48 CFR § 16.205-3 - 16.205-3 Limitations.

---
identifier: "/us/cfr/t48/s16.205-3"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "48 CFR § 16.205-3 - 16.205-3   Limitations."
title_number: 48
title_name: "Federal Acquisition Regulations System"
section_number: "16.205-3"
section_name: "16.205-3   Limitations."
chapter_number: 1
chapter_name: "FEDERAL ACQUISITION REGULATION"
subchapter_number: "C"
subchapter_name: "CONTRACTING METHODS AND CONTRACT TYPES"
part_number: "16"
part_name: "TYPES OF CONTRACTS"
positive_law: false
currency: "2026-03-24"
last_updated: "2026-03-24"
format_version: "1.1.0"
generator: "[email protected]"
authority: "41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113."
regulatory_source: "48 FR 42219, Sept. 19, 1983, unless otherwise noted."
cfr_part: "16"
---


# 16.205-3 16.205-3   Limitations.

This contract type shall not be used unless—

(a) Negotiations have established that (1) the conditions for use of a firm-fixed-price contract are not present (see 16.202-2), and (2) a fixed-price incentive contract would not be more appropriate;

(b) The contractor's accounting system is adequate for price redetermination;

(c) The prospective pricing periods can be made to conform with operation of the contractor's accounting system; and

(d) There is reasonable assurance that price redetermination actions will take place promptly at the specified times.