The pricing methodology of a fixed price, or fixed unit price contract
offer toa federal agency is auditable. Once the contract is let, the
billings are auditable only to determine that the deliverables were
met. Expressly, allowability cannot be examined.
HOWEVER, questions of fraud override this freedom from audit. This could
arise if most of your activities are cost reimbursable, and a few fixed
price agreements get a lot of otherwise unallowable costs related to other
projects get dumped on them. In practice, you should let your system
(presuming it passes a A-133 audit) work routinely for the account and just
override on an occasional cost which is morally/ethically (do auditors
understand those words?) related to the fixed price agreement but not
routinely allowable. The handling of fixed price agreements can be looked
at in general in a broad system audit, but not from the point of view of
identifying specific unallowable costs on that agreement.
Also think through your CAS DS-2 disclosure. If you make your cost
estimate in accordance with your cost principles (which you can be audited
about), then you should accumulate costs essentially similarly, to be
consistent. In short, only a fey oddball costs should get into a fixed
price agreement.
You used the word "fee" -- I always understand that to mean the "profit" of
a commercial concern in the federal contract lexicon.
In this case, technical legality needs to be tempered with good sense.
Chuck
At 10:21 AM 9/1/00 -0400, you wrote:
>I would appreciate hearing your views on whether fixed price agreements
>containing federal dollars are generally subject to fiscal audit, in
>particular the allowability of expenditures regarding cost accounting
>standards. By fixed price I mean agreements where payments are triggered by
>the completion of tasks, deliverables, or milestones with a fixed fee
>attached to each, rather than reimbursement of actual expenditures. I'm
>interested in contracts you receive as well as the subcontracts you write to
>your subrecipients. Any thoughts, experiences, practice vs. rules, etc. are
>welcome. Thanks.
>
>
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