Contracts and Pricing Arrangements

When requesting a bid package, you need to be familiar with the types of contracts, or pricing arrangements, that the government uses in buying a product or service. The type of contract used is determined by the circumstances of the acquisition and the extent to which the government wishes to accept the cost risks. The contract type used will have an important effect on the way you price out the contract. These pricing arrangements reflect the risk involved in contract performance.

There are three basic categories of contracts:

• fixed-price
• cost-reimbursement
• special situation