Benefits of Cost-Plus Contracts
Cost-reimbursement (or cost-plus) contracts offer growing federal contractors an attractive, lucrative opportunity, such as:
- Predictable cost recovery
- Reduced financial risk
- Access to larger DoD and civilian agency contracts
However, many firms, especially those engaged in fixed-price contracts, quickly discover that the regulations governing cost-plus contracts are significantly more complex than they realized.
Unlike fixed-price solicitations, cost-plus contracts demand strict adherence to FAR Part 31, DFARS cost principles, and agency-specific rules.
Contractors must maintain a DCAA-compliant accounting system, accurately track direct and indirect costs, understand unallowable expenses, and prepare detailed cost volumes for proposals.
Risks of Non-Compliance
Failure to meet these expectations can have serious consequences, such as:
- Payment delays
- Disallowed costs
- Negative audit findings
- Even disqualification from award consideration
At Woodard Walker Associates, Inc., we help contractors understand the realities of cost-reimbursement contracts and prepare the systems, accounting structures, and compliance frameworks needed to win and sustain ongoing requirements. Whether you’re new to cost-plus work or looking to upgrade your internal controls, we connect you with vetted accounting and legal professionals who can guide you with confidence.
Upcoming: In Blog 2, we explain FAR Part 31 and break down its key parts in easy-to-understand language.
