(a) Description. A cost contract is a cost reimbursement contract in which the contractor receives no remuneration. (d) restrictions on the use of on-demand contracts for advisory and support services. (4) The time entrepreneurs need to make informed business decisions about whether to respond to potential orders. (4) The term form may be used only if the contractor is required by the contractor to make a certain effort within a certain period. What is the difference between a fixed-price contract and a cost-plus contract? In the case of a fixed-price contract, the seller assumes the risk of performing the contract at a fixed price, even if its costs increase. With a cost-plus contract, suppliers charge the costs they incur and an additional amount to cover project management and profit generation. This transfers the risk that the project will be more expensive or longer than originally estimated by the seller to the buyer. (5) If the contract is with a non-profit organization that is not an educational institution, a state or local government, or a non-profit organization that is exempted under the OMB Uniform Guidelines in 2 CFR Part 200, Annex VIII, the contract agent will use clause 52.216-7 with its Variant IV. Note that the contract does not deal with the steps: that JDK Creative will commit to developing the logo. Because no matter how many steps are needed, the price remains $2,000.

(ii) The likelihood that procurement objectives will be met is increased by the use of a contract that effectively motivates the contractor to perform exceptionally and gives the government the flexibility to assess both actual performance and the conditions under which it was achieved. and these contacts first reimburse the seller for all costs actually incurred, and then add a fee for the seller`s profit. With this type of contract, most of the risks fall on the buyer and are therefore less desirable. These types of contracts are more appropriate if there is no clear description of the service at the beginning of the project during the negotiation process or if there are too high risks for the seller to accept at a fixed price. There are several types of refundable contracts: (1) A cost-up incentive contract is suitable for development and testing services or programs if- Don`t take any of these changes at face value, even if the change reduces your required work. Contractors must ensure that they receive a change order for each shift in the project. In the event of a payment dispute, documentation is the only way to prove that you have completed the project under the contract. A fixed-price contract with an economic adjustment of prices may be applied only if the contracting authority determines that this is necessary either to protect the contractor and the government against significant fluctuations in the costs of labour or materials, or to provide for an adjustment of the market price in the event of a change in the prices set by the contractor.

(3) Because of the various obligations assumed by the contractor, the filling form is preferred to the duration form whenever the work or certain milestones of the work can be defined well enough to allow the development of estimates in which the contractor can be expected to complete the work. (a) Description. The Cost Plus incentive fee contract is a reimbursement contract that provides that the fees originally negotiated are then adjusted according to a formula based on the ratio of the total eligible costs to the total target cost. This type of contract specifies a target cost, target fees, minimum and maximum fees, and a fee adjustment formula. After the execution of the contract, the fees to be paid to the contractor will be determined according to the formula. The formula provides for fee increases above the target royalty within limits if the total eligible costs are below the target costs and a reduction in the fee below the target royalty if the total eligible costs exceed the target costs. This increase or decrease is intended to encourage the contractor to effectively manage the contract. If the total eligible costs are above or below the cost range within which the fee adjustment formula is applied, the Contractor shall receive the total eligible costs plus the minimum or maximum fee. 16.101 General. (a) The Government and contractors have a wide range of types of contracts at their disposal in order to ensure the necessary flexibility in the procurement of the wide variety and breadth of supplies and services requested by the agencies. The types of contracts vary depending on the scope and duration of the contractor`s liability for performance costs; and (2) the amount and nature of the profit incentive offered to the contractor to meet or exceed certain standards or objectives. (b) The types of contracts can be divided into two broad categories: fixed-price contracts (see subsection 16.2) and reimbursement contracts (see subsection 16.3).

Specific types of contracts range from fixed fixed price, where the contractor assumes full responsibility for the cost of performance and the resulting profit (or loss), to costs plus the fixed price, where the contractor assumes only minimal responsibility for the cost of performance and the negotiated commission (profit) is fixed. In between, there are the various incentive contracts (see subsection 16.4), where the contractor`s liability for performance costs and incentives for the benefits or fees offered is tailored to the uncertainties in the performance of the contract. 16.102 Guidelines. (a) Contracts resulting from sealed tenders are fixed-price contracts or fixed-price contracts with economic price adjustment. (b) Contracts negotiated under Part 15 may be of any type or combination of species that promote the interest of the government, unless this Part is restricted (see 10 U.S.C.2306(a) and 41 U.S.C.3901). Types of contracts that are not described in these Regulations may only be used if it is a deviation in accordance with section 1.4.c) The supply system based on cost plus one per cent of costs cannot be applied (see 10 U.S.C.2306(a) and 41 U.S.C.3905(a)). Master contracts (including contracts to the letter), which are not fixed-price contracts, prohibit subcontracts with costs plus a percentage of costs by means of a corresponding clause (see the clauses in subsection 44.2 for reimbursement contracts and subsections 16.2 and 16.4 for fixed-price contracts). d) No contract may be awarded until the implementation of the findings and findings (D&F) required by this Part.

The minimum requirements for D&F content required in this Part are set out in Section 1,704. 16.103 Type of contract negotiation. (a) The choice of the type of contract is usually a matter of negotiation and requires good judgment. The negotiation of the type of contract and the negotiation of prices are closely linked and must be considered together. The objective is to negotiate a type of contract and a price (or estimated costs and fees) that entail a reasonable risk for the contractor and that most encourage him to perform efficiently and economically. (b) A fixed-price contract that best exploits the fundamental profit motive of the enterprise shall be applied if the risk involved is minimal or can be predicted with an acceptable level of certainty. However, where there is no adequate basis for setting prices, other types of contracts should be considered and negotiations should focus on the choice of a type of contract (or a combination of types) that appropriately links profit to the contractor`s performance. (c) In the context of an acquisition programme, a series of contracts or a single long-term contract, changing circumstances may make a different type of contract appropriate in later periods than the one used at the beginning. In particular, contracting entities should avoid prolonged recourse to reimbursement or a contract for time and equipment after experience has provided a basis for price fixing. (d) 1. Each procurement file shall contain documents indicating why the type of contract in question was chosen.

This should be documented in the procurement plan or contract file if a written procurement plan is not required under agency procedures. (i) Explain why the type of contract chosen is to be used to meet the needs of the Agency. (ii) Discuss the additional risks to the government and the burden of managing the type of contract chosen (e.B. when a repayment contract is selected, the government takes risks of additional costs and the government has the additional burden of managing the contractor`s costs). In such cases, procurement staff should discuss – (A) how the government has identified additional risks (e.B. pre-award survey or information on past services); B) the nature of the additional risks (e.g.B. inadequate accounting system of the contractor, weaknesses in the contractor`s internal control, non-compliance with cost accounting standards or missing or inadequate earned value management system); and (C) How the government will manage and mitigate risks. .