A fixed price contract is a type of contract where the payment amount does not depend on resources used or time expended. Fixed price contracts may involve significant financial risk to the University because the PI has agreed to perform the work regardless of the actual cost of conducting the project. Therefore, great care must be taken during the budget development and project negotiation stage to ensure the amount requested from the sponsor includes all anticipated allowable direct costs and indirect costs based on use of the appropriate full federal or non-federal F&A rate.
- Obtain Department Head and Dean approval.
During the review of “significant” residual balances, the SPA Executive Director and VPR will assess the fixed price awards held by a PI to verify proper costing, pricing and charging of applicable expenses. Additional clarifying information may be sought, or corrective actions identified if there appears to be a pattern of large unexpended balances or large overdrafts. Future participation in fixed price contract work will be contingent on reasonable and successful management of prior projects. This is done to protect the University from accusations of defective pricing