A public owner asks why the bid package is set up as one fixed price for a fully designed school addition. Which statement matches a lump-sum contract?
Correct Answer
A) Defined scope for a fixed contract amount
A lump-sum agreement prices the defined work at an agreed amount. Actual costs do not automatically replace that price; authorized changes can still alter the contract. FAR 16.202-1 illustrates the distinction from cost reimbursement for federal firm-fixed-price contracting. Unit-price measurement and hourly time-and-material billing describe different pricing arrangements. Source: https://www.acquisition.gov/far/16.202-1
Why This Is the Correct Answer
A lump-sum agreement prices the defined work at an agreed amount. Actual costs do not automatically replace that price; authorized changes can still alter the contract. FAR 16.202-1 illustrates the distinction from cost reimbursement for federal firm-fixed-price contracting. Unit-price measurement and hourly time-and-material billing describe different pricing arrangements. Source: https://www.acquisition.gov/far/16.202-1
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