What is the difference between fixed-price and cost-reimbursement agreements?

§ 137.336 What is the difference between fixed-price and cost-reimbursement agreements? (a) Cost-reimbursement agreements generally have one or more of the following characteristics: (1) Risk is shared between IHS and the Self-Governance Tribe; (2) Self-Governance Tribes are not required to perform beyond the amount of funds provided under the agreement; (3) Self-Governance Tribes establish budgets based upon the actual costs of the project and are not allowed to include profit; (4) Budgets are stated using broad categories, such as planning, design, construction project administration, and contingency; (5) The agreement funding amount is stated as a “not to exceed” amount; (6) Self-Governance Tribes provide notice to the IHS if they expect to exceed the amount of the agreement and require more funds; (7) Excess funds remaining at the end of the project are considered savings; and (8) Actual costs are subject to applicable OMB circulars and cost principles. (b) Fixed Price agreements generally have one or more of the following characteristics: (1) Self-Governance Tribes assume the risk for performance; (2) Self-Governance Tribes are entitled to make a reasonable profit; (3) Budgets may be stated as lump sums, unit cost pricing, or a combination thereof; (4) For unit cost pricing, savings may occur if actual quantity is less than estimated; and, (5) Excess funds remaining at the end of a lump sum fixed price project are considered profit, unless, at the option of the Self-Governance Tribe, such amounts are reclassified in whole or in part as savings.