41 U.S. Code § 1503 - Contract price adjustment

(a) Disagreement Constitutes a Dispute.—

If the Federal Government and a contractor or subcontractor fail to agree on a contract price adjustment, including whether the contractor or subcontractor has complied with the applicable cost accounting standards, the disagreement will constitute a dispute under chapter 71 of this title.

(b) Amount of Adjustment.—

A contract price adjustment undertaken under section 1502(f)(2) of this title shall be made, where applicable, on relevant contracts that are subject to the cost accounting standards so as to protect the Federal Government from payment, in the aggregate, of increased costs, as defined by the Cost Accounting Standards Board and in accordance with the following requirements:

(1) The Federal Government may not recover costs greater than the aggregate increased cost to the Federal Government, as defined by the Board, on the relevant contracts subject to the price adjustment unless the contractor or subcontractor made a change in its cost accounting practices of which the contractor or subcontractor was aware or should have been aware at the time of the price negotiation and which contractor or subcontractor failed to disclose to the Federal Government.

(2) For such changes in cost accounting practices—

(A) costs recovered by the Federal Government shall exclude any contract or subcontract (or any portion of such contract or subcontract) that is firm, fixed-price, or that is not price-redeterminable based on costs; and

(B) for a fiscal year, for any contract or subcontract (or any portion of such contract or subcontract) that is not a firm, fixed-price contract or subcontract the costs recovered by the Federal Government shall not exceed the net increased costs, if any, paid to the contractor or subcontractor for all changes in cost accounting practices implemented within the same fiscal year.

(c) Interest.—

The interest rate applicable to a contract price adjustment is the annual rate of interest established under section 6621 of the Internal Revenue Code of 1986 (26 U.S.C. 6621) for the period. Interest accrues from the time payments of the increased costs were made to the contractor or subcontractor to the time the Federal Government receives full compensation for the price adjustment.

(Pub. L. 111–350, § 3, Jan. 4, 2011, 124 Stat. 3699; Pub. L. 119–60, div. A, title XVIII, § 1806(f)(1), Dec. 18, 2025, 139 Stat. 1240.)

Historical and Revision Notes
Revised Section	Source (U.S. Code)	Source (Statutes at Large)
1503(a)	41:422(h)(2).	Pub. L. 93–400, § 26(h)(2)–(4), as added Pub. L. 100–679, § 5(a), Nov. 17, 1988, 102 Stat. 4062.
1503(b)	41:422(h)(3).
1503(c)	41:422(h)(4).

Editorial Notes

Amendments

2025—Subsec. (b). Pub. L. 119–60 amended subsec. (b) generally. Prior to amendment, text read as follows: “A contract price adjustment undertaken under section 1502(f)(2) of this title shall be made, where applicable, on relevant contracts between the Federal Government and the contractor that are subject to the cost accounting standards so as to protect the Federal Government from payment, in the aggregate, of increased costs, as defined by the Cost Accounting Standards Board. The Federal Government may not recover costs greater than the aggregate increased cost to the Federal Government, as defined by the Board, on the relevant contracts subject to the price adjustment unless the contractor made a change in its cost accounting practices of which it was aware or should have been aware at the time of the price negotiation and which it failed to disclose to the Federal Government.”

Statutory Notes and Related Subsidiaries

Regulations

Pub. L. 119–60, div. A, title XVIII, § 1806(f)(2), Dec. 18, 2025, 139 Stat. 1240, provided that:

“Not later than 180 days after the date of the enactment of this Act [Dec. 18, 2025], the Administrator for Federal Procurement Policy shall issue such regulations as are necessary to implement the amendments made by this subsection [amending this section].”