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36.207 Pricing fixed-price construction contracts.

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36.207 Pricing fixed-price construction contracts.

36.207 Pricing fixed-price construction contracts.

      (a) Generally, firm-fixed-price contracts shall be used to acquire construction. They may be priced-

           (1) On a lump-sum basis (when a lump sum is paid for the total work or defined parts of the work),

           (2) On a unit-price basis (when a unit price is paid for a specified quantity of work units), or

           (3) Using a combination of the two methods.

      (b) Lump-sum pricing shall be used in preference to unit pricing except when-

           (1) Large quantities of work such as grading, paving, building outside utilities, or site preparation are involved;

           (2) Quantities of work, such as excavation, cannot be estimated with sufficient confidence to permit a lump-sum offer without a substantial contingency;

           (3) Estimated quantities of work required may change significantly during construction; or

           (4) Offerors would have to expend unusual effort to develop adequate estimates.

      (c) Fixed-price contracts with economic price adjustment may be used if such a provision is customary in contracts for the type of work being acquired, or when omission of an adjustment provision would preclude a significant number of firms from submitting offers or would result in offerors including unwarranted contingencies in proposed prices.