Which of the following contract types is described in the statement below?

“This contract type provides no incentive for the contractor to control costs and hence is rarely
utilized.”

A.
Cost Plus Fixed Fee

B.
Cost Plus Percentage of Cost

C.
Cost Plus Incentive Fee

D.
Cost Plus Award Fee

Explanation:
Cost Plus Percentage of Cost contracts pay a fee that rises as the contractors cost rise. Because this
contract type provides no incentive for the contractor to control costs, it is rarely utilized. The U.S.
Federal Acquisition Regulations specifically prohibit the use of this type for U.S. Federal Government
contracting.