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Managing Cost Type Contracts

October 8 @ 9:00 am - 4:00 pm


The US Government contracts by using either Fixed Price or Cost Reimbursement Type Contracts to acquire goods and services. Fixed Price contracts are preferred as they place the burden of risk on the seller/contractor, whereas Cost Reimbursement Type contracts place the burden of risk on the buyer/government. Federal Acquisition Regulation (FAR) Part 16 describes types of contracts that may be used in acquisitions and prescribes policies, procedures, and guidance for selecting a contract type appropriate to acquisition circumstances. Cost-reimbursement contracts are covered by FAR subpart 16.3. The selection of contract types is wide in order to provide the Government and contractors the needed flexibility to acquire the variety and volume of services and supplies. The primary factors that govern the contract types are: The degree of timing and responsibility assumed by the contractor for the costs of performance; and the amount and nature of the profit incentive offered to the contractor for achieving or exceeding specific standards or goals. FAR provides for specific contract types from firm fixed price, where the contractor has total responsibility for the performance costs and resulting profit or loss to cost-plus-fixed-fee, wherein the contractor has minimal responsibility for performance costs and the negotiated fee (profit) is fixed. In between are the various incentive contracts, per FAR 16.4, wherein the contractor’s responsibility for the performance costs and the profit or fee incentives offered are tailored to uncertainties involved in contract performance. Contracts negotiated under FAR Part 15 may be of any type or combination of types that will promote the Government’s interest, except as restricted per 10 U.S.C. 2306(a) and 41 U.S.C. 3901 and cost-plus-a-percentage-of-cost system of contracting shall not be used.

Learning Objectives

Upon completion of this course, the participant should know the FAR Determination and Finding requirements prior to award of a negotiated contract per FAR 1.704, the factors leading to selection of a cost type contact and tools leading and contributing to effective management of cost type contracts including

  • Regulatory requirements and factors in selecting the appropriate cost type contract
  • Various cost type contracts
  • TRUISMS of Cost Type Contracts
  • Work Breakdown Structure (WBS)
  • Allowable & Allocable Costs
  • Effects on Government and Contractor related to poorly managed cost contracts
  • Problem resolution & how effective and constant communications are mutually beneficial to the Government and the contractor resulting in meeting mission requirements

This course is designed to provide specific guidance and subjective thinking in managing cost-type- contracts on a daily basis leading to successfully meeting mission requirements.


October 8
9:00 am - 4:00 pm


Delivery Method
In-Person Seminar