52.216-17 Incentive Price RevisionSuccessive Targets.

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

Incentive Price Revision-Successive Targets (Jan 2022)

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

Officer insert 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

($__________________). The prices of these items shown in the Schedule are the initial target prices,

which include an initial target profit of ___________ [Contracting Officer insert percent] percent of the

initial target cost. 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 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) Submitting data for establishing the firm fixed price or a final profit adjustment formula.

(1) Within ___________ [Contracting Officer insert number of days] days after the end of the month in

which the Contractor has completed ___________ (see Note 1), the Contractor shall submit the

following data:

(i) A proposed firm fixed price or total firm target price for supplies delivered and to be delivered

and services performed and to be performed.

(ii) A detailed statement of all costs incurred in the performance of this contract through the end of

the month specified above, in the format of Table 15-2, FAR 15.408 (or in any other form on which

the parties may agree), with sufficient supporting data to disclose unit costs and cost trends for-

(A) Supplies delivered and services performed; and

(B) Inventories of work in process and undelivered contract supplies on hand (estimated to the

extent necessary).

(iii) An estimate of costs of all supplies delivered and to be delivered and all services performed and

to be performed under this contract, using the statement of costs incurred plus an estimate of costs

to complete performance, in the format of Table 15-2, FAR 15.408 (or in any other form on which

the parties may agree), together with-

(A) Sufficient data to support the accuracy and reliability of the estimate; and

(B) An explanation of the differences between this estimate and the original estimate used to

establish the initial target prices.
(2) The Contractor shall also submit, to the extent that it becomes available before negotiations

establishing the total firm price are concluded-

(i) Supplemental statements of costs incurred after the end of the month specified in paragraph (1)

of this section for-

(A) Supplies delivered and services performed; and

(B) Inventories of work in process and undelivered contract supplies on hand (estimated to the

extent necessary); and

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

(3) If the Contractor fails to submit the data required by paragraphs (c)(1) and (2) of this section

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) Establishing firm fixed price or final profit adjustment formula. Upon the Contracting Officer’s

receipt of the data required by paragraph (c) of this section, the Contracting Officer and the

Contractor shall promptly establish either a firm fixed price or a profit adjustment formula for

determining final profit, as follows:

(1) The parties shall negotiate a total firm target cost, based upon the data submitted under

paragraph (c) of this section.

(2) If the total firm target cost is more than the total initial target cost, the total initial target profit

shall be decreased. If the total firm target cost is less than the total initial target cost, the total initial

target profit shall be increased. The initial target profit shall be increased or decreased by _____

percent (see Note 2) of the difference between the total initial target cost and the total firm target

cost. The resulting amount shall be the total firm target profit; provided, that in no event shall the

total firm target profit be less than ___________ percent or more than ___________ percent [Contracting

Officer insert percents] of the total initial cost.

(3) If the total firm target cost plus the total firm target profit represent a reasonable price for

performing that part of the contract subject to price revision under this clause, the parties may

agree on a firm fixed price, which shall be evidenced by a contract modification signed by the

Contractor and the Contracting Officer.

(4) Failure of the parties to agree to a firm fixed price shall not constitute a dispute under the

Disputes clause. If agreement is not reached, or if establishment of a firm fixed price is

inappropriate, the Contractor and the Contracting Officer shall establish a profit adjustment formula

under which the total final price shall be established by applying to the total final negotiated cost an

adjustment for profit or loss, determined as follows:

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

firm target profit.

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

total firm target profit, less ___________ percent of the amount by which the total final negotiated cost

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

firm target profit, plus ___________ percent of the amount by which the total final negotiated cost is

less than the total firm target cost.

(iv) The total firm target cost, total firm target profit, and the profit adjustment formula for

determining final profit shall be evidenced by a modification to this contract signed by the

Contractor and the Contracting Officer.

(e) Submitting data for final price revision. Unless a firm fixed price has been established in

accordance with paragraph (d) of this section 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 section, the

Contractor shall submit in the format of Table 15-2, FAR 15.408 (or in any other form on which the

parties agree)-

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

under the items;

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

performance of all work under the items;

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

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

(f) Final price revision. Unless a firm fixed price has been agreed to in accordance with paragraph

(d) of this section, the Contractor and the Contracting Officer shall, promptly after submission of the

data required by paragraph (e) of this section, establish the total final price, as follows:

(1) On the basis of the information required by paragraph (e) of this section, together with any other

pertinent information, the parties shall negotiate the total final cost incurred or to be incurred for

the 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 final profit or loss determined as agreed upon under paragraph (d)(4) of this section.

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

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 these elements;

and

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

contract.

(h) Adjustment of billing prices.

(1) Pending execution of the contract modification (see paragraph (e) of this section), the Contractor
shall submit invoices or vouchers in accordance with billing prices as provided in this paragraph.

The billing prices shall be the initial target prices shown in this contract until firm target prices are

established under paragraph (d) of this section. When established, the firm target prices shall be

used as the billing prices.

(2) If at any time it appears from information provided by the contractor under paragraph (i)(1) of

this section 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 the final cost under

this contract will be substantially greater than the target cost.

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

the determination of any price under paragraph (d) or (f) of this section. 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.

(i) Quarterly limitation on payments statement. This paragraph (i) shall apply until a firm fixed price

or a total final price is established under paragraph (d)(3) or (f)(2).

(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 cost (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 interim profit (used in establishing the initial contract price or agreed to

for the purpose of this paragraph (i)) 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)(4) of this section when the

amount stated under subdivision (ii) of this section, differs from the aggregate firm 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 (i)(1)(iv) of this section exceeds the sum due the Contractor,

as computed in accordance with subdivisions (i)(1)(i), (ii), and (iii) of this section, 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.

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

(k) Disagreements. If the Contractor and the Contracting Officer fail to agree upon (1)a total firm

target cost and a final profit adjustment formula or (2)a 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

in paragraphs (c) and (e) of this section are to be submitted, the Contracting Officer shall promptly

issue a decision in accordance with the Disputes clause.

(l) 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 or 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.

(m) Equitable adjustments 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.

(n) 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.

(o) 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.

(p) 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.

Notes:

(1) The degree of completion may be based on a percentage of contract performance or any other

reasonable basis.

(2) The language may be changed to describe a negotiated adjustment pattern under which the
extent of adjustment is not the same for all levels of cost variation.

(End of clause)

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

clause:

(q) 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 initial target

prices, or target prices as agreed upon and stipulated in the pricing document supporting the

provisioning or added items. Initial or firm target costs and profits and final prices 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]