Cost Share Contract Type

2. Where all the conditions of paragraph a(a)(1) of this Subsection apply and the contracting authority considers that the use of the clause in Article 52.216-2 is inappropriate, the agent may use a clause prescribed by the Agency instead of clause 52.216-2. (1) Adjustments on the basis of fixed prices. These price adjustments are based on increases or decreases from an agreed level in the published or otherwise determined prices of certain items or contract evaluation criteria. 16 405-1 Fee-based contracts plus incentives. (a) Description. The cost plus incentive fee contract is a cost reimbursement contract that provides that the fees originally negotiated are then adjusted according to a formula based on the ratio of total eligible costs to total target cost. This type of contract specifies the target cost, target fees, minimum and maximum fees, and a fee adjustment formula. After the performance of the contract, the fee to be paid to the contractor is determined according to the formula. The formula provides, within certain limits, for fee increases beyond the target charge if the total eligible costs are below the target cost, and for fee reductions below the target fee 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 operates, the Contractor shall receive the total eligible costs plus the minimum or maximum fee. (b) enforcement.

(1) A cost plus incentive fee contract is appropriate for development and testing services or programs if: (i) a reimbursement contract is required (see 16.301-2); and (ii) target costs and a fee adjustment formula can be negotiated, which may motivate the contractor to manage effectively. 2. The contract may contain technical incentives for performance where it is very likely that the necessary development of a larger system is feasible and the government has set its performance targets at least in general. This approach may also apply to other acquisitions if the use of cost and technical performance incentives is desirable and administratively feasible. (3) The fee adjustment formula should provide an effective incentive across the full range of reasonably foreseeable deviations from the target costs. If high maximum fees are negotiated, the contract also provides for a low minimum fee, which can be zero fees or, in rare cases, negative fees. (c) Restrictions. No cost plus incentive fee contracts will be awarded unless all restrictions of 16-301-3 are met. 16.405-2 Additional fee contracts. A cost plus award contract is a cost reimbursement contract that provides for a fee consisting of (1) a base amount determined at the beginning of the contract, if any and at the customer`s discretion, and (2) an additional amount that the contractor can earn in whole or in part during performance and that is sufficient to create a motivation for excellence in cost areas. Schedule and technical performance.

See paragraph 16.401(e) for requirements for the use of this type of contract. 3. Where the contract also includes incentives for technical performance and/or delivery, the performance requirements provide a reasonable possibility for the incentives to have a significant effect on the performance of the contract by the contractor. (2) To bind the contract, the minimum quantity must be greater than a nominal quantity, but must not exceed the amount that the government will almost certainly order. 16.101 General. (a) The Government and contractors have at their disposal a wide range of types of contracts to ensure the flexibility necessary for the acquisition of the wide variety and breadth of supplies and services required by the agencies. The types of contracts vary depending on – (1) the scope and timing of the contractor`s liability for the cost of performance; 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 are 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 price at fixed price, where the contractor assumes full responsibility for the cost of performance and the resulting profit (or loss), to cost plus fixed costs, where the contractor has minimal liability for the cost of performance and the negotiated commission (profit) is fixed. In between, there are the various incentive contracts (see subsection 16.4), in which the contractor`s liability for performance costs and the incentives for profits or fees offered are tailored to the uncertainties of contract performance.

16.102 Guidelines. (a) Orders resulting from sealed offers 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 further the interests 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 in the event of a deviation under subsection 1.4.c) The system of cost plus one per cent of procurement costs may not be applied (see 10 U.S.C.2306(a) and 41 U.S.C.3905(a)). Main contracts (including letter contracts) that are not fixed-price contracts prohibit subcontracts at cost plus a percentage of the cost by an appropriate clause (see clauses in paragraph 44.2 for reimbursement contracts and paragraphs 16.2 and 16.4 for fixed-price contracts). (d) No contract may be awarded until the findings and findings (D&F) required by this Part have been made. The minimum requirements for the content of D&Fs required in this Part are set out in Article 1,704. 16,103 Negotiate the type of contract. (a) The choice of the type of contract is generally 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 goal is to negotiate a type of contract and a price (or estimated costs and fees) that result in a reasonable risk to the contractor and provide the contractor with the greatest incentive for efficient and economical performance. (b) A fixed-price contract that makes the best use of the company`s basic profit motive shall be used if the risk involved is minimal or can be predicted with an acceptable level of certainty. However, in the absence of a reasonable basis for pricing, other types of contracts should be considered and negotiations should focus on the choice of a type of contract (or 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 result in a different type of contract being suitable for periods subsequent to that used at the beginning. In particular, contract agents should avoid prolonged recourse to a refund or a temporary and material contract, as experience provides a basis for more fixed prices. (d) 1. Each procurement file shall contain documents indicating the reasons why the type of contract was chosen. This should be documented in the acquisition plan or in the contract file if a written acquisition plan is not required by the agency`s procedures. (i) Explain why the type of contract chosen is to be used to meet the needs of the Agency.

(ii) Discuss additional government risks and the burden of managing the type of contract chosen (e.B. when a repayment contract is chosen, 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 past performance information); B) the nature of the additional risks (e.g. B contractor`s inadequate accounting system, weaknesses in the contractor`s internal control, non-compliance with cost accounting standards or non-existent or inadequate earned value management system); and C) how the government will manage and mitigate risks. (iii) Review of State resources necessary for the proper planning, award and management of the selected type of procurement (e.B. , the resources required and the additional risks to the government if adequate resources are not provided). (iv) For contracts other than fixed prices, the documentation should include at least the following: (A) an analysis of why the use of a contract other than a fixed-price contract (e.B reimbursement, time and equipment, hours of work) is appropriate; B) Justification in which the particular facts and circumstances (e.B. the complexity of the requirements, the uncertain duration of the work, the technical capacity and financial responsibility of the contractor or the adequacy of the contractor`s accounting system) and the related reasoning essential for the choice of the type of contract; (C) An assessment of the adequacy of State resources necessary for the proper planning, awarding and management of contracts other than fixed prices; and (D) a review of the measures envisaged to minimize the use of non-fixed-price contracts for future acquisitions for the same needs and to move to fixed-price contracts to the extent possible.

.