Gunnison Valley RTA Public Transportation
Gunnison Valley Transportation Authority (RTA) Procurement Policies and Standards/Types of Contracts – Fixed Price v. Cost Reimbursement
Procurement by the Sealed Bid/Invitation For Bids (IFB) method when certain conditions are present.
Among those listed is the condition that:
- The procurement lends itself to a firm fixed price contract and the selection of the successful bidder can be made principally on the basis of price.
- Paragraph 9.d of FTA Circular 4420.1E authorizes procurement by the Competitive Proposal/Request for Proposals (RFP) method and either a fixed price or cost reimbursement type contract may be awarded.
- Paragraph 7.i of FTA Circular 4420.1E requires that departments must document their reasons for selecting the contract type as a part of the written record of procurement history.
- Paragraph 10.e of FTA Circular 4420.1E prohibits the cost plus a percentage of cost method of contracting.
There are two broad categories of contract types: fixed-price contracts and cost-reimbursement contracts. Within these two families of contract types there are a number of subtypes offering differing degrees of incentives. At the extremes are the firm-fixed-price contract, in which the contractor has complete responsibility for the costs of performance and the resulting profit or loss, and the cost-plus-fixed-fee contract, in which the contractor has virtually no risk for performance costs and the fee (profit) is fixed.
Between these two extremes are the various incentive-type contracts where the degree of cost risk and profit incentive can be tailored to meet almost any specific program situation.