Type of Contract

Purpose

To ensure that contracts meet NIAID's needs while providing contractors reasonable risks and maximum incentives for performing work efficiently and economically.

Procedure

Contract specialists work with project officers to select a contract type. Selecting a contract type significantly affects acquisition planning and contract administration and must be done carefully, beginning with a precise definition of the work. Contract type is stated in a solicitation; however, it may change before award based on negotiations with offerors.

Contracts can be grouped into two broad categories: fixed-price (see FAR 16.2) and cost-reimbursement (see FAR 16.3).

• Fixed price contracts -- Used to acquire commercial items, supplies, or services based on reasonably definite specifications. They give contractors the greatest incentive to control costs and perform effectively, while imposing the smallest administrative burden on both parties.
• Cost reimbursement contracts -- Used when uncertainties about performance do not allow us to accurately estimate costs. Contractors have less risk for performance and little incentive to control costs, and the government must ensure contractors are using efficient methods and controlling costs.

Contracts in these categories range from firm-fixed-price in which contractors have full responsibility for costs and profit or loss, to cost-plus-fixed-fee where they have minimal responsibility for costs, and the negotiated fee is fixed. In between are various incentive contracts (see FAR 16.4), that tailor performance costs and profit or fee to the level of uncertainty of the work.

Other contract types include:

• Indefinite-delivery contracts (see FAR 16.5) -- Used when contractors provide supplies or services in unknown quantities other than a minimum or maximum quantity. Provides for the issuance of orders for the performance of tasks during the period of the contract.
• Performance-based contracts (see FAR 37.6) -- Used to ensure that contractors meet quality levels; payment relates to the degree that contract standards (i.e., in terms of quality, timeliness, quality, etc.) are met. These standards are measured through the use of quality assurance surveillance plans.
• Broad agency announcements (see FAR 35.016) -- Used by government agencies to advance science by encouraging offerors to submit innovative research. Use only when you anticipate proposals with varying technical or scientific approaches.
• Interagency acquisitions (see FAR 17.5) -- Used when one government agency needs supplies or services from another agency.

Contacts

See the Office of Acquisitions staff listing for the appropriate contract specialist.

If you have knowledge to share or want more information on this topic, email deaweb@niaid.nih.gov with the title of this page or its URL and your question or comment. Thanks for helping us clarify and expand our knowledge base.

Links

FAR Part 16, Types of Contracts

FAR Part 17, Special Contracting Methods

FAR Part 35.016, Broad Agency Announcement

FAR Part 37.6, Performance-Based Contracting

NIH Manual Issuance 1165, Agency Agreements

NIH Manual Issuance 6016-2, Task and Delivery Order Contracting

NIH Manual Issuance 6035, Broad Agency Announcements

Broad Agency Announcement Development SOP

Inter and Intra-Agency Agreement SOP