D.C. Mun. Regs. tit. 27, r. 50-5027
Cost-reimbursement contracts provide for payment of incurred costs to the extent prescribed in the contract. A cost-reimbursement contracts must include a total cost ceiling (not-to-exceed amount), which the contractor may not exceed except at its own risk. Cost-reimbursement contracts are appropriate when costs of performance cannot be estimated with sufficient accuracy to establish a fixed price.
Other contract types may include cost-reimbursement components, which must be clearly identified in the price schedule and include a cost ceiling. Cost-reimbursement components are reimbursed at cost, unless additional limitations are prescribed by the contract, and may not include a fee.
In accordance with 27 DCMR Chapter 33, to be reimbursable, a cost must be:
The contractor must notify the Contracting Officer when it believes it will reach the total cost ceiling prior to the completion of all required contract work. The Contracting Officer may approve an increase to the ceiling if warranted, so long as sufficient funds have been certified for the increase, or may instruct the contractor to cease performance.
Cost reimbursement contracts may include:
A cost-plus-fixed-fee contract provides for a negotiated fee that is fixed at the contract's inception. The fee is only subject to adjustment as a result of changes the work to be performed under the contract that change the contractor's level of effort required to perform the work.
A cost-plus-incentive-fee contract provides for a fee that is either based on the relationship between the contractor's total reimbursable cost and a total target cost, subject to a specified minimum and maximum, or on the contractor's schedule for completion or objective technical performance. These contracts must include a formula for calculating the incentive fee.
A cost-plus-award-fee contract provides for:
The award fee in a cost-plus-award-fee contract is determined unilaterally by the Contracting Officer, based on the Contracting Officer's 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 Contracting Officer 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.
A cost-sharing contract is a cost-reimbursement contract in which the contractor receives no fee and is reimbursed only for an agreed-upon portion of its allowable costs. A cost-sharing contract may be used when the contractor agrees to absorb a portion of the costs, in the expectation of substantial compensating benefits.
A cost-no-fee contract reimburses allowable costs up to a specified not to exceed total awarded amount of the contract. The contractor receives no fee or profit.
D.C. Mun. Regs. tit. 27, r. 50-5027