52.216-9
Fixed Fee-Construction
FAR 52.216-9 requires contractors on cost-plus-fixed-fee construction contracts to meet specific completion and reporting requirements before receiving full payment of their fixed fee, with a portion withheld to protect the Government’s interests.
Overview
FAR 52.216-9, Fixed Fee-Construction, establishes the rules for payment of fixed fees to contractors performing construction contracts under a cost-plus-fixed-fee arrangement. The clause outlines how the fixed fee is paid, the process for installment payments based on work completion, and the requirements for withholding and releasing portions of the fee to protect the Government’s interests. It also details the conditions under which withheld fees may be released, including submission of certified final indirect cost rate proposals and compliance with other contract terms.
Key Rules
- Fixed Fee Payment
- The contractor is paid a fixed fee as specified in the contract schedule for performing the work.
- Installment Payments
- Payments are made in installments based on the percentage of work completed, as determined by estimates approved by the Contracting Officer.
- Withholding Provisions
- The Contracting Officer must withhold up to 15% of the total fixed fee or $100,000 (whichever is less) until certain conditions are met.
- Release of Withheld Fee
- 75% of withheld fees are released after the contractor submits an adequate certified final indirect cost rate proposal for the year of physical completion, provided all other contract terms are met. Up to 90% may be released based on the contractor’s past performance.
Responsibilities
- Contracting Officers: Approve work completion estimates, withhold and release fees per the clause, and ensure all required submissions are received.
- Contractors: Submit accurate completion estimates, provide certified final indirect cost rate proposals, fulfill all contract terms, and submit required reports and vouchers.
- Agencies: Oversee compliance with fee payment and withholding requirements.
Practical Implications
- Ensures contractors are incentivized to complete work and fulfill all reporting obligations before receiving full payment of the fixed fee.
- Protects the Government’s financial interests by withholding a portion of the fee until contract closeout requirements are met.
- Common issues include delays in submitting required cost proposals or reports, which can delay release of withheld fees.