52.216-9 Fixed Fee-Construction
Source: FAR 52.216-9 on acquisition.gov
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.
As prescribed in 16.307(c), insert the following clause:
Fixed Fee-Construction (Jun 2011)
(a) The Government shall pay to the Contractor for performing this contract the fixed fee specified in the Schedule.
(b) Payment of the fixed fee shall be made in installments based upon the percentage of completion of the work as determined from estimates submitted to and approved by the Contracting Officer, but subject to the withholding provisions of paragraph (c) of this section.
(c) The Contracting Officer shall withhold 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)