Can I ask for a different contract type?

You can raise it during the question period or in discussions, and it is occasionally granted where you can show the proposed type does not fit the uncertainty in the work. It is far more common on a negotiated procurement than on a simplified buy, and the argument has to be about risk and definition rather than about your preference.

Is time and materials good or bad for a small firm?

It is comfortable on cash and risk, because you are paid for hours worked at agreed rates. It also carries real obligations: the labour category definitions have to be met by the people you bill, the timekeeping has to be disciplined, and the ceiling is a ceiling. The government treats it as a last resort type, so seeing it usually means the requirement genuinely could not be defined.

What is the smallest accounting setup that can pass a pre-award survey?

Not a specific product. A system, in operation, that separates direct from indirect cost, accumulates direct cost by contract, allocates indirect cost through consistent pools and bases, excludes unallowable cost, reconciles to the general ledger, and records labour by employee by day by charge code. Small firms pass with modest software and good discipline; firms fail on timekeeping far more often than on software.

What happens if I go over on a firm fixed price contract?

You absorb it. That is what the type means. The exception is where the government changed something, in which case the change is handled by modification and you may be entitled to an equitable adjustment, which is why module 15 insists that nothing counts unless the contracting officer signed it.

Do I need certified cost or pricing data?

Only above a threshold and only where an exception does not apply. Adequate price competition and commercial products are the common exceptions. When it is required it is a certification that the data was accurate, complete and current as of a stated date, and a later finding that it was defective can reduce the contract price.

Course, module 10 of 16

Contract types and what each one obliges you to prove

The contract type decides who carries the risk of being wrong about cost, what records you must be able to produce, and whether you may be awarded anything at all before your accounting system has been examined. It is chosen by the government and it is negotiable more often than people assume.

the less certain the work, the more they pay for uncertainty and the more of your books they expect to see

By the end of this module you will be able to

Name each contract type and say who carries the cost risk on it
Tell which types require an accounting system that can be examined before award
Read the fee arrangements on cost-type work and say what each one rewards
Explain the limitation of cost and limitation of funds clauses and what they oblige you to do
Judge whether a proposed type is right for the work, and what to say if it is not

One axis: who is wrong if the cost is wrong

Every contract type sits somewhere on one line. At one end, you agreed a price and you live with it: if the job costs more than you thought, that is yours, and if it costs less, that is yours too. At the other end, the government reimburses what the work actually costs within limits, and pays you a fee on top, which means the government carries the risk of being wrong and in exchange requires the ability to see inside your costs.

Everything else is a detail on that line. The contracting officer chooses the type based on how well the requirement can be defined and how much uncertainty there is, and the choice is supposed to put the risk where it can best be managed. A perfectly defined widget is fixed price. A research effort where nobody knows what it will take is cost reimbursement.

The practical reading for a supplier: the less certain the work, the more the government will pay for uncertainty and the more of your books it will expect to see.

Keep reading

The rest of this module opens with your name and email

All sixteen modules open on this device for about six months. No card and no password.

Still to come in this module

The types, and what each one asks of you
What "allowable" means, and why it is three tests not one
Limitation of cost, limitation of funds, and the letter you must write
Fee, and what each arrangement is actually rewarding
Undefinitized work, and being asked to start before the price is agreed
The words in this module, defined
Questions at this stage