Pending litigation and judicial decisions in recent tort suits filed by U.S. civilian and military personnel, other U.S. persons, and other parties against federal contractors have prompted congressional and public interest. Many of these suits allege that contractors were negligent or committed fraud or intentional torts (e.g., false imprisonment, infliction of emotional distress) in the course of providing services in support of combat operations in Iraq and Afghanistan.

Federal procurement contracts are commonly divided into two main types--fixed-price and cost-reimbursement--that primarily differ as to whether the government or the contractor assumes the risk of increases in performance costs (e.g., wages, materials). With a fixed-price contract, the contractor assumes this risk because it agrees to provide goods or services to the government for a certain price established at the time of contracting. If the performance costs exceed this price, the contractor generally cannot, absent a price adjustment clause, recover more money from the government.