Types of Contracts and Performance Based Acquistion

Types of Contracts and Performance Based Acquisition

Dr. Victor Villarreal

BUS 501

March 8, 2015

Types of Contracts and Performance-Based Acquisition

A contract is a type of written agreement between the two or more entities that is abide by the law. The purpose of the contract is to fix the rights and the responsibilities of the parties according to the agreement. There are different types of contracts that vary with respect to the context of the agreement. A few common types of contracts are discussed as under:-

* Fixed Price Contracts

* Cost Reimbursement Contracts

* Labor/ Hour and Materials Contracts

* Letter Contracts

* Indefinite Delivery Contracts

In Fixed Priced Contracts the contractor needs to provide the services or perform successfully to receive the price of the services that is decided to up front. There is the highest level of cost and risk paid involved in this type of contracts.

Another type of contracts are cost reimbursement contract that agrees to pay all the incurred costs of the project. The incurred costs are paid within a predetermined rate and the contractor is allowed to act within cost standards.

Labor/ Hour and Material contracts pay contractor at a predefined fixed rate. The fixed rate is for the rendered services and materials including an additional handling fee.

Letter Contracts are the type of contracts that allow the contractor to start work on the project if the terms and conditions are not sealed yet. These types of contracts are used when there is some sort of urgency to start the project

Indefinite Delivery Contracts comes in different types and shapes such as definite quality contracts, indefinite quality contracts and requirements. These contracts appear on surface when delivery or goods is urgently required.

On the other hand performance based acquisition is a type of contracting in which the performance of the contractor is compared to desired outcome or results desired...