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Compensation Arrangements

(10). Generally, compensation arrangements do not determine:
(a). Degree & timing of the cost responsibility assumed by the suppliers,
(b). Amount of profit or fee available to the supplier,
(c). Capability of the supplier with respect to quality,
(d). Motivational implications of the fee portion of the compensation

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Compensation arrangements by contract generally state the basis upon the contractor will be compensated (e.g., fixed fee, ...

Solution Summary

Through solving a multiple choice question, this solution discusses the advantages and disadvantages of various compensation arrangements.