Which of the following best describes a cost-plus-fixed-fee contract?

A cost-plus-fixed-fee contract is characterized by the reimbursement of allowable costs incurred by the contractor for the project, along with a predetermined fixed fee that is not contingent upon the project costs. This means that the contractor is paid for all legitimate costs associated with the project, such as labor, materials, and overhead, plus an additional fixed amount as profit. This structure provides the contractor with certainty regarding their profit margin, independent of actual expenses.

In contrast to other contract types, this arrangement is particularly beneficial when project scope and costs are difficult to define upfront. It ensures that the contractor is motivated to perform well since the fee remains constant regardless of the unpredictability of costs, but it also requires careful tracking and documentation of expenses by the contractor to achieve reimbursement.

Meanwhile, other options represent different contract types. A fixed total price for the project implies a lump-sum contract where the contractor agrees to complete the work for a single, predetermined price. A time and materials contract focuses primarily on billing for time spent and materials used, without the fixed fee component. Lastly, a contract for a specific scope of work only indicates a fixed-price contract for a well-defined project, not inclusive of variable reimbursements.