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To provide a description of the types of contracts that may be used and guidance for selecting a contract type that is appropriate to the circumstances of the acquisition.
The contracting officer’s representative (COR) makes recommendations to the contracting officer (CO) to help determine the appropriate contract type. However, the CO is ultimately responsible for selecting the contract type.
The contract type selected significantly affects acquisition planning and contract administration and, therefore, must be done carefully, beginning with a precise description of the work.
The contract type selected must be stated in the acquisition plan. The contract type also must be subsequently stated in the solicitation; however, it may change before award based on negotiations with offerors. FAR 16.102 details policies that apply to selecting the contract type and FAR 16.104 details the factors that should be considered in selecting and negotiating the appropriate contract type.
Negotiating the contract type and negotiating prices are closely related and should be considered together. The objective is to negotiate a contract type and price (or estimated cost and fee) that will result in reasonable contractor risk and provide the contractor with the greatest incentive for efficient and economical performance (see FAR 16.103).
A wide selection of contract types is available to the government and contractors in order to provide needed flexibility in acquiring the large variety and volume of supplies and services required. Contract types vary according to both of the following:
Contract types are grouped into two broad categories: fixed-price (see FAR Subpart 16.2) and cost-reimbursement (see FAR Subpart 16.3).
The specific contract types range from firm-fixed-price, in which the contractor has full responsibility for the performance costs and resulting profit (or loss), to cost-plus-fixed-fee, in which the contractor has minimal responsibility for the performance costs and the negotiated fee (profit) is fixed. In between are the various incentive contracts (see FAR Subpart 16.4), in which the contractor’s responsibility for the performance costs and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.
Here are details on these two categories and subtypes:
Other types of contracts and acquisition methods include:
See the Office of Acquisitions staff listing for the appropriate contract specialist.
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FAR Part 16, Types of Contracts
FAR Part 17, Special Contracting Methods
FAR Part 37.6, Performance-Based Contracting
NIH Manual Issuance 1165, Agency Agreements
NIH Manual Issuance 6016-2, Task and Delivery Order Contracting
OFPP Guidance for Improving the Management and Use of Interagency Acquisitions (June 6, 2008)
Reviewing and Clearing Inter-Agency Agreements
Last Updated May 23, 2012
Last Reviewed September 17, 2014