[313] Firm fixed price - Provides for the payment of a definite price upon the delivery and acceptance of the items or services specified in the contract. It is used when designs and specifications are firm and fair, and reasonable prices can be established before performance. With this type of contract the contractor assumes the maximum performance risk and has the most incentive to reduce his cost.
Fixed-price incentive - Has the same concept and criteria as the firm fixed-price type, except that profits may be adjusted for rewards or penalties related to the contractor's succeeding or failing in attaining prescribed goals....
Fixed-price escalation - Differs from the firm fixed-price type in that specific contingencies generally related to unstable market or labor conditions are recognized by a provision which permits the price to fluctuate up or down as the particular contingencies materialize.
Fixed-price redetermination - Concept and criteria are the same as for the firm fixed price except that uncertainty as to costs may be present, which are resolved by an adjustment of the price upward or downward after a specified delivery or completion point has been reached.
Cost-plus-fixed-fee - Provides that the contractor will be reimbursed for all his acceptable costs plus a fixed amount of fee as profit. This type of contract is generally used for research, development, of studies for which the parties cannot reasonably predict the required level of effort, the parameters to be investigated, or the probable costs.
Cost-plus-incentive-fee - Similar in concept to the CPFF contract but generally with a clearer view as to the work to be done and results to be obtained. The fee in this type of contract is not fixed but is established in terms of target, [314] maximum, and minimum within which range the contractor's earnings are governed to the extent to which he exceeds or falls short of targets in terms of cost, schedule, performance, or a combination of these.
Cost-plus-award-fee. - . . provides for a basic fixed fee for performance to a level deemed acceptable, plus an additional award fee, not in excess of a stipulated maximum, for accomplishment better than the 'acceptable' level....
Cost sharing - The contractor is paid no fee and is reimbursed for only part of his cost, _ accepting in lieu of monetary reimbursement certain commercial or other benefits which may be found in the contract.
Cost reimbursement - The contractor receives no fee and is reimbursed only for his acceptable costs.
* Source: House Committee on Science and Astronautics, 1965 NASA Authorization, 88th Cong., 2d ses (1964), pp. 1327-1328.