The focus on awarding more fixed-price contracts resulted in cost-plus contracts going from the most common contract type to less than 5 percent of Air Force procurement dollars by 1966, according to G.
In general, fixed-price contracts are more appropriate for production contracts where costs are either known or easily predicted, and cost-plus contracts are more appropriate in situations--such as development--where costs are uncertain.
In respect of integral services, TEI supports the general cost-plus
approach to valuing services based on the anticipated benefits where the provider is not in the trade or business of providing such services.
4] Under the current priority of methods, the agents would not take into account the fact that the parent company has an apparently reasonable cost-plus
methodology, since this method has a lower priority that the resale price method.
Both contracts generally provide compensation to ABX on a cost-plus
basis, with a base mark-up of 1.