FAR 52.216-6—Price Redetermination-Retroactive.
Plain-English Summary
FAR 52.216-6, Price Redetermination-Retroactive, is a pricing clause used in certain fixed-price contracts where the parties do not know the final fair and reasonable price at award and agree to determine it later based on actual allowable costs. This clause covers the ceiling price, the definition of costs, the contractor’s post-performance data submission, the government’s right to suspend payments for late data, the process for negotiating final prices, the contract modification that memorializes the redetermined price, interim billing-price adjustments while final pricing is pending, and quarterly limitation-on-payments reporting until final redetermination is complete. It also addresses refunds, credits, and interest when the government has overpaid, including special treatment when excess amounts have been applied to progress payment liquidation. In practice, the clause shifts significant administrative burden to both sides: the contractor must maintain cost records and submit detailed pricing data, while the contracting officer must review the data, negotiate final prices, and ensure payments do not exceed the ceiling or the amounts justified by accepted work. The clause is designed to protect the government from overpayment while still allowing performance to proceed before final prices are established. It is especially important where pricing uncertainty exists at award but the parties need a workable mechanism to settle the final contract price after performance.
Key Rules
Ceiling price controls payment
The contract must state a ceiling price, and the total amount paid under the contract may never exceed that ceiling. Even after redetermination, the government cannot pay above the stated cap.
Allowable costs govern redetermination
For purposes of this clause, "costs" means allowable costs under FAR part 31 as in effect on the contract date. This ties the final price process to cost principles, not just the contractor’s actual expenditures.
Contractor must submit final data
Within the specified number of days after all supplies are delivered and all services are completed, the contractor must submit proposed prices, a cost statement in Table 15-1 format or another agreed format, and any other data reasonably required by the contracting officer.
Late data can stop payments
If the contractor misses the required data submission deadline, the contracting officer may suspend payments until the data are provided. If overpayment is later found, the contractor must repay the excess immediately, with interest if not repaid within 30 days after the due date.
Final prices are negotiated
After receiving the required data, the contracting officer and contractor must promptly negotiate fair and reasonable final prices for the supplies delivered and services performed under the contract.
Modification makes price final
The negotiated redetermination must be documented in a signed contract modification. Until that modification is executed, the original contract pricing and billing procedures remain in effect, subject to interim adjustments.
Billing prices may be adjusted interim
While final redetermination is pending, the contractor bills at the contract’s billing prices. If those prices appear materially out of line with expected final prices, the parties must negotiate an appropriate increase or decrease, and any change must be made by modification without affecting the final redetermination.
Quarterly limitation statements required
Until final price redetermination is complete, the contractor must submit quarterly cumulative statements showing accepted work priced finally, costs incurred for work not yet finally priced, interim profit allocable to that work, and total invoices or vouchers, including progress payment liquidations.
Excess quarterly payments must be returned
If quarterly billings exceed the amount due based on accepted work, costs, and interim profit, the contractor must immediately refund or credit the excess. Portions already applied to progress payment liquidation may be handled through the unliquidated progress payment account, and the contractor must support any claimed reduction in the refund.
Interest applies to unpaid overages
If the contractor fails to submit the quarterly statement on time and the government later determines an overpayment occurred, the contractor must repay the excess immediately. If not repaid within 30 days after the statement due date, interest accrues under the contract’s Interest clause.
Responsibilities
Contracting Officer
Insert the ceiling price and the number of days for post-performance data submission; review the contractor’s proposed prices and cost data; negotiate fair and reasonable final prices; execute the contract modification reflecting the redetermined price; monitor billing-price adjustments; and enforce payment suspension or recovery actions when required.
Contractor
Maintain and submit allowable-cost data, proposed prices, and any additional requested information within the required time; continue billing at contract billing prices until modified; submit quarterly limitation-on-payments statements; refund or credit overpayments promptly; and support any claimed reduction in refunds with complete details.
Contract Administration Office
Receive the quarterly limitation-on-payments statements and coordinate administration of the clause during the period before final price redetermination is completed.
Cognizant Contract Auditor
Receive a copy of the quarterly limitation-on-payments statement and use the information as needed for audit or review of costs and pricing data.
Government
Accept delivered supplies or performed services, review reported costs and pricing information, and recover any overpayments through refund, credit, or interest as authorized by the clause.
Practical Implications
This clause requires disciplined cost accounting and recordkeeping; contractors should expect to justify costs using FAR part 31 allowability standards, not just internal job-cost totals.
The quarterly statement requirement is easy to miss, but failure to file on time can trigger payment suspension and interest exposure if overpayments are later found.
Billing prices are not the final price, so both sides must track interim billings carefully and reconcile them after the modification is signed.
Progress payment liquidation can complicate refund calculations, so contractors should document how excess amounts were applied and be ready to show the math.
Contracting officers should watch for a mismatch between current billing prices and likely final prices and use interim billing-price adjustments early to reduce later disputes and cash-flow corrections.
Official Regulatory Text
As prescribed in 16.206-4 , insert the following clause: Price Redetermination-Retroactive (Jan 2022) (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 15-1 , 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. (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 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 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-of-cost 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)