CFR > Title 42 - Public Health > CHAPTER I—PUBLIC HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES > SUBCHAPTER M—INDIAN HEALTH SERVICE, DEPARTMENT OF HEALTH AND HUMAN SERVICES (parts 136 to 138) > PART 137—TRIBAL SELF-GOVERNANCE > SUBPART N—Construction (§137.270 to §137.379) > 137.336—What is the difference between fixed-price and cost-reimbursement agreements?

137.336—What is the difference between fixed-price and cost-reimbursement agreements?

(a) Cost-reimbursement agreements generally have one or more of the following characteristics:
(1) Risk is shared between IHS and the Self-Governance Tribe;
(2) Self-Governance Tribes are not required to perform beyond the amount of funds provided under the agreement;
(3) Self-Governance Tribes establish budgets based upon the actual costs of the project and are not allowed to include profit;
(4) Budgets are stated using broad categories, such as planning, design, construction project administration, and contingency;
(5) The agreement funding amount is stated as a “not to exceed” amount;
(6) Self-Governance Tribes provide notice to the IHS if they expect to exceed the amount of the agreement and require more funds;
(7) Excess funds remaining at the end of the project are considered savings; and
(8) Actual costs are subject to applicable OMB circulars and cost principles.
(b) Fixed Price agreements generally have one or more of the following characteristics:
(1) Self-Governance Tribes assume the risk for performance;
(2) Self-Governance Tribes are entitled to make a reasonable profit;
(3) Budgets may be stated as lump sums, unit cost pricing, or a combination thereof;
(4) For unit cost pricing, savings may occur if actual quantity is less than estimated; and,
(5) Excess funds remaining at the end of a lump sum fixed price project are considered profit, unless, at the option of the Self-Governance Tribe, such amounts are reclassified in whole or in part as savings.