10 U.S.C. § 3322 – Cost contracts

(a) Cost-plus-a-percentage-of-cost System of Contracting Prohibited.— The cost-plus-a-percentage-of-cost system of contracting may not be used.
(b) Cost-plus-a-fixed-fee Contracts.— The fee for performing a cost-plus-a-fixed-fee contract for experimental, developmental, or research work may not be more than 15 percent of the estimated cost of the contract, not including the fee. The fee for performing a cost-plus-a-fixed-fee contract for architectural or engineering services for a public work or utility plus the cost of those services to the contractor may not be more than 6 percent of the estimated cost of that work or project, not including fees. The fee for performing any other cost-plus-a-fixed-fee contract may not be more than 10 percent of the estimated cost of the contract, not including the fee. Determinations under this subsection of the estimated costs of a contract or project shall be made by the head of the agency at the time the contract is made.
(c) Advance Notice of Certain Subcontracts.—
1. (1) In general.— Except as provided in paragraph (2), each cost contract and each cost-plus-a-fixed-fee contract shall provide for notice to the agency by the contractor before the making, under the prime contract, of—
  1. (A) a cost-plus-a-fixed-fee subcontract; or
  2. (B) a fixed-price subcontract or purchase order involving more than the greater of (i) the simplified acquisition threshold, or (ii) 5 percent of the estimated cost of the prime contract.
2. (2) Exception.— Paragraph (1) shall not apply to a prime contract with a contractor that maintains a purchasing system approved by the contracting officer for the contract.