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Fixed Frice Agreements Ivette M.C. Alvarez 10 Jul 1997 12:07 EST

 I need help in  identifying the  positive points  as well as the negative
 points of
accepting fixed price agreements. Please share as  much information as possible
 as to
how your University is handling some of the issues stated in the questions
 listed below.
The information received will assist us in reviewing our present  policy and
and to propose changes, if warranted. None of the documents/ information
will be attributed or released outside of the Comptrollers Office of my

 1- Does your Institution accepts fixed price agreements? If it does not,
 please explain
 briefly why not.
 2-Do you have written policies and procedures in place to guide the
 and other administrative offices in the administration of this type of
 3- Percentage of your University's total funding that represents fixed
 agreements. Please state a percentage and the  fiscal period. If you do not
 have this information handy, just give me an average and/or a sense as to
 whether this type on funding is increasing or decreasing at your
 4--Major sources of fixed price funding: Federal or non-federal?
 5- What percentage of your  non-federal fixed price agreements from
 Corporations, if any.
 6- Most common payment arrangements used: advance payment in full,
 schedule tied with deliverables, in full at the completion of the project,
 half at
 the beginning and the other half upon completion, other.
 7- Do you require that the payment arrangement be specified in the body
 of the
 8-When pricing a fixed price agreement, do you factor in an extra fee to
 cover risks
 to the University such as delays, default costs,  poor performance, or loss
 of key
 9-In the absence of extra fees,how are costs overruns dealt with? Who
 covers them
 and how are they handled: cost sharing, transferred to a cost overrun cost
 or transferred to the Principa  Investigator's Home Department budget?
 10- Type and extent of monitoring performed by the Pre-Award and by the
 Award offices ( technical and fiscal monitoring).
 11- Disposition of unexpended balances: do you limit the amount that the
 Principal Investigator is allow to transfer out of the fixed price cost
 center, and do
 you specify  the purpose for which it can be used?
 12- Do you have a high incidence of completed  fixed price projects( the
 Principal Investigator verifies that all deliverables have been completed
 and delivered,and the agreement is paid in full) without costs recorded in
 the cost
 center assigned to the agreement? If this is the case, is this practice
 acceptable at
 your University?
 13-How do you dispose of the residual funds?
 14- Do you normally charge the Institution's negotiated  Indirect Costs
 15- Do you track those Principal Investigators  that consistently end up
 with large
 amounts of residual funds or with costs overruns?
 16- Do you issue subcontracts under fixed price agreements, and if you
 do, which
 types of subcontracts do you issue most: fixed or cost-reimbursable?
 17- Do you apply budgetary constrains to fixed price agreements  such as
 allowing federal non allowable costs being charged?
 18- Have you revised your policies  and procedures for fixed price
 agreements in
 light of the applicability of the 4  Cost Accounting Standards  and the
 latest revision
 to  Circular A-21? Please explain how and why.

 Please send your comments and written information directly to my attention
 to the
address listed below or through E-Mail or Fax. I will be glad to post a summary
 of the
answers and information received if there is sufficient interest in receiving
 Your assistance is greatly appreciated.

     Ivette M.C. Alvarez, Director
     Grants and Contracts Accounting Services
     The George Washington University
     2100 M St., N.W., Suite 310
     Washington, D.C, 20052
     Tel. #: 202 973-1043
     Fax #: 202 973-1013