Agencies Avoid Fixed-Price Contracts for Complex Work.

When agencies contract for complex services, they are far more likely to pay the vendor for actual costs than to set a fixed price for the work, a new study shows.

Fixed-price contracts, which are considered the lowest risk to the government because they put a lid on costs and thus encourage vendors to keep costs to a minimum, accounted for 35 percent of dollars spent in fiscal 2007. Meanwhile, cost-based contracts — which, critics say, encourage vendors to spend more — accounted for 45 percent of procurement spending, according to an analysis of Federal Procurement Data System information by the Center for Strategic and International Studies and the Professional Services Council. The remainder of government procurements rely on other types of methods such as time and materials contracts.

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