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(a) Policy. Subject to the limitations of this section, any type of contract which will promote the best interests of WSSC may be used; provided, that the use of a cost-plus-a-percentage-of-cost contract is prohibited. A cost-reimbursement contract may be used only if the Chief Procurement Officer determines in writing that such a contract is likely to be less costly to WSSC than any other type or that it is impracticable to obtain the goods and supplies, services, or construction required except under such a contract.

(b) Prohibition of Cost-Plus-a-Percentage-of-Cost Contracting. Except for a cost-plus-a-percentage-of-cost contract which is prohibited by this section, the use of any type of contract is permissible. Permitted contract types include, but are not limited to, the following:

(1) Fixed-price contracts (with contract-specified adjustments);

(2) Firm fixed-price contracts;

(3) Cost-reimbursement contracts;

(4) Allowable-cost contracts;

(5) Cost-plus-fixed fee contracts;

(6) Cost incentive contracts;

(7) Fixed-price cost incentive contracts;

(8) Cost-reimbursement contracts with cost incentive fee;

(9) Performance incentive contracts;

(10) Time-and-materials contracts;

(11) Labor-hour contracts;

(12) Definite-quantity contracts;

(13) Indefinite-quantity contracts;

(14) Indefinite-delivery indefinite-quantity contracts; and

(15) Requirements contracts.

(c) Option Provisions.

(1) Contract Provision. When a contract is to contain an option for renewal, extension, or purchase, notice of such provision shall be included in the solicitation. Exercise of an option is always at WSSC’s discretion.

(2) Exercise of Option. Before exercising any option for renewal, extension, or purchase, the Procurement Officer should attempt to ascertain whether a competitive procurement is practical, in terms of pertinent competitive and cost factors, and would be more advantageous to WSSC than renewal or extension of the existing contract.

(3) Lease with Purchase Option. A purchase option in a lease may be exercised only if the lease containing the purchase option was awarded under competitive sealed bidding or competitive sealed proposals, or the leased supply or facility is the only supply or facility that can meet WSSC requirements, as determined in writing by the Chief Procurement Officer. Before exercising such an option the Procurement Officer shall:

(i) Investigate alternative means of procuring comparable goods and supplies or facilities;

(ii) Compare estimated costs and benefits associated with the alternative means and the exercise of such option; for example, the benefit of buying new, state-of-the-art equipment compared to the estimated, initial savings associated with exercise of a purchase option; and

(iii) Obtain approval of the Chief Financial Officer for the original lease with purchase option contract.

(d) Provision to Extend Contract for 90 Days.

(1) General. Under certain procurement circumstances, WSSC may find it advantageous to obtain the option of a unilateral contract extension to extend the contract 90 days past its termination date.

(2) Contract Provision. When a contract is to contain an option for unilateral contract extension for 90 days, notice of such provision shall be included in the solicitation. If WSSC intends to exercise the extension, it shall provide written notice to the contractor at least 30 days prior to the contract termination date. The exercise of the extension is at WSSC’s sole discretion.

(e) Policy Regarding Selection of Contract Types.

(1) General. The selection of an appropriate contract type depends on factors such as the nature of the goods and supplies or services to be procured, the uncertainties which may be involved in contract performance, and the extent to which WSSC or the contractor is to assume the risk of the cost of performance of the contract. Contract types differ in the degree of responsibility assumed by the contractor.

(2) Among the factors that may be considered in selecting any type of contract are:

(i) Limitations on contract types stated in the Public Utilities Article, §§ 20-101 through 20-106, Annotated Code of Maryland;

(ii) The type and complexity of the supply or service being procured;

(iii) The difficulty of estimating performance costs due to WSSC’s inability to develop definitive specifications, identify risks to the contractor inherent in the nature of the work to be performed, or otherwise establish clearly the requirements of the contract;

(iv) The administrative costs to both parties;

(v) The degree to which WSSC must provide technical coordination during the performance of the contract;

(vi) The effect the contract type may have on the amount of competition to be expected;

(vii) The stability of material or commodity market prices or wage levels;

(viii) The urgency of the requirement; and

(ix) The length of contract performance. (Procurement regulations § 4-501, dated August 1, 2012)