§137.336. What is the difference between fixed-price and cost-reimbursement agreements?

Risk is shared between IHS and the Self-Governance Tribe;

Self-Governance Tribes are not required to perform beyond the amount of funds provided under the agreement;

Self-Governance Tribes establish budgets based upon the actual costs of the project and are not allowed to include profit;

Budgets are stated using broad categories, such as planning, design, construction project administration, and contingency;

The agreement funding amount is stated as a “not to exceed” amount;

Self-Governance Tribes provide notice to the IHS if they expect to exceed the amount of the agreement and require more funds;

Excess funds remaining at the end of the project are considered savings; and

Self-Governance Tribes assume the risk for performance;

Self-Governance Tribes are entitled to make a reasonable profit;

Budgets may be stated as lump sums, unit cost pricing, or a combination thereof;

For unit cost pricing, savings may occur if actual quantity is less than estimated; and,

Excess funds remaining at the end of a lump sum fixed price project are considered profit, unless, at the option of the Self-Governance Tribe, such amounts are reclassified in whole or in part as savings.