mASTERING contract typeS

Contract type dictates the degree and timing of the responsibility assumed by the contractor for the costs of performance and the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals. Most contract types fall into two general categories: fixed-price contracts and cost-reimbursement contracts. 

Fixed-price contracts place full responsibility on the contractor for performance costs and resulting profit (or loss). 

Cost-reimbursement contracts impose minimal responsibility onto the contractor for performance costs. The Government pays the contractor for allowable costs incurred in performance of the contract and fee (profit) is either fixed or based on a fee incentive arrangement.