[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: 48CFR16.206-2]



[Page 308-309]

 

            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. 16.206-2  Application.



    A fixed-ceiling-price contract with retroactive price 

redetermination is appropriate for research and development contracts 

estimated at $100,000 or less when it is established at the outset that 

a fair and reasonable firm fixed price cannot be negotiated and that the 

amount involved and short performance period make the use of any other 

fixed-price contract type impracticable.

    (a) A ceiling price shall be negotiated for the contract at a level 

that reflects a reasonable sharing of risk by the contractor. The 

established ceiling price may be adjusted only if required by the 

operation of contract clauses providing for equitable adjustment or 

other revision of the contract price under stated circumstances.

    (b) The contract should be awarded only after negotiation of a 

billing price that is as fair and reasonable as the circumstances 

permit.



[[Page 309]]



    (c) Since this contract type provides the contractor no cost control 

incentive except the ceiling price, the contracting officer should make 

clear to the contractor during discussion before award that the 

contractor's management effectiveness and ingenuity will be considered 

in retroactively redetermining the price.