Cost-Reimbursement Contract

The government reimburses allowable costs plus a fee.

Definition

Cost-reimbursement contracts pay allowable, allocable, and reasonable costs plus a fixed, incentive, or award fee, and require an adequate accounting system.

Why it matters

These contracts require a DCAA-compliant accounting system — a gate many small firms fail.

Example

A research contract uses cost-plus-fixed-fee with a 7% fee.

Related terms

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