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Procurement Forum Training Presented by Code 210.H. Type of Procurement Action (TPA) Contract Types. Type of Procurement Action. Type of Procurement Actions also known as TPAs. The purpose of the TPAs is to provide guidance in creating milestones for procurements.

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Procurement Forum Training Presented by Code 210.H

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    1. Procurement Forum Training Presented byCode 210.H Type of Procurement Action (TPA) Contract Types

    2. Type of Procurement Action • Type of Procurement Actions also known as TPAs. The purpose of the TPAs is to provide guidance in creating milestones for procurements. • For the contract milestone spreadsheet go to 210 Procurement Operations Home Page, (, click on Procurement Policy, TPA will be the last item under Additional Links.

    3. Contract Milestones

    4. TYPES OF CONTRACTS (FAR PART 16) • Firm-Fixed-Price Contract (FAR Subpart 16.2) • Cost Reimbursement Contract (FAR Subpart 16.3) • Other Contract Types (FAR Subpart 16.5 & 16.6)


    6. Firm-Fixed-Price Contracts (FAR 16.202) • Firm-Fixed-Price (FFP) contracts provide for a price that is not subject to any adjustment on the basis of the contractor’s cost experience in performing the contract. • Use FFP when work can be clearly defined.

    7. Firm-Fixed-Price Contracts (FAR 16.202) • FFP contract type places upon the contractor maximum risk and full responsibility for all costs and resulting profit or loss. • The contractor is required to deliver the product specified and there is a maximum limit on the amount of money the government must pay.

    8. Firm-Fixed-Price Contracts (FAR 16.202) • A FFP contract is suitable when the contracting officer can establish fair and reasonable prices through: • Adequate price competition • Reasonable price comparisons with prior purchases of the same or similar supplies or services • Available cost or pricing information permits realistic estimates of the probable costs of performance

    9. Firm-Fixed-Price Contracts (FAR 16.202) • Performance uncertainties can be identified and reasonable estimates provided that the contractor is willing to accept a FFP representing assumption of the risks involved • FFP is the preferred type when cost risk is none or minimal, or can be predicted with an acceptable degree of certainty • Fully funded at time of award • Incremental funding waiver requires concurrence of the Deputy Project Manager-Resources/Deputy Resources Manager (DPMR/DRM) and the Director prior to concurrence by the Chief Finance Officer (CFO) and the approval of the Procurement Officer

    10. Fixed-Price Incentive (FPI) Contracts (FAR 16.204) • Fixed-Price Incentive contract is a fixed-price type contract, but provides for profit adjustment formula to be applied either at a pre-determined mid-point of performance or upon completion of performance in order to establish the final contract price. • FPI is appropriate when both parties can negotiate an initial target and assume an appropriate share of the risk.



    13. Cost Reimbursement (FAR 16.302) • Cost-Plus-Fixed-Fee (FAR 16.306) • Cost-Plus-Incentive-Fee (FAR 16.304) • Cost-Plus-Award-Fee (FAR 16.305)

    14. Cost Reimbursement Contracts (FAR 16.302) • These types of contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. Cost Reimbursement contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer. • Cost Reimbursement contracts are Suitable for use only when uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract. (FAR 16.301-2)

    15. Cost Reimbursement Contracts (FAR 16.302) • A cost-reimbursement contract may be used only when – • The contractor’s accounting system is adequate for determining costs applicable to the contract; and • Appropriate Government surveillance during performance will provide reasonable assurance that efficient methods and effective cost controls are used • The use of cost-reimbursement contracts is prohibited for the acquisition of commercial items (See FAR Parts 2 and 12).

    16. Cost-Plus-Fixed-Fee Contracts (FAR 16.306) • Provides for payment to the contractor of a negotiated fee that is fixed at the inception of the contract. • The fixed fee does not vary with actual cost, but may be adjusted as a result of changes in the work to be performed under the contract. • This contract type permits contracting for efforts that might otherwise present too great a risk to contractors, but it provides the contractor only a minimum financial incentive to control costs.

    17. Cost-Plus-Incentive-Fee Contracts (FAR 16.304) • A cost-plus-incentive-fee contract is appropriate for services or development and test programs when • A target cost and a fee adjustment formula can be negotiated that are likely to motivate the contractor to manage effectively.

    18. Cost-Plus-Award-Fee Contracts (FAR 16.305) • Provides for a fee consisting of (1) a base amount fixed at inception of the contract and (2) an award amount that the contractor may earn in whole or in part during performance. • Amount of the award fee is determined by the Government's judgmental Performance Evaluation Board (PEB) of the contractor's performance in terms of the criteria stated in the contract (Performance Evaluation Plan).

    19. Cost-Plus-Award-Fee Contracts (FAR 16.305) • The cost-plus-award-fee contract is suitable for use when- • The work to be performed is such that it is neither feasible nor effective to devise predetermined objective incentive targets applicable to cost, technical performance, or schedule; • The likelihood of meeting acquisition objectives will be enhanced by using a contract that effectively motivates the contractor toward exceptional performance and provides the Government with the flexibility to evaluate both actual performance and the conditions under which it was achieved;

    20. Cost-Plus-Award-Fee Contracts (FAR 16.305) • Any additional administrative effort and cost required to monitor and evaluate performance are justified by the expected benefits; and • Must be approved at Procurement Officer level.

    21. Profit (FAR 15.404-4) • The contractor Officer shall not negotiate a price or fee that exceeds the following statutory limitations, imposed by 10 U.S.C. 2306(d) and 41 U.S.C. 254(b): • (A) For experimental, developmental, or research work performed under a CPFF contract, the fee shall not exceed 15 percent of the contract’s estimated cost, excluding fee.

    22. Profit (FAR 15.404-4) • (B) For architect-engineer services for public works or utilities, the contract price or the estimated cost or fee for production and delivery of designs, plans, drawings, and specifications the fee shall not exceed 6 percent of the estimated cost of construction of public work or utility, excluding fee. • (C) For other CPFF contracts, the fee shall not exceed 10 percent of the contract’s estimated cost, excluding fee.



    25. Award Term • Indefinite-Quantity (FAR 16.504) • Indefinite-Delivery (Sub Part 16.605) • Definite-Quantity (FAR 16.502) • Time and Materials (FAR 16.601)

    26. Award Term Contracts • Provides for a term consisting of an award term fixed at inception of the contract. • The award term is determined by the Government's judgmental evaluation of the contractor's performance in terms of the criteria stated in the contract. The number of evaluation criteria and the requirements.

    27. Indefinite-Quantity limit government obligation to minimum quantity specified in the contract. • Requirements may permit faster deliveries when production lead time is involved. • Indefinite-Delivery may provide appropriate cost or pricing arrangement under FAR Part 16. Cost or pricing arrangements that provide for an estimated quantity of supplies or services must comply with FAR Part 16.

    28. Definite-Quantity may be used to determine in advance that a definite quantity of supplies or services are required during contract period. Supplies or Services are regularly available after a short lead time. • Requirements provide for filling all actual purchase requirements of designated Government activities for supplies or services during a specified contract period with deliveries or performance scheduled by placing orders with contractor.

    29. Time and Materials are used only when it is not possible to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence. • Labor –Hour used when materials are not involved. • Requires Determination and Findings (FAR Subpart 1.7), reviewed by Legal and approved by Associate Division Chief.