--- kind: "section" citation: "10 U.S.C. § 3322" title: "10" title_heading: "Armed Forces" number: "3322" heading: "Cost contracts" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/10/3322" units: - "Subtitle A — General Military Law" - "Part V — Acquisition" - "Subpart C — Contracting Methods and Contract Types" - "Chapter 242 — Specific Types of Contracts" --- # §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](/usc/10/3451.md?p=3) at the time the contract is made. - (c) **Advance Notice of Certain Subcontracts.—** - (1) **In general.—** Except as provided in [paragraph (2)](#c-2), each cost contract and each cost-plus-a-fixed-fee contract shall provide for notice to the [agency](/usc/10/3451.md?p=3) by the contractor before the making, under the prime contract, of— - (A) a cost-plus-a-fixed-fee [subcontract](/usc/10/3701.md?p=2); or - (B) a fixed-price [subcontract](/usc/10/3701.md?p=2) 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) **Exception.—** [Paragraph (1)](#c-1) shall not apply to a prime contract with a contractor that maintains a purchasing system approved by the contracting [officer](/usc/10/101.md?p=b-1) for the contract. - (d) **Limitation on Certain Options.—** - (1) **In general.—** Except as provided by [paragraph (2)](#d-2), a covered contract shall limit the number of low-[rate](/usc/10/101.md?p=b-9) production lots for any production quantities procured using fixed-priced options under such covered contract to not more than one. - (2) **Waiver.—** - (A) **In general.—** The [service acquisition executive](/usc/10/101.md?p=a-10) of the [military](/usc/10/801.md?p=8) [department](/usc/10/101.md?p=a-6) concerned or, in the case of [program](/usc/10/2101.md?p=1) that is a joint [program](/usc/10/2101.md?p=1), the [Secretary](/usc/10/4951.md?p=3) of Defense may waive the limit required under [paragraph (1)](#d-1) with respect to the number of low-[rate](/usc/10/101.md?p=b-9) production lots for a production quantity under a covered contract if such [service acquisition executive](/usc/10/101.md?p=a-10) or the [Secretary](/usc/10/4951.md?p=3) of Defense, as applicable, determines that such waiver is in the best interest of the [Department](/usc/10/101.md?p=a-6) of Defense. - (B) **Delegation limit.—** Neither a [service acquisition executive](/usc/10/101.md?p=a-10) nor the [Secretary](/usc/10/4951.md?p=3) of Defense may delegate the authority under [subparagraph (A)](#d-2-A) to waive the limit required under [paragraph (1)](#d-1) below the level of a [service acquisition executive](/usc/10/101.md?p=a-10). - (3) **Definitions.—** In this subsection: - (A) The term “covered contract” means a cost reimbursement contract for the development of a major system. - (B) The term “low-[rate](/usc/10/101.md?p=b-9) initial production” has the same meaning as in [section 4231 of this title](/usc/10/4231.md). - (C) The term “major system” has the meaning given such term in [section 3041 of this title](/usc/10/3041.md). ## Source credit (Added and amended Pub. L. 116–283, div. A, title XVIII, § 1817(a), (c), (e), (f), Jan. 1, 2021, 134 Stat. 4186, 4187; Pub. L. 118–159, div. A, title VIII, § 802(a), Dec. 23, 2024, 138 Stat. 1965.) ## Notes ### Editorial Notes ### Codification For derivation of subsec. (a) of this section, see Codification note related to subsec. (a) of section 2306 of this title set out under section 3321 of this title. The text of subsec. (d) of section 2306 of this title, which was transferred to this section, redesignated as subsec. (b), and amended by Pub. L. 116–283, § 1817(e), (f)(2), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 131. The text of subsec. (e) of section 2306 of this title, which was transferred to this section, redesignated as subsec. (c), and amended by Pub. L. 116–283, § 1817(e), (f)(3), was based on act Aug. 10, 1956, ch. 1041, 70A Stat. 131; Pub. L. 98–369, div. B, title VII, § 2724, July 18, 1984, 98 Stat. 1193; Pub. L. 102–25, title VII, § 701(d)(3), Apr. 6, 1991, 105 Stat. 114; Pub. L. 103–355, title IV, 4401(c), Oct. 13, 1994, 108 Stat. 3348; Pub. L. 108–136, div. A, title VIII, § 842, Nov. 24, 2003, 117 Stat. 1552. ### Amendments 2024—Subsec. (d). Pub. L. 118–159 added subsec. (d). 2021—Subsec. (a). Pub. L. 116–283, § 1817(c), (f)(1), transferred first sentence of subsec. (a) of section 3321 of this title to this section, designated it as subsec. (a), and inserted heading. Subsec. (b). Pub. L. 116–283, § 1817(e), (f)(2), redesignated subsec. (d) of section 2306 of this title as subsec. (b) of this section and inserted heading. Subsec. (c). Pub. L. 116–283, § 1817(e), (f)(3), redesignated subsec. (e) of section 2306 of this title as subsec. (c) of this section, inserted subsec. and par. headings, and realigned margin of par. (2). ### Statutory Notes and Related Subsidiaries ### Effective Date Section and amendment by Pub. L. 116–283 effective Jan. 1, 2022, with additional provisions for delayed implementation and applicability of existing law, see section 1801(d) of Pub. L. 116–283, set out as an Effective Date of 2021 Amendment note preceding section 3001 of this title. ### Conforming Regulations Pub. L. 118–159, div. A, title VIII, § 802(b), Dec. 23, 2024, 138 Stat. 1965, provided that: “Not later than 120 days after the date of the enactment of this Act [Dec. 23, 2024], the Secretary of Defense shall revise the Department of Defense Supplement to the Federal Acquisition Regulation to implement subsection (d) of section 3322 of title 10, United States Code, as added by subsection (a) of this section.”