What are the four most commonly used contract types ranked from most risky to least risky to the government?

The ranking of contract types from most risky to least risky to the government reflects how the risk for cost overruns and performance outcomes is distributed between the contracting parties.

In the context provided, Cost-Plus-Fixed-Fee (CPFF) contracts are generally considered to carry more risk for the government compared to other contract types because the contractor is reimbursed for allowable costs along with a fixed fee, leading to less incentive for cost control. Following CPFF, Cost-Plus-Incentive-Fee (CPIF) contracts are ranked next, as they also provide cost reimbursement but include an incentive structure that encourages better performance and cost management, thus reducing the risk to an extent.

Next in line is the Firm-Fixed-Price Incentive (FPIF) contract, where the contractor agrees to deliver a project for a fixed price, but there are certain incentives built in for meeting or exceeding cost and performance targets. This type maintains a balanced risk-sharing approach, making it less risky than cost-plus contracts.

Finally, Firm-Fixed-Price (FFP) contracts are considered the least risky for the government. In this type of contract, the price is established at the outset and does not change regardless of incurred costs, placing the risk of cost overr