Presented by: Fay K. Schulte, CPPM
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Government contracts can be complex and
managing Government property against
different types of contracts can be
complicated.
This presentation covers different contract
types and how property should be managed
against these types.
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Grouped into the following categories
under FAR Part 16:
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Fixed-Price Contracts (Subpart 16.202)
Cost-Reimbursement Contracts (Subpart 16.301)
Time and Material Contracts (Subpart 16.601)
Incentive Contracts (Subpart 16.401)
Indefinite – Delivery Contracts (Subpart 16.501)
Labor Hour Contracts (Subpart 16.602)
Letter Contracts (Subpart 16.603)
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Firm Fixed-Price (FFP)
Fixed-Price Level of Effort (FPLOE)
Fixed-Price With Award Fees
Fixed-Price with Economic Price
Adjustment
Fixed-Price Incentive (FPI)
Fixed-Price, Material Reimbursement
Fixed-Price Redeterminable
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Basic Definition: A contract that negotiates a
fair and reasonable priced that can be
established at the outset with a negotiated
price that remains the same over the life of
the contract and the Government pays the
negotiated amount regardless of the
contractor’s real costs.
Maximum risks and full responsibility for all
costs and resulting profits or loss on the
contractor with minimum administrative
burden on both contracting parties.
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Generally used for a specified level of effort
over a stated period of time.
Contractor is obligated to devote a specified
“level of effort” over a stated period of time
for a “fixed” price. Price is based on effort
expended, not results achieved.
Contract price not-to-exceed $100,000
except with the approval from the Chief of
the Contracting Officer (CO).
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An award fee earned in addition to the fixed
price.
May be used to motivate contractors since
other incentive cannot be used when
contractor performance cannot be objectively
measured.
Award fee amount is determined by
contractor’s performance based on criteria
established in the contract.
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Price adjustments provisions based on
upward and downward revision of stated
contract price with specific contingencies
regarding stability of labor or material prices
during the life of the contract.
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Fixed-price incentive (FPI) contract with
provisions for adjustment of profit. The final
contract price is based on a comparison
between the final negotiated total costs and
the total target costs.
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Used in the purchase of repair and overhaul
services to provide a firm fixed-price for
services with reimbursement for cost of
materials used.
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Fixed-Price Redetermination contracts are either
prospective or retroactive. The prospective type is
used when it is possible to negotiate a fair and
reasonable price for an initial period but not for
subsequent periods. The initial portion of the
contract is firm fixed price and will be the longest
period possible. The price for subsequent periods is
determined through negotiation after completion of
the contract and will be for at least 12 months. The
retroactive type is used when it is not possible to
negotiate a fair and reasonable price for the entire
contract period. A ceiling price is established and
final price is determined through negotiation after
completion of the contract.
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Cost-Plus-Fixed Fee (CPFF)
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Cost-Plus-Award-Fee (CPAF)
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Cost-Plus-Incentive-Fee (CPIF)
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Basic Definition of Cost Plus: Type of
contract where a contractor is paid for all
of its allowed expense up to a set limit,
plus additional payment to allow the
company to make a profit.
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Contractor's costs responsibility is
minimized, Government's cost
responsibility is maximized. The
contractor is reimbursed for allowable,
allocable costs. Contractor's profit is
fixed. Price of the contract (total amount
paid to the contractor) is not fixed.
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A cost reimbursement type contract with
special fee provisions. It provides a means of
applying incentives in contracts which are not
susceptible to finite measurements of
performance necessary for structuring
incentive contracts. The fee is in two parts: a
fixed amount unrelated to performance, and
an award amount related to a subjective
judgment of the quality of the contractor's
performance.
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A cost-reimbursement type contract with
provision for a fee that is adjusted by
formula in accordance with the
relationship which total allowable costs
bear to target cost.
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Definition: A contract under which a
contractor is paid on the basis of the
actual cost of direct labor, usually with
specific hourly rates along with the
actual costs of materials and equipment
and agreed fixed add-on to cover the
contractor’s overhead and profits.
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Definition: Type of contract that provides for
an indefinite quantity of services or supplies
during a fixed period of time.
Delivery or Task Orders are placed against a
Basic Ordering Agreement (BOA) for
individual requirements. Generally IDIQs are
used when it cannot predetermine the precise
quantities of services or supplies that it will
require during the contract period.
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Definition: A contractual written letter that
authorizes the contractor to begin
immediately performing services or
manufacturing supplies.
May be used when the Government’s interest
demands that the contractor be given a
binding commitment so that work can start
immediately in the event negotiating a
definitive is not possible in sufficient time to
meet the requirement.
Property professional should have a principle
understanding of the complexity of the
different types of contracts so they can within
the contract ◦ Understand the basic format and the contract type
risk analysis;
◦ Understand specific property requirements;
◦ Understand their property administration role
within the lifecyle of the contracting process;
◦ Be able to identify contractual FARs and other
Agency’s supplement clauses (DFARs etc,);
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The Contracts department and/or the
cognizant contract representative within
your company should be your contact for
contractual information including the
contract type.
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Where would you find the contract
type within the contract?
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you have been made aware
there is property on a Government
contract. What should be your
first initial step?
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“Read the contract”, particularly the
Statement of Work, CLINs, applicable FARs
and any attachments pertaining to
Government property.
Next step - how would the contract type
affects the management of Government
property?
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Contractor retains title to all Contractor Acquired
Property (CAP) on a basic FFP contract after final
delivery unless:
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The CAP is called out in a separate Contract Line Item
Number (CLIN) which the Government will reimburse;
then title shall be vested to the Government, and/or
If the contract is financed by Progress Payments under
FAR 52.232-16.
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With the exception to the basic FFP, all
“CAP & GFP” property shall be managed in
accordance with FAR Clause 52.245-1,
52.245-2, and other Agency’s clauses (if
applicable), along with the contractual
Statement of Work (SOW) in conjunction
with the contractor’s Government Property
Policies and Procedures.
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Questions?
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Contact Info:
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Fay K. Schulte, CPPM
(310) 722-3430 – Mobile
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fayk888@gmail.com
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