When proposing a fixed price agreement, estimate costs accurately, and choose deliverables that do not rely on specific research outcomes, such as technical reporting. Clauses that carry a potential financial penalty must be underwritten fully by the proposing unit.
Estimating Costs
All cost proposals should be estimated on a cost basis consistent with MIT cost accounting practices. Budgets should not anticipate revenue in excess of expenses.
Federal
Federal fixed price awards are typically milestone-based payment awards. For milestones, MIT recommends:
- Open-source software
- Submission of a publication or report
- Report of activities
At proposal, MIT requires:
- Statement of Work (SOW)
- Detailed budget
- Schedule of deliverables/milestones with due dates
Review and Approval
The dean of the school or department head must review and approve the acceptance of the fixed price award in accordance with the routing policies and procedures for that school.
Industry
Most industry agreements are fixed price agreements. Industry fixed price agreements typically have scheduled payments, with no more than 10% due at the end of the award.
At proposal, MIT requires:
- Statement of Work (SOW)
- Detailed budget (include additional detail and justification if required by sponsor)
Industry awards with a federal prime follow the federal fixed price guidelines.