14.104
Types of contracts
Firm-fixed-price contracts are standard for sealed bidding, but fixed-price contracts with economic price adjustment clauses may be used if authorized and structured to ensure fair competition.
Overview
FAR 14.104 specifies the types of contracts that are appropriate for use with sealed bidding procedures. The regulation mandates that firm-fixed-price contracts are the standard for sealed bidding, ensuring price certainty and comparability among bids. However, it allows for the use of fixed-price contracts with economic price adjustment (EPA) clauses if authorized under FAR 16.203, providing flexibility when market conditions or other factors warrant it. Importantly, any EPA clause used must be structured so that all bidders have an equal opportunity to compete, maintaining fairness in the bidding process.
Key Rules
- Firm-Fixed-Price Contracts Required
- Sealed bidding must use firm-fixed-price contracts as the default contract type.
- Economic Price Adjustment (EPA) Clauses
- Fixed-price contracts with EPA clauses may be used if authorized and when flexibility is needed, but must ensure equal opportunity for all bidders.
Responsibilities
- Contracting Officers: Must select the appropriate contract type for sealed bidding and ensure any EPA clauses are properly authorized and structured for fairness.
- Contractors: Must understand the contract type being used and ensure their bids comply with the terms, especially if EPA clauses are present.
- Agencies: Must oversee that sealed bidding processes maintain fairness and compliance with FAR requirements.
Practical Implications
- This section ensures price stability and fairness in sealed bidding, which is critical for government procurement integrity.
- Contractors should be aware that most sealed bids will be firm-fixed-price, but should also be prepared for EPA clauses in certain circumstances.
- Common pitfalls include improper use or structuring of EPA clauses, which can lead to bid protests or contract disputes.