When a Party Does Not Do What It Has Promised to Do Under a Contract It Can Be Used for

Contract type is a term used to signify differences in contract structure or course, including compensation arrangements and amount of risk (either to the regime or to the contractor). Federal government contracts are usually divided into 2 main types, stock-still-toll and cost-reimbursement.

Other contract types include incentive contracts, time-and-materials, labor-hr contracts, indefinite-commitment contracts, and letter contracts. This wide choice of contract types is available to the government and contractors to provide flexibility in acquiring the large variety and volume of supplies and services required past agencies. Contract types vary according to:

• The degree and timing of the hazard causeless by the contractor for the costs of performance
• The corporeality and nature of the profit incentive offered to the contractor for achieving or exceeding specified standards or goals

While more than than a dozen contract types are described in the Federal Acquisition Regulation (FAR) Part 16external icon, the table below highlights CDC'due south most commonly used contract types.

CDC's about commonly used contract types

Contract Type	Description	Applications
Firm Fixed Price (FFP) Contracts	Provides supplies or services for a specific price non subject field to any adjustment on the basis of the contractor's incurred costs. This contract type imposes minimum administrative brunt.	Generally favored because the contractor assumes the gamble of increase performance costs. Used for acquiring supplies and services with reasonably definite specifications, and reasonable prices tin be established at the outset.
Cost Reimbursement Contracts	Provides for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an judge of full cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its ain risk) without the approval of the contracting officer. This places toll risk on the government.	Used just when circumstances do not permit the agency to define its requirements sufficiently to allow for a fixed-price type contract, OR uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to utilize any type of fixed-cost contract.
Cost Contracts (subtype of Cost Reimbursement Contract)	A Cost contract reimburses allowable costs up to the specified total awarded amount of the contract in which the contractor receives no fee or profit.	Used for research and development work, particularly with nonprofit educational institutions or other nonprofit organizations.
Cost Plus Fixed Fee Contracts (subtype of Cost Reimbursement Contract)	Provides payment to the contractor for a negotiated fee (profit) that is stock-still at the inception of the contract. The stock-still fee does not vary with actual cost, but may exist adjusted equally a upshot of changes in the work to be performed. This permits contracting for efforts that might otherwise present besides great a risk to contractors, but provides the contractor but a minimum incentive to command costs.	Same as stated for Cost Reimbursement contracts AND for example when the contract is for the performance of enquiry or preliminary/ exploration study, and the level of attempt required is unknown.
Time and Materials Contracts	Acquires supplies or services on the basis of: Straight labor hours at specified stock-still hourly rates that include wages, overhead, general expenses, and turn a profit Actual cost for materials including: Direct Materials Subcontracts for supplies and incidental services for which there is non a labor category specified in the contract; Other direct costs (travel, calculator usage etc.) Applicative indirect costs. Material handling costs shall include only costs clearly excluded from the labor-hour rate.	Used only when information technology is not possible at the time of placing the contract to estimate the extent or elapsing of the work or to anticipate costs with whatsoever reasonable degree of confidence. Used only when the contracting officer determines that no other contract type is suitable. When acquiring commercial services, a time-and-materials or labor hours contract may be used only when the award of the contract or guild is made using competitive procedures.
Labor Hour Contracts	A variation of the Time and Materials contract blazon, differing only in that materials are not supplied by the contractor.	Used only when it is not possible at the time of placing the contract to judge the extent or duration of the work or to anticipate costs with any reasonable caste of confidence. Used merely when the contracting officer determines that no other contract blazon is suitable. When acquiring commercial services, a time-and-materials or labor hours contract may be used but when the award of the contract or gild is made using competitive procedures.
Indefinite-Delivery, Indefinite-Quantity	Acquires supplies or services just does not specify a business firm quantity that will be issued and delivered during the flow of the contract (every bit delivery orders or task orders). The basic contract specifies the contract types authorized (due east.g. Cost Reimbursement or Firm Stock-still Price) and each chore gild will identify the specific contract type utilized.	Used when the Government cannot predetermine, above a specified minimum, the precise quantities of supplies or services the Government volition crave during the contract menstruum and it is inadvisable for the Government to commit itself for more a minimum quantity. Used when a recurring need is anticipated. There are 3 types of indefinite-delivery contracts: definite quantity, indefinite quantity, and requirements contracts.

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Source: https://www.cdc.gov/contracts/about-CDC-contracts/types.html

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