The document discusses different types of contracts used between private contractors and the government: fixed-price contracts, cost-reimbursement contracts, and labor-hour contracts. Fixed-price contracts set a specific budget and seek bids closest to that amount, benefiting the government but carrying risk for contractors if costs are higher than expected. Cost-reimbursement contracts reimburse contractors for actual costs plus a fee, benefiting contractors but with less incentive to control costs. Labor-hour contracts reimburse hourly labor costs and expenses but not profits, providing less risk than fixed-price but also less incentive to control costs than fixed-price.