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B-196556 1 (1980-08-05)

handle is hein.gao/gaobadilo0001 and id is 1 raw text is: THE COMPTROLLER GENERAL SION . OF THE UNITED STATES 'wAS HINGTON. 0.C. 20548 FILE: B-196556 DATE:Agast 5, 1980 MATTER OF: Department of State--Method of Payment Provisions CIGEST: 1. Characterizing management fees as fixed fees based on different levels of effort does not prevent contract from being contrary to statute when all elements of cost-plus-a-per- centage-of-cost system of contracting are otherwise present. 2. In cost-plus-a-percentage-of-cost contract- ing, fact that payment in addition to actual costs is at predetermined dollar amount, rather than at predetermined percentage rate, is immaterial when contractor's fee increases in direct proportion to costs of performance. 3. Administrative safeguards are not suffi- cient to save contract from being construed as cost-plus-a-percentage-of-cost system of contracting. Such safeguards may be con- sidered, however, in determining whether amounts paid equal reasonable value of goods or services provided. 4. When procurement is invalid due to failure to comply with Federal statute, Government has obligation to pay reasonable value of goods or services provided on quantum meruit or quantum valebat basis. The Department of State has requested our opinion on whether the method of payment provisions in two Agency for International Development (AID) contracts violated the prohibition against the cost-plus-a-percentage-of- cost system of contracting of 41 U.S.C. S 254(b) (1976). For the reasons outlined below, we find that they did.

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