteria (e.g., unrealistically low cost estimates in proposals for cost-reimbursement or fixed-price incentive contracts). Although cost or price is not normally the controlling factor in selecting a contractor to perform R&D, it should no…
  • FAR 42.703-1 Policy.
    …irect costs under cost-reimbursement contracts and in determining progress payments under fixed-price contracts. (c) To ensure compliance with 10 U.S.C. 3743(a) and 41 U.S.C. 4303(a)— (1) Final indirect cost rates shall be used for contra…
  • FAR 42.709-1 Scope.
    …posals; or (2) The final statement of costs incurred or estimated to be incurred under a fixed-price incentive contract. (b) This section applies to all contracts in excess of $1 million, except fixed-price contracts without cost incentiv…

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.