What type of contract is typically used for commercial services?

The Time-and-Materials Contract is often utilized for commercial services due to its flexibility in handling variable scopes of work and unpredictable project requirements. This type of contract combines elements of both fixed prices for materials and hourly rates for labor, making it particularly well-suited for situations where the amount of work cannot be precisely defined at the outset.

Commercial services frequently involve tasks that may evolve based on ongoing project needs or changing client requirements, and the Time-and-Materials contract allows contractors to charge for the actual time spent and materials used. This adaptability can lead to a more efficient execution of services when the scope may not be fully known when the contract is initiated.

In contrast, other contract types such as Firm-Fixed-Price or Fixed-Price Incentive Firm are more suitable for projects with well-defined requirements and limited scope changes, while Cost-Plus-Award-Fee contracts are designed for incentivizing performance on more complex projects, making the Time-and-Materials contract the most appropriate choice for many commercial service scenarios.