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Understanding the Fixed-price Supply Contract: A Comprehensive Guide
Definition & Meaning
A fixed-price supply contract is a type of agreement where the price for supplies or services is set in advance and does not change, regardless of the costs incurred by the contractor. These contracts are typically used when the total amount is expected to exceed a specific threshold known as the simplified acquisition threshold. In some cases, contracting officers may include specific clauses in contracts that are below this threshold if it is deemed beneficial for the government.
Table of content
Legal Use & context
Fixed-price supply contracts are commonly used in government procurement and contracting. They fall under the broader category of contract law and are particularly relevant in federal and state government transactions. These contracts help ensure that the government receives the goods or services it needs at a predetermined price, which can simplify budgeting and reduce the risk of cost overruns.
Users can manage these contracts using legal templates available through resources like US Legal Forms, which provide guidance on creating and executing fixed-price contracts.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
Example 1: A government agency enters into a fixed-price supply contract with a vendor to provide office supplies for a year. The price is set at $10,000, and the vendor is responsible for delivering the supplies as specified.
Example 2: A contractor is hired to build a bridge under a fixed-price contract. The agreed-upon price is $2 million, and any changes to the project specifications must be documented and approved by the contracting officer within the stipulated timeframe. (hypothetical example)
Comparison with related terms
Term
Definition
Key Differences
Cost-reimbursement contract
A contract where the government pays the contractor for allowable costs incurred.
Costs can vary; the price is not fixed.
Time-and-materials contract
A contract where the government pays for labor and materials used.
Pricing is based on actual costs rather than a fixed amount.
Common misunderstandings
What to do if this term applies to you
If you are involved in a fixed-price supply contract, ensure that you fully understand the terms and conditions. Keep track of any changes and document them promptly. If you need assistance, consider using US Legal Forms to access templates that can help you manage your contract effectively. For complex situations, seeking professional legal advice is advisable.
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Adjustment Claim Period: 30 days from notification of change
Contract Amount: Generally exceeds the simplified acquisition threshold
Key takeaways
Frequently asked questions
The simplified acquisition threshold is a monetary limit set by the government for purchasing goods and services without requiring a formal bidding process.
Yes, a fixed-price contract can be modified, but changes must be documented and approved by the contracting officer.
If you miss the 30-day period to assert a claim for adjustment, you may lose your right to seek changes or compensation related to that issue.