You are the program manager of the NQA Program. In this program you're planning which contract types you'll allow into the program and which ones you will not.
One contract type you won't accept is the cost plus percentage of cost contract. Which of the following is a valid reason you would not allow this contract type into your program?
The cost plus percentage of cost contract is the most dangerous for the buyer because it provides little incentive for the contractor to control costs. Under this type of contract, the contractor's profit increases with the total costs incurred, which can lead to inefficiencies and inflated costs, making it a financially risky option for the buyer.
Yes, C is correct
C. The contract type is the most dangerous for the buyer. A cost plus percentage of cost contract can be risky for the buyer (in this case, your program) because it provides little incentive for the contractor to control costs. Under this type of contract, the contractor is reimbursed for all legitimate costs incurred during the project plus a percentage of these costs as profit. This means the more the contractor spends, the more profit they make, which can lead to inefficiencies and inflated costs, potentially causing financial risks for the program.