63G-6a-1205. Regulation of contract types — Permitted and prohibited contract types.
(1)
Except as otherwise provided in this section, and subject to rules made under this section by the rulemaking authority, a procurement unit may use any type of contract that will promote the best interests of the procurement unit.
Terms Used In Utah Code 63G-6a-1205
Change order: means a written alteration in specifications, delivery point, rate of delivery, period of performance, price, quantity, or other provisions of a contract, upon mutual agreement of the parties to the contract. See Utah Code 63G-6a-103
Contract: A legal written agreement that becomes binding when signed.
Contractor: means a person who is awarded a contract with a procurement unit. See Utah Code 63G-6a-103
Cost-reimbursement contract: means a contract under which a contractor is reimbursed for costs which are allowed and allocated in accordance with the contract terms and the provisions of this chapter, and a fee, if any. See Utah Code 63G-6a-103
Definite quantity contract: means a fixed price contract that provides for a specified amount of supplies over a specified period, with deliveries scheduled according to a specified schedule. See Utah Code 63G-6a-103
Fixed price contract: means a contract that provides a price, for each procurement item obtained under the contract, that is not subject to adjustment except to the extent that:
(a)
the contract provides, under circumstances specified in the contract, for an adjustment in price that is not based on cost to the contractor; or
Fixed price contract with price adjustment: means a fixed price contract that provides for an upward or downward revision of price, precisely described in the contract, that:
(a)
is based on the consumer price index or another commercially acceptable index, source, or formula; and
(b)
is not based on a percentage of the cost to the contractor. See Utah Code 63G-6a-103
Indefinite quantity contract: means a fixed price contract that:
(a)
is for an indefinite amount of procurement items to be supplied as ordered by a procurement unit; and
the supplies and materials are not provided by, or through, the contractor; and
(b)
the contractor is paid a fixed rate that includes the cost of labor, overhead, and profit for a specified number of labor hours or days. See Utah Code 63G-6a-103
Procurement: means the acquisition of a procurement item through an expenditure of public funds, or an agreement to expend public funds, including an acquisition through a public-private partnership. See Utah Code 63G-6a-103
Procurement item: means an item of personal property, a technology, a service, or a construction project. See Utah Code 63G-6a-103
Procurement official: means :
(a)
for a procurement unit other than an independent procurement unit, the chief procurement officer;
(b)
for a legislative procurement unit, the individual, individuals, or body designated in a policy adopted by the Legislative Management Committee;
(c)
for a judicial procurement unit, the Judicial Council or an individual or body designated by the Judicial Council by rule;
(d)
for a local government procurement unit:
(i)
the legislative body of the local government procurement unit; or
(ii)
an individual or body designated by the local government procurement unit;
(e)
for a special district, the board of trustees of the special district or the board of trustees' designee;
(f)
for a special service district, the governing body of the special service district or the governing body's designee;
(g)
for a local building authority, the board of directors of the local building authority or the board of directors' designee;
(h)
for a conservation district, the board of supervisors of the conservation district or the board of supervisors' designee;
(i)
for a public corporation, the board of directors of the public corporation or the board of directors' designee;
(j)
for a school district or any school or entity within a school district, the board of the school district or the board's designee;
(k)
for a charter school, the individual or body with executive authority over the charter school or the designee of the individual or body;
(l)
for an institution of higher education described in Section 53B-2-101, the president of the institution of higher education or the president's designee;
(m)
for the State Board of Education, the State Board of Education or the State Board of Education's designee;
(n)
for the Utah Board of Higher Education, the Commissioner of Higher Education or the designee of the Commissioner of Higher Education;
(o)
for the Utah Communications Authority, established in Section 63H-7a-201, the executive director of the Utah Communications Authority or the executive director's designee; or
(p)
(i)
for the facilities division, and only to the extent of procurement activities of the facilities division as an independent procurement unit under the procurement authority provided under Title 63A, Chapter 5b, Administration of State Facilities, the director of the facilities division or the director's designee;
(ii)
for the attorney general, and only to the extent of procurement activities of the attorney general as an independent procurement unit under the procurement authority provided under Title 67, Chapter 5, Attorney General, the attorney general or the attorney general's designee;
(iii)
for the Department of Transportation created in Section 72-1-201, and only to the extent of procurement activities of the Department of Transportation as an independent procurement unit under the procurement authority provided under Title 72, Transportation Code, the executive director of the Department of Transportation or the executive director's designee; or
(iv)
for any other executive branch department, division, office, or entity that has statutory procurement authority outside this chapter, and only to the extent of the procurement activities of the department, division, office, or entity as an independent procurement unit under the procurement authority provided outside this chapter for the department, division, office, or entity, the chief executive officer of the department, division, office, or entity or the chief executive officer's designee. See Utah Code 63G-6a-103
Requirements contract: means a contract:
(a)
under which a contractor agrees to provide a procurement unit's entire requirements for certain procurement items at prices specified in the contract during the contract period; and
for a legislative procurement unit, the Legislative Management Committee;
(b)
for a judicial procurement unit, the Judicial Council;
(c)
(i)
only to the extent of the procurement authority expressly granted to the procurement unit by statute:
(A)
for the facilities division, the facilities division;
(B)
for the Office of the Attorney General, the attorney general;
(C)
for the Department of Transportation created in Section 72-1-201, the executive director of the Department of Transportation; and
(D)
for any other executive branch department, division, office, or entity that has statutory procurement authority outside this chapter, the governing authority of the department, division, office, or entity; and
(ii)
for each other executive branch procurement unit, the board;
(d)
for a local government procurement unit:
(i)
the governing body of the local government unit; or
(ii)
an individual or body designated by the local government procurement unit;
(e)
for a school district or a public school, the board, except to the extent of a school district's own nonadministrative rules that do not conflict with the provisions of this chapter;
(f)
for a state institution of higher education, the Utah Board of Higher Education;
(g)
for the State Board of Education or the Utah Schools for the Deaf and the Blind, the State Board of Education;
(h)
for a public transit district, the chief executive of the public transit district;
(i)
for a special district other than a public transit district or for a special service district, the board, except to the extent that the board of trustees of the special district or the governing body of the special service district makes its own rules:
(i)
with respect to a subject addressed by board rules; or
(ii)
that are in addition to board rules;
(j)
for the Utah Educational Savings Plan, created in Section 53B-8a-103, the Utah Board of Higher Education;
(k)
for the School and Institutional Trust Lands Administration, created in Section 53C-1-201, the School and Institutional Trust Lands Board of Trustees;
(l)
for the School and Institutional Trust Fund Office, created in Section 53D-1-201, the School and Institutional Trust Fund Board of Trustees;
(m)
for the Utah Communications Authority, established in Section 63H-7a-201, the Utah Communications Authority board, created in Section 63H-7a-203; or
Time and materials contract: means a contract under which the contractor is paid:
(a)
the actual cost of direct labor at specified hourly rates;
(b)
the actual cost of materials and equipment usage; and
(c)
an additional amount, expressly described in the contract, to cover overhead and profit, that is not based on a percentage of the cost to the contractor. See Utah Code 63G-6a-103
(2)
A rulemaking authority:
(a)
may make rules governing, placing restrictions on, or prohibiting the use of any type of contract; and
(b)
may not make rules that permit the use of a contract:
(i)
that is prohibited under this section; or
(ii)
in a manner that is prohibited under this section.
(3)
A procurement official may not use a type of contract, other than a firm fixed price contract, unless the procurement official makes a written determination that:
(a)
the proposed contractor‘s accounting system will permit timely development of all necessary cost data in the form required by the specific contract type contemplated;
(b)
the proposed contractor’s accounting system is adequate to allocate costs in accordance with generally accepted accounting principles; and
(c)
the use of a specified type of contract, other than a firm fixed price contract, is in the best interest of the procurement unit, taking into consideration the following criteria:
(i)
the type and complexity of the procurement item;
(ii)
the difficulty of estimating performance costs at the time the contract is entered into, due to factors that may include:
(A)
the difficulty of determining definitive specifications;
(B)
the difficulty of determining the risks, to the contractor, that are inherent in the nature of the work to be performed; or
(C)
the difficulty to clearly determine other factors necessary to enter into an accurate firm fixed price contract;
(iii)
the administrative costs to the procurement unit and the contractor;
(iv)
the degree to which the procurement unit is required to provide technical coordination during performance of the contract;
(v)
the impact that the choice of contract type may have upon the level of competition for award of the contract;
(vi)
the stability of material prices, commodity prices, and wage rates in the applicable market;
(vii)
the impact of the contract type on the level of urgency related to obtaining the procurement item;
(viii)
the impact of any applicable governmental regulation relating to the contract; and
(ix)
other criteria that the procurement officer determines may relate to determining the contract type that is in the best interest of the procurement unit.
(4)
Contract types that, subject to the provisions of this section and rules made under this section, may be used by a procurement unit include the following:
(a)
a fixed price contract;
(b)
a fixed price contract with price adjustment;
(c)
a time and materials contract;
(d)
a labor hour contract;
(e)
a definite quantity contract;
(f)
an indefinite quantity contract;
(g)
a requirements contract;
(h)
a contract based on a rate table in accordance with industry standards; or
(i)
a contract that includes one of the following construction delivery methods:
(i)
design-build;
(ii)
design-bid-build; or
(iii)
construction manager/general contractor.
(5)
Except as it applies to a change order, a procurement unit may not enter into a cost-plus-percentage-of-cost contract, unless:
(a)
use of a cost-plus-percentage-of-cost contract is approved by the procurement officer;
(b)
it is standard practice in the industry to obtain the procurement item through a cost-plus-percentage-of-cost contract; and
(c)
the percentage and the method of calculating costs in the contract are in accordance with industry standards.
(6)
A procurement unit may not enter into a cost-reimbursement contract, unless the procurement official makes a written determination that:
(a)
(i)
a cost-reimbursement contract is likely to cost less than any other type of permitted contract; or
(ii)
it is impracticable to obtain the procurement item under any other type of permitted contract; and
(b)
the proposed contractor’s accounting system:
(i)
will timely develop the cost data in the form necessary for the procurement unit to timely and accurately make payments under the contract; and
(ii)
will allocate costs in accordance with generally accepted accounting principles.
