Identifies the contract type (fixed-price, cost-reimbursable, time-and-materials, etc.)
Applicability: Included in all contracts to define cost and risk allocation.
Key Requirements
Understand risk allocation based on contract type (fixed-price vs. cost-plus)
Plan cost management and schedule control according to contract type
Document costs properly based on contract type requirements
Budget for contingency appropriately to your risk under the contract type
Common Issues & Pitfalls
Bidding fixed-price without adequate contingency for cost overruns
Not understanding cost-plus profit calculation and allowability
Failing to manage changes differently based on contract type
Not tracking actual costs for cost-reimbursable contracts properly
Contractor Guidance for Your Bid
Contract type determines your financial risk. Fixed-price: you bear cost risk (bid with adequate margin). Cost-plus: government bears risk (cost transparency critical). Time-and-materials: you control hours, government controls scope. Understand your risk profile and bid/manage accordingly. A low fixed-price bid that doesn't account for risk is a path to financial loss.
Related FAR Clauses
Frequently Asked Questions
What are the key requirements for FAR 52.216-1: Type of Contract?
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Identifies the contract type (fixed-price, cost-reimbursable, time-and-materials, etc.) Included in all contracts to define cost and risk allocation.
When does FAR 52.216-1 apply to a federal contract?
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Included in all contracts to define cost and risk allocation.
What are the most common compliance issues with FAR 52.216-1?
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Bidding fixed-price without adequate contingency for cost overruns Not understanding cost-plus profit calculation and allowability Failing to manage changes differently based on contract type Not tracking actual costs for cost-reimbursable contracts properly
How should contractors approach FAR 52.216-1 in their proposals?
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Contract type determines your financial risk. Fixed-price: you bear cost risk (bid with adequate margin). Cost-plus: government bears risk (cost transparency critical). Time-and-materials: you control hours, government controls scope. Understand your risk profile and bid/manage accordingly. A low fixed-price bid that doesn't account for risk is a path to financial loss.
What related FAR clauses should contractors review alongside FAR 52.216-1?
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Contractors reviewing FAR 52.216-1 should also study related clauses: 52-216-2, 52-216-3. Understanding how these clauses interact helps avoid compliance gaps that can trigger contract disputes or disqualify bids.
What happens if a contractor fails to comply with FAR 52.216-1?
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Non-compliance with FAR 52.216-1 can result in contract termination for default, withholding of payments, debarment proceedings, or False Claims Act liability. Contracting officers typically issue a cure notice before termination. Contractors should consult with a contract attorney if they receive a cure notice related to this clause.