§3905 — Title 41 Public Contracts | U.S. Code

Summary

You cannot use contracts that pay a fee as a percentage of the contractor’s costs. If a contract pays costs plus a fixed fee, the agency sets the estimated cost when signing and the fee limits are: 10% normally, 15% for experimental, development, or research work, and up to 6% for architect or engineer services on public works or utility projects (the 6% can include the contractor’s costs). Contractors must tell the agency ahead of time about any cost-plus-fixed-fee subcontract or any fixed-price subcontract or purchase order that is larger than the simplified acquisition threshold or more than 5% of the prime contract’s estimated cost. The agency may inspect plans and audit the books and records of the prime contractor or subcontractors on cost or cost-plus-fixed-fee contracts.

Title 41, §3905

Public Contracts — Source: USLM XML via OLRC

(a)The cost-plus-a-percentage-of-cost system of contracting shall not be used.

(b)(1)Except as provided in paragraphs (2) and (3), the fee in a cost-plus-a-fixed-fee contract shall not exceed 10 percent of the estimated cost of the contract, not including the fee, as determined by the agency head at the time of entering into the contract.

(2)The fee in a cost-plus-a-fixed-fee contract for experimental, developmental, or research work shall not exceed 15 percent of the estimated cost of the contract, not including the fee.

(3)The fee in a cost-plus-a-fixed-fee contract for architectural or engineering services relating to any public works or utility project may include the contractor’s costs and shall not exceed 6 percent of the estimated cost, not including the fee, as determined by the agency head at the time of entering into the contract, of the project to which the fee applies.

(c)All cost and cost-plus-a-fixed-fee contracts shall provide for advance notification by the contractor to the procuring agency of any subcontract on a cost-plus-a-fixed-fee basis and of any fixed-price subcontract or purchase order which exceeds in dollar amount either the simplified acquisition threshold or 5 percent of the total estimated cost of the prime contract.

(d)A procuring agency, through any authorized representative thereof, has the right to inspect the plans and to audit the books and records of a prime contractor or subcontractor engaged in the performance of a cost or cost-plus-a-fixed-fee contract.

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 3905(a)41:254(b) (1st sentence words before 1st comma).June 30, 1949, ch. 288, title III, § 304(b), 63 Stat. 395; July 12, 1952, ch. 703, § 1(m), 66 Stat. 594; Pub. L. 103–355, title I, § 1071, title IV, § 4402(c), title X, § 10005(e), Oct. 13, 1994, 108 Stat. 3270, 3349, 3408. 3905(b)41:254(b) (1st sentence words after 1st comma). 3905(c)41:254(b) (last sentence words before semicolon). 3905(d)41:254(b) (last sentence words after semicolon).

§3905 Cost Contracts

Summary

Title 41, §3905

Notes & Related Subsidiaries

Historical and Revision Notes

Citations & Metadata