Avoiding Terminations, Single Offer Competition, and Costly Change Orders With Fixed-Price Contracts

Report Number: SYM-AM-15-106

Series: Contract Management

Category: Contracting Strategies

Report Series: Symposium Proceedings

Authors: Andrew Hunter, Gregory Sanders, Alexander Lobkovsky

Title: Avoiding Terminations, Single Offer Competition, and Costly Change Orders With Fixed-Price Contracts

Published: 2015-04-01

Sponsored By: Acquisition Research Program

Status: Published--Unlimited Distribution

Research Type: Other Research Faculty

Full Text URL: http://acquisitionresearch.net/files/FY2015/SYM-AM-15-106.pdf

Keywords: Proceedings, Thursday Sessions, Vol. 2, Symposium

Abstract:

Fixed-price contracts offer the promise of controlling costs but are less likely to succeed when there is uncertainty regarding requirements. While these broad principles are uncontroversial, disagreement rages regarding the practical question of how widely they should be used. This study tests a variety of hypotheses regarding what contract characteristics are associated with better performance under fixed-price contracts. Here, performance is measured across three dependent variables: (a) the Number of Offers Received for competed contracts, (b) whether the contract was terminated, and (c) the extent to which change-orders raised the contracts