2-18.1 Contract Selection Factors

Numerous factors guide the selection of the best contract type for a given purchase. Factors to be considered when determining the contract type include:

• Realism of cost estimate (either through price or cost analysis).
• Extent of competition (results in realistic pricing).
• Risks and uncertainties.
• Type and complexity of the requirement(s).
• Adequacy and firmness of specifications.
• Likelihood of changes.
• Past experience with industry, suppliers, and requirements.
• Extent of subcontracting.
• Adequacy of the supplier’s estimating and accounting system.
• Urgency of the requirement.
• Volatility of cost factors (e.g., unstable labor or market conditions).
• Period of performance or length of production run.
• Business practices in industries, trades, or professions.
• Concurrent contracts (if performance under the proposed contract involves concurrent operations under other contracts, the impact of those contracts should be considered).