Exercise 4.2: Contract Types

1. ❌ One of the two broad categories of contract types. This category places minimal responsibility on the contractor for the performance costs. It may be used only with approval one level above the CO and 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.

2. ❌ A fixed-price contract that is suitable for acquiring commercial items or for acquiring other supplies or services based on reasonably definite functional or detailed specifications when the CO can establish fair and reasonable prices at the outset through adequate price competition, comparison with prior competitive purchases, or available cost or pricing information. The contract price is not subject to any adjustment based on contractor’s cost experience in performing the contract.

3. ❌ A fixed-price contract that requires the contractor to provide a specified level of effort, over a stated period, on work that can be stated only in general terms.

4. ❌ A cost-reimbursement contract that provides for payment to the contractor of a negotiated fee (profit) that is fixed at the inception of the contract. The fixed fee does not vary with actual cost but may be adjusted because of changes in the work to be performed under the contract.

5. ❌ An indefinite delivery contract that provides for filling all actual purchase requirements of the designated USG activity for supplies or services during a specified contract period (from one contractor), with deliveries or performance to be scheduled by the USG by placing orders with the contractor.

6. ❌ An indefinite-delivery contract that provides for an indefinite quantity, within stated limits (units or dollar values), of supplies or services during a fixed period.

7. ❌ A contract type that provides for acquiring supplies or services based on direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative (G&A), and profit and actual costs for materials (e.g., other direct costs [ODCs], travel, subcontracts).

8. ❌ A written preliminary contractual instrument that authorizes the contractor to begin immediately manufacturing supplies or performing services.

9. ❌ A written instrument of understanding, negotiated between the USG and a contractor that contains (a) terms and clauses applying to future contracts (orders) between the parties during its term; (b) a description, as specific as possible, of supplies or services to be provided; and (c) methods for pricing, issuing, and delivery of future orders. It is addressed in FAR Part 16, Contract Types, but it is not a contract.

10. ❌ One of two broad categories of contract types. This category provides for a firm price or, in appropriate cases, an adjustable price. The contractor must deliver all that is promised, and the USG need only pay the initially agreed-upon price after delivery and acceptance of the supplies or services. This contract places maximum risk on contractors and little or no risk on the Government.

11. ❌ This procurement instrument is used for Acquisitions less than $250,000 (or commercial items up to $6.5 million) and is in a simplified format. They are generally issued on a fixed-price basis.

12. ❌ This contract creates an employer–employee relationship between the USG and the contractor employee performing the services.