# 16.205-3 Limitations.

This contract type shall not be used unless-

1. (a) Negotiations have established that-

   1. (1) The conditions for use of a firm-fixed-price contract are not present (see 16.202-2); and

   2. (2) A fixed-price incentive contract would not be more appropriate;

2. (b) The contractor’s accounting system is adequate for price redetermination;

3. (c) The prospective pricing periods can be made to conform with operation of the contractor’s accounting system; and

4. (d) There is reasonable assurance that price redetermination actions will take place promptly at the specified times.