Contract Pricing Essay

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Fixed-Price Contract or Cost-Reimbursement Contract Willie Glover BUS 501 February 20, 2011 Dr. Nick Nayak Abstract Fixed-price contracts and cost-reimbursements are two different forms of contracts used by the federal government while determining contract pricing. Contracting officers may use either when contracting however there are several types of fixed-price contracts. Fixed-price type of contracts provide for a firm price or an adjustable price. Fixed-price contracts consist of firm-fixed-price contracts, level-of-effort term contracts, materials reimbursement, fixed-price contract with economic price adjustment, incentive contracts, redetermination, cost-imbursement contacts and cost-plus-a-fixed-fee contracts. As we …show more content…

The firm-fixed price contract provides for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. This contract places maximum risk and full responsibility for all costs and resulting profit or loss. This requires less administrative burdens upon the contracting parties. The firm-fixed price is suitable for supplies and services. Fixed-price contracts with economic price adjustment provides for upward and downward revision of the stated contract price upon the occurrence of specified contingencies. Adjustments are based on established prices, actual costs of labor or material, and based on cost indexes or labor or material. Fixed price incentive contracts are used when the firm-fixed price contract is not suitable, the nature of the supplies and services being acquired are such that the contractor’s assumption of a degree of cost responsibility will provide a positive profit incentive and if the contract also includes incentives on performance and deliver. Fixed –price contracts with prospective price redetermination provides a firm fixed-price for an initial period of contract deliveries and performance or a prospective redetermination at times during performance. Fixed-ceiling-price contracts with retroactive price

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