If the contract’s period of performance or length of production run extends over a long
period of time, a contract type that allows for an economic price adjustment or price
redetermination would likely be appropriate if there is economic uncertainty [FAR
If only a portion of the contract would be affected by volatile prices due to
the contract length, the contracting officer can use a combination of contract types and
apply the economic price adjustment provision to only that portion of the contract.
For other than FFP pricing arrangements, the contracting officer must ensure that the
contractor’s accounting system is adequate to develop the cost data necessary for the
proposed contract type [FAR 16.104(i)].
FP with price redetermination, FPI, and all CR
contract types require a contractor to have an adequate accounting system as a
limitation for their use.
A contracting officer must consider the acquisition history for a requirement for multiple
When selecting a contract type for the new procurement, the contracting
officer can review what went well, and not so well, for the previous buys and contract
Also, contract performance risk usually decreases as the requirement is
repetitively acquired because there is more data available to develop reasonable and
realistic cost estimates and the requirement should be able to be clearly defined.
more mature the requirement, the more likely a contracting officer should be able to use
a FP pricing arrangement.
Contracting officers should avoid prolonged use of CR or
T&M and LH contract types after experience provides a basis for firmer pricing [FAR