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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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30 sections with “incentive target price”

  • 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.
    (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…
  • DFARS 216.403-1 Fixed-price incentive (firm target) contracts.
    …(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 pay particula…
  • 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 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…
  • FAR 52.216-16 Incentive Price Revision—Firm Target.
    As prescribed in 16.406(a), insert the following clause: Incentive Price Revision—Firm Target (JAN 2022) (a) General. The supplies or services identified in the Schedule as Items ___ [Contracting Officer insert Schedule line item numbers]…
  • FAR 52.216-17 Incentive Price Revision—Successive Targets.
    As prescribed in 16.406(b), insert the following clause: Incentive Price Revision—Successive Targets (JAN 2022) (a) General. The supplies or services identified in the Schedule as Items ___ [Contracting Officer insert line item numbers] a…
  • 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 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 …
  • 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 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…
  • FAR 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity.
    … the amount of the fee specified in the contract at the time of award; (2) For cost-plus-incentive-fee conrtracts, the target fee specified in the contract at the time of award, notwithstanding any minimum fee or “fee floor” specified in t…
  • 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 16.406 Contract clauses.
    (a) Insert the clause at 52.216-16, Incentive Price Revision—Firm Target, in solicitations and contracts when a fixed-price incentive (firm target) contract is contemplated. If the contract calls for supplies or services to be ordered under…
  • FAR 31.205-6 Compensation for personal services.
    …wable reimbursed relocation costs are allowable under 31.205-35(a)(10).) (f) Bonuses and incentive compensation. (1) Bonuses and incentive compensation are allowable provided the— (i) Awards are paid or accrued under an agreement entered …
  • FAR 48.104-2 Sharing acquisition savings.
    …m payment or as each future contract is awarded. (i) When the instant contract is not an incentive contract, the contractor's share of net acquisition savings is calculated and paid each time such savings are realized. This may occur once,…
  • FAR 52.226-1 Utilization of Indian Organizations and Indian-Owned Economic Enterprises.
    …0240-4000. The BIA will determine the eligibility and notify the Contracting Officer. No incentive payment will be made within 50 working days of subcontract award or while a challenge is pending. If a subcontractor is determined to be an …
  • FAR 52.230-6 Administration of Cost Accounting Standards.
    …al costs of labor or material, described at 16.203-1(a)(2)), and 16.207; (2) Fixed-price incentive contracts and subcontracts where the price is not adjusted based on actual costs incurred (FAR Subpart 16.4); (3) Orders issued under indef…
  • FAR 52.246-2 Inspection of Supplies—Fixed-Price.
    …sioned the Government thereby. (End of clause) Alternate I (JUL 1985). If a fixed-price incentive contract is contemplated, substitute paragraphs (g), (h), and (l) below for paragraphs (g), (h), and (l) of the basic clause. (g) The Contr…
  • FAR 52.248-1 Value Engineering.
    …hare in any net acquisition savings realized from accepted VECP's, in accordance with the incentive sharing rates in paragraph (f) below. (b) Definitions. Acquisition savings, as used in this clause, means savings resulting from the applic…
  • DFARS 252.226-7001 Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns.
    …ome Lands will determine the eligibility and will notify the Contracting Officer. (e) No incentive payment will be made— (1) While a challenge is pending; or (2) If a subcontractor is determined to be an ineligible participant. (f)(1) T…
  • FAR 32.501-3 Contract price.
    …ustment, the contract price is the initial price until modified. (3) Under a fixed-price incentive contract, the contract price is the target price plus the not-to-exceed amount of unpriced modifications. However, if the contractor's prope…
  • DFARS 252.246-7001 Warranty of data.
    … (C) Seventy-five percent of the total subcontract target profit or fee in a fixed-price-incentive or cost-plus-incentive subcontract. (iii) Damages due the Government under the provisions of this warranty are not an allowable cost. (iv)…
  • FAR 52.215-9 Changes or Additions to Make-or-Buy Program.
    …icer an equitable reduction in the contract price in accordance with paragraph (k) of the Incentive Price Revision—Firm Target clause or paragraph (m) of the Incentive Price Revision—Successive Targets clause of this contract. Alternate II…
  • FAR 30.606 Resolving cost impacts.
    …ecovery of monies by the Government (e.g., due to cost overruns); or (ii) Distortions of incentive provisions and relationships between target costs, ceiling costs, and actual costs for incentive type contracts. (3) When using an alternat…
  • FAR 27.202-5 Solicitation provisions and contract clause.
    …licitations and contracts when royalties may be paid under the contract. If a fixed-price incentive contract is contemplated, change “price” to “target cost and target profit” wherever it appears in the clause. The clause may be used in cos…
  • FAR 32.503-9 Liquidation rates—alternate method.
    …ntract price or target profit when— (i) The target profit is changed under a fixed-price incentive contract with successive targets; or (ii) A redetermined price involves a change in the profit element under a contract with prospective pr…
  • DFARS 215.404-71-4 Facilities capital employed.
    …ormal, booked costs, to establish a cost objective or the target cost when structuring an incentive type contract. Do not adjust target costs established at the outset even though actual cost of money rates become available during the perio…
  • DFARS 234.004 Acquisition strategy.
    …ntract type approval requirements for cost-reimbursement contracts. (iv) For fixed-price incentive (firm target) contracts, contracting officers shall comply with the guidance provided at PGI 216.403-1(1)(ii)(B) and (C). (v) In accordance…
  • DFARS 244.305-70 Policy.
    …mit a corrected proposal; (ii) Considering another type of contract, e.g., a fixed-price incentive (firm target) contract instead of firm-fixed-price; (iii) Using additional cost analysis techniques to determine the reasonableness of the …

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.