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The Importance of a Cost Plus Contract
SpaceX is working on a contract with the federal government to build space shuttles. The contracts are called cost plus and they're usually reserved for items that only 1 or 2 or 3 companies can make like F 35 fighter jets, nuclear bombs or you know nuclear submarines. Hank: Government pricing right might be worth doing a little minute on thisA lot of people don't know They'll go like oh the government pays $500 for a toilet seat I mean, okay, there's probably some stuff like that But the margins are agreed by the government so every company is incentivized to give the lowest price in order to win the contract.