Institutional Framework of Federal Acquisitions The fixed price contract is a vital element in creating effective, efficient, and accountable acquisition planning. Fixed pricing is typically used when the product or service being purchased is fairly easy to determine a fair market value. For example, a fixed price contract might be used to purchase office equipment because the price structure isn't subject to much fluctuation. It also is efficient because it cuts out some of the administrative burden that is placed on the relevant parties (U.S. Government, N.d.). However, when the deal is subject to price fluctuations there are also economic price adjustments that can be added to account for these differences.

Cost reimbursement contracts also serve and important role in creating effective, efficient, and accountable acquisition planning. A cost contract is...

Government, N.d.). These are useful when a non-profit organization is providing some good or service. Under this type of contract the organization is free to provide their goods or services without having to obtain any further verification up to a certain monetary limit.
The time and materials contracts are useful when labor is involved in providing some service and it is difficult to estimate exactly how much labor will be required. For example, when building a road there estimate for total labor might include an estimate of anywhere between one year and two years with a wide range of possible labor costs. Instead of having the contractor bid the project for the highest possible costs that they might incur,…