52.216-16 Incentive Price Revision-Firm

Target.

As prescribed in 16.406(a), insert the following clause:

Incentive Price Revision-Firm Target (Jan 2022)

(a) General. The supplies or services identified in the Schedule as Items _______ [Contracting Officer

insert Schedule line item numbers] are subject to price revision in accordance with this clause;

provided, that in no event shall the total final price of these items exceed the ceiling price of ________

dollars ($_____). Any supplies or services that are to be (1) ordered separately under, or otherwise

added to, this

contract and (2) subject to price revision in accordance with the terms of this clause shall be

identified as such in a modification to this contract.

(b) Definition. "Costs," as used in this clause, means allowable costs in accordance with part 31 of

the Federal Acquisition Regulation (FAR) in effect on the date of this contract.

(c) Data submission.

(1) Within __________________ [Contracting Officer insert number of days] days after the end of the

month in which the Contractor has delivered the last unit of supplies and completed the services

specified by item number in paragraph (a) of this clause, the Contractor shall submit in the format of

Table 15-2, FAR 15.408, or in any other form on which the parties agree-

(i) A detailed statement of all costs incurred up to the end of that month in performing all work

under the items;

(ii) An estimate of costs of further performance, if any, that may be necessary to complete

performance of all work under the items;

(iii) A list of all residual inventory and an estimate of its value; and

(iv) Any other relevant data that the Contracting Officer may reasonably require.

(2) If the Contractor fails to submit the data required by paragraph (c)(1) of this clause within the

time specified and it is later determined that the Government has overpaid the Contractor, the

Contractor shall repay the excess to the Government immediately. Unless repaid within 30 days

after the end of the data submittal period, the amount of the excess shall bear interest, computed

from the date the data were due to the date of repayment, at the rate established in accordance with

the Interest clause.

(d) Price revision. Upon the Contracting Officer’s receipt of the data required by paragraph (c) of

this clause, the Contracting Officer and the Contractor shall promptly establish the total final price

of the items specified in (a) of this clause by applying to final negotiated cost an adjustment for

profit or loss, as follows:

(1) On the basis of the information required by paragraph (c) of this clause, together with any other
pertinent information, the parties shall negotiate the total final cost incurred or to be incurred for

supplies delivered (or services performed) and accepted by the Government and which are subject to

price revision under this clause.

(2) The total final price shall be established by applying to the total final negotiated cost an

adjustment for profit or loss, as follows:

(i) If the total final negotiated cost is equal to the total target cost, the adjustment is the total target

profit.

(ii) If the total final negotiated cost is greater than the total target cost, the adjustment is the total

target profit, less ______ [Contracting Officer insert percent] percent of the amount by which the

total final negotiated cost exceeds the total target cost.

(iii) If the final negotiated cost is less than the total target cost, the adjustment is the total target

profit plus _____ [Contracting Officer insert percent] percent of the amount by which the total final

negotiated cost is less than the total target cost.

(e) Contract modification. The total final price of the items specified in paragraph (a) of this clause

shall be evidenced by a modification to this contract, signed by the Contractor and the Contracting

Officer. This price shall not be subject to revision, notwithstanding any changes in the cost of

performing the contract, except to the extent that-

(1) The parties may agree in writing, before the determination of total final price, to exclude specific

elements of cost from this price and to a procedure for subsequent disposition of those elements;

and

(2) Adjustments or credits are explicitly permitted or required by this or any other clause in this

contract.

(f) Adjusting billing prices.

(1) Pending execution of the contract modification (see paragraph (e) of this clause), the Contractor

shall submit invoices or vouchers in accordance with billing prices as provided in this paragraph.

The billing prices shall be the target prices shown in this contract.

(2) If at any time it appears from information provided by the contractor under paragraph (g)(2) of

this clause that the then-current billing prices will be substantially greater than the estimated final

prices, the parties shall negotiate a reduction in the billing prices. Similarly, the parties may

negotiate an increase in billing prices by any or all of the difference between the target prices and

the ceiling price, upon the Contractor’s submission of factual data showing that final cost under this

contract will be substantially greater than the target cost.

(3) Any billing price adjustment shall be reflected in a contract modification and shall not affect the

determination of the total final price under paragraph (d) of this clause. After the contract

modification establishing the total final price is executed, the total amount paid or to be paid on all

invoices or vouchers shall be adjusted to reflect the total final price, and any resulting additional

payments, refunds, or credits shall be made promptly.

(g) Quarterly limitation on payments statement. This paragraph (g) shall apply until final price

revision under this contract has been completed.
(1) Within 45 days after the end of each quarter of the Contractor’s fiscal year in which a delivery is

first made (or services are first performed) and accepted by the Government under this contract,

and for each quarter thereafter, the Contractor shall submit to the contract administration office

(with a copy to the contracting office and the cognizant contract auditor) a statement, cumulative

from the beginning of the contract, showing-

(i) The total contract price of all supplies delivered (or services performed) and accepted by the

Government and for which final prices have been established;

(ii) The total costs (estimated to the extent necessary) reasonably incurred for, and properly

allocable solely to, the supplies delivered (or services performed) and accepted by the Government

and for which final prices have not been established;

(iii) The portion of the total target profit (used in establishing the initial contract price or agreed to

for the purpose of this paragraph (g)) that is in direct proportion to the supplies delivered (or

services performed) and accepted by the Government and for which final prices have not been

established-increased or decreased in accordance with paragraph (d)(2) of this clause, when the

amount stated under subdivision (g)(1)(ii) of this clause differs from the aggregate target costs of

the supplies or services; and

(iv) The total amount of all invoices or vouchers for supplies delivered (or services performed) and

accepted by the Government (including amounts applied or to be applied to liquidate progress

payments).

(2) Notwithstanding any provision of this contract authorizing greater payments, if on any quarterly

statement the amount under subdivision (g)(1)(iv) of this clause exceeds the sum due the Contractor,

as computed in accordance with subdivisions (g)(1)(i), (ii), and (iii) of this clause, the Contractor

shall immediately refund or credit to the Government the amount of this excess. The Contractor

may, when appropriate, reduce this refund or credit by the amount of previous refunds or credits

effected under this clause. If any portion of the excess has been applied to the liquidation of

progress payments, then that portion may, instead of being refunded, be added to the unliquidated

progress payment account consistent with the Progress Payments clause. The Contractor shall

provide complete details to support any claimed reductions in refunds.

(3) If the Contractor fails to submit the quarterly statement within 45 days after the end of each

quarter and it is later determined that the Government has overpaid the Contractor, the Contractor

shall repay the excess to the Government immediately. Unless repaid within 30 days after the end of

the statement submittal period, the amount of the excess shall bear interest, computed from the date

the quarterly statement was due to the date of repayment, at the rate established in accordance with

the Interest clause.

(h) Subcontracts. No subcontract placed under this contract may provide for payment on a cost-plusa-percentage-of-cost basis.

(i) Disagreements. If the Contractor and the Contracting Officer fail to agree upon the total final

price within 60 days (or within such other period as the Contracting Officer may specify) after the

date on which the data required by paragraph (c) of this clause are to be submitted, the Contracting

Officer shall promptly issue a decision in accordance with the Disputes clause.

(j) Termination. If this contract is terminated before the total final price is established, prices of

supplies or services subject to price revision shall be established in accordance with this clause for

(1) completed supplies and services accepted by the Government and (2) those supplies and services
not terminated under a partial termination. All other elements of the termination shall be resolved in

accordance with other applicable clauses of this contract.

(k) Equitable adjustment under other clauses. If an equitable adjustment in the contract price is

made under any other clause of this contract before the total final price is established, the

adjustment shall be made in the total target cost and may be made in the maximum dollar limit on

the total final price, the total target profit, or both. If the adjustment is made after the total final

price is established, only the total final price shall be adjusted.

(l) Exclusion from target price and total final price. If any clause of this contract provides that the

contract price does not or will not include an amount for a specific purpose, then neither any target

price nor the total final price includes or will include any amount for that purpose.

(m) Separate reimbursement. If any clause of this contract expressly provides that the cost of

performance of an obligation shall be at Government expense, that expense shall not be included in

any target price or in the total final price, but shall be reimbursed separately.

(n) Taxes. As used in the Federal, State, and Local Taxes clause or in any other clause that provides

for certain taxes or duties to be included in, or excluded from, the contract price, the term "contract

price" includes the total target price or, if it has been established, the total final price. When any of

these clauses requires that the contract price be increased or decreased as a result of changes in the

obligation of the Contractor to pay or bear the burden of certain taxes or duties, the increase or

decrease shall be made in the total target price or, if it has been established, in the total final price,

so that it will not affect the Contractor’s profit or loss on this contract.

(End of clause)

Alternate I (Apr 1984). As prescribed in 16.406 (a), add the following paragraph (o) to the basic

clause:

(o) Provisioning and options. Parts, other supplies, or services that are to be furnished under this

contract on the basis of a provisioning document or Government option shall be subject to price

revision in accordance with this clause. Any prices established for these parts, other supplies, or

services under a provisioning document or Government option shall be treated as target prices.

Target cost and profit covering these parts, other supplies, or services may be established

separately, in the aggregate, or in any combination, as the parties may agree.

Parent topic: 52.216 [Reserved]