D.C. Mun. Regs. tit. 27, r. 27-4713
Cost reimbursement contracts provide for the contractor to recover the reimbursable costs it incurs in contract performance, plus a fee (that is, a profit).
A reimbursable cost shall be:
To ensure that the Department's payment obligations are not open-ended, a cost reimbursement contract must specify an estimated total cost that the contractor cannot exceed (the not-to-exceed limit), except at its own risk, without the Contracting Officer's written approval. Because the contractor can cease performance once it reaches the estimated total cost, unless the Contracting Officer approves an increase, it is not obligated to complete the contract work unless it can do so within the not-to-exceed limit.
Cost reimbursement contracts can take three (3) forms:
The differences between the types of cost reimbursement contracts listed in subsection 4713.4 relate to the manner in which the contractor's fee is determined.
A cost-plus-fixed-fee contract provides for a fee that is fixed at the contract's inception and is not subject to adjustment unless the contract is modified to change the contract work.
A cost-plus-incentive-fee contract provides for a fee that generally is determined by applying a formula based on the relationship between the contractor's total reimbursable cost and a total target cost, subject to a specified minimum and maximum. These contracts can also include incentive formulas based on the contractor's schedule or technical performance.
A cost-plus-award-fee contract provides for:
The award fee in a cost-plus-award-fee contract is determined unilaterally by the Department, based on its judgment and evaluation of how well the contractor has performed in relation to the award fee criteria identified in the contract. In no event shall the total award fee available to the contractor exceed ten percent (10%).
In appropriate circumstances, the Department may include a guaranteed maximum price (GMP) in a cost reimbursement contract. A GMP differs from a not-to-exceed amount in that a contractor is required to complete performance of the base scope of work required under the contract for an amount that does not exceed the GMP. Under such an approach, if the total cost exceeds the GMP, the contractor shall be required to complete performance of the base scope of work at its own cost and expense.
The Department shall only award a cost-reimbursement type contract pursuant to an IFB, RFP, or a sole source procurement after making a determination and findings that that a cost-reimbursement type contract is likely to cost less than any other type of contract and that it is impractical to obtain the goods or services of the kind or quality required except under a cost-reimbursement type contract.
D.C. Mun. Regs. tit. 27, r. 27-4713