The counter-problem is that a cost-plus contract works the opposite way - you are incentivised to account for none of the risks in your initial bid to make your

The counter-problem is that a cost-plus contract works the opposite way - you are incentivised to account for none of the risks in your initial bid to make your quote competitive, and the sales strategy is to 'land and expand' (i.e. get the initial contract and then expand it's value - sales teams will openly talk about land and expand behind closed doors). In practice this means that the quotes you get back are much harder to assess from a commercial perspective, as you are trying to weed out which companies are underquoting. Also cost plus contracts almost always end up being cost 'plus plus' if you dig enough under the covers in my experiences in procurement/contract management (there are always hidden fees and profit lines, and too many opportunities for conflicts of interest or to charge more to the open book), so even a low % can just mean more 'hidden' profits. You could write a book on all the ways to extract additional profit from an open book contract. IMO the best model isn't an either/or approach, it's a mix of models where the right model is used at the right time (including open book, fixed price, rate cards, hybrid contracts e.t.c.) where the contracts are adequately sized & scoped (i.e. several small fixed price contracts with set deliverables which have value on their own rather than one huge contract with one massive deliverable at the end).