• US defence contracts have various arrangements to allocate financial exposure.
• Fixed-price, cost-reimbursable, and time-and-materials contracts differ in risk allocation.
• Boeing's VC-25B programme illustrates contractor risk in procurement.
• Contract type selection depends on project maturity and predictability.

The choice of contract type may indicate the level of risk tolerance and cost certainty desired by the customer, which could influence the competitive landscape of defence contractors. The allocation of financial exposure suggests that fixed-price contracts may be more suitable for mature and predictable projects, while cost-reimbursable contracts may be more appropriate for development work with substantial uncertainty.