Overview
FAR 16.102 establishes the fundamental regulatory framework and statutory constraints for selecting contract types, ensuring that the chosen structure aligns with the procurement method and protects the Government from prohibited pricing arrangements.
Key Rules
- Sealed Bidding Limitations: Contracts resulting from sealed bidding (Part 14) are strictly limited to firm-fixed-price or fixed-price with economic price adjustment types.
- Negotiated Procurement Flexibility: Under Part 15, any contract type or combination described in the FAR may be used to promote the Government's interest, provided it is not otherwise restricted.
- Prohibition of CPPC: The cost-plus-a-percentage-of-cost (CPPC) system is illegal and strictly prohibited at both the prime contract and subcontract levels.
- Mandatory D&Fs: No contract requiring a Determination and Findings (D&F) can be awarded until the D&F is officially executed in accordance with FAR 1.704.
- Unauthorized Types: Any contract type not explicitly described in FAR Part 16 is prohibited unless authorized through a formal deviation under subpart 1.4.
Practical Implications
- Contracting Officers must perform due diligence to ensure that "cost-plus" arrangements do not inadvertently mirror prohibited CPPC structures, where a contractor's profit increases automatically as costs rise.
- The requirement for executed D&Fs before award means that acquisition timelines must account for the administrative lead time necessary for high-level approvals of complex or risky contract types (e.g., Incentive or Cost-Reimbursement contracts).