In a cost plus fixed fee contract, can one negotiate a maximum overhead rate even though the overhead rates are subject to audit?
A. You can negotiate an advance agreement with the contractor establishing a ceiling overhead rate for any given fiscal/calendar year and state that the final overhead rate payable on the contract will be established by a final contract audit, except that in no event will the final rate payable exceed the ceiling rate(s) stipulated in the contract. In the event that the audited overhead rates are less than the rates the contractor billed you during the course of the contract, the lesser (audited) rates will be the final rates paid. (Revised: October, 2010) Q.
