There are several types of government contracts, each requiring a different approach to the bidding process. As a business owner interested in pursuing government contracts, it’s essential to understand the different types of contract structures. This knowledge can help you identify the right opportunities and make informed decisions when bidding.

Four Primary Award Types of Government Contracts

Federal contracts are awarded based on a specific scope of work, with defined terms, conditions, and deliverables. These contracts can be used for a single project or a series of projects, depending on the needs of the government agency.

Schedule Consultation with a FedBiz Specialist

Firm-Fixed-Price (“FFP”) Contracts: FFP contracts establish a fixed price for the completion of a specific scope of work, providing certainty to both the government and the contractor regarding the cost of the project.

Cost-Reimbursement Contracts: Under these contracts, the government reimburses the contractor for allowable costs incurred during the performance of the contract, up to a predetermined ceiling.

Time-and-Materials (“T&M”) Contracts: T&M contracts provide for the payment of labor at fixed hourly rates and materials at actual cost. These contracts are used when it is difficult to estimate the extent of work required for a project.

Performance-Based Contracts: Performance-Based contracts establish clear performance objectives and outcomes that the contractor must achieve. Payment is tied to the achievement of these objectives, incentivizing contractors to focus on results.

Understanding the differences between contract structures is crucial for businesses looking to succeed in federal contracting. It can mean the difference between making a profit or losing money on contracts.

Identifying the appropriate contract type for your products or services allows you to better target your bidding efforts and increase your chances of winning government contracts that can help you grow your business.

FedBiz Access (“FedBiz”) has an experienced team that works with small businesses and takes the time to get to know their business and ask questions to ensure they have a solid contracting plan. FedBiz is a leading government contracting business development and marketing firm that provides set-aside certification registrations, as well as SAM & DSBS registration, GSA Schedules, market research, and engagement strategy coaching.

FedBiz has over 22 years of experience working with thousands of companies worldwide to help them win over $35.7 billion in awards. From registration to award, FedBiz helps businesses succeed in the government marketplace.

Your Government Registration Level (“GRL”) is your roadmap from registration to award.