A detailed description and a full discussion of contracts is contained
in the FAR at Part 16.
5-130 Cost Reimbursement Contracts . Cost reimbursement contracts provide
for the payment of allowable incurred costs to the extent prescribed in the
contract. These contracts establish an estimate of total costs for the
purpose of obligating funds and establishing a ceiling that the contractor
may not exceed without the approval of the Contracting Officer. This type
of contract may be used only under certain limited circumstances. Among the
limitations, noted in the FAR is that this type of contract should only be
used when uncertainties involved in contract performance do not permit costs
to be estimated with sufficient accuracy to use any type of fixedprice
contract. A detailed description and a full discussion of the limitations
on the use of cost reimbursement contracts is contained in the FAR at
5-210 Responsibility for Procurement. The Contracting Officer is
responsible for deciding which type of contract and which method of
procurement should be employed. The activity contract specialist is
responsible for coordinating this decision with the Procuring Contracts
Officer (PCO) and the Administrative Contracts Officer (ACO). In many
cases, the PCO and the ACO are the same person.
Due to the importance of selecting the correct contract type, method of
procurement, and the different time periods required for preparation and
obtaining higher level approvals, the procurement team approach to
acquisition planning is highly recommended.
5-220 Procurement Methods. Under the Competition in Contracting Act
(CICA), competitive procedures must be used to the greatest extent
practicable. Agencies are required to use competitive procedures whether by
sealed bidding or by requesting competitive proposals. Sealed bidding
consists of soliciting sealed bids from contractors and making award without
discussions with the contractor. Competitive proposals permit negotiation
and discussion of the terms and conditions of the contract with contractors
prior to award of the contract.
Two-step sealed bidding is a combination of sealed bidding and competitive
proposals. Step one consists of the request for submission, evaluation, and
(if necessary) discussion of a technical proposal. The technical proposal
describes the approach the contractor plans to take in meeting the contract
requirements. It does not address matters of contractor responsibility as
discussed at 5-310. No pricing is involved at this stage. Step two
involves the submission of sealed price bids by those who submitted
acceptable technical proposals in step one
CICA recognized that under certain circumstances a negotiated procurement
may be more advantageous to the Government than sealed bid procedures.