Which option represents a basic Cost-Reimbursement contract type that reimburses costs?

Which option represents a basic Cost-Reimbursement contract type that reimburses costs?

• A. Time-and-Materials
• B. Cost-Plus-Incentive-Fee
• C. Cost
• D. Cost-Plus-Award-Fee

Answer: (C)

In cost-reimbursement contracts, the contractor is reimbursed for allowable costs actually incurred, plus a fee. The basic form is the straightforward one labeled Cost, because there’s no additional incentive structure attached. Time-and-Materials is a hybrid method that reimburses labor at stated rates plus materials at cost, so it isn’t the pure baseline reimbursement. Cost-Plus-Incentive-Fee and Cost-Plus-Award-Fee also reimburse costs but add incentive-based elements to the fee, which changes the compensation structure from the simple cost-reimbursement arrangement. Therefore, the option that represents the basic cost-reimbursement contract type is the one labeled Cost.

In cost-reimbursement contracts, the contractor is reimbursed for allowable costs actually incurred, plus a fee. The basic form is the straightforward one labeled Cost, because there’s no additional incentive structure attached. Time-and-Materials is a hybrid method that reimburses labor at stated rates plus materials at cost, so it isn’t the pure baseline reimbursement. Cost-Plus-Incentive-Fee and Cost-Plus-Award-Fee also reimburse costs but add incentive-based elements to the fee, which changes the compensation structure from the simple cost-reimbursement arrangement. Therefore, the option that represents the basic cost-reimbursement contract type is the one labeled Cost.