<Tr> <Td> Incentive - fee contracts </Td> <Td> $8 billion </Td> </Tr> <Tr> <Td> Fixed - fee contracts </Td> <Td> $32 billion </Td> </Tr> <P> A cost - reimbursement contract is appropriate when it is desirable to shift some risk of successful contract performance from the contractor to the buyer . It is most commonly used when the item purchased cannot be explicitly defined, as in research and development, or in cases where there is not enough data to accurately estimate the final cost . </P> <Ul> <Li> A cost - plus contract is often used when performance, quality or delivery time is a much higher concern than cost, such as in the United States space program . </Li> <Li> Final cost may be less than a fixed price contract because contractors do not have to inflate the price to cover their risk, especially when the ability to estimate costs is low . </Li> <Li> Final cost may be less than a fixed price contract when there is little market or price competition . </Li> <Li> Allows more oversight and control over the quality of the contractor's work . </Li> <Li> Flexible, allowing for changes in specification . </Li> </Ul>

When should a cost plus contract be used