Quantcast Fixed Price Contracts

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(2) An indefinite quantity contract provides for an indefinite
quantity, within stated limits, of specific services to be furnished during
a fixed period with deliveries scheduled by the Government placing orders
with the contractor.  To ensure that the contract is binding, the contract
requires the Government to order at least a stated minimum quantity.
(3) A requirements contract operates in the same manner as an
indefinite quantity contract with the Government ordering services during
the course of the contract. However, a requirements contract does not
require the Government to order a minimum quantity during the contract
Instead, the Government makes a commitment to order all of its requirements
for that particular service required at a particular location only from that
(c) Combination Firm Fixed Price and Indefinite Quantity. In this type
of contract, the work is separated into two categories: Work which can be
quantified in advance of contract award and work which is difficult to
quantify inadvance. Work in the first category is carried out under the
firm fixed price portion of the contract with no adjustment in price for
work performed within the contract scope. Work in the second category is
ordered by the Government as the need arises.  When the combination contract
is used, the Government is generally not required by the terms of the
contract to order a minimum amount of work under the indefinite quantity
portion of the contract.  The contract specialist should be consulted to
determine this requirement.
(d) Fixed Price Award Fee.  This type of contract is based on
definitive specifications, but the contract permits the payment of an
additional fee or portions thereof for exceptional performance. The
contract specifies the maximum fee which may be awarded. Anevaluation
board reviews the contractor's performance and recommends the fee to be paid
to the contractor based on evaluation criteria included in the contract.
The fee determination official makes the final decision on the amount of the
award fee.
(e) Fixed Price Incentive. A fixed price incentive contract is a
contract that provides for adjusting profits and establishing the final
contract price by application of a formula based on the relationship of the
total final cost to total target cost.  The final price is subject to a
price ceiling established at the outset. There are two forms of fixed price
incentives: firm targets and successive targets. These are described in
detail in the FAR at 16.4.
(f) Time and Materials.  A time and materials contract provides for
acquiring supplies or services on the basis of (1) direct labor hours at
specified hourly rates that include wages, overhead, general and
administrative expenses, and profit and (2) materials at cost, including if
appropriate, material handling costs as part of material costs. The use of
this type of contract by NAVFACENGCOM is used mainly for equipment overhaul
and repair contracts.


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