Cost-plus contract

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Cost-plus contract

A contract in which the selling price is based on the total cost of production plus a fixed percentage or fixed amount.

Cost-Plus Contract

An agreement between a buyer and seller in which the seller agrees to make or produce a good for the buyer. The selling price is the cost to the seller of making or producing the good in addition to some fixed fee or percentage of the cost. See also: Cost-plus pricing.
References in periodicals archive ?
We will end unnecessary no-bid and cost-plus contracts that run up a bill that is paid by the American people.
Another is the cost-plus contract, which requires a slightly different pricing mindset than a firm-fixed-price contract.
When [Alpha] [is greater than] 1, the contract again becomes a sort of cost-plus contract.
But, the actual contract costs on these fixed-price contracts ballooned by 36%, which is more than the average cost overruns on cost-plus contracts for major weapons systems.
President Obama's first budget follows through on his campaign pledges to overhaul federal contracting, including an ongoing review of sole source and cost-plus contracts.
The IRS recently issued taxpayer-favorable guidance, ruling that an accrual-method taxpayer recognizes income from the reimbursement of allowable costs under cost-plus contracts when the amounts are billed and due, not when the taxpayer incurs the reimbursable costs.
These one-of-a-kind items are almost always cost-plus contracts, with very little profit for the prime contractors.
The flawed assumption in the management of America's space program, according to Task Force leaders, is that centralized five and ten-year plans through cost-plus contracts to selected contractors is the most efficient way to innovate and compete with the global space community.
Cost reimbursable contracts are a favorite target of politicians, who lament shameless cost overruns and declare that it is time to do away with cost-plus contracts.
In a position paper during his campaign, President Obama also called for limits on cost-plus contracts.
Cost-plus contracts allow the government and contractor to share risk by giving the government the option to continue funding a weapon program above a contractor's initial estimate.