D.C. Mun. Regs. tit. 7, r. 7-1610

Current through Register Vol. 71, No. 43, October 25, 2024

Rule 7-1610 - CONTRACT TYPES

1610.1

The type of contract awarded by the Board will generally depend on factors such as the particular goods or services to be acquired, whether the costs of the goods or services can be estimated in advance with reasonable accuracy, and the degree to which the precise nature and extent of the contract work is known at the time of award.

1610.2

The Contracting Officer may use a variety of contract types, including but not limited to:

(a) Fixed Price contracts;

(b) Cost Reimbursement contracts;

(c) Ordering agreements (Reimbursement or Indefinite Quantity contracts); and

(d) Time-and-Materials or Labor-Hours contracts.

1610.3

The Contracting Officer may also award any alternative type of contract that will produce reasonable value to the Board in the context of a particular procurement. However, the CO may not award cost-plus-percentage-of-cost contracts.

1610.4

Fixed Price Contracts may take three (3) forms:

(a)Firm Fixed Price. A firm fixed price contract obligates the contractor to complete the contractual work for a fixed price. A firm fixed price contract provides for a price that is not subject to adjustment, except in the event of a change to the scope of work;

(b)Fixed Price with Economic Price Adjustment. A fixed price contract with economic price adjustment provides for an upward or downward adjustment in the stated contract price based on changes in certain benchmarks specifically identified in the contract, subject to a ceiling on upward adjustments; and

(c)Fixed Price Incentive. A fixed price incentive contract generally provides for establishing a final price by applying a formula based on the relationship between the total cost actually incurred by the contractor and a total target cost. A fixed price incentive contract results in the parties sharing in the cost savings or increases associated with differences between the actual and target cost. These contracts also can include incentive formulas based on the contractor's schedule or technical performance.

1610.5

Cost Reimbursement Contracts provide for the contractor to recover the reimbursable costs it incurs during contract performance, plus a fee or profit.

1610.6

A reimbursable cost must be:

(a) Reasonable in nature and amount;

(b) Properly allocable to the contract;

(c) Determined in accordance with generally accepted accounting principles; and

(d) Not identified as non-reimbursable under these Rules or the terms of the particular contract.

1610.7

To ensure that the Board's payment obligations are not open-ended, each cost reimbursement contract must specify a not-to-exceed price that the contractor cannot exceed, except at its own risk, without the Chief Contracting Officer's written approval. The contractor may cease performance once it reaches the not-to-exceed price, unless the Chief Contracting Officer approves an increase, and is not obligated to complete the contract work unless it can do so within the not-to-exceed price.

1610.8

The differences between the types of cost reimbursement contracts relate to the manner in which the contractor's fee is determined. Cost reimbursement contracts may take three (3) forms:

(a)Cost-Plus-Fixed-Fee. A cost-plus-fixed-fee contract provides for a fee that is fixed at the contract's inception and is not subject to adjustment unless the contract is modified to change the scope of work;

(b)Cost-Plus-Incentive-Fee. A cost-plus-incentive-fee contract provides for a fee that generally is determined by applying a formula based on the relationship between the contractor's total reimbursable cost and a total target cost, subject to a specified minimum and maximum. These contracts also can include incentive formulas based on the contractor's schedule or technical performance; and

(c)Cost-Plus-Award-Fee. A cost-plus-award-fee contract provides for:

(1) A base fee fixed at the contract's inception; and

(2) An award fee that the contractor may earn (in whole or in part) during performance, which is designed to motivate superior performance. The award fee is determined unilaterally by the Contracting Officer, based on the CO's evaluation of how well the contractor has performed in relation to the award fee criteria identified in the contract. In no event shall the total award fee available to the contractor exceed ten percent (10%) of the total value of the awarded contract, including any options.

1610.9

Ordering Agreements. Under an ordering agreement, the contractor's performance obligations are triggered when the Contracting Officer issues task or purchase orders pursuant to the contract.

1610.10

Ordering agreements may take two (2) forms:

(a)Requirements Contracts. A requirement contract allows the Contracting Officer to order from one (1) source, all of the designated supplies or services required during a specified period. This type of contract should only be used when the Contracting Officer determines that a requirement contract will provide superior economic benefits as compared to an indefinite quantity contract; and

(b)Indefinite Quantity Contracts. An indefinite quantity contract provides for an indefinite quantity of goods or services to be furnished during a fixed period. An indefinite quantity contract:

(1) Requires the Board to order and the contractor to deliver, at least, the stated minimum quantity of goods or services; and

(2) Requires the contractor to deliver any additional quantities the Board may order during the contract period, subject to any maximum quantity limitations provided for in the contract.

1610.11

The Board may award a single indefinite quantity contract for specified goods or services or may award multiple contracts and choose between the selected contractors in awarding subsequent task or purchase orders.

1610.12

Each task or purchase order shall specify:

(a) The specific goods or services required;

(b) A delivery date; and

(c) Such other information as the Contracting Officer may reasonably request.

1610.13

Time-and-Materials Contracts. A time-and-materials contract acquires goods or services on the basis of:

(a) Direct labor hours charged at fixed hourly rates inclusive of the contractor's overhead, expenses, and profits; and

(b) Materials charged either at their actual cost or at fixed unit prices.

1610.14

Labor-Hours Contracts. A labor-hours contract acquires goods or services on the basis of direct labor hours charged at fixed hourly rates inclusive of the contractor's overhead, expenses, and profits.

1610.15

Both time-and-materials and labor hours contracts must specify a not-to-exceed price.

1610.16

Contracts with Federal Agencies. The Chief Contracting Officer may authorize agreements with any Federal agency for goods or services of any kind that such Federal agency may be in a position to supply.

1610.17

Contracts with District Agencies. The Chief Contracting Officer may authorize agreements with any District agency for goods or services of any kind that such District agency may be in a position to supply.

1610.18

Letter Contracts. The Chief Contracting Officer may only use a letter contract after the CCO determines, in writing, that no other type of contract is suitable. A letter contract shall not commit the Board to a definitive contract in excess of the funds available at the time the letter contract is executed. The CCO may use a letter contract when the Board's interests demand that the contractor be given a binding commitment so that work can start immediately and executing a definitive contract is not possible in sufficient time to meet the requirement.

1610.19

Each letter contract shall be as complete and definite as possible under the circumstances and subject to legal sufficiency review by Board's General Counsel.

1610.20

Each letter contract shall include the not-to-exceed price for the anticipated final contract. Each letter contract shall also include a clause stating that the maximum liability of the Board under the letter contract shall be the amount estimated to cover the contractor's funding requirements prior to the execution of the final contract. The Board's maximum liability shall not exceed fifty percent (50%) of the not-to-exceed price for the term of the anticipated final contract.

1610.21

The Chief Contracting Officer shall execute a final contract within sixty (60) calendar days after the date of execution of the letter contract or before completion of fifty percent (50%) of the work to be performed, whichever occurs first. The CCO may authorize an additional period to complete the final contract; however, no letter contract shall exceed one hundred and twenty (120) calendar days.

1610.22

Prior to execution of the letter contract, the Chief Contracting Officer shall ensure that funds are encumbered in the amount of the Board's maximum liability under the letter contract.

D.C. Mun. Regs. tit. 7, r. 7-1610

Notice of Final Rulemaking published at 57 DCR 12594, 12602 (December 31, 2010); amended by Final Rulemaking published at 68 DCR 63 (1/7/2022)

Authority: The District of Columbia Retirement Board (the Board), pursuant to the authority set forth in section 121(i) of the District of Columbia Retirement Reform Act of 1979 ( Pub. L. 96-122, 93 Stat. 866 (Nov. 17, 1979) (codified at D.C. Official Code § 1-711(i) (2001)) (the Reform Act).