Definitions
FAR 15.401 establishes precise definitions for "price" and "subcontract" to ensure consistent application of contract pricing rules across all relevant transactions.
Overview
FAR 15.401 provides definitions for key terms used throughout Subpart 15.4, which addresses contract pricing. Specifically, it clarifies the meaning of "price" and "subcontract" for the purposes of pricing regulations. "Price" is defined as the total of cost plus any applicable fee or profit, ensuring all parties understand what constitutes the full value of a contract. The definition of "subcontract" is broadened to include not only traditional third-party agreements but also transfers of commercial products or services between divisions, subsidiaries, or affiliates of a contractor or subcontractor, except as noted in FAR 15.407-2. These definitions are critical for interpreting pricing requirements and compliance obligations under this subpart.