j) Include clause under 52.216-32, Ombudsman for Task Orders and Delivery Orders, in requests and contracts if a contract with several non-contractual indeterminate deliveries in indeterminate quantities is contemplated. Use the clause with its alternative I if the contract is available for use by multiple agencies (e.g.B. government-wide acquisition agreements or multi-agency contracts). When entering into a contract under the multiple award contract available for use by multiple agencies, the order process officer must complete paragraph (d) number 2 and include substitute I in the letter of intent to place the order and in the resulting appointment. (2) The nature of the supplies or services purchased and the other circumstances of the acquisition must be such that the assumption by the contractor of a certain responsibility for costs constitutes a positive incentive for effective cost control and performance. and you should always seek advice from an experienced business lawyer when determining the type of purchase agreement you want and drafting a purchase agreement that fully protects your rights. Entity Purchase Agreements – Also known as share purchase agreements, this type of agreement oversees an acquisition whereby the buyer obtains ownership by purchasing at least the majority of the company`s shares. Once they are the majority owners, the acquiring company takes control of the company, including the company`s obligations and debts. 16 405-1 Fee-based contracts plus incentives.

(a) Description. The cost plus incentive fee contract is a cost reimbursement contract that provides that the fees originally negotiated are then adjusted according to a formula based on the ratio of total eligible costs to total target cost. This type of contract specifies the target cost, target fees, minimum and maximum fees, and a fee adjustment formula. After the performance of the contract, the fee to be paid to the contractor is determined according to the formula. The formula provides, within certain limits, for fee increases beyond the target charge if the total eligible costs are below the target cost, and for fee reductions below the target fee if the total eligible costs exceed the target costs. This increase or decrease is intended to encourage the contractor to effectively manage the contract. If the total eligible costs are above or below the cost range within which the fee adjustment formula operates, the Contractor shall receive the total eligible costs plus the minimum or maximum fee. (b) enforcement. (1) A cost plus incentive fee contract is appropriate for development and testing services or programs if: (i) a reimbursement contract is required (see 16.301-2); and (ii) target costs and a fee adjustment formula can be negotiated, which may motivate the contractor to manage effectively. 2. The contract may contain technical incentives for performance where it is very likely that the necessary development of a larger system is feasible and the government has set its performance targets at least in general.

This approach may also apply to other acquisitions if the use of cost and technical performance incentives is desirable and administratively feasible. (3) The fee adjustment formula should provide an effective incentive across the full range of reasonably foreseeable deviations from the target costs. If high maximum fees are negotiated, the contract also provides for a low minimum fee, which can be zero fees or, in rare cases, negative fees. (c) Restrictions. No cost plus incentive fee contracts will be awarded unless all restrictions of 16-301-3 are met. 16.405-2 Additional fee contracts. A cost plus award contract is a cost reimbursement contract that provides for a fee consisting of (1) a base amount determined at the beginning of the contract, if any and at the customer`s discretion, and (2) an additional amount that the contractor can earn in whole or in part during performance and that is sufficient to create a motivation for excellence in cost areas. Schedule and technical performance. See paragraph 16.401(e) for requirements for the use of this type of contract. (3) Performance-based collection methods shall be used to the greatest extent possible for services (see 37.102(a) and paragraph 37.6). 16.401 General.

(a) incentive contracts, as described in this Subsection, are appropriate where a fixed-price contract is not appropriate and the necessary supplies or services can be purchased at a lower cost and, in some cases, with an improvement in supply or technical performance, by linking the amount of profit or royalty payable under the contract to the performance of the contractor. Incentive contracts are designed to achieve specific acquisition objectives by: – (1) setting reasonable and achievable objectives that are clearly communicated to the contractor; and (2) include appropriate incentive agreements to (i) motivate the contractor`s efforts that would not otherwise be highlighted; and (ii) discouraging contractors from inefficiency and waste. (b) where specified in advance, incentive formulas for technical performance or supply shall be included, profit increases or royalties shall be granted only for outputs exceeding the targets and reductions shall be provided for to the extent that those targets are not achieved; Incentive increases or decreases are applied to performance targets and not to minimum performance requirements. (c) The two basic categories of incentive contracts are fixed-price incentive contracts (see 16,403 and 16,404) and reimbursement premium contracts (see 16,405). As it is generally advantageous for the contractor to assume significant cost responsibility and a fair share of cost risk, fixed-price incentive contracts are preferable if the contractual costs and performance requirements are sufficiently certain. Refund incentive contracts are subject to the general restrictions set out in section 16 301 that apply to all refund contracts. (d) For all contracts with incentive and award fees, a declaration and conclusion signed by the Chief Procurement Officer must be completed attesting that the use of such contracts is in the best interests of the Government. This finding must be recorded in the contract file and, in the case of premium rate contracts, all eligibility points must be addressed in paragraph 16 401(e)(1). (e) Award contracts are a kind of incentive contract. (1) Application. A surcharge contract may be used where (i) the work to be carried out is such that it is neither possible nor effective to set predetermined incentive targets in terms of costs, timing and technical performance; (ii) The likelihood of achieving the acquisition objectives is increased by the use of a contract that effectively motivates the contractor to perform exceptionally and gives the Government the flexibility to assess both actual performance and the conditions under which it was achieved; and (iii) any administrative burden and additional costs required to monitor and evaluate performance are justified by the expected benefits documented by a risk-benefit and cost-benefit analysis included in the determination and conclusions of paragraph 16 401(e)(5)(iii). .

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