A membership contract is a contract drafted by one party with much more bargaining power than the other party, which means that the weaker party cannot accept the contract or not. Often referred to as “take it or leave it” contracts, these contracts lack many or no negotiations because one party has little or nothing to negotiate. Such contracts should not be confused with unscrupulous contracts, since the lack of bargaining power does not necessarily mean that the conditions set are abusive. However, the courts are still not allowed to apply the accession treaties if they believe that a meeting of minds never existed. The key element of bilateral treaties is the exchange of something precious for another valuable object called consideration. If only one party offers something of value, it is called a unilateral contract. (a) Most incentive contracts contain only cost incentives, which take the form of a formula for adjusting profits or fees and are intended to motivate the contractor to manage costs effectively; No incentive contract can provide for other incentives without also offering an incentive (or restriction) of costs. 16.101 General. (a) The Government and contractors have a wide range of types of contracts at their disposal in order to ensure the necessary flexibility in the procurement of the wide variety and breadth of supplies and services requested by the agencies. The types of contracts vary depending on the scope and duration of the contractor`s liability for performance costs; and (2) the amount and nature of the profit incentive offered to the contractor to meet or exceed certain standards or objectives.

(b) The types of contracts can be divided into two broad categories: fixed-price contracts (see subsection 16.2) and reimbursement contracts (see subsection 16.3). Specific types of contracts range from fixed fixed price, where the contractor assumes full responsibility for the cost of performance and the resulting profit (or loss), to costs plus the fixed price, where the contractor assumes only minimal responsibility for the cost of performance and the negotiated commission (profit) is fixed. In between, there are the various incentive contracts (see subsection 16.4), where the contractor`s liability for performance costs and incentives for the benefits or fees offered is tailored to the uncertainties in the performance of the contract. 16.102 Guidelines. (a) Contracts resulting from sealed tenders are fixed-price contracts or fixed-price contracts with economic price adjustment. (b) Contracts negotiated under Part 15 may be of any type or combination of species that promote the interest of the government, unless this Part is restricted (see 10 U.S.C.2306(a) and 41 U.S.C.3901). Types of contracts that are not described in these Regulations may only be used if there is a variance in accordance with Section 1.4.c) The cost-based procurement system plus one percent of costs cannot be applied (see 10 U.S.C.2306(a) and 41 U.S.C.3905(a)). Master contracts (including contracts to the letter), which are not fixed-price contracts, prohibit subcontracts with costs plus a percentage of costs by means of a corresponding clause (see the clauses in subsection 44.2 for reimbursement contracts and subsections 16.2 and 16.4 for fixed-price contracts). d) No contract may be awarded until the implementation of the findings and findings (D&F) required by this Part. The minimum requirements for the content of D&Fs required in this Part are set out in Article 1,704.

16.103 Type of contract negotiation. (a) The choice of the type of contract is usually a matter of negotiation and requires good judgment. The negotiation of the type of contract and the negotiation of prices are closely linked and must be considered together. The objective is to negotiate a type of contract and a price (or estimated costs and fees) that entail a reasonable risk for the contractor and that most encourage him to perform efficiently and economically. (b) A fixed-price contract that best exploits the fundamental profit motive of the enterprise shall be applied if the risk involved is minimal or can be predicted with an acceptable level of certainty. However, where there is no adequate basis for setting prices, other types of contracts should be considered and negotiations should focus on the choice of a type of contract (or a combination of types) that appropriately links profit to the contractor`s performance. (c) In the context of an acquisition programme, a series of contracts or a single long-term contract, changing circumstances may make a different type of contract appropriate in later periods than the one used at the beginning. In particular, contracting entities should avoid prolonged recourse to reimbursement or a contract for time and equipment after experience has provided a basis for price fixing.

(d) 1. Each procurement file shall contain documents indicating why the type of contract in question was chosen. This should be documented in the procurement plan or contract file if a written procurement plan is not required under agency procedures. (i) Explain why the type of contract chosen is to be used to meet the needs of the Agency. (ii) Discuss the additional risks to the government and the burden of managing the type of contract chosen (p.B. if a repayment contract is chosen, the government takes risks of additional costs and the government has the additional burden of managing the contractor`s costs). In such cases, procurement staff should discuss – (A) how the government has identified additional risks (e.B. pre-award survey or information on past services); B) the nature of the additional risks (e.g.B. contractor`s inadequate accounting system, weaknesses in the contractor`s internal control, non-compliance with cost accounting standards or non-existent or inadequate earned value management system); and C) how the government will manage and mitigate risks. iii) Discuss the government resources required for the proper planning, awarding and management of the selected type of contract (p.B. the resources required and the additional risks to government if adequate resources are not provided).

(iv) For contracts other than a fixed-price contract, the documentation should contain at least the following: (A) an analysis of why the use of a contract other than a fixed-price contract (e.B reimbursement, time and equipment, time worked) is appropriate; B) Statement of reasons indicating the particular facts and circumstances (e.B. describes in detail the complexity of the requirements, the uncertain duration of the work, the contractor`s technical capacity and financial responsibility or the adequacy of the contractor`s accounting system) and the related reasoning, which is essential to support the choice of contract type; (c) An assessment of the adequacy of State resources necessary for the proper planning, awarding and management of contracts other than fixed-term contracts; and (D) a review of the measures envisaged to minimize the use of non-fixed-price contracts in future purchases for the same needs and to move to fixed-price contracts to the extent possible. (v) A discussion of why a level of effort, price realignment or provision for costs was included. (2) Exceptions to the requirements of point (d)(1) of this Section are – (i) fixed-price purchases made under simplified procurement procedures; (ii) contracts based on fixed prices, other than contracts for large-scale systems or research and development; and (iii) surcharges for the set-aside portion of the sealed supply – partial set-aside for small enterprises. 16,104 Factors in the choice of contract types. There are many factors that the client must take into account when selecting and negotiating the type of contract. These include: (a) price competition. Usually, effective price competition leads to realistic prices, and a fixed-price contract is usually in the interest of the government. (b) price analysis. Price analysis, with or without competition, can be a basis for the choice of the type of contract. The extent to which price analysis can provide a realistic price standard needs to be carefully considered.

(See 15.404-1(b).) (c) cost analysis. In the absence of effective price competition and where price analysis is insufficient, supplier and government cost estimates form the basis for negotiating contractual price agreements. It is important that performance uncertainties and their potential impact on costs be identified and assessed so that a type of contract can be negotiated that imposes a reasonable level of cost liability on the contractor. (d) the nature and complexity of the requirement. Complex requirements, especially those that apply only to government, generally lead to greater risk-taking by the government. This is especially true for complex research and development contracts where performance uncertainties or the likelihood of changes make it difficult to estimate service costs in advance. If a request is repeated or when mass production begins, the cost risk should be transferred to the contractor and a fixed-price contract should be considered. (e) combination of types of contracts.

Where the entire contract cannot be fixed, the contracting entity shall examine whether or not part of the contract can be fixed on the basis of a fixed fixed price. (f) the urgency of the requirement. If urgency is a significant factor, the government may decide to assume more of the risk, or it may provide incentives tailored to performance results to ensure timely contract execution. (g) Period of execution or duration of the period of production. . . .