What are the differences between fixed-price and cost-reimbursement contracts?

Fixed-price and cost-reimbursement contracts are two different kinds of government contracts that are commonly used in New York. A fixed-price contract is when the exact amount of money is agreed upon at the start of the contract, and the government agency pays the contractor the pre-determined price regardless of the costs incurred by the contractor. Cost-reimbursement contracts involve the government agency reimbursing the contractor for the costs incurred for the services provided. The main difference between these two types of contracts is the amount of risk that is assumed by each party. In a fixed-price contract, all the risk falls on the contractor since they have agreed to a fixed price for the services provided. This means that if the contractor incurs more costs than anticipated, they absorb all of the additional costs. On the other hand, in a cost-reimbursement contract, the government agency takes on the risk since the contractor is reimbursed for all costs incurred. The terms of each contract must be carefully thought out, as the government agency and the contractor must both agree to the terms of the contract and any changes that might be made. In New York, both types of contracts are widely used, and both parties must understand the differences between them to ensure that they are entering into an agreement that meets their needs.

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What are the differences between fixed-price and cost-reimbursement contracts?

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