Definition of "cost-plus" [cost-plus]

• The cost of production plus a fixed rate of profit. (noun)

American Heritage(R) Dictionary of the English Language, Fifth Edition. Copyright (c) 2011 by Houghton Mifflin Harcourt Publishing Company. Published by Houghton Mifflin Harcourt Publishing Company. All rights reserved.

• "Late last year, the Pentagon's chief weapons buyer, Ashton Carter, announced that his office would seek fixed-price contracts to replace so-called cost-plus deals, which cover all expenses and pay an extra incentive fee, even for troubled programs."
• "And instead of relying on cost-plus contracts that provide no incentive for saving money, defense firms should be encouraged to see keeping costs down as part of their own bottom line, as any other company would."
• "Complying with the system's regulations costs every defense contractor extra time, labor and mountains of paperwork—all of which gets passed onto the taxpayer thanks to the standard cost-plus contract that the Pentagon issues, which reimburses contractors for allowed expenses with an add-on fee as profit."