Effective 5/12/2020
63G-6a-1205. Regulation of contract types — Permitted and prohibited contract types.
63G-6a-1205. Regulation of contract types — Permitted and prohibited contract types.
- (1) Except as otherwise provided in this section, and subject to rules made under this section by the rulemaking authority, a procurement unit may use any type of contract that will promote the best interests of the procurement unit.
- (2) A rulemaking authority:
- (a) may make rules governing, placing restrictions on, or prohibiting the use of any type of contract; and
- (b) may not make rules that permit the use of a contract:
- (i) that is prohibited under this section; or
- (ii) in a manner that is prohibited under this section.
- (3) A procurement official may not use a type of contract, other than a firm fixed price contract, unless the procurement official makes a written determination that:
- (a) the proposed contractor’s accounting system will permit timely development of all necessary cost data in the form required by the specific contract type contemplated;
- (b) the proposed contractor’s accounting system is adequate to allocate costs in accordance with generally accepted accounting principles; and
- (c) the use of a specified type of contract, other than a firm fixed price contract, is in the best interest of the procurement unit, taking into consideration the following criteria:
- (i) the type and complexity of the procurement item;
- (ii) the difficulty of estimating performance costs at the time the contract is entered into, due to factors that may include:
- (A) the difficulty of determining definitive specifications;
- (B) the difficulty of determining the risks, to the contractor, that are inherent in the nature of the work to be performed; or
- (C) the difficulty to clearly determine other factors necessary to enter into an accurate firm fixed price contract;
- (iii) the administrative costs to the procurement unit and the contractor;
- (iv) the degree to which the procurement unit is required to provide technical coordination during performance of the contract;
- (v) the impact that the choice of contract type may have upon the level of competition for award of the contract;
- (vi) the stability of material prices, commodity prices, and wage rates in the applicable market;
- (vii) the impact of the contract type on the level of urgency related to obtaining the procurement item;
- (viii) the impact of any applicable governmental regulation relating to the contract; and
- (ix) other criteria that the procurement officer determines may relate to determining the contract type that is in the best interest of the procurement unit.
- (4) Contract types that, subject to the provisions of this section and rules made under this section, may be used by a procurement unit include the following:
- (a) a fixed price contract;
- (b) a fixed price contract with price adjustment;
- (c) a time and materials contract;
- (d) a labor hour contract;
- (e) a definite quantity contract;
- (f) an indefinite quantity contract;
- (g) a requirements contract;
- (h) a contract based on a rate table in accordance with industry standards; or
- (i) a contract that includes one of the following construction delivery methods:
- (i) design-build;
- (ii) design-bid-build; or
- (iii) construction manager/general contractor.
- (5) Except as it applies to a change order, a procurement unit may not enter into a cost-plus-percentage-of-cost contract, unless:
- (a) use of a cost-plus-percentage-of-cost contract is approved by the procurement officer;
- (b) it is standard practice in the industry to obtain the procurement item through a cost-plus-percentage-of-cost contract; and
- (c) the percentage and the method of calculating costs in the contract are in accordance with industry standards.
- (6) A procurement unit may not enter into a cost-reimbursement contract, unless the procurement official makes a written determination that:
- (a)
- (i) a cost-reimbursement contract is likely to cost less than any other type of permitted contract; or
- (ii) it is impracticable to obtain the procurement item under any other type of permitted contract; and
- (b) the proposed contractor’s accounting system:
- (i) will timely develop the cost data in the form necessary for the procurement unit to timely and accurately make payments under the contract; and
- (ii) will allocate costs in accordance with generally accepted accounting principles.
- (a)
Amended by Chapter 257, 2020 General Session