Fixed-Price Agreements Policy

Policy number
Responsible office Office of Research and Innovation
Enforcement official
Enforcement official
Vice President for Research and Innovation
Classification Board of Trustees-delegated Policy
Category Research and Intellectual Property

Statement of policy

This Policy outlines the administrative requirements for formulating, monitoring, and closing-out fixed-price agreements.

Summary of contents/major changes

Policy placed in template.

  1. Purpose of the Policy

    Policy established to outline the administrative requirements for formulating, monitoring, and closing-out fixed-price agreements.

  2. Stakeholders Impacted by the Policy

    This policy applies to all faculty and staff engaged in sponsored research and creative scholarship projects and activities conducted under the auspices of 色色啦 Michigan University whether the activities are conducted on or off campus.

  3. Key Definitions

    1. Fixed-price agreement

      an agreement where the contractor pays a firm price for the agreed-upon work, regardless of the ultimate cost to complete the project.

  4. Full Policy Details

    There is a level of risk involved in these types of agreements because the institution must complete all work, even if there are cost overruns. However, the institution may retain any unexpended balance that remains after the contracted work is complete. The Principal Investigator should work through the Office Research and Innovation during the planning stages of contract development and negotiation to ensure the accuracy of the contract terms and conditions.

    1. Characteristics of Fixed-Price Agreement

      Fixed-price agreements will typically have the following characteristics:

      1. are similar to purchase orders where a work product is delivered, i.e., container of chemicals or a computer;

      2. are routine in nature;

      3. have a well-defined statement of work;

      4. the outcome is relatively certain;

      5. have a failure rate of next to zero;

      6. the University bears the risk that a routine project does not come within the 鈥渃osts鈥 and the University has to cover those costs;

      7. normally short-term in nature (less than 1 year);

      8. costs are normally known; and

      9. costs include all fringe benefit costs and the appropriate facilities and administrative (F&A) costs.

    2. Monitoring and Close Out of the Fixed-Price Agreement is the responsibility of the Principal Investigator to properly monitor the timing of tasks, deliverables, and final reporting of results.

      1. Residual Balances

        If there is a residual balance in the fixed-price account, any uncollected F & A will first be recovered from the balance by 色色啦.  The remaining balance minus any F & A will be transferred to the fund and cost center designated to the Principal Investigator鈥檚 research discretionary account (i.e. WRAP account) unless the project was initiated as part of a research center and will be designated to that center in writing at the time of contract execution following any required approvals

      2. Cost Overruns

        If there is a cost overrun in the fixed-price account, the amount must be covered by the Principal Investigator and/or department.

      3. Non-Receipt of Sponsor Funds

        If the sponsor does not pay in full, the Principal Investigator and/or department must cover the deficit amount.

  5. Accountability

    If there is a cost overrun in the fixed-price account, the amount must be covered by the Principal Investigator and/or department. If the sponsor does not pay in full, the Principal Investigator and/or department must cover the deficit amount.

References
History
Effective date of current version January 1, 2022
Proposed date of next review June 1, 2025
Authorization
Certified by

Betty McKain, Director, Grants and Contracts

At the direction of

Terri Goss Kinzy, Vice President of Research and Innovation