Procurement Flashcards
What is a contract?
Legal agreement relationships between two or more parties.
Agreement vs. contract
An agreement might not involve a contract, but every contract will involve an agreement.
Fixed price contracts
A fixed total price for a defined product, used when the requirements are well defined and no significant changes to the scope are expected.
Firm fixed price contracts
Most commonly used - has a fixed price and won’t change unless scope of work changes.
Fixed price incentive fee contracts
Allows for deviation from performance, with financial incentives tied to achieving agreed-upon metrics (usually based on cost, schedule, or quality) A price ceiling is set, and all costs above the price ceiling are the responsibility of the seller.
Fixed price with economic price adjustments contracts
A fixed price contract, but with a special provision allowing for predefined final adjustments to the contract price due to change conditions (performance period spans a period of years or payments are made in a different currency).
Cost-reimbursable contracts
Involves payments (reimbursements) to the seller for all legitimate actual costs incurred for completed work, plus a fee representing seller profit. Best used if scope of work is expected to change significantly during the execution of the contract).
Cost plus fixed fee contracts
The seller is reimbursed for all allowable costs for performing the contract work and receives a fixed-fee payment calculated as a percentage of the initial estimated project costs. Fee amounts do not change unless the project scope changes.
Cost plus incentive fee contracts
The seller is reimbursed for all allowable costs for performing the contract work and receives a predetermined incentive fee based on achieving specific performance objectives outlined in the contract.
Cost plus award fee contracts
The seller is reimbursed for all legitimate costs. Still, most of the fee is earned based on the satisfaction of specific broad, subjective performance criteria defined and incorporated into the contract.
Time and materials contracts
A hybrid type of contractual arrangement with aspects of both cost-reimbursable and fixed-price contracts. Often used for staff augmentation, acquisition of experts, and any outside support when a precise statement of work cannot be quickly prescribed.
Bidder conferences
Also called contractor conferences, vendor conferences, and pre-bid conferences, meetings between the buyer and prospective sellers before proposal submittal. Used to ensure all prospective bidders have a clear shared understanding of the procurement and that no bidders receive preferential treatment.
What are claims?
Contested items in a project, when the buyer and seller cannot reach an agreement on a change or its compensation.
Alternative dispute resolution (ADR)
If the buyer and seller cannot resolve a claim it might have to go to a third party.
Where should the claims process and ADR (if needed) be outlined?
In the contract
