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

Cost reimbursement and fixed-price contracts are two distinct types of government contracts. A cost reimbursement contract is used when the price of goods or services being contracted for cannot be determined in advance. With this type of contract, the government agrees to reimburse the contractor for all costs related to the project, such as materials, labor, overhead, and other associated costs. The contractor’s risk in a cost reimbursement contract is much higher because they are responsible for any cost overruns. A fixed-price contract, on the other hand, is used when the price of the goods or services being contracted for can be determined in advance. The contractor is responsible for the entire cost of the project, and the government agrees to pay a predetermined price. The contractor’s risk in a fixed-price contract is much lower because they are only responsible for costs up to the agreed-upon price. In New York, cost reimbursement and fixed-price contracts both require that the contractor obtain approval from the state government before entering into the contract. Additionally, both contracts must include all necessary details, such as the deliverables, the payment schedule, and the contractor’s obligations. Overall, cost reimbursement and fixed-price contracts are two very different types of government contracts that can be used in New York. A cost reimbursement contract is used when the price of goods or services being contracted for cannot be determined in advance; whereas a fixed-price contract is used when the price of goods or services being contracted for can be determined in advance.

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

Related FAQs

Related Blog Posts