Part 16 Contract Types Flashcards
Two Broad Contract Type Categories
Fixed Price and Cost Reimbursement
Risk Allocation to Contract Type
Fixed Price - More risk to the contractor
Cost Reimbursement - More risk to the Gov.
Factors to determine Contract Type
Acq History Competition Complexity Urgency Period of Performance Adequacy of Contractor's Accounting System
Documenting Contract Type
CO Shall document file on contract type. Document in the AP if required.
Cost-Plus-A-Percentage-of-Cost-type
SHALL NOT BE USED
FAR 15 Negotiated Contracts
Any type or combination
FAR 12 Commerical Contracts
Typically FFP or FP with EPA (T&M/LH must be approved one level above PCO if less than 3 years and less than $1M)
FAR 14 Sealed Bids Contracts
Shall only be FFP or FFP with EPA
Objective to negotiating contract type
it should result in reasonable contractor risk and provide the contractor with the greatest incentive for efficient and economical performance
Fixed Price Contracts
FFP, FP w/ EPA, and FPIF
Cost Reimbursement Contracts
CPIF, CPAF, and CPFF
FP with EPA
Include EPA clauses and be specific on cost covered and the contract value assigned to those costs.
When to use Incentive Contracts
when the required supplies or services can be acquired at lower costs by relating the profit or fee to the contractors performance
When to use award fee contracts
only used when not effective or feasible to determine obj incentive targets for cost/schedule/tech performance. Must be approved by the SCO.
Incentive Contract Types
FPIF, FPI successive targets, FPAF, CPIF, CPAF
What is FPIF
specifies target cost, a target profit, a price ceiling and a profit adjustment formula. Negotiated on the outset. When the contractor completes performace, the parties negotiate the final cost and final price is established by applying the formula. When the final cost is less than the target cost then the final profit greath than the target profit.
Elements of FPIF
Target Cost Actual Cost Target Profit Ceiling Price Share Ratio Point of Total Asumption
Steps of FPIF
- Determine the Underrun or Overrun
- Determine Adjusted Profit
- Compute FInal Price (only has profit if Final Price is less than ceiling price)
What is CPIF
provides for initially negotiated fee to be adjusted later by a formula based on the relationship of total allowable costs to total target costs. It specifies a target cost, target fee, minimum and maximum fees and a fee adjustment formula. After contract performance, the fee payble to the contractor is determined by the formula. The formula provides for increases in fee above target fee when total allowable costs are less than target costs.
Elements of CPIF
Target cost (allowable) Target Fee Min Fee Max Fee Share Ratio
Steps of CPIF
- Determine Underrun or Overrun
- Determine Adjusted Fee
- Compute final price
Limitations on CR contracts
- Factors in considering contract type have been considered
- AP must be approved at least a level above CO
- Contractor must have an adequate accounting system
- Gov surveillance resources to track KTR
- Prohibited on commercial
Limitation on Fee
6% of estimated construction costs in A&E Efforts
15% for R&D efforts
10% for all other efforts
CPFF LOE
A variant of CPFF Term
Used as an alternative to T&M for direct support services
T&M and LH
NOT Fixed Price Contracts. Used when you can’t accurately estimate extent or duration of work or anticipate costs.
T&M
Time: Direct Labor at specified fixed hourly rates
Material: Direct Materials, subcontracts and ODC
Labor Hour
contractor does not pay for material
How to document T&M and LH
D&F if over $10M approved by SCO (over 3 years must be approved by HCA)
3 types of IDC
Definite Quantity, Indefinite Quantity, and Requirements
Requirments
No min but we have to buy all requirements for that specific time period
IDIQ
No obligation to buy any more than the minimum from the contractor for the remaining period
Contract Types from least risk to the government to most risk to the government.
- FFP (least risk)
- Fixed Price Incentive Fee
- Cost Share
- Cost Plus Incentive Fee
- Cost Plus Award Fee
- Cost Plus Fixed Fee
