Pricing and Cost Accounting, 3rd Edition

 

CHAPTER 2Types of Government Contracts

A flexible selection of contract types is available to the government for acquiring the variety and volume of goods and services it requires. Contract types vary according to 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.

Two factors are significant in the government’s selection of contract type: (1) the government’s ability to state precisely a quantity of goods or services; and (2) the government’s ability to define precisely the work to be performed. When uncertainties are limited, the contracting arrangement will be ...