[3] Cost-plus contracts were first used by the government in the United States during World War I to encourage wartime production by American businesses.
[4] According to Martin Kenney, they "allowed what were then small technology firms like Hewlett-Packard and Fairchild Semiconductor to charge the Department of Defense for the price of research and development that none could pay on its own.
It is used most commonly when the item purchased cannot be defined explicitly, as for research and development, or for cases where there is not enough data to estimate the final cost accurately.
A cost-plus contract is often used when performance, quality or delivery time is a much greater concern than cost, such as in the United States space program.
For all other contract types combined the relative ranking is reversed to the original cost-plus order, meaning that products are most numerous, followed by service and research.