Overview
This section prohibits the simultaneous performance of fixed-price and cost-reimbursement or incentive-type construction contracts at the same worksite without high-level authorization. It aims to prevent administrative complications and labor issues that arise when different pricing structures overlap in a single location.
Key Rules
- General Prohibition: Cost-plus-fixed-fee, price-incentive, or other cost-adjustment contracts cannot be performed at the same site as firm-fixed-price, lump sum, or unit price contracts.
- Approval Requirement: An exception to this rule is only permitted with the prior approval of the Head of the Contracting Activity (HCA).
- Scope of Coverage: The rule applies specifically to situations where cost variation features exist alongside fixed-price obligations at the "same work site."
- Regulatory Intent: The restriction is maintained specifically to avoid potential labor disputes and complex cost-accounting/administrative problems.
Practical Implications
- Contracting Officers must ensure site-specific segregation of contract types to prevent "cost shifting," where a contractor might improperly charge labor or materials from a fixed-price project to a cost-reimbursement project.
- If a project requires mixed contract types at one location for operational efficiency, the procurement timeline must account for the additional time needed to obtain formal HCA approval.