16.206-4
Contract clause
Always include the Price Redetermination-Retroactive clause (52.216-6) in negotiated fixed-ceiling-price contracts when the specified FAR conditions apply.
Overview
FAR 16.206-4 requires contracting officers to include the clause at 52.216-6, Price Redetermination-Retroactive, in solicitations and contracts when using fixed-ceiling-price contracts with retroactive price redetermination, provided the conditions in FAR 16.206-2 and 16.206-3(a)-(d) are met. This ensures that both parties understand the procedures for adjusting the contract price after performance, based on actual costs incurred. The clause is mandatory for negotiated contracts where this contract type is appropriate, providing a standardized approach to price redetermination and protecting both government and contractor interests.
Key Rules
- Mandatory Clause Inclusion
- The Price Redetermination-Retroactive clause (52.216-6) must be inserted in applicable solicitations and contracts.
- Applicability Conditions
- The clause is only required when the contract meets the criteria outlined in FAR 16.206-2 and 16.206-3(a)-(d), which relate to the suitability and prerequisites for this contract type.
Responsibilities
- Contracting Officers: Must ensure the correct clause is included in all relevant solicitations and contracts.
- Contractors: Should review and understand the implications of the clause on contract pricing and performance.
- Agencies: Must oversee compliance with clause inclusion and proper contract formation.
Practical Implications
- This section ensures price adjustments are handled fairly and transparently for contracts where costs cannot be accurately estimated in advance.
- Failure to include the clause can result in noncompliance and potential disputes over contract pricing.
- Contractors should be aware of the retroactive price adjustment process and maintain thorough cost records to support redetermination.