A fixed-price contract with retroactive pricing is appropriate for research and development contracts estimated at the simplified acquisition threshold or less if it is established from the outset that a fair and reasonable fixed fixed price cannot be negotiated and that the amount and short period of performance make the use of other types of fixed-price contracts impracticable. Contracts with subsequent revaluation allow the contract price to be adjusted after the completion of the project. This type of contract applies more to research and development contracts than to construction. A fixed-price contract (FFP) (subpart 16.2 of the FAR) provides for a price that is not subject to adjustment due to the contractor`s experience with costs in performing the contract. This type of contract gives the contractor maximum risk and full responsibility for all costs and the resulting profit or loss. It encourages the contractor to control costs and provide efficient services and imposes a minimum administrative burden on the parties. Let`s say you have a fixed-price contract that covers 12 months of services, set aside the fascinating hurdles that your automated procurement system will offer you (good luck!), and do the following: Modify the contract to create a unique position for services that covers a set of “12”, a unit of “months”, a “unit price” that corresponds to the 12-month price divided by 12, and a “total price” equal to the unit price multiplied by 12. (3) Submission of compensation for all claims against the Government arising out of this Agreement, with the exception of claims for specified amounts that the Contractor has expressly excluded from the performance of the Discharge. Indemnification from the assignee may also be sought if the Contractor`s claim for amounts payable under this Agreement has been assigned under the Assignment of Claims Act of 1940 (31 U.S.C.3727 and 41 U.S.C.6305). However, to account for different scenarios, the Federal Procurement Regulations (FSR) describe several types of fixed-price contracts. Having options gives the appropriate government agency some flexibility to tailor the contract to the situation. A fixed-price contract may also be subject to change.

Maybe a piece of equipment is simply not available, or the order fulfillment time needs to be extended due to unforeseen circumstances. In this case, the correct way to handle a change is to create a change order. h) Final payment. The government reimburses the amount owed to the contractor under this contract – just like flat-rate contracts, fixed-price contracts certainly have their advantages and disadvantages. They can be incredibly lucrative, or they can be the only reason an entrepreneur loses their shirt on a project. (d) reimbursement of unearned amounts. If, after a certified request for advance payments, the Contractor determines that part or all of such claim constitutes a payment for the Contractor`s performance that does not comply with the specifications, terms and conditions of this Agreement (hereinafter referred to as the “Unearned Amount”), the Contractor – (3) This request for advance payment shall not include amounts that the Prime Contractor intends to: retain or retain a subcontractor or supplier in accordance with the terms of the subcontract; and (a) In determining the base level beyond which the adjustment is made, the public representative shall ensure that the cost allowances are not reproduced by including both the base price and the adjustment requested by the contractor in accordance with the economic price adjustment clause. If you are talking about a commercial interim payment or a contractual financing payment, you must find the clause that specifies the type of payment and its execution, e.B. 52.232-5 (, 52.232-16 or 52.232-32. If you are talking about a delivery payment, the payment is always the agreed price for an agreed delivery item (“contract item” or “delivery item”). The “item” can be a specific product or service.

Look at the contract item “Appendix” (or “CLIN Schedule”) and note which item(s) are. It can be a single thing or units of a thing (ANY) or a single job (JO) or units of a job (MONTH or HOUR). The entrepreneur will then receive the agreed price for the delivery unit when the product or service is delivered and accepted. The contract must contain a corresponding payment clause, e.B. 52.212-4(i), 52.232-1, 52.232-2 or 52.232-5(h). If a project is carried out under a standard fixed-price contract, there is not much leeway for the contractor to renegotiate the price. When something like lack of materials, rising prices, or labor shortage occurs, the entrepreneur has to take on the problem himself. You can contact the owner and possibly change the contract, but the owner is not obliged to do so. (b) advance payments.

The Government makes progressive payments on a monthly basis during the course of the work or at more frequent intervals determined by the Public Commissioner, on the basis of estimates of the work performed in accordance with the quality standards set out in the contract approved by the Public Commissioner […].