Reference · Contract vehicles & pricing
Cost-plus contract
Cost-reimbursement contract
A cost-plus (cost-reimbursement) contract pays a contractor's allowable incurred costs plus a fee. It is used when requirements or costs can't be estimated precisely enough for a fixed price, and it puts more cost risk on the government.
What it is
The government reimburses allowable, allocable costs and pays a fee (fixed, incentive, or award). Variants include Cost-Plus-Fixed-Fee (CPFF), Cost-Plus-Incentive-Fee (CPIF), and Cost-Plus-Award-Fee (CPAF).
Why it exists
For R&D or work with uncertain scope, a fixed price would either be padded with risk or leave the contractor exposed; cost-reimbursement shifts that uncertainty to the government while capping fee.
Who it applies to
Contractors on development, research, or ill-defined efforts. These contracts require an adequate accounting system, since costs are reimbursed and audited.
Frequently asked
What is a cost-plus contract?
A cost-plus contract reimburses a contractor's allowable incurred costs and adds a fee. It is used when the scope or cost can't be pinned down for a fixed price — common in R&D — and it places more of the cost risk on the government.
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