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  • Question

    Can a firm fixed price construction contract be structured around performance-based payments rather than the usual progress payments? If not, what other options, if any, would be at my disposal outside of FFP contracts for construction?


    Answer

    For your scenario, FAR 32.1001(e)(2) prohibits the use of performance-based payments on construction contracts.

    Additionally, IAW FAR 36.207(a) "Generally, firm-fixed-price contracts shall be used to acquire construction." FAR 36.207(c) describes when fixed-price with economic price adjustment may be used for construction contracts. FAR 36.215 and DFARS 236.215 states the limited circumstances where a cost reimbursement construction contract could be used.

    But you are in luck. If you read the description of a fixed-price contract at FAR 16.202-1, it states "

    The contracting officer may use a firm-fixed-price contract in conjunction with an award-fee incentive (see 16.404) and performance or delivery incentives (see 16.402-2 and 16.402-3) when the award fee or incentive is based solely on factors other than cost. The contract type remains firm-fixed-price when used with these incentives." (note: Bold and italics added for emphasis)

    Another incentive would be to document accurately when, how, what the impact of "dragging their feet" in the performance assessment report (see FAR 42.1502(e) and CD 2013-O0018). Past performance evaluations can often be a significant motivator.

     

     

     

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