cost-plus contract


Also found in: Dictionary, Thesaurus, Financial, Wikipedia.

cost-plus contract

[¦kȯst ′pləs ‚kän‚trakt]
(engineering)
A contract under which a contractor furnishes all material, construction equipment, and labor at actual cost, plus an agreed-upon fee for his services.
References in periodicals archive ?
For cost-plus contracts, the government pays all cost overruns and the contractor is virtually unaffected.
(43) For an economic analysis of cost-plus contracts see B.
Cost-plus contracts also can strain accounting systems that were designed for private commercial investors.
Further choices are required between various types of contracts ranging between firmprice, incentive, and cost-plus contracts. Ultimately, the allocation of Mod contracts will determine the size of the UK defence industrial base and raises key policy choices about buying British (or European) or importing defence equipment and about whether the UK needs a domestic defence industry.
Under cost-plus contracts, a principal pays ail project costs plus a fee to the agent; the agent receives a fixed fee under fixed-price contracts.
In fact, the contract--known as a "cost-plus contract"--gave Northrop an incentive to overcharge, since the company was paid for its expenses and then given a percentage bonus.
Other factors which may favor these industry offers are fixed-price rather than cost-plus contract terms, and an anticipated unwillingness by the US Army to guarantee installed system performance.
Either we bid on a lump sum contract based on completed plans and specifications or a cost-plus contract with or without a guaranteed maximum price (GMP), also based, in all likelihood, on completed plans and specifications.
This taxpayer's compensation arrangement with the relos resembles a cost-plus contract, which is frequently used in manufacturing or construction.
McCain has threatened to block funding for the B-21 aircraft, which will cost around $500 million for each unit, as long as it remains a cost-plus contract. He and Mac Thornberry, chairman of the House of Representatives Armed Services Committee, are both defense hawks who favor more fiscally conservative procurement programs for the military.
In a cost-plus contract, a share ratio based on the contract cost and the contractor's fee (profit) is negotiated so that the contractor has a predetermined responsibility for the performance costs, which will directly affect the fee (profit) (U.S.