Overview
This section establishes that firm-fixed-price contracts are the standard for sealed bidding, while providing a narrow exception for fixed-price contracts with economic price adjustments.
Key Rules
- Mandatory Default: Firm-fixed-price contracts must be used for all sealed bidding acquisitions unless a specific exception applies.
- Economic Price Adjustment (EPA) Exception: Fixed-price contracts with EPA clauses are permitted only if authorized by FAR 16.203 and deemed both necessary and feasible.
- Equality in Bidding: Any EPA clauses included in the solicitation must be structured to ensure all bidders are treated equally and have the same opportunity to compete.
Practical Implications
- This regulation minimizes financial risk to the government by ensuring price certainty in the sealed bidding process.
- It allows for competitive bidding in volatile markets (e.g., fluctuating fuel or steel prices) by using EPA clauses to protect contractors from unpredictable cost shifts that might otherwise prevent them from submitting a fixed-price bid.