Answer 1

Cost-reimbursement contract that provides for a fee that consists of a base fee (which may be zero) fixed at inception of the contract and an award fee based on periodic judgmental evaluation by the procuring authority. Used to provide motivation for performance in areas such as quality, timeliness, technical ingenuity, and cost-effective management during the contract. In cost type contracts, the performance risk is borne mostly by the buyer, not the seller.