Closeout of Fixed Price Contracts

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.


SPA will identify fixed price projects that have reached their end date and contact the PI to determine if deliverables have been completed and accepted by the sponsor or if an extension is needed. If activities for the project remain, the PI will be directed to Sponsored Research Services (SRS) to request a formal contract extension from the sponsor. If the project is complete, SPA will determine whether a final deficit or residual balance exists on the project.


For deficit balances, SPA will work with the PI to identify an account to transfer the over expenditures.


For residual (surplus) balances, the following actions will be taken:



  1. SPA will review the award budget versus actual expenses to determine the residual balance. 
    • The full F&A budgeted amount (regardless of actual expenses) will be manually charged to the project. 
  2. If the final project balance is less than $5,000 OR 10% of the contract amount (whichever is greater), SPA will transfer the residual balance to the account designated by the PI. 
  3. If the final project balance is $5,000 or more OR greater than 10% of the contract amount, the residual amount is considered to be a "significant balance" and the following steps must be completed:
    1. SPA will prepare the top portion of the Fixed Price Agreement Closeout form and send to the PI to complete the remainder.
    2. The PI must complete the section below:

    3. Obtain Department Head and Dean approval. 
    4. Forward completed form to SPA for review.

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