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8 Guide to Contracting ITS Projects form of work distribution because the work distribution form determines the method of award. The following are the methods of award: Low bid--Low-bid contracting, commonly referred to as sealed bidding, is a contracting method that employs competitive bids, public openings of bids, and contractor selection based on the lowest price offered. Negotiated--Unlike formal advertising of a contract requirement, which is a precise, highly structured method of procurement with one definitive set of procedures, negotiation allows considerable flexibility, permitting the use of a number of different procedures in making awards. The negotiated selection is typically based on the evaluation of a technical approach, qualifications, and experience as represented in a technical proposal and possible subsequent presentations to the agency. Sole source--Sole-source procurement is the direct selection of a contractor without competition. Best value--Selection is made on a weighted combination of the technical approach, qualifi- cations, experience, and price of the offeror. Best value is, in effect, a combination of the low- bid and negotiated methods of award. Contract Form The three contract forms define the manner in which work is authorized: Phased contracts--Phased contracts are the conventional form of contracting that is in use for the majority of projects including ITS acquisitions. Phased contracts divide the work into sets of predefined activities (or phases) with specified deliverables. Task order (or indefinite delivery) contracts--Task order contracts are used with contracts in which the required supplies and services are unknown at the time of contract execution. They provide a mechanism for the agency to place orders for these supplies and services dur- ing the life or term of an overarching "umbrella" contract. Purchase orders--A purchase order is a form of sole-source contracting used for relatively small procurements. Purchase orders are a simple, rapidly executed form of contract that usu- ally contains a standard set of terms and conditions (payment, insurance, cancellation clauses, etc.) and a relatively brief description of the work to be performed. Contract Type Numerous types of contracts are available for use with different types of projects and under various circumstances. Contract types may vary according to the degree and timing of respon- sibility assumed by the contractor for the costs of performance and the amount of time and nature of the profit incentive offered to the contractor for achieving or exceeding specific stan- dards or goals. Contract types include the following range of alternatives: Firm, fixed price--The contractor assumes full responsibility for the performance costs and any profit or loss at a fixed price. Cost reimbursable--The contractor is paid (reimbursed) for his actual costs of performing the work and the fee (profit) is fixed. Time and materials--The contractor is paid for his actual costs of performing the work, and a percentage fee is added to all payments. Incentives--The contractor's responsibility for performance costs and profit and/or fee incentives are dependent upon the uncertainties associated with the desired outcomes of the procurement. Incentives are paid in addition to the three types of previously described reimbursements.