FAR 36.207

(a) Generally, firm-fixed-price contracts shall be used to acquire construction. They may be priced- (1) On a lump-sum basis (when a lump sum is paid for the total work or defined parts of the work), (2) On a unit-price basis (when a unit price is paid for a specified quantity of work units), or (3) Using a combination of the two methods. (b) Lump-sum pricing shall be used in preference to unit pricing except when- (1) Large quantities of work such as grading, paving, building outside utilities, or site preparation are involved; (2) Quantities of work, such as excavation, cannot be estimated with sufficient confidence to permit a lump-sum offer without a substantial contingency; (3) Estimated quantities of work required may change significantly during construction; or (4) Offerors would have to expend unusual effort to develop adequate estimates. (c) Fixed-price contracts with economic price adjustment may be used if such a provision is customary in contracts for the type of work being acquired, or when omission of an adjustment provision would preclude a significant number of firms from submitting offers or would result in offerors including unwarranted contingencies in proposed prices.

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