Payment for a fixed-price contract is based on successfully providing the goods or services agreed to in the contract. A fixed-price contract is not adjusted when it actually costs more or costs less to complete the project than the price initially agreed upon. One of the greatest benefits of fixed-price contracts is the reduced amount of administrative burden for the University and the funding agency.
It is very important that all fixed-price contracts be clearly identified as such in the written agreement. All projects costs, including indirect costs, are to be charged to the contract/grant account. Indirect costs, at Federally-approved rates, should be included in the proposal or contract budget and subsequently charged to the account.
In some cases, money may remain in an account after a fixed-price project has been completed, all bills have been paid, and all payments have been received from the sponsor. If the University's policies regarding project costs and indirect cost recovery have been met, the University may allow the administering department to use the remaining funds.
Fixed Price Agreements that have been satisfactorily completed (all the terms of the agreement have been met) and have cash (budget) available must be closed by sending a memo to Sponsored Program Accounting. This memo notifies Sponsored Program Accounting that the funds are no longer restricted based on the original agreement. If this request has not been made within a year after the project has been completed, Sponsored Program Accounting will automatically distribute the funds as described below: