Ask anyone who actually understands the process what can go wrong when agencies forget that
fixed-price contracts are ill-suited to research-and-development efforts or to the production of something that has yet to be developed.
Fixed-price contracts place greater risk on defense contractors to deliver a weapon system at a quoted cost.
Most remodelers working with
fixed-price contracts pay attention to costs just long enough to price and sell the job.
Fixed-price contracts also make customers more comfortable.
Total quantity or scope: For lots 1-8 fixed price contracts; for lots 9-16 fixed price contracts and unit prices with an annual maximum amount per lot; for lots 17 and 18
fixed-price contracts with conditional phase; for lots 19 and 20 unit price contracts with an annual maximum amount per lot; for lots 21-23 lumpsum markets with a conditional phase; for lots 24-26 unit price contracts with an annual maximum amount per lot.
At the same time, some acquisition practices adopted by the commercial sector, including exclusive use of firm,
fixed-price contracts and developing highly accurate cost estimates, may not be successfully applied to DOD in its current acquisition environment because of factors such as unique requirements and immature technologies at program start.
The Department of Defense adopted as final, with changes, an interim rule, published in September 1993, (1) amending the Defense Federal Acquisition Regulation Supplement, regarding incremental funding of
fixed-price contracts.
As previously reported, FASA generally provides that agencies must use firm fixed-price (FFP) contracts and
fixed-price contracts with economic price adjustments (FP/EPA) "to the maximum extent practicable" for commercial item acquisitions.
The exemption from CAS includes firm
fixed-price contracts and subcontracts, as well as
fixed-price contracts and subcontracts with economic price adjustments, provided the price adjustments are not based on actual incurred costs.
