§ 2-222. Contract pricing.

(a)

Cost plus percentage of cost and percentage of construction cost methods of contracting must not be used. The village shall perform cost or pricing analysis in connection with every procurement action including contract modifications. Costs or prices based on estimated costs for LCDBG projects shall be allowed only to the extent that the costs incurred or the cost estimates included in negotiated prices are consistent with federal cost principals. Cost reimbursement, fixed price, per diem contracts, or a combination thereof may be utilized as appropriate.

(b)

A cost reimbursement type contract is most appropriate when the scope and extent of the work to be performed are not clearly defined. A cost reimbursement contract must clearly establish a cost ceiling which may not be exceeded without formally amending the contract, and must identify a fixed dollar profit which may not be increased unless there is a contract amendment which increases the scope of the work.

(c)

A fixed price contract is appropriate when the scope of work is very well defined and product oriented. A fixed price contract must establish a guaranteed price which may not increase unless there is a contract amendment that increases the scope of the work.

(d)

A per diem contract expected to exceed $10,000.00 will not be considered unless the village has determined that a cost reimbursable or fixed price contract is not appropriate. Cost and profit included in the per diem rate must specifically negotiated and shown separately in the proposal. The contract must clearly establish a ceiling price which may not be exceeded without formally amending the contract.

(e)

The village may use a multiplier type of compensation under either the cost reimbursement or fixed price contract. The multiplier and the portions of the multiplier applicable to overhead and profit must be specifically negotiated and separately identified in the contract.

(Code 2004, § 19.5; Mo. of 1-14-1999)