[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR16.203-1]

[Page 295]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 16_TYPES OF CONTRACTS--Table of Contents
 
                   Subpart 16.2_Fixed-Price Contracts
 
Sec.  16.203-1  Description.

    (a) A fixed-price contract with economic price adjustment provides 
for upward and downward revision of the stated contract price upon the 
occurrence of specified contingencies. Economic price adjustments are of 
three general types:
    (1) Adjustments based on established prices. These price adjustments 
are based on increases or decreases from an agreed-upon level in 
published or otherwise established 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 actually experiences during 
contract performance.
    (3) Adjustments based on cost indexes of labor or material. These 
price adjustments are based on increases or decreases in labor or 
material cost standards or indexes that are specifically identified in 
the contract.
    (b) The contracting officer may use a fixed-price contract with 
economic price adjustment in conjunction with an award-fee incentive 
(see 16.404) and performance or delivery incentives (see 16.402-2 and 
16.402-3) when the award fee or incentive is based solely on factors 
other than cost. The contract type remains fixed-price with economic 
price adjustment when used with these incentives.

[48 FR 42219, Sept. 19, 1983, as amended at 68 FR 13201, Mar. 18, 2003]