Risk Flowdown- A Myth?- What do you think?

Not an opinion but an open forum for anyone contractually savvy to provide their “two cents”. For Prime contract that is either Cost reimbursable, Unit Prices or Time & Material, how true is the notion that risks from the Prime are flowed down to the sub-contracts? Are all costs being eventually paid up by the Customer?

May be you don’t get profits and Overhead on specific overruns, but all sub-contract costs are certainly included. Now how about Prime contracts that are Lumpsum; a different ball game here.These are contracts where risks and opportunities would be borne in its entirety by the contractor.

 

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