what are the types of contract in procurement

(d) Contract schedule. (1) For the information of offerors and contractors, the contracting officer shall state a realistic estimated total quantity in the solicitation and resulting contract. (C) The order must be issued on a sole-source basis in the interest of economy and efficiency because it is a logical follow-on to an order already issued under the contract, provided that all awardees were given a fair opportunity to be considered for the original order. Brand-name specifications shall not be used unless the particular brand-name, product, or feature is essential to the Governments requirements and market research indicates other companies similar products, or products lacking the particular feature, do not meet, or cannot be modified to meet, the agencys needs. (4) Contracting officers shall carefully screen all justifications for contractor proprietary data and remove all such data, and such references and citations as are necessary to protect the proprietary data, before making the justifications available for public inspection. (1) The contracting officer shall, when contracting by negotiation, insert the clause at 52.216-2, Economic Price Adjustment-Standard Supplies, or an agency-prescribed clause as authorized in paragraph (a)(2) of this subsection, in solicitations and contracts when all of the following conditions apply: (i) A fixed-price contract is contemplated. However, the contracting officer shall. A letter contract is a written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services. 644(r)), contracting officers may, at their discretion, set aside orders for any of the small business concerns identified in 19.000(a)(3). This form of contract normally requires the contractor to complete and deliver the specified end product (e.g.,a final report of research accomplishing the goal or target) within the estimated cost, if possible, as a condition for payment of the entire fixed fee. (b) Prospective redetermination, at a stated time or times during performance, of the price for subsequent periods of performance. Types of contracts | Procurement Department | City of Philadelphia (d) There is reasonable assurance that price redetermination actions will take place promptly at the specified times. What are the Different Types of Contract? - UpCounsel The 5 Key Types of Construction Contracts | Procore (iii) A summary of the debriefing shall be included in the task or delivery order file. The price ceiling is the maximum that may be paid to the contractor, except for any adjustment under other contract clauses. (6) Postaward Notices and debriefing of awardees for orders exceeding $6 million.The contracting officer shall notify unsuccessful awardees when the total price of a task or delivery order exceeds $6 million. (3) If the contract is with an educational institution, the contracting officer shall use the clause at 52.216-7 with its Alternate II. The key stakeholders in direct procurement . The most straightforward type of contract is the fixed price contract, where buyers and sellers agree upon a fixed price for the supplies. This data must be furnished to the ordering activity in sufficient time for the activity to prepare its report for the action within three working days of the order. An official website of the General Services Administration. (b) When predetermined, formula-type incentives on technical performance or delivery are included, increases in profit or fee are provided only for achievement that surpasses the targets, and decreases are provided for to the extent that such targets are not met. If the letter contract is being awarded on the basis of price competition, the contracting officer shall use the clause with its Alternate I. In order to respond to the growing trend of contracting out, out-sourcing, and privatizing research and development, project managers need more knowledge in the area of project contracts. (2) When this clause is included in invitations for bids, omit Note 6 of the clause and all references to Note 6. 16.402 Application of predetermined, formula-type incentives. Covered incident and serious bodily injury, as used in this section, are defined in the clause at 252.216-7004, Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel. (2) When objective criteria exist but the contracting officer determines that it is in the best interest of the Government also to incentivize subjective elements of performance, the most appropriate contract type is a multiple-incentive contract containing both objective incentives and subjective award-fee criteria (i.e., cost-plus-incentive-fee/award-fee or fixed-price-incentive/award-fee). (iii) An order issued under multiple award task and delivery order contracts, follow the procedures at 16.505(b)(2). (ii) The requirements of paragraph (c)(2)(i) of this section do not apply if the contracting officer or other official designated by the head of the agency determines that the advisory and assistance services are incidental and not a significant component of the contract. This process must not prevent or delay the posting of the justification in accordance with the timeframes required in paragraphs (b)(2)(ii)(D)(1) and (3) of this section. The procedure for bidding for a public tender varies depending on the type of contract and the contract value. (2) Fixed hourly rates. A basic agreement shall not-. (5) If the contract is with a nonprofit organization other than an educational institution, a State or local government, or a nonprofit organization exempted under the OMB Uniform Guidance at 2 CFR part 200, appendix VIII, the contracting officer shall use the clause at 52.216-7 with its Alternate IV. The smoother this process, the happier all involved will be, and the more likely that a bond will be built between both parties to make sure that future procurement goes as well. (e) The contracting officer shall assign a priority rating to the letter contract if it is appropriate under 11.604. This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum incentive to control costs. (3) If the contract also includes incentives on technical performance and/or delivery, the performance requirements provide a reasonable opportunity for the incentives to have a meaningful impact on the contractors management of the work. (ii) An initial target profit. (2) Cost or pricing information adequate for establishing a reasonable firm target cost is reasonably expected to be available at an early point in contract performance. (i) Describe the method for determining prices to be paid to the contractor for the supplies or services; (ii) Include delivery terms and conditions or specify how they will be determined; (iii) List one or more Government activities authorized to issue orders under the agreement; (iv) Specify the point at which each order becomes a binding contract (e.g., issuance of the order, acceptance of the order in a specified manner, or failure to reject the order within a specified number of days); (v) Provide that failure to reach agreement on price for any order issued before its price is established (see paragraph (d)(3) of this section) is a dispute under the Disputes clause included in the basic ordering agreement; and. This agreement includes paying invoices and meeting the terms and conditions of the contract. Each subsequent pricing period should be at least 12 months. For contracts in connection with a military construction project or a military family housing project, contracting officers shall not use cost-plus-fixed-fee, cost-plus-award-fee, or cost-plus-incentive-fee contract types ( 10 U.S.C. (1) Generally, use the clauses at FAR 52.216-2, Economic Price AdjustmentStandard Supplies, FAR 52.216-3, Economic Price AdjustmentSemistandard Supplies, and FAR 52.216-4, Economic Price AdjustmentLabor and Material, only when, (i) The total contract price exceeds the simplified acquisition threshold; and. However, in the event the work cannot be completed within the estimated cost, the Government may require more effort without increase in fee, provided the Government increases the estimated cost. These are: Fixed Price (FP) - also called as Fixed Fee or Lump Sum Time & Material (T&M) - also called as Unit Price or Rate Contract Cost Reimbursable (CR) - also called as Cost Plus (CP) (2) Any clause using this method shall be prepared and approved under agency procedures. It. Guidance on Using Incentive and Other Contract Types. Types of Contracts: Learn About The 14 Types - Contract Lawyers (e) See subpart 19.5 for procedures to set aside part or parts of multiple-award contracts for small businesses; to reserve one or more awards for small business on multiple-award contracts; and to set aside orders for small businesses under multiple-award contracts. (D) The justification is subject to the screening requirement in paragraph (b)(2)(ii)(D)(4) of this section. I'll pay you ten dollars to mow my lawn. (a) Selecting the contract type is generally a matter for negotiation and requires the exercise of sound judgment. When the contractor assumes a considerable or major share of the cost responsibility under the adjustment formula, the target profit should reflect this responsibility. L. 111-84)); or. A definite-quantity contract provides for delivery of a definite quantity of specific supplies or services for a fixed period, with deliveries or performance to be scheduled at designated locations upon order. The percentage of award fee available for the final evaluation may be set below 40 per cent if the contracting officer determines that a lower percentage is appropriate, and this determination is approved by the head of the contracting activity (HCA). After selecting the primary strategy from the contracting cone, another element of the contracting strategy is selecting the appropriate contract type. No justification is needed for the exception described in paragraph (b)(2)(i)(F) of this section. Indicate the type of instrument by entering one of the following upper case letters in position nine. (4) Discontinuing or modifying a basic agreement shall not affect any prior contract incorporating the basic agreement. Cost-reimbursement types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. (a) Description. If performance under the proposed contract involves concurrent operations under other contracts, the impact of those contracts, including their pricing arrangements, should be considered. Although the submitter notice process set out in Executive Order 12600 "Predisclosure Notification Procedures for Confidential Commercial Information" does not apply, if the justification appears to contain proprietary data, the contracting officer should provide the contractor that submitted the information an opportunity to review the justification for proprietary data before making the justification available for public inspection, redacted as necessary. A cost-plus-award-fee contract is a cost-reimbursement contract that provides for a fee consisting of (a)a base amount (which may be zero) fixed at inception of the contract and (b)an award amount, based upon a judgmental evaluation by the Government, sufficient to provide motivation for excellence in contract performance. (b) Use the clause at 252.216-7010, Postaward Debriefings for Task Orders and Delivery Orders, in competitive negotiated solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services, when a multiple-award contract is contemplated and task orders or delivery orders placed under the contract may be valued at $10 million or more. Task-order contract means a contract for services that does not procure or specify a firm quantity of services (other than a minimum or maximum quantity) and that provides for the issuance of orders for the performance of tasks during the period of the contract. 216.402 Application of predetermined, formula-type incentives. It is key to the buyer and seller relationship and provides a framework to deal with each other. In fixed-price incentive contracts, billing prices are established as an interim basis for payment. (iii) An official named in paragraph (b)(2)(ii)(C)(4)of this section. (ii) When placing an order for an end product identified by a material identifier that is available as described at PGI 204.7603, and item risk was not previously considered during award of the contract, the contracting officer shall also consider SPRS assessments of item risk in the award decision. (C) The requirements in paragraph (a)(4)(iii)(A) of this section do not apply when disclosure would compromise the national security (e.g., would result in disclosure of classified information) or create other security risks. This type of contract is suitable for projects that have uncertain or changing requirements, specifications, or deliverables, and where the buyer wants to encourage innovation and quality from the supplier. (ii) The contract is for an acquisition of supplies or services that includes the acquisition of advisory and assistance services and the contracting officer, or other official designated by the head of the agency, determines that the advisory and assistance services are incidental and not a significant component of the contract. Procurement contracting is important because it serves to maximize profits and keep businesses soluble in a competitive marketplace. (iii) Awards on the set-aside portion of sealed bid partial set-asides for small business. (iii) One or more identifiable labor or material cost factors are subject to change. (2) Award-fee evaluation and payments. (i) Consider work in process and materials on hand at the time of changes in labor rates, including fringe benefits (if any) or material prices; (ii) Not include in adjustments any indirect cost (except fringe benefits as defined in 31.205-6(m)) or profit; and. (1) Base period plus any option periods is three years or less. A cost contract is a cost-reimbursement contract in which the contractor receives no fee. (2) Exceptions to the fair opportunity process. These different types of contracts in procurement offer a variety of risks for one party or the other and are suitable for construction projects where the scope is more or less certain from the start. If the contractor proposes extensive subcontracting, a contract type reflecting the actual risks to the prime contractor should be selected. However, a cost-reimbursement contract also exposes the buyer to the risk of paying more than expected or budgeted, and requires more oversight and control of the supplier's performance and expenses. (d) Contract schedule. Draft the procurement contract The process: Once the scope and deliverables for the transaction have been outlined, legal or procurement teams are then tasked drafting a contract, which they later send over to the counterparty for review.In a manual contract workflow, these contracts are typically written up using Microsoft Word, saved, and then emailed to other members of the team for . First, you need to identify the goods or services you need. (i) The contract involves an extended period of performance with significant costs to be incurred beyond 1 year after performance begins; (ii) The contract amount subject to adjustment is substantial; and. 216.506 Solicitationprovisions and contract clauses. (5) If the supplies are standard, except for preservation, packaging, and packing requirements, the clause prescribed in 16.203-4(a) shall be used rather than this clause. (b) Orders under multiple-award contracts. (B) The contracting officer must not use the multiple award approach if-. (f) Insert the provision at 52.216-27, Single or Multiple Awards, in solicitations for indefinite-quantity contracts that may result in multiple contract awards. This contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. Cost-plus contract A cost-plus contract occurs when a consumer agrees to reimburse a business for expenses it incurs when completing some work, adding a certain amount to ensure profit for the business. Types of Contracts in Procurement Management | PMPwithRay (3) The contract may also specify maximum or minimum quantities that the Government may order under each task or delivery order and the maximum that it may order during a specific period of time. (2) If a cost-reimbursement research and development contract with an educational institution or a nonprofit organization that provides no fee or other payment above cost and is not a cost-sharing contract is contemplated, and if the contracting officer determines that withholding of a portion of allowable costs is not required, the contracting officer shall use the clause with its Alternate I. (f) Because performance incentives present complex problems in contract administration, the contracting officer should negotiate them in full coordination with Government engineering and pricing specialists. A fixed-price incentive (firm target) contract specifies a target cost, a target profit, a price ceiling (but not a profit ceiling or floor), and a profit adjustment formula. A cost-plus-award-fee contract is a cost-reimbursement contract that provides for a fee consisting of (1) a base amount fixed at inception of the contract, if applicable and at the discretion of the contracting officer, and (2) an award amount that the contractor may earn in whole or in part during performance and that is sufficient to provide motivation for excellence in the areas of cost, schedule, and technical performance. 3403(d)(3), when making the determination at FAR 16.504(c)(1)(ii)(D)(1)(i), the senior procurement executive shall determine that the task or delivery orders expected under the contract are so integrally related that only a single source can efficiently perform the work, instead of reasonably perform the work as required by the FAR.
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