Question

There are several types of contracting approaches, and each supports different project environments and project approaches. The legal contracts that support the procurement plan consist of two general types of contracts. Explain these 2 main types of contracts with their main features.

Answer 1

The two main types of contracts that support the procurement plan are fixed-price contracts and cost-reimbursement contracts.

Step-by-step explanation:

The two main types of contracts that support the procurement plan are fixed-price contracts and cost-reimbursement contracts.

Fixed-price contracts

• These contracts establish a fixed price for the goods or services being procured.
• The contractor bears the risk of any cost overruns or delays.
• Examples of fixed-price contracts include firm-fixed-price contracts and fixed-price with economic price adjustment contracts.

Cost-reimbursement contracts

• These contracts reimburse the contractor for allowable costs and provide additional payment as a fee or profit.
• The government bears the risk of any cost overruns or delays.
• Examples of cost-reimbursement contracts include cost-plus-fixed-fee contracts and cost-plus-incentive-fee contracts.