Written by Justo Torres, Director for Contracts and Grants
Fixed price awards play a critical role in research on campus. Sponsors will typically issue fixed-price awards when they are more interested in the outcome and deliverables of a project rather than costs.
What is a fixed-price agreement?
A fixed-price agreement is one in which the sponsor pays a firm price for the agreed-upon work within an established timeframe, regardless of the ultimate cost to complete the project.
Which projects are eligible for a fixed-price award?
Fixed-price agreements typically meet the following criteria:
- No financial reporting requirements
- No financial audit requirements
- No reference to costs being “reimbursable”
- No reference to Uniform Guidance beyond the allowance for Federal and/or Federal flow-through fixed-price agreements up to $150,000
- No reference to limitations on types of allowable expenditures or prior approval issues related to expenditures
What is a “residual balance?”
Unlike cost reimbursable awards where we are only paid for expenditures, a fixed-price award could have a residual balance. In these events, balances may be retained by the PI, providing that:
- The scope of work is completed by the project end date and all related expenses are charged to the award.
- Full payment has been received from the sponsor.
- The full F&A rate allowable on the agreement has been assessed on the remaining direct cost balance of the fixed-price award.
What you need to know
Please work with your college and fiscal manager to ensure that fixed-price awards are closed appropriately and in a timely manner (within 90 days of the end of the award).