PGI 216.404-2: Fixed-price incentive (successive targets) contracts.
R-DFARS PGI › Part 216 › PGI 216.404-2 · issued under 2026-O0045
Deviated Text
This text comes from the Word attachment to class deviation 2026-O0045, not from acquisition.gov. The deviation memo directs contracting officers to use it in place of the codified PGI. The source attachment linked below is authoritative.
Text
The formula specified in FAR 16.404-2(a)(3) does not apply for the life of the contract. It is used to fix the firm target profit for the contract. To provide an incentive consistent with the circumstances, the formula should reflect the relative risk involved in establishing an incentive arrangement where cost and pricing information were not sufficient to permit the negotiation of firm targets at the outset.