[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR16.205-2]



[Page 308]

 

            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. 16.205-2  Application.



    A fixed-price contract with prospective price redetermination may be 

used in acquisitions of quantity production or services for which it is 

possible to negotiate a fair and reasonable firm fixed price for an 

initial period, but not for subsequent periods of contract performance.

    (a) The initial period should be the longest period for which it is 

possible to negotiate a fair and reasonable firm fixed price. Each 

subsequent pricing period should be at least 12 months.

    (b) The contract may provide for a ceiling price based on evaluation 

of the uncertainties involved in performance and their possible cost 

impact. This ceiling price should provide for assumption of a reasonable 

proportion of the risk by the contractor and, once established, may be 

adjusted only by operation of contract clauses providing for equitable 

adjustment or other revision of the contract price under stated 

circumstances.