FAR sections 52.216-5 and 52.216-6

SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
(iii) Changes in the quantities of labor or material
used from those shown in the Schedule for each item.
(2) No upward adjustment shall apply to supplies or services that are required to be delivered or performed before the
effective date of the adjustment, unless the Contractor’s failure to deliver or perform according to the delivery schedule
results from causes beyond the Contractor’s control and without its fault or negligence, within the meaning of the Default
clause.
(3) There shall be no adjustment for any change in rates
of pay for labor (including fringe benefits) or unit prices for
material which would not result in a net change of at least
3 percent of the then-current total contract price. This limitation shall not apply, however, if, after final delivery of all contract line items, either party requests an adjustment under
paragraph (b) of this clause.
(4) The aggregate of the increases in any contract unit
price made under this clause shall not exceed 10 percent of the
original unit price. There is no percentage limitation on the
amount of decreases that may be made under this clause.
(d) The Contracting Officer may examine the Contractor’s
books, records, and other supporting data relevant to the cost
of labor (including fringe benefits) and material during all reasonable times until the end of 3 years after the date of final
payment under this contract or the time periods specified in
Subpart 4.7 of the Federal Acquisition Regulation (FAR),
whichever is earlier.
(End of clause)
52.216-5 Price Redetermination—Prospective.
As prescribed in 16.205-4, insert the following clause:
PRICE REDETERMINATION—PROSPECTIVE (OCT 1997)
(a) General. The unit prices and the total price stated in this
contract shall be periodically redetermined in accordance with
this clause, except that—
(1) The prices for supplies delivered and services performed before the first effective date of price redetermination
(see paragraph (c) of this clause) shall remain fixed; and
(2) In no event shall the total amount paid under this
contract exceed any ceiling price included in the 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) Price redetermination periods. For the purpose of price
redetermination, performance of this contract is divided into
successive periods. The first period shall extend from the date
of the contract to ________, (see Note (1)) and the second and
each succeeding period shall extend for ________ [insert
appropriate number] months from the end of the last preceding period, except that the parties may agree to vary the length
of the final period. The first day of the second and each suc-

52.216-5
ceeding period shall be the effective date of price redetermination for that period.
(d) Data submission. (1) Not more than _______ nor less
than ______ (see Note (2)) days before the end of each redetermination period, except the last, the Contractor shall
submit—
(i) Proposed prices for supplies that may be delivered
or services that may be performed in the next succeeding
period, and—
(A) An estimate and breakdown of the costs of
these supplies or services in the format of Table 15-2,
FAR 15.408, or in any other form on which the parties may
agree;
(B) Sufficient data to support the accuracy and
reliability of this estimate; and
(C) An explanation of the differences between
this estimate and the original (or last preceding) estimate for
the same supplies or services; and
(ii) A statement of all costs incurred in performing
this contract through the end of the _______________ month
(see Note (3)) before the submission of proposed prices 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).
(2) The Contractor shall also submit, to the extent that
it becomes available before negotiations on redetermined
prices are concluded—
(i) Supplemental statements of costs incurred after
the date stated in subdivision (d)(1)(ii) 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 (d)(1) and (2) of this section, within the time specified, the Contracting Officer may suspend payments under
this contract until the data are furnished. If 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.
52.2-67

52.216-5
(e) Price redetermination. Upon the Contracting Officer’s
receipt of the data required by paragraph (d) of this section,
the Contracting Officer and the Contractor shall promptly
negotiate to redetermine fair and reasonable prices for supplies that may be delivered or services that may be performed
in the period following the effective date of price
redetermination.
(f) Contract modifications. Each negotiated redetermination of prices shall be evidenced by a modification to this contract, signed by the Contractor and the Contracting Officer,
stating the redetermined prices that apply during the redetermination period.
(g) Adjusting billing prices. Pending execution of the contract modification (see paragraph (f) of this section), the Contractor shall submit invoices or vouchers in accordance with
the billing prices stated in this contract. If at any time it
appears that the then-current billing prices will be substantially greater than the estimated final prices, or if the Contractor submits data showing that the redetermined price will be
substantially greater than the current billing prices, the parties
shall negotiate an appropriate decrease or increase in billing
prices. Any billing price adjustment shall be reflected in a
contract modification and shall not affect the redetermination
of prices under this clause. After the contract modification for
price redetermination is executed, the total amount paid or to
be paid on all invoices or vouchers shall be adjusted to reflect
the agreed-upon prices, and any requested additional payments, refunds, or credits shall be made promptly.
(h) Quarterly limitation on payments statement. This
paragraph (h) applies only during periods for which firm
prices have not been established.
(1) Within 45 days after the end of the 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 interim profit (used in
establishing the initial contract price or agreed to for the purpose of this paragraph (h)) 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; and
52.2-68

FEDERAL ACQUISITION REGULATION
(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) The statement required by paragraph (h)(1) of this
section need not be submitted for any quarter for which either
no costs are to be reported under subdivision (h)(1)(ii) of this
section, or revised billing prices have been established in
accordance with paragraph (g) of this section, and do not
exceed the existing contract price, the Contractor’s priceredetermination proposal, or a price based on the most recent
quarterly statement, whichever is least.
(3) Notwithstanding any provision of this contract
authorizing greater payments, if on any quarterly statement
the amount under subdivision (h)(1)(iv) of this section
exceeds the sum due the Contractor, as computed in accordance with subdivisions (h)(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 any
applicable tax credits due the Contractor under
26 U.S.C. 1481 and by the amount of previous refunds or
credits affected 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.
(4) 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.
(i) Subcontracts. No subcontract placed under this contract
may provide for payment on a cost-plus-a-percentage-of-cost
basis.
(j) Disagreements. If the Contractor and the Contracting
Officer fail to agree upon redetermined prices for any price
redetermination period within 60 days (or within such other
period as the parties agree) after the date on which the data
required by paragraph (d) of this section are to be submitted,
the Contracting Officer shall promptly issue a decision in
accordance with the Disputes clause. For the purpose of
paragraphs (f), (g), and (h) of this section, and pending final
settlement of the disagreement on appeal, by failure to appeal,
or by agreement, this decision shall be treated as an executed
contract modification. Pending final settlement, price redetermination for subsequent periods, if any, shall continue to be
negotiated as provided in this clause.

SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
(k) Termination. If this contract is terminated, prices shall
continue to 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.
(End of clause)
NOTES:
(1) Express in terms of units delivered, or as a date; but in either
case the period should end on the last day of a month.
(2) Insert the number of days chosen so that the Contractor’s
submission will be late enough to reflect recent cost experience (taking into account the Contractor’s accounting system), but early enough to permit review, audit (if
necessary), and negotiation before the start of the prospective period.
(3) Insert “first,” except that “second” may be inserted if necessary to achieve compatibility with the Contractor’s
accounting system.

52.216-6 Price Redetermination—Retroactive.
As prescribed in 16.206-4, insert the following clause:
PRICE REDETERMINATION—RETROACTIVE (OCT 1997)
(a) General. The unit price and the total price stated in this
contract shall be redetermined in accordance with this clause,
but in no event shall the total amount paid under this contract
exceed __________ [insert dollar amount of ceiling price].
(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 delivery of all supplies to be delivered and completion of all services to be performed under this contract, the Contractor shall submit—
(i) Proposed prices;
(ii) A statement in the format of Table 15-2,
FAR 15.408, or in any other form on which the parties may
agree, of all costs incurred in performing the contract; and
(iii) 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 section within the time specified, the
Contracting Officer may suspend payments under this contract until the data are furnished. If it is later determined that
the Government has overpaid the Contractor, the excess shall
be repaid 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.

52.216-6
(d) Price determination. Upon the Contracting Officer’s
receipt of the data required by paragraph (c) of this section,
the Contracting Officer and the Contractor shall promptly
negotiate to redetermine fair and reasonable prices for supplies delivered and services performed by the Contractor
under this contract.
(e) Contract modification. The negotiated redetermination
of price shall be evidenced by a modification to this contract,
signed by the Contractor and the Contracting Officer.
(f) Adjusting billing prices. Pending execution of the contract modification (see paragraph (e) of this section), the Contractor shall submit invoices or vouchers in accordance with
billing prices stated in this contract. If at any time it appears
that the then-current billing prices will be substantially greater
than the estimated final prices, or if the Contractor submits
data showing that the redetermined prices will be substantially
greater than the current billing prices, the parties shall negotiate an appropriate decrease or increase in billing prices. Any
billing price adjustment shall be reflected in a contract modification and shall not affect the redetermination of prices
under this clause. After the contract modification for price
redetermination is executed, the total amount paid or to be
paid on all invoices or vouchers shall be adjusted to reflect the
agreed-upon prices, 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 redetermination
under this contract has been completed.
(1) Within 45 days after the end of the 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 interim 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; and
(iv) The total amount of all invoices or vouchers for
supplies delivered (or services performed) and accepted by
52.2-69

52.216-7

FEDERAL ACQUISITION REGULATION

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 section
exceeds the sum due the Contractor, as computed in accordance with subdivisions (g)(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 any
applicable tax credits due the contractor under
26 U.S.C. 1481 and 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 reduction 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-plus-a-percentage-ofcost basis.
(i) Disagreements. If the Contractor and the Contracting
Officer fail to agree upon redetermined prices within 60 days
(or within such other period as the parties agree) after the date
on which the data required by paragraph (c) of this section are
to be submitted, the Contracting Officer shall promptly issue
a decision in accordance with the Disputes clause. For the purpose of paragraphs (e), (f), and (g) of this section, and pending
final settlement of the disagreement on appeal, by failure to
appeal, or by agreement, this decision shall be treated as an
executed contract modification.
(j) Termination. If this contract is terminated before price
redetermination, prices shall be established in accordance
with this clause for completed supplies and services not terminated. All other elements of the termination shall be
resolved in accordance with other applicable clauses of this
contract.
(End of clause)
52.216-7 Allowable Cost and Payment.
As prescribed in 16.307(a), insert the following clause:
ALLOWABLE COST AND PAYMENT (DEC 2002)
52.2-70

(a) Invoicing. (1) The Government will make payments to
the Contractor when requested as work progresses, but
(except for small business concerns) not more often than once
every 2 weeks, in amounts determined to be allowable by the
Contracting Officer in accordance with Federal Acquisition
Regulation (FAR) Subpart 31.2 in effect on the date of this
contract and the terms of this contract. The Contractor may
submit to an authorized representative of the Contracting
Officer, in such form and reasonable detail as the representative may require, an invoice or voucher supported by a statement of the claimed allowable cost for performing this
contract.
(2) Contract financing payments are not subject to the
interest penalty provisions of the Prompt Payment Act.
Interim payments made prior to the final payment under the
contract are contract financing payments, except interim payments if this contract contains Alternate I to the clause at
52.232-25.
(3) The designated payment office will make interim
payments for contract financing on the _________ [Contracting Officer insert day as prescribed by agency head; if not prescribed, insert "30th"] day after the designated billing office
receives a proper payment request. In the event that the Government requires an audit or other review of a specific payment request to ensure compliance with the terms and
conditions of the contract, the designated payment office is
not compelled to make payment by the specified due date.
(b) Reimbursing costs. (1) For the purpose of reimbursing
allowable costs (except as provided in paragraph (b)(2) of this
clause, with respect to pension, deferred profit sharing, and
employee stock ownership plan contributions), the term
“costs” includes only—
(i) Those recorded costs that, at the time of the
request for reimbursement, the Contractor has paid by cash,
check, or other form of actual payment for items or services
purchased directly for the contract;
(ii) When the Contractor is not delinquent in paying
costs of contract performance in the ordinary course of business, costs incurred, but not necessarily paid, for—
(A) Supplies and services purchased directly for
the contract and associated financing payments to subcontractors, provided payments determined due will be made—
(1) In accordance with the terms and conditions of a subcontract or invoice; and
(2) Ordinarily within 30 days of the submission of the Contractor’s payment request to the Government;
(B) Materials issued from the Contractor’s inventory and placed in the production process for use on the
contract;
(C) Direct labor;
(D) Direct travel;
(E) Other direct in-house costs; and