The Written Agreement That Contains the Specific Details

(g) It is essential that the Government and the contractor expressly agree on the impact of changes to the contract (e.g. B in accordance with the amending clause) on performance incentives. (d) The maximum liability of the Government inserted in article 52.216-24, Limitation of State Liability, is the estimated amount necessary to meet the financing needs of the contractor prior to the definition. However, it may not exceed 50 per cent of the estimated cost of the final contract, unless it has previously approved the staff member who approved the contract letter. (b) Contracts negotiated under Part 15 may be of any type or combination of species that advance the interests of the Government, unless this Part is restricted (see 10 U.S.C.2306(a) and 41 U.S.C.3901). Types of contracts not described in these Regulations may only be used as a deviation under paragraph 1.4. (4) Determination of the exception to equitable opportunity (see 16.505(b)(2)) and the justification, including evidence that the unique qualifications of the proposed contractor or the nature of the acquisition require the application of that exception. If the contractor uses the logical tracking exception, the rationale should describe why the relationship between the initial order and the tracking approval makes sense (p.B in terms of scope, performance period, or value). 16.403-1 Fixed price incentive contracts (fixed target).

(a) Description. A fixed-price incentive contract (fixed target) sets the target cost, the target profit, a price cap (but not a profit cap or cap) and a profit adjustment formula. These elements are all negotiated from the beginning. The price cap is the maximum amount that can be paid to the contractor, with the exception of any adjustment under other contractual clauses. When the contractor has completed the service, the parties negotiate the final cost and the final price is determined using the formula. If the final cost is less than the target cost, the application of the formula gives a final gain greater than the target gain; Conversely, if the final cost is higher than the target cost, the application of the formula results in a final gain below the target profit, or even a net loss. If the final negotiated costs exceed the price ceiling, the contractor absorbs the difference as a loss. Since profit varies inversely with costs, this type of contract provides a positive and calculable incentive for profit for the entrepreneur to control costs. (b) enforcement. A fixed-price incentive contract (fixed target) is appropriate if the parties can negotiate from the outset a fixed target cost, benefit and profit adjustment formula that provides a fair and reasonable incentive and cap that allows the contractor to assume a reasonable share of the risk. If the contractor assumes a significant or larger share of the responsibility for the costs under the adjustment formula, the target profit should reflect that responsibility.

(c) Restrictions. This type of contract can only be used if: — (1) the contractor`s accounting system is appropriate to provide data to support the negotiation of the final revision of the cost and incentive price; and (2) Reasonable information on costs or prices for the establishment of reasonable fixed objectives must be available at the time of the first negotiation of the contract. (d) Contract schedule. The customer must specify in the contractual plan the target costs, target profit and target price for each item subject to a performance price revision. 16 403-2 Fixed-price incentive contracts (successive objectives). (a) Description. 1. A fixed-price incentive contract (successive objectives) shall specify the following elements, all of which shall be negotiated from the outset: (i) initial target costs. (ii) An initial target gain. (iii) an initial profit adjustment formula to be used to determine the target profit, including a ceiling and a lower limit for the fixed target profit. (This formula generally provides for a lower level of cost responsibility than the contractor than a formula for determining final profit and price.) (iv) The point of production at which the fixed target cost and profit are negotiated (usually before delivery or completion of the first item). (v) A maximum price, which is the maximum price that may be paid to the contractor, with the exception of an adjustment based on other contractual terms that, in certain circumstances, provide for a reasonable adjustment or other change in the contract price.

2. When the point of production specified in the contract is reached, the parties shall negotiate the fixed target costs, taking into account the cost experience of the contract and other relevant factors. The fixed target profit is determined by the formula. At present, the parties have two alternatives, as follows: (i) You can negotiate a fixed fixed price, using the fixed target cost plus the fixed target profit as a guideline. (ii) Where the negotiation of a fixed price is not appropriate, they may negotiate a formula to set the final price using the fixed target costs and the fixed target profit; The final costs are then negotiated at closing, and the final profit is determined by a formula, as in the framework of the fixed price incentive contract (fixed target) (see 16 403-1 above). (b) enforcement. A fixed-price incentive contract (successive targets) is appropriate if: — (1) the available information on costs or prices is not sufficient to allow the negotiation of a realistic fixed target of costs and benefits prior to the award; 2. Sufficient information shall be available to enable the initial objectives to be negotiated. and (3) There is reasonable assurance that reliable additional information will be available at an early stage of contract performance, allowing either (i) a fixed fixed price or (ii) fixed targets and a formula for determining the final profit and price that provide a fair and reasonable incentive. This additional information is not limited to the experience of the contract itself, but may come from other contracts dealing with the same or similar elements. (c) Restrictions.

This type of contract can only be used if: — (1) the contractor`s accounting system is sufficient to provide data for the negotiation of fixed objectives and a realistic formula for adjusting profits, as well as for the subsequent negotiation of final costs; and (2) It can reasonably be expected that information on costs or prices sufficient to establish reasonable fixed costs will be available at an early stage of performance of the contract. .