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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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49 sections with “target cost”: the first 40

  • FAR 16.402-1 Cost incentives.
    …Except for award-fee contracts (see 16.404 and 16.401 (e)), incentive contracts include a target cost, a target profit or fee, and a profit or fee adjustment formula that (within the constraints of a price ceiling or minimum and maximum fee…
  • 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…
  • FAR 16.405-1 Cost-plus-incentive-fee contracts.
    …e adjusted later by a formula based on the relationship of total allowable costs to total target costs. This contract type specifies a target cost, a target fee, minimum and maximum fees, and a fee adjustment formula. After contract perform…
  • 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.
    …rescribed 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] are s…
  • FAR 30.606 Resolving cost impacts.
    …ers, increase or decrease individual contract prices, including contract cost ceilings or target costs on flexibly-priced contracts. In such cases, the CFAO shall limit any upward contract price adjustments on affected contracts to the amou…
  • FAR 49.115 Settlement of terminated incentive contracts.
    …the provisions of paragraph (j) of the clause at 52.216-16, Incentive Price Revision—Firm Target, and 52.249-2, Termination for Convenience of the Government (Fixed-Price). (1) Partial termination. Under a partially terminated contract, th…
  • FAR 52.216-10 Incentive Fee.
    …ntractor for performing this contract a fee determined as provided in this contract. (b) Target cost and target fee. The target cost and target fee specified in the Schedule are subject to adjustment if the contract is modified in accordan…
  • FAR 52.248-1 Value Engineering.
    …tant contract items affected. Any negative instant contract savings shall be added to the target cost or to the target price and ceiling price, and the amount shall be offset against concurrent and future contract savings. (4) If the Gover…
  • FAR 16.304 Cost-plus-incentive-fee contracts.
    …e adjusted later by a formula based on the relationship of total allowable costs to total target costs. Cost-plus-incentive-fee contracts are covered in subpart 16.4, Incentive Contracts. See 16.405-1 for a more complete description and dis…
  • FAR 16.403 Fixed-price incentive contracts.
    …pplication 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, firm target an…
  • FAR 16.201 General.
    …e. Fixed-price contracts providing for an adjustable price may include a ceiling price, a target price (including target cost), or both. Unless otherwise specified in the contract, the ceiling price or target price is subject to adjustment …
  • FAR 16.306 Cost-plus-fixed-fee contracts.
    … term. (1) The completion form describes the scope of work by stating a definite goal or target and specifying an end product. This form of contract normally requires the contractor to complete and deliver the specified end product (e.g., …
  • FAR 16.401 General.
    …to obtain specific acquisition objectives by— (1) Establishing reasonable and attainable targets that are clearly communicated to the contractor; and (2) Including appropriate incentive arrangements designed to (i) motivate contractor eff…
  • FAR 52.203-10 Price or Fee Adjustment for Illegal or Improper Activity.
    …ed 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 the contract. (3) For cost-plu…
  • FAR 52.226-1 Utilization of Indian Organizations and Indian-Owned Economic Enterprises.
    …tive 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-price incentive prime contract. (iv) The…
  • FAR 52.230-6 Administration of Cost Accounting Standards.
    … (i) Estimated increased cost accumulations are the basis for increasing contract prices, target prices and cost ceilings; and (ii) Estimated decreased cost accumulations are the basis for decreasing contract prices, target prices and cost…
  • FAR 52.246-2 Inspection of Supplies—Fixed-Price.
    … contract or otherwise, remove, replace, or correct the supplies and equitably reduce the target price or, if established, the total final price or (2) may terminate the contract for default. Unless the Contractor corrects or replaces the n…
  • 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 27.202-5 Solicitation provisions and contract clause.
    …der 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 cost-reimbursement contracts where agency approval of roya…
  • FAR 31.205-38 Selling costs.
    …2) Corporate image enhancement. Corporate image enhancement activities, including broadly targeted sales efforts, other than advertising, are included within the definition of public relations at 31.205-1(a), and the costs of such efforts a…
  • FAR 48.104-2 Sharing acquisition savings.
    …contracts, the contracting officer shall add any negative instant contract savings to the target cost or to the target price and ceiling price and then offset these negative instant contract savings and any Government costs against concurre…
  • FAR 48.104-3 Sharing collateral savings.
    …cal year of use but must not exceed the greater of— (1) The contract's firm-fixed-price, target price, target cost, or estimated cost, at the time the VECP is accepted; or (2) $100,000. (c) The contracting officer must determine the shar…
  • DFARS 215.404-71-4 Facilities capital employed.
    …es capital cost of money, with normal, 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 b…
  • DFARS 215.407-4 Should-cost review.
    …cation and prioritization of cost savings opportunities. (K) Establishment of measurable targets and ongoing tracking systems. (ii) The should-cost review shall provide for sufficient analysis while minimizing the impact on program schedu…
  • DFARS 216.405-2 Cost-plus-award-fee contracts.
    …s when the criteria for cost-plus-fixed-fee contracts apply; or (2) Developing objective targets so a cost-plus-incentive-fee contract can be used; or (B) For either engineering development or operational system development acquisitions t…
  • DFARS 252.226-7001 Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns.
    …ause. (2) The incentive amount that may be requested is 5 percent of the estimated cost, target cost, or fixed price included in the subcontract at the time of award to the Indian organization, Indian-owned economic enterprise, or Native H…
  • FAR 16.204 Fixed-price incentive contracts.
    …ract 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, application,…
  • FAR 32.503-9 Liquidation rates—alternate method.
    …be increased or decreased in keeping with the successive changes to the contract 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 in…
  • DFARS 252.246-7001 Warranty of data.
    …tional liability under paragraph (d)(3) of this clause shall not exceed 75 percent of the target profit. (ii) If the breach of the warranty is with respect to the data supplied by an equipment subcontractor, the limit of the Contractor's l…
  • FAR 31.205-6 Compensation for personal services.
    …rdedafterJune24.pdf. (iii) Exceptions. An agency head may establish one or more narrowly targeted exceptions for scientists, engineers, or other specialists upon a determination that such exceptions are needed to ensure that the executive …
  • FAR 32.501-3 Contract price.
    …ce 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 properly incurred costs exceed the target price, th…
  • FAR 48.105 Relationship to other incentives.
    …lar incentives of the contract. To that end, when performance, design-to-cost, or similar targets are set and incentivized, the targets of such incentives affected by the VECP are not to be adjusted because of the acceptance of the VECP. On…
  • FAR 52.215-9 Changes or Additions to Make-or-Buy Program.
    … 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 (OCT 2010). As prescribed in …
  • FAR 52.216-25 Contract Definitization.
    …5-2, supporting its proposal. (b) The schedule for definitizing this contract is [insert target date for definitization of the contract and dates for submission of proposal, beginning of negotiations, and, if appropriate, submission of mak…
  • DFARS 252.217-7027 Contract Definitization.
    …qualifying. (c) The schedule for definitizing this contract action is as follows [insert target date for definitization of the contract action and dates for submission of proposal, beginning of negotiations, and, if appropriate, submission…
  • DFARS 252.234-7002 Earned Value Management System.
    …tract performance, the Contractor shall submit a request for approval to initiate an over-target baseline or over-target schedule to the Contracting Officer. The request shall include a top-level projection of cost and/or schedule growth, a…
  • FAR 16.603-2 Application.
    …make-or-buy and subcontracting plans, (2) a date for the start of negotiations, and (3) a target date for definitization, which shall be the earliest practicable date for definitization. The schedule will provide for definitization of the c…
  • FAR 22.103-5 Contract clauses.
    …ontemplated, or (b) a cost-plus-incentive-fee contract that will provide a swing from the target fee of at least plus or minus 3 percent and a contractor's share of at least 10 percent is contemplated.

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.