subpart
216.1--selecting contract types
216.104 Factors in selecting
contract types.
216.104-70 Research and
development.
216.104 Factors in selecting
contract types.
(d) Design stability
should also be considered.
216.104-70 Research and
development.
(a) General. There are several categories of research and development (R&D)
contracts: research, exploratory
development, advanced development, engineering development, and operational
systems development (see 235.001 for definitions). Each category has a primary technical or functional
objective. Different parts of a project
may fit several categories. The
contract type must fit the work required, not just the classification of the
overall program.
(b) Research and exploratory development.
(1) Price is not necessarily the primary factor
in determining the contract type.
(2) The nature of the work to be performed will
usually result in a cost-plus award fee, cost-plus fixed fee term, cost-no-fee,
or cost-sharing contract.
(3) If the Government and the contractor can
identify and agree upon the level of contractor effort required, the
contracting officer may select a firm fixed-price level-of-effort contract,
except see 235.006.
(4) If the Government and the contractor agree
that an incentive arrangement is desirable and capable of being evaluated after
completion of the work, the contracting officer may use an incentive type
contract.
(c) Advanced development.
(1) The nature of the work to be performed often
results in a cost-plus fixed fee completion type contract.
(2) Contracting officers may select incentive
contracts if—
(i) Realistic and measurable targets are
identified; and
(ii)
Achievement of those targets is predictable with a reasonable degree of
accuracy.
(3) Contracting officers should not use
contracts with only cost incentives where—
(i) There will be a large number of major
technical changes; or
(ii)
Actions beyond the control of the contractor may influence the
contractor's achievement of cost targets.
(d) Engineering
development and operational systems development.
(1) When selecting contract types, also consider—
(i) The degree to which the project is clearly
defined, which in turn affects the contractor's ability to provide accurate
cost estimates;
(ii)
The need for effort that will overlap that of earlier stages;
(iii)
The need for firm technical direction by the Government; and
(iv)
The degree of configuration control the Government will exercise.
(2) For development efforts, particularly for
major defense systems, the preferred contract type is cost reimbursement.
(3) Contracting officers should use fixed-price type contracts when risk has been reduced to the extent that realistic pricing can occur; e.g., when a program has reached the final stages of development and technical risks are minimal, except see 235.006.