Which contract type is explicitly prohibited from being used?

Cost-Plus-A-Percentage-of-a-Cost contracts are explicitly prohibited due to concerns over cost control and fiscal responsibility. This contract type creates an inherent risk of incentivizing contractors to increase costs, as their profit is directly tied to the total costs incurred. The more a contractor spends, the more profit they earn, which can lead to inefficiencies and lack of motivation to contain costs. This goes against the principles of responsible financial management in government contracting and can result in taxpayers bearing higher costs without the assurance of effective performance.

In contrast, fixed-price contracts, firm-fixed-price contracts, and time-and-materials contracts provide clearer cost structures and better alignment of contractor incentives to complete a project efficiently. These alternatives promote accountability and ensure that both parties have a mutual interest in completing the project within agreed-upon costs.