Gov to English translation: A contract where the amount the government pays is based on a formula.
What is Cost+: When pricing your bids there are two basic ways to price your solution Cost+ and Fixed price. Some example Cost+ contracts are:
1) A construction contract priced as: “I will charge the government what I pay for all the building materials that are needed plus a 15% markup”
2) A services contract priced as: “I will charge the government what I pay the employees doing the work plus 10%.”
Why you care:
1) Because the government takes the risk of cost overruns you usually get less profit on Cost contracts
2) Because the price is unknown at the time of award the government typically require vendors to have government accounting weirdo systems in-place (e.g DCAA).
3) Bottom line, Cost is great for established vendors who don’t want to take on risk