True or False: Cost-reimbursement contracts require the contractor to exert their best effort to perform and ensure payment for allowable costs.

Cost-reimbursement contracts are structured to reimburse the contractor for allowable expenses incurred during the performance of the contract. These contracts require contractors to demonstrate that they are exerting their best efforts in the performance of the work because they are compensated for the costs they incur, not a fixed amount, which incentivizes efficiency and positive performance.

In this type of contract, while the risk is largely borne by the government (or the entity that issues the contract), the contractor is still expected to manage costs effectively and work diligently towards achieving the objectives of the contract. They must keep detailed records of expenses and make genuine efforts to control costs, ensuring that only allowable and allocable costs are billed. This best effort standard is crucial in maintaining the integrity of the cost-reimbursement process and assures that taxpayer or stake-holder funds are utilized effectively.

Other options might misrepresent the fundamental nature of cost-reimbursement contracts. For example, suggesting that payment depends solely on contract type would overlook the inherent requirements that coincide with cost reimbursement, which demands diligent effort from contractors.