Which contract type gives the contractor minimal responsibility for performance costs?

The correct answer is Cost-Plus-Fixed-Fee, as this contract type allocates a fixed fee to the contractor on top of the reimbursements for allowable costs incurred during performance. In a Cost-Plus-Fixed-Fee contract, the contractor is compensated for their performance costs plus a predetermined fee that is not affected by their cost performance. This structure minimizes the contractor's financial risk because, regardless of the actual performance costs, they are guaranteed a set fee upon completion of the project.

Under this contract type, the contractor has less incentive to control costs strictly because they are reimbursed for their expenses. This means that the responsibility for any cost overruns primarily rests with the buyer, since the contractor will receive the fixed fee no matter how high the actual expenses may be.

In contrast, other contract types operate on different risk-sharing principles. For instance, a Firm-Fixed-Price contract would require the contractor to deliver at a set price, making them entirely responsible for any cost overruns. Similarly, Cost-Plus-A-Percentage-of-a-Cost contracts provide a fee that varies with the contractor's costs, which may incentivize higher spending. Time-and-Materials contracts cover labor and materials but still place some responsibility on the contractor for efficiently managing