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

Fixed-price and cost-reimbursement contracts are types of agreements in Government Contracts Law that determine how much a contractor will be paid for a service. In Washington, each type of contract can be used to secure a variety of services and goods. In a fixed-price contract, the contractor and the government agree on a set price before the work begins. This type of contract is beneficial for contractors because they are guaranteed a certain amount of money regardless of how much they actually spend on the project. On the other hand, the government has the advantage of knowing exactly how much they will be spending and exactly when they will need to make the payment. In contrast, a cost-reimbursement contract allows the contractor to recoup costs from the government after the work is completed. This type of contract is especially beneficial for contractors who do not know the exact costs for a project up front. The government also has the advantage of only paying for what the contractor actually spends, which can provide savings to the government. Both fixed-price and cost-reimbursement contracts are useful in Government Contracts Law and can be used to secure services and goods in Washington. Knowing the differences between the two contracts can help government and contractors to decide which type of agreement is best for their situation.

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

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