52.216-8 Fixed Fee
Source: FAR 52.216-8 on acquisition.gov
FAR 52.216-8 requires contractors to meet all contract closeout requirements, including submitting certified final indirect cost rate proposals, before withheld fixed fees are released.
Overview
FAR 52.216-8, Fixed Fee, outlines the requirements for payment of a fixed fee to contractors under applicable contracts. The clause specifies that the contractor will be paid the fixed fee stated in the contract Schedule, and details the process for payment, including the withholding of a portion of the fee to protect the Government’s interests. The Contracting Officer may withhold up to 15% of the total fixed fee or $100,000 (whichever is less) until certain conditions are met. Release of withheld amounts is contingent upon the contractor submitting an adequate certified final indirect cost rate proposal, fulfilling all contract terms (including patent and royalty reports), and not being delinquent in submitting final vouchers. The Contracting Officer has discretion to release up to 90% of the withhold based on the contractor’s past performance in settling indirect cost rates.
Key Rules
- Fixed Fee Payment
- The contractor is paid the fixed fee specified in the contract Schedule.
- Withholding of Fee
- The Contracting Officer may withhold up to 15% of the total fixed fee or $100,000, whichever is less, to protect the Government’s interest.
- Release of Withheld Fee
- 75% of the withheld fee is released after the contractor submits an adequate certified final indirect cost rate proposal and meets all other contract requirements. Up to 90% may be released based on past performance.
Responsibilities
- Contracting Officers: Must withhold and release fixed fee payments according to the clause, ensuring all conditions are met before releasing withheld amounts.
- Contractors: Must submit certified final indirect cost rate proposals, final patent and royalty reports, and ensure timely submission of final vouchers.
- Agencies: Oversee compliance with fee payment and withholding requirements.
Practical Implications
- This clause ensures the Government’s interests are protected by withholding a portion of the fixed fee until contract closeout requirements are met. Contractors must be diligent in submitting required documentation and final reports to avoid delays in fee payment. Delays or deficiencies in required submissions can result in withheld payments and impact cash flow.
As prescribed in 16.307(b), insert the following clause:
Fixed Fee (Jun 2011)
(a) The Government shall pay the Contractor for performing this contract the fixed fee specified in the Schedule.
(b) Payment of the fixed fee shall be made as specified in the Schedule; provided that the Contracting Officer withholds a reserve not to exceed 15 percent of the total fixed fee or $100,000, whichever is less, to protect the Government’s interest. The Contracting Officer shall release 75 percent of all fee withholds under this contract after receipt of an adequate certified final indirect cost rate proposal covering the year of physical completion of this contract, provided the Contractor has satisfied all other contract terms and conditions, including the submission of the final patent and royalty reports, and is not delinquent in submitting final vouchers on prior years’ settlements. The Contracting Officer may release up to 90 percent of the fee withholds under this contract based on the Contractor’s past performance related to the submission and settlement of final indirect cost rate proposals.
(End of clause)