ABSTRACT
In this chapter, the authors look broadly at provisions in contracts that tend to have a significant effect on the level of risk those contracts pose to the public sector jurisdictions and at the consequent degree of advantageousness of those contracts to the public. The Federal Acquisition Fixed-price incentive contracts are similar to firm-fixed-price contracts with the exception that these contracts include incentive payments to contractors for exceeding specifications or achieving milestones or completion before the contractual dates. Cost-reimbursement contracts are generally considered to be more appropriate than fixed-price contracts when public agencies are able to provide complete or detailed specifications for the work in the contract. The Federal Acquisition Regulation states that cost-reimbursement contracts are suitable when uncertainties inherent in the contract work do not permit costs to be estimated with the accuracy sufficient for using fixed-price contracts.
