the outline of administrative requirements for the formulation, control and conclusion of fixed-price agreements. A fixed-price agreement (also known as a fixed price, fixed price or service contract) is an agreement by which the contractor pays a fixed price for the agreed work, regardless of the latest project costs. The financial risk to the university is higher than that of a refundable contract, because the university must complete all the work, even if there are cost overruns. In addition, the university is often paid only when milestones have been reached or benefits have been accepted. As a result, actual or perceived performance issues may prevent or delay payment to the university when expenses have already been made. However, the university can also maintain all unreeaten balances that remain after the completion of the order work. However, significant residual balances call into question the integrity of the university`s calculation practices or their consideration of project costs and should therefore be mitigated. To satisfy omb 2 CFR 200, the university is required to review fixed-price contracts that show a significant discrepancy between proposed and actual expenses. If the estimates are consistent and significantly higher than the actual costs, the university is required to review cost estimation methods to address the problem. The US-Boeing KC-46 PEGasus contract was a fixed-price contract. Because of its history of cost overruns, this is an example of how fixed-price contracts take the risk for the seller, in this case Boeing.

Total cost overruns for this aircraft amounted to approximately $1.9 billion. [6] However, Boeing was able to absorb these costs and obtained approval from the U.S. Air Force to put the KC-46 into production. [7] Fixed-price contracts are common in many IT contexts, including project management, procurement and outsourcing. If the magnitude and costs are clearly defined from the outset, administrative time will be saved and much of the negotiation time required for less clear types of agreements will be avoided. However, the resources and time required to produce goods or provide services must be carefully controlled by the seller. Those who do not have considerable experience with similar efforts should be wary of fixed-price contracts, as it can be difficult for them to anticipate all the necessary resources and the duration of different tasks. Fixed-price contracts are most useful when the terms of the services provided are relatively easy to determine and the scope of the project is concrete.

In these cases, the supplier can certainly agree at a price in advance, without fear of overtrend over time and equipment while these services are provided. In addition, most federal authorities require suppliers to bid or accept fixed pricing conditions for transparency and to ensure equal opportunities for contractors. A fixed price contract with retroactive renewal is suitable for research and development contracts, estimated at a simplified threshold of activity or less, if it is established from the outset that a fair and reasonable fixed price cannot be negotiated and that the amount and short duration of service make the use of other types of fixed-price contracts unfeasible.