Subpart 16 2 Fixed-Price Contracts

Production Costs means those costs and expenditures incurred in carrying out Production Operations as classified and defined in Section 2 of the Accounting Procedure and allowed to be recovered in terms of Section 3 thereof. Aprio’s Government Contracting team is here to help you navigate accounting system requirements and reviews. If you are performing work only as a subcontractor, attempt to work through the prime contractors to trigger the review.

• Calculate the amount you’ll add to the contract to cover this risk.
• When actual accounts receivables are written off, a cost/expense is not identified in the current year since the allowance for doubtful accounts and the expense account in the general ledger are established for this purpose.
• Cost-based budgets shall be developed by budget activity, program, and major organization.
• A Cost Plus Percentage of Cost contract shall mean one which provides for a fee which is adjusted by percentage formula in accordance with the relationship to total cost.
• That is, major improvements to leased properties must be capitalized and depreciated over the estimated life of the lease, or the life of the improvement, whichever is less.
• Price Adjustment – a modification of the base purchase order price on the basis of increases or decreases in published or established prices of specific items.

However, provided that good cause is shown, the Director of the Department of Administration may waive the requirements for contracts not in excess of fifty thousand dollars ($50,000). Gen. Laws § , contractors must comply with state and federal Equal Opportunity requirements for all contracts for supplies and services exceeding ten thousand dollars ($10,000). Failure to comply will be considered a substantial breach of contract subject to penalties prescribed in regulations issued and administered by the State Equal Opportunity Office and set forth herein. Basic financial reports covering numerous aspects of Department operations must be prepared from data recorded in the Department’s financial management system. In addition to external financial reports required by controlling agencies (OMB, Treasury, etc.) and the Congress, data must be captured as necessary for internal reports that meet the specific needs of Department managers.

206 Fixed-ceiling-price contracts with retroactive price redetermination.

The Fixed Price with Economic Price Adjustment (FP W/EPA) contract shall mean one which provides for the upward or downward revision of the stated price upon the occurrence of certain economic conditions which are specifically defined in the contract. These conditions are limited to those beyond the control of the seller. All agreements and changes to scope of work, price, or other terms shall be incorporated into purchase orders via “change order” documents incorporating contract amendments. “Purchasing Contract Authority” shall mean the authority to act on behalf of the state to commit funds, enter into binding agreements or contracts, dispose of state property, or in any other manner control procurement or obligate the State. It shall include bilateral actions, such as change orders, administrative changes, notices of termination, and notices of the exercise of a contract option. From the little you wrote, it seems your contractor should invoice for the agreed-upon firm-fixed-price each month.

Government agencies’ determinations concerning the useful life or anticipated obsolescence of property. Non-Treasury investments acquired through purchase or trade that will be definitely resold must be valued and recorded in accordance with the book to market method promulgated under Generally Accepted Accounting Principles . Under this GAAP principle, the non-Treasury investment security that will be resold must be recorded in the general ledger at either cost or fair market value, whichever is lower at the time of acquisition. In addition, a contra account must be established to recognize gains and losses to these investments between accounting periods.

Beware the Cost-Plus GMP (or It’s Complicated)

Some Fixed Price contracts specify T&M as a method for determining costs of change orders. Labor rates include a certain percentage markup for overhead. A type of contract that is a hybrid contractual arrangement containing aspects of both cost-reimbursable construction bookkeeping and fixed-price contracts. Time and material contracts resemble cost-reimbursable in that they have no definitive end, because the full value of the arrangement is not defined at the time of the award, thus they can grow in value.

Allottees must also be responsible for controlling the rate of obligations in accordance with the approved financial plan, specifically to prevent the exhaustion of funds prior to planned expiration of an allotment. To adequately satisfy the need for fund control, obligation information must be reported promptly and accurately. The authority to incur liabilities on behalf of the United States originates with the Constitution and subsequent laws, and the Comptroller General whose decisions have the effect of law (see 4 FAH-3 H-050). Specific criteria governing the recording and reporting of financial transactions as obligations are prescribed in Section 1311 of the Supplemental Appropriation Act, 1955 (31 U.S.C. 1501). The Canadian Construction Documents Committee’s “Stipulated Price Contract” (CCDC-2), revised in February 2008, provides for a property owner and prime contractor to agree that work is done for a fixed price or lump sum.