Beruflich Dokumente
Kultur Dokumente
CONTRACT TYPES
Module Lead:
OO-ALC/PKCA
August 2007
Course Overview
Length: 2 Hours
Method of delivery:
Course contents:
Slide Presentation
The Requirement
Production Stages
Risk
Competitive or Non-Competitive
Industrial Base, Market Research, Technology
Type of funds
ETC
Overview
Risk
Reward
FAR 16.101
4
Greatest Risk
on
Government
Sharing Risk
Greatest Risk on
Contractor
High
__________________________________ Low
Requirement
Definition
Vague __________________________________
Production
Stages
Concept
Studies &
Basic
Research
Contract
Type
Varied CPFF
Welldefined
Exploratory
Development
Test/
Demonstration
Full-scale
Development
Full
Production
CPIF,
FPIF
CPIF,
FPIF,
FFP
FFP,
FFP,
FPIF,
FPIF,
FPEPA FPEPA
6
Follow-on
Production
FAR 16.104
8
FAR 16.104
9
FAR 12
Commercial
Items
FAR 14
Sealed
Bidding
FAR 15
Contract By
Negotiation
Firm Fixed
Price
Fixed Price
w/EPA
Firm Fixed
Price
Fixed Price
w/ EPA
Any
contract
type or
combination
of types
10
Fixed
Price
Contracts
Cost
Reimbursement
Contracts
11
12
Fixed Price
w/Award Fee
Fixed Price
Fixed Price
w/Economic Price w/Price
Adjustment
Re-determination
Fixed Price
Fixed Price Level
Incentive
of Effort
13
Application
15
Application
3.
Restricted to
Industry-Wide
Contingencies
CO must determine
its necessary to
protect the
contractor and
government
2.
18
Incentive Contracts
Description
Incentives used:
1.
2.
3.
4.
Cost Incentives
Performance Incentives
Delivery Incentives
Multiple Incentives
19
Negotiate
Successive Target
-Initial Target Cost
-Initial Target Profit
-Profit Adjustment
Formula
(floor/ceiling)
-Production Point
-Price Ceiling
At Production Point,
negotiate firm
target
-Firm Target cost
-Firm Target profit
-May use FFIF or FFP
20
FAR 16.403
22
FPIF Formulas
REFER TO HANDOUT
23
Target Cost
$10,000,000
Target Profit
$850,000
Target Price
$10,850,000
Price Ceiling
$11,500,000
Share Ratio
70/30
24
$850,00
0
Target
$400,000
Price Ceiling
$0
$8 M
$9 M
$10 M
Profit
Loss
$11 M
$12 M
Cost
(Dollars)
25
26
Application
29
$10,000
Contracting
Version
True or
False?
Contracting
Version
FAR
30 16.402-1
Answer
Contracting
Version
Contracting
Version
True!
FAR
31 16.402-1
$10,000
Contracting
Version
True or
False?
Contracting
Version
FAR
32 16.203-2
Answer
Contracting
Version
Contracti
ng
Version
LSE, Should
n't duplicate
contingenci
e
FAR
33 16.203-2
$25,000
Contracting
Version
Contracts
resulting from
sealed bidding
can be only
A. Firm-Fixed Price or
B. Firm-Fixed Price or
C. Firm-Fixed Price or
Adjustment
D. Firm-Fixed Price or
Contracti
ng
Version
34 16.102
FAR
Answer
Contracting
Version
Contracti
ng
Version
FAR
35 16.201
Prospective
Retroactive
1. FFP for initial
(Future)
2.(Past)
Award after fair
delivery period
can be established
2. Re-determine
price at every 12
months (or more)
during future
performance
3. Price Ceiling may
be established to
allow contractor
so share risk
billable rate is
negotiated
3. Price re-determined
within ceiling after
completion of contract
4. Useful for R&D
>$100K
5. Price Ceiling
established to allow
contractor to
FARshare
16.205 thru 206
36
Application
Cost Reimbursement
Contracts
FAR 16.3
38
Cost
Cost Sharing
Cost Plus
Incentive Fee
39
Application
Cost
Description
A cost-reimbursement contract
Contractor receives no fee
Application
A cost contract may be appropriate for research and
development work, particularly with nonprofit
educational institutions or other nonprofit
organization, and for facilities contracts.
FAR 16.302
41
Cost Example
There is a requirement for a study of earthquake
fault lines in the eastern United States, for which
universities and colleges with Geology Departments
may be interested in performing. A cost contract
with no fee would be appropriate in this instance
since universities/colleges are not for profit
organizations.
42
Cost Sharing
Description
Cost-reimbursement contract
Contractor receives no fee
Reimbursed only for agreed-upon portion of
allowable costs
Application
A cost-sharing contract may be used when the
contractor agrees to absorb a portion of the costs, in
expectation of substantial compensating benefits.
FAR 16.303
43
Incentives used:
1.
2.
3.
4.
Cost Incentives
Performance Incentives
Delivery Incentives
Multiple Incentives
FAR 16.302
44
Cost-Plus-Incentive Fee
Description
Initially negotiated fee adjusted later by formula
Fee Adjustment Formula based on
Total allowable costs vs. Total target costs
Specifies target cost, target fee and min & max fees
If Total allowable < Total target, then Fee Increases
If Total Allowable > Total target, then Fee Decreases
Application
Appropriate for services or development and test
programs whencost reimbursement contract is
necessary; and a target cost and a fee adjustment
formula can be negotiated that are likely to motivate
the contractor to manage effectively.
FAR 16.405-1
45
46
Target Cost
Target Profit
$10,000,000
$750,000
Maximum Fee
$1,350,000
Minimum Fee
$300,000
Share Ratio
85/15
47
Profit
(Dollars)
$1,500,000
Maximum Fee
Target
$1,000,000
$500,000
$0
Loss
$6 M
$8 M
$10 M
$12 M
$14 M
Cost
(Dollars)
48
49
Application
Negatives
Cumbersome and bureaucratic
Key players change may affect continuity
Evaluations can at times appear punitive
53
Cost-Plus-Fixed Fee
Description
Payment of negotiated fee fixed
Statutory fee limitations apply (FAR 15.404-4(c)(4))
Application
55
Cost-Plus-Fixed Fee
Completion Form
1. Describes scope of
- Stating a
definite goal or
target
- Specifying an
end product
Term
Form scope
1. Describes
- In general terms
- Obligates
contractor to a
level-of-effort for
a specified time
2. Contractor required
to deliver the
specified end
product within
estimated cost as
condition of
payment
2. If the Govt
considers
performance
satisfactory
contractor is paid
fixed fee at the end
of the specified time
FAR
56 16.306
57
58
$50,000
Contracting
Version
Cost
Reimbursement
Contracts allow for
payment of
A. Allowable
Costs
B. Allowable
C. Allowable
D. Allowable
Contracti
ng
Version
Retroactive
Projected Costs
Incurred Costs
Advanced Costs
59
FAR 16.301-1
Answer
Contracting
Version
Contracti
ng
Version
60
FAR 16.301-1
$50,000
Contracti
ng
Version
Cost Reimbursement
Contracts should be
used only when
uncertainties dont
permit costs to be
Contracti
ng
Version
FAR6116.301-2
Answer
Contracti
ng
Version
Contracti
ng
Version
. Estimated
Accurately
enough for
FP
FAR6216.301-2
$100,00
0
Contracti
ng
Version
Cost Reimbursement
Contracts can be used only
with
Contracti
ng
Version
FAR6316.301-3
Answer
Contracti
ng
Version
Contracti
ng
Version
FAR6416.301-3
Contracting
Version
Cost$100,000
Reimbursement
Contracts
establish an
estimated total
cost in order to
Contracti
ng
Version
Answer
Contracting
Version
Contracti
ng
Version
Obligate
Funds an
d Establi
sh a Ceil
in
FAR6616.301-1
$250,000
Contracting
Version
Contracti
ng
Version
FAR
67 16.401
Answer
Contracting
Version
D. All of the
above!
Contracti
ng
Version
FAR
68 16.401
$250,00
0
Cost & Fixed
Contracting
Version
Incentive
Contracts can use
which of the
following
Contracti
ng
Version
A. Cost Incentives
B. Performance Incentives
C. Delivery Incentives
D. All of the above
FAR
69 16.402
Answer
Contracting
Version
D. All of the
above!
Contracti
ng
Version
FAR
70 16.402
$500,000
Contracting
Version
Contracti
ng
Version
A.Cost-Sharing
B. Cost-Plus-Award-Fee
C. Cost-Plus-Percentage-of-Cost
D.None of the Types Above
71 16.102
FAR
Answer
Contracting
Version
C. Cost-plus-perce
ntag
Contracti
ng
Version
e-of-cost!
72 16.102
FAR
$500,000
Contracting
Version
Contracts under
FAR 15 (Contract
By Negotiation)
can be
Contracti
ng
Version
FAR
73 16.102
Answer
Contracting
Version
Contracti
ng
Version
FAR
74 16.102
Indefinite
Delivery
Time &
Materials
Labor-Hour
Letter
Contracts
Basic Agreements
Basic Ordering
Agreements
(BOAs)
75
Requirements Contract
Best Estimated Quantity (BEQ)
Provides for filling actual requirements by placing order
during a fixed period
All known government requirements (of that sort) will be
placed with that contractor
FAR 16.5
76
Requirements Example
A contract is needed for maintenance and
repair of hand held portable radios over the
next five years. Historical data indicates
between 15-20% of the radios will require
some type of repair during any given year.
78
Application
May be used only when it is not possible at the time of
placing the contract to estimate accurately the extent or
duration of the work or to anticipate costs with any
reasonable degree of confidencemay be used (1) only
after the contracting officer executes a determination
and findings that no other contract is suitable; and (2)
only if the contract includes a ceiling price that the
contractor exceeds at its own risk.
FAR 16.601
79
Letter Contracts
Description
Preliminary contract that authorizes contractor to
begin work immediately
Includes (not-to-exceed) price ceiling
Application
A letter contract may be used when (1) the
Governments interests demand that the contractor
be given a binding commitment so that work can
start immediately and (2)negotiating a definitive
contract is not possible in sufficient time to meet the
requirement.
FAR 16.603
80
81
Application
When a substantial number of separate contracts may
be awarded to a contractor during a particular period
and significant recurring negotiating problems have
been experienced with the contractor.
FAR 16.601
82
$1,000,000
Contracting
Version
True or
False?
Contracti
ng
Version
FAR
83 16.601
Answer
Contracting
Version
Contracti
ng
Version
True!
FAR
84 16.601
$1,000,00
0
A T&M contract
may
Contracting
Version
not be awarded
before execution of
which?
A.Any required
B. Any required
C. Any required
Data
D.Any required
Contracti
ng
Version
FAR
85 16.601
Answer
Contracting
Version
Contracti
ng
Version
FAR
86 16.601
Questions?
87