There are several branches of the government, such as judicial, executive, legislative, and sessions. There are also different types of government contracts. Knowing these different types of contracts is important whether or not you’re in the government.
Knowing the differences is vital if you decide to go into government contracts. Learning these differences might seem confusing, but they don’t have to be. Read this guide on the various types of government contracts today!
Fixed-Price Contracts
Government contracting agencies ask for a specific item. These could include fixed-price economic price adjustments and firm-fixed prices. Along with fixed-price contracts, it’s also important to learn more on OTAs.
When a government agency asks for a specific item, they’ll set a price they’ll pay. There are also fixed-price contracts with economic price adjustments.
If material or labor costs change, this will impact how much a contractor could receive. There are also fixed-price prospective redetermination, fixed-price award-fees, and more.
Incentive Contracts
Government contract bids offer you a reward or incentive with the said contract. It could be based on a fixed-price or cost-reimbursement contract. This happens when a fixed-price contract can’t meet the services or supplies needed for the project.
Cost-Reimbursement Contracts
Cost-reimbursement contracts pay for authorized expenditures for the amount specified. They establish a cost estimate that the contractor can’t exceed. They’ll need the contracting officer’s consent to go over that amount.
The different types:
- Cost-plus-fixed-fee contracts
- Cost-plus-award-fee contracts
- Cost-plus-incentive-fee contracts
- Cost contracts
- Cost-sharing contracts
A cost contract is when a contractor isn’t compensated. It’s used mainly for development and research for nonprofits and educational establishments.
Cost-sharing contracts give reimbursements for part of the costs. A cost-plus incentive increases a charge depending on the total costs and charges.
Cost-plus-award fees include charges for the cost of the specified amount at the start of the contract. A cost-plus-fixed fee is when a contractor receives an agreed charge at the start of the project.
Indefinite Delivery and Quantity Contracts
This is used when the government isn’t sure about the number of services or supplies or when they’ll need them. They’re common with electrical or construction work.
These contracts occur through a series of task orders. It can last for years until the issue needs to be addressed.
Normally, the agency will have many businesses to choose from. Contractors need to provide a minimum quantity of supplies or a ceiling price. A set timeline for delivery in the bid will be offered as well.
Understanding the Different Types of Government Contracts
After exploring this guide, you should know the types of government contracts. You should also better understand the differences.
Take your time researching the various government contracts to decide which is best. Know your next steps as far as the requirements for each contract.
Would you like to read more informative and educational content? Then, be sure to check out our other articles today!
