FAR 16.205-3 — Limitations
Regulatory text. Not legal advice.
This contract type shall not be used unless—
(a)
(a) Negotiations have established that (1) the conditions for use of a firm-fixed-price contract are not present (see FAR 16.202-2), and (2) a fixed-price incentive contract would not be more appropriate;
(b)
(b) The contractor’s accounting system is adequate for price redetermination;
(c)
(c) The prospective pricing periods can be made to conform with operation of the contractor’s accounting system; and
(d)
(d) There is reasonable assurance that price redetermination actions will take place promptly at the specified times.
Source: eCFR • Pulled 2026-04-16