Mississippi Administrative Code › Title 27 - STATE PERSONNEL BOARD › Part 1 › Chapter 3 - SOURCE SELECTION AND CONTRACT FORMATION › Section 27-1-3-501 - TYPES OF CONTRACTS

Current through June 25, 2024
3-501.01
Scope of Regulation
This regulation section contains descriptions of types of
				  contracts and limitations as to when they should be utilized by the State in
				  its procurements.
Subject to the limitations of this section, any type of
				  contract which will promote the best interests of the State may be used. A cost
				  reimbursement contract may be used only when a determination is made in writing
				  that such contract is to be less costly to the State than any other type of
				  contract or that it is impracticable to obtain the services required except
				  under such a contract.
3-501.02
Cost-Plus-a-Percentage-of-Cost Contracting
A cost-plus-a-percentage-of-cost contract is one in which,
				  prior to beginning the work, the parties agree that the fee will be a
				  predetermined percentage of the total cost of the work. Thereby, the more the
				  contractor spends, the greater its fee and the contractor's incentive may,
				  therefore, be to incur cost at the expense of the State and not to economize.
				  Agencies are urged to avoid the use of cost-plus-a-percentage-of-cost
				  contracts.
3-501.03
Policy Regarding Selection of Contract Types
3-501.03.1
General
The selection of an appropriate contract type depends on
				  factors such as the nature of the services to be procured, the uncertainties
				  which may be involved in contract performance, and the extent to which the
				  State or the contractor is to assume the risk of the cost of performance of the
				  contract. Contract types differ in degree of responsibility assumed by the
				  contractor.
The objective when selecting a contract type is to obtain
				  the best value in needed services in the time required and at the lowest cost
				  or price to the State. In order to achieve this objective, the Procurement
				  Officer, before choosing a contract type, should review those elements of the
				  procurement which directly affect the cost, time, risk and profit incentive
				  bearing on the performance.
Among the factors to be considered in selecting any type of
				  contract are:
(a) the type and
				complexity of services being procured;
(b) the difficulty of estimating performance
				costs such as the inability of the State to develop definitive specifications,
				to identify the risks to the contractor inherent in the nature of the work to
				be performed, or otherwise to establish clearly the requirements of the
				contract;
(c) the administrative
				costs to both parties;
(d) the
				degree to which the State must provide technical coordination during the
				performance of the contract;
(e)
				the effect of the choice of the type of contract on the amount of competition
				to be expected;
(f) the stability
				of material or commodity market prices or wage levels;
(g) the urgency of the requirement; and,
(h) the length of contract
				performance.
Note:
It is
				  self-defeating for the State to select a type of contract that would place an
				  unreasonable economic risk on the contractor, since such action may tend to
				  jeopardize satisfactory performance of the contract.