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Aerospace R&E Audit Technique Guide January 28, 2005: 1. Fixed-Price Family of Contracts
Aerospace R&E Audit Technique Guide January 28, 2005: 1. Fixed-Price Family of Contracts
for the performance cost and the resulting profit (loss), to Cost-Plus Fixed-Fee (CPFF), in which the contractor has minimal responsibility for the performance cost and the negotiated fee is fixed. In between are various incentive contracts, in which the contractors responsibility for the performance cost and the profit or fee incentives offered are tailored to the uncertainties involved in contract performance.
Fixed-Price Award Fee (FPAF) Establishes a fixed price (including normal profit) for the effort. This price will be paid for satisfactory contract performance. An award fee can also be earned based upon a judgmental evaluation by the customer, sufficient to provide motivation for excellence in contract performance. Fixed Price With Economic Price Adjustment (FPEPA) - A type of contract providing for upward or downward revision of the stated contract price upon the occurrence of a specified contingency. Adjustments may reflect increases/decreases in actual costs of labor or material, or in specific indices of labor or material costs.
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3. Other
Letter Contract A letter contract is a written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services. While a set price for contract performance has not been agreed to, the letter contract usually contains an overall contract price ceiling. Time and Materials contracts (T&M) A time and materials contract provides for acquiring supplies or services on the basis of (1) direct labor hours at specified fixed 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. Basic Ordering Agreement (BOA) - An instrument executed between a customer and a contractor which sets forth negotiated contract clauses that will be applicable to future procurements entered into between the parties during the term of the agreement. It includes as specific a description as possible of the supplies or services and a description of the method for determining pricing, issuing, and delivery of future orders.
Section C (Description or Specifications) This section more fully describes the specifications and requirements of each line item which must be met in order to comply with the contract. Section may refer to the Statement of Work (SOW), which is a separate document incorporated into the contract by reference. The SOW gives a complete description of performance required under the contract. It further describes work to be performed and establishes and defines
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