The European Union Institutions (EUI) directly influence the creation of national public tenders through frameworks for public procurement, such as the Public Procurement Directives (Directive 2014/23/EU, Directive 2014/24/EU, and Directive 2014/25/EU).
Additionally, the tenders that EUI publish are often used as examples by national public administrations.
Therefore, it is valuable for a service manager to understand how the EUI contractually manages professional services contracts.
This post focus on the Fix Price type of contract.

In the post “Understanding T&M Contracts in EUI tenders” it was explained the importance of the Annex III. GENERAL TERMS AND CONDITIONS FOR INFORMATION TECHNOLOGIES CONTRACTS (from now on just indicated as Annex III).
This document mentions the three basic type of contracts for professional services that are implemented through specific contracts with EUI: time and means, quoted time-and-means and fixed-price.

Fix Price (FP) Contract.
Annex III specifies that “Informatics Services shall be provided at a fixed price when the Parties agree in the Specific Contract that an overall sum, which must be justified using the agreed daily rates in the Framework contract, is to be paid following express acceptance of the work by the Commission.
The work shall be undertaken by the Contractor in accordance with the specifications set out in the Specific Contract… each result and deliverable shall be subject to acceptance by the
Commission”.

The Key Element of FP Contract.
– The requirements of the customer.
These requirements are normally expressed through a “Request of Quotation” (normally the tender supplies a template of this document). This document will become part of the final specific contract.
– The Statement of Work (SOW).
In this document, the service provider must describe in details his approach to meet the requirements of the EUI.
– The Certificate of Conformity.
The document in which the EUI states the acceptance (partial or total) of the deliverables is called the Certificate of Conformity (the tender normally supplies a template).
This contract implies an obligation of result. So, the EUI has a powerful control on the execution of the contract as they only decide the “percentage of the target reached”, despite the effort (resources) performed by the service provider. Only when the Certificate of Conformity is validated by EUI, it is possible for the contractor to invoice.
The service provider must by consequence manage the risk to have a partial payment for the services provided (that’s why the FP is the most expensive type of contract).
– The total value of the contract.
This represents the maximal expense budgeted by the EUI. Normally in this type of contract the EUI always reserve the right to spend less.

FP Contracs: A fit for Waterfall projects and Maintanance Services.
The FP contract fits perfectly a waterfall project as the requirements must be defined at the moment of the signature of the specific contract.
These requirements can be changed with the agreement of both parties through an amendment of the contract. As this process requires times, it is advisable to limit the duration of the contract. In any case, the EUI have serious problems, for their financial regulation, to establish FP contract that goes over one year of length.
It is possible to introduce milestones (that can be executed in parallel or in cascade) but their content and value must be established at the moment of the signature of the contract. This is a key difference with the quoted time and mean type of contract.

FP contracts are well-suited for maintenance or support contracts where the service scope is clearly defined upfront. Examples include Technical Account Management contracts, maintenance contracts, and cloud support contracts. In these scenarios, periodic payments, such as quarterly installments, align well with the FP contract model.

However, FP contracts are not appropriate for situations where the service provider requires upfront payment. This contradicts the core principle of FP contracts, where payment is contingent upon the EUI’s approval of the Certificate of Conformity, signifying satisfactory service delivery.

Even if Annex III mentions that the overall sum should be justified using the the agreed daily rates, in the practice it not necessary to link this contract to a catalogue of resources. If this is the case, much better to utilize a Quoted time and means type of contract.

To know more:
Understanding QUOTED TIME AND MEANS contracts in EUI tenders.